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Cash flow is one of the biggest problems with many small and growing businesses and the beauty industry is no different. Seeing cash coming into the tills is all well and good, but, understanding where it has to go to (and when it has to get there) is essential. You must get your head around cash flow. By the time suppliers, rent, rates, etc. are paid (not to mention VAT), cash can quickly go out of the salon door as quickly as it can come in and bills can start to mount. Learn to understand your regular monthly expenses and keep your records up to date as much as you can. Beauty salon computer systems (such as iSalon, Short Cuts, etc.) can deliver you fantastic income data, but knowing what is needed for bills, when they are due, and making sure you have money available is essential. If you are not inclined towards numbers and accounts, find a book-keeper who is who can guide you and help you manage this essential aspect of managing your beauty salon. If you’ve ever visited one of the big beauty industry trade shows, you are probably well aware of how hard the skincare companies and equipment resellers work to sell their products into beauty salons with the promise that “all my salons make lots of money selling this”.
A lot of the large skincare brands want an investment of around £5,000 to stock your salon. That’s a lot of money to recoup. It may not sound it, but you need to sell a lot of facials and body treatments (as well as retail) to get that investment back. Relying on these skincare brands is not as good a bet as they would suggest. The same applies to products and equipment. For instance, I had a conversation with a salon owner recently who had spent £36,000 on a specialist bed/bench for her salon as it was sold as such a great investment at a show. Be ruthless and don’t be fooled into the sales pitch. Which brings me to my next point… As technology develops – both in professional beauty equipment and the skincare and nail care products; and, as new trends / fads come and go, it’s easy to think that there needs to be a constant investment in the latest treatments, otherwise your beauty salon will fall behind. [This is the most important piece of advice on this page…]
You will make most of your revenue from bread and butter beauty treatments, such as waxing and manicures (which usually cost the less). In the past, I have invested money into training (and supporting products) because a therapist has told me that “all our clients are asking for it” only to find out that £1,000 later, no-one is actually booking. Obviously, the beauty treatments you offer depends on your specific salon – as well as knowing your client base – but, to give you an example, in one of our beauty salons, Facials and Body Treatments (the most expensive treatments to deliver) make up less than 20% of the income. Waxing on its own makes up 28%. If you were to measure over a month how much money a beauty treatment brings in and balance it against how much you spend on products (and time) to deliver it, you may well be surprised. This is where you may need to be ruthless and potentially cut treatments from your salon. It may upset the odd client, but you can not base your beauty salon treatment offering (and your livelihood) on the wishes of one or two people.
When things are slow, it is very tempting to run offers in your beauty salon. You need to play this one very carefully. About three years ago, I had a manager in one of our salons, and I was not ‘in’ the business as much as I should have been. As such, the feedback I was getting from the manager was that the salons was not busy at all. So, we started offering (what I thought were) very good monthly offers for clients. The problem was that we became the ‘offers’ salon. The cheap beauty salon where you could grab a bargain. Make sure you value your beauty salon brand, otherwise you will get the wrong kind of reputation. The same applies to Offer sites such as GroupOn. I have heard nothing but bad stories for salon owners about running these kind of offers and we nearly fell into the same trap, until I worked out the maths of the GroupOn offer and couldn’t work out how it would benefit us in any way. In the old days, companies selling advertising, such as newspapers and directories, found it a hell of a lot easier than today because:
But, the Internet has turned these restrictions on their head and there’s no going back. Anyone selling advertising to you will be able to give you a great success story when they go through their sales pitch – don’t be fooled. Yes, experiment with marketing and advertising ideas but make sure you implement measurement, such as ‘old fashioned’ coupons. Beauty Salon Computer Systems give you the option to measure marketing campaigns and this measurement will help you refine how to spend your cash. The web is the obvious route to reach customers – as it’s where most of them will look to find you – and having a good website can offer a great way to reach new clients. Make sure you invest in a good website and make sure it delivers something you can measure to your business. Too many salons work on trying to bring in new clients, rather than concentrating on the ones they have. Learn who your customers are and what they want and don’t see them as the enemy that needs conquering.
Create a two-way conversational relationship with them and invest time and effort into how you communicate. The Internet allows for a much more powerful consumer. They can rate you, share experiences with their friends and tell the world about you. If you invest in the experience your clients have, the comments they share will more likely be positive. If your business has a training budget set aside, invest just as much as you do in treatment training into getting your therapists to be able to communicate effectively with clients. I have delivered a retail communications course into our salons (developed by Daryll Scott) and although it wasn’t cheap, it was amazing value for money. Our beauty therapists understand how to interact more effectively with clients (and feel more comfortable and confident in doing so). They are more welcoming, more personable and as a result they get better feedback, increased re-bookings and they sell more products. Meanwhile, because the therapist has listened and asked the right questions, the client leaves the salon feeling they have received amazing value and a truly personalised experience.