Everyone is talking about the economic downturn, how could you avoid it? Pictures of doom and gloom for the retail sector fill our television screens. It has everyone worried. As small business owners many of us are concerned about the effects a recession would have on our income. That’s natural. But not many salon owners know exactly what they can do to “recession proof” their businesses.

Basically, the ideas I am going to provide here are the same tactics we should employing whether we are approaching a recession or not – It’s just more pertinent in difficult economic times. I teach that there are two major areas we need to concentrate on when times get a little tough. The first is to cut back on some of your costs. (I know what you are thinking – easier said than done!) But cutting back significantly on costs could simply mean doing things a bit smarter, not necessarily making wholesale changes to your business. It certainly means putting some time and effort into maintaining a healthy, loyal data base so that less money needs to be spent on attracting new clients through expensive advertising.

Click the ‘Read More’ link below to continue reading this article.

The second is to secure and even increase known income streams. We make our money through services and retail sales. Getting professional help to improve rebooking rates, retail sales and the up-selling of services might just prove to be the best spent money you could ever outlay. None of this is too difficult nor terribly time consuming but like so many things we need to prioritise that we will actually implement them sooner rather than later if we want to manage our businesses better through these tough times!

You don’t have to be mathematics major to realise that the biggest costs to your salon are rent, wages, stock and advertising. Now most of us will not be able to renegotiate rent very easily so that leaves wages, stock and advertising to make money saving changes to our businesses.

Wages

The question of wages can be looked at in two different ways.

Reducing the amount of hours actually worked.
Altering the hours through clever rostering that makes the working hours most productive at peak customer flow periods.

My salon is in Queensland where casual employees are available. There are a number of states in Australia that allow us to utilise casual employees in our staffing mix. Now whilst you pay a premium price for the hours they work, it allows for enormous flexibility in both quiet and busy times. I can utilise short three hour shifts, send staff home when the salon is not busy or retain them for extra hours when we are busy. Staff can be called in at short notice and rosters can change week to week to reflect forward bookings. Basically, I can utilise these staff to meet peak demand periods and not have them unproductive for long periods of time when we are not busy.

However, not all states allow for such flexibility and demand either part time or full time employees to have set rosters. In this situation it is vital that you adjust your rosters to meet client demand. So many salons I visit merely open their doors “nine to five” because of some historical convention in the labour laws, when actually there is much more flexibility allowed without penalty rates for both full time and part time employees. I often undertake a review of customer demand in salons.

In other words we look at when your clients actually want their appointments. How busy is your 4 o’clock – 5 o’clock period each day? If it is always booked out then perhaps you should consider staying open until 6 o’clock. In my own salon we start at 8am each Saturday because the demand was for early Saturday morning rather than late in the afternoon. We now close earlier, work the same number of hours, but meet the demands of our clients and therefore have staff fully booked and highly productive.

Many salon owners are amazed at how willing good staff are to work rosters that take in late nights or Saturdays, especially if it is shared or only one in every two or three weeks. Try sitting staff down individually and explaining the need for roster changes. Ask if they are willing to work a late night, start earlier, work weekends or have Mondays or Tuesdays off. You might be surprised at just how flexible your team can be.
Which are your busiest days?

Where is the highest demand each day?
Do you need as many staff early in the mornings?
Would starting one or two staff later and finishing them later extend the possible booking hours for your clients?
Instead of 8 hour days some staff might be open to some longer days when you have late nights and shorter days earlier in the week.
Do you utilise rotating rosters over a 2, 3 or 4 week rotation to manage staff fairly through late night trading and weekend work?

Many of the salons I visit can extend their available hours to clients and not spend a cent more in wages by simply monitoring when the highest customer demands are. Whatever the solution you come up with the fact is that wages should be viewed as a percentage of your total income not a fixed cost like rent. Profitable salons manage their wages below 30% of their total income.

Stock

Another area of saving can be in the amount of stock you are holding in the salon. Many salons have tens of thousands of dollars of stock on their shelves. Now whilst I am an advocate of looking like you are serious about selling retail by having plenty of retail stock to sell, many items are slow moving and yet have large stock holdings. Use your computer software to ascertain exactly how many of each retail line you have sold over the past month and adjust your shelf holding accordingly. By only holding what you will sell in a normal ordering period you will free up cash flow.

And it’s not just retail and professional stock that requires some careful consideration. This is the time to start comparing prices from various distributors that provide you with salon supplies. I recently informed my usual supplier that I could purchase the same wax cheaper from another distributor and they quite happily matched the price saving me almost $5 per kilo. If this was done with all salon supplies and the saving calculated over a year you can save thousands of dollars. But don’t just think about salon supplies. Get quotations on printing, office goods, insurance and even bulk cleaning products to help slash costs.

Advertising

Then there is your advertising budget. By far the most expensive advertising mediums are the newspaper, radio or regional television. At the moment they are desperate to find advertising dollars and will cut great deals if you are willing to agree to multiple advertisements. Even so these media are still very expensive to use. Concentrate on your existing, known data base through newsletters, flyers and special offers at a fraction of the cost and you should expect a far greater return on your dollar spend.

In fact, your existing data base is a one of the most precious assets your salon owns. Yet so many salon owners do very little to keep this asset current. Set up a reactivation scheme for clients you haven’t seen for more than three months. Contact these clients by letter, phone or email with an offer to attract them back to your salon. In the process you will get return mail from changes of address or customers who just don’t want to return for any number of reasons. This allows you to clean up your data base and make clients who are no longer visiting inactive. Many salons spend enormous sums of money mailing and SMSing to clients that are no longer active but because their data base hasn’t been kept up to date these people still receive all your advertising. This is a waste of money that could be utilised in extra advertising to those who are still active visitors to your business.

Secure your Income

Difficult economic times require us to make the most of every opportunity that comes our way. With less money to spend, every inquiry must be converted, rebooking must become a priority, up-selling is a skill that all staff must make second nature and retail sales opportunities must be taken advantage of. It is necessary right now to spend time re-training staff in these four vital areas. If fewer clients are going to be spending less money, then it is vital that every opportunity that appears in the salon must be taken full advantage of. If you don’t feel that you can do this training then get some professional help. Here in Australia we are blessed with a number of very skilled consultants that offer expert training in all four of these key areas. It may well be the best money you ever spent.

Every staff member must be proficient at answering the phone and converting inquiries into bookings. This maximises the effectiveness of every dollar spent on advertising.
Every staff member must be trained in how to effectively rebook each client they treat no matter what service was performed.
All staff must be actively suggesting add on treatments to every service and additional home care sales whether the client is in the salon or on the phone.

Clients must be prescribed home care as an integral part of their treatment no matter what the treatment is. They are buying product from somewhere - you must make certain that it is from your salon. In fact, in most cases the value for money of salon exclusive products when you take into consideration the amount used and how long the product lasts, is better than the cheaper pharmacy and supermarket lines.

It is simple mathematics. If your staff were to sell just two extra items per day at $100 total, over 300 working days in a year that is $30,000 extra income. Similarly, if one extra booking per day was secured at $50, there is another $15,000 added to your total. Add to that two or three up-graded treatments and securing re-bookings ensuring clients return.
That is a significant boost to helping you beat these difficult times.

Many of us get so busy in our salons that we sometimes neglect to take a big step backwards and look at how we need to work on our business to secure our prosperity. As an individual you are limited to the amount of income you will return working in a room all day. However, by managing your salon better you can significantly increase your return on advertising and the income of every staff member under your control. Despite your desire to save on wages by taking on more clients yourself, think about working diligently on the advice mentioned above and securing your salon’s financial return during these difficult times.