Top 5 Mistakes Salon Owners Make | Salons Direct
1. Cashflow and Money Management

Cash flow is one of the most important things to keep on top of in any business, but particularly when your business is small and cannot always predict a steady stream of regular business. It’s one thing to see cash coming into the tills, but you need to understand where it has to go as well as it can leave the salon just as quickly as it comes in.

It’s important to have a monthly budget in place, factoring in costs for your suppliers, rent, rates, wages etc and knowing when bills are due as they can easily mount up and start a vicious circle!

If you are not naturally figure-minded or find it hard to keep track of all the incomings and outgoings, then find a good accountant or book-keeper who can help you, as money management is the most essential aspect of managing your salon and you need to know what targets to set yourself each month to keep the business in profit.

2. Overspending on Brands and Services

If you’ve ever been to large industry trade shows then you will have seen just how many different brands and products as well as equipment and furniture that are available on the market, and it’s easy to get sucked in to taking on something which “is guaranteed to make your salon money”. Don’t be fooled, it’s not.

First of all, most brands will want a substantial investment to initially stock your salon, which unless you have an amazing retail strategy is money which is quite literally sat on the shelf. You will need to sell an awful lot of treatments alongside the retail range to recoup this money back, and this will take time. Time which you are out of pocket!

And if you’re being persuaded into investing in a large piece of specialist equipment then this isn’t a decision to be taken lightly, you must consider how much you have to lay out for it and how long (realistically) you think it will take you to recuperate this money. It may be a fantastic new top of the range service, but is it one that your clients and potential new clients in your area are really going to be interested in, or are you being seduced by a sales pitch?

Before taking on any new range or piece of equipment, think about the impact it will have on your business not having that cash available while it’s tied up in stock or repayments. If it is going to make cash flow a bit tight, then is it too much of a risk?

3. Ignoring the Money Making Treatments

If you take one piece of advice from this article, it’s that you will make most of your revenue from bread and butter treatments, such as haircuts and colours, and manicures and waxing than any other service in the salon. New trends come onto the market all of the time and it’s easy to get sucked into investing time and money into these and neglecting the services which consistently bring in revenue to your salon.

Whilst it is important to listen to your therapists and stylists (they are the eyes and ears to your clients after all), make sure that any recommendations for new services that they make are fully thought out and not based on a simple, “Loads of clients are asking for it”. Do your research, calculate your figures and see what it can potentially bring in and whether it is worth the time and investment.

Know what works for your salon, and always keep track of what individual treatments and services bring in – if it’s not working, it needs to be cut from your price list, even if it upsets 1 or 2 of your clients. Be ruthless!

4. Becoming an “Offers” Salon

In this industry reputation is everything, so when business is slow don’t be tempted to run too many offers or you’ll get known as the “offers” salon. Special offers are one to be played very carefully and before advertising your services on a discount website you need to see the effect it might have on your books.

Most discount websites will require a minimum reduction on the treatment or service to publish it to their site, and it can be around 70%. If you were offering a £50 service with a 70% discount that means you are performing it for just £15. But it’s not £15 for you, you will have to split that money with the discount company too, so that leaves you just £7.50 from a £50 sale.

There is a lot of debate surrounding “loss leader” deals and whether or not they actually work, but before you write off the cost to new client acquisition you need to consider what type of client these discounts are actually attracting. Are they likely to return, or are they likely to be “offers clients” who will show you no loyalty and wait for another deal from another salon?

And reputation isn’t the only problem, think of the effect this will have on your cashflow. If you were to earn just £7.50 for a 60 minute service, then that means that 100 clients will only bring in £750, losing you a potential extra £4,250, and you will likely have had to turn down full paying clients to accommodate the influx of new people taking up the offer.
Doesn’t seem such an attractive proposition now, does it?

5. Ineffective Marketing

Why do you think it was so easy for advertisers to sell newspaper and directory ad space in the past? Because in the past there were very few places for a client to look for a beauty or hair salon, and because it was hard for a salon to see what new business actually came from these ads and therefore they didn’t really measure their success.

Oh how times have changed. Nowadays it’s becoming easier and easier to see where your new clients are coming from, be it through social media, discount sites, your website or other advertising you do and so you have no excuse for not having a tighter rein on where your marketing budget is spent. There’s no right and wrong for what will work for your salon, but anything that you trial should be analysed properly and evaluated to see what’s most profitable for you.

And it’s not just about spending money to get new clients in through the doors either. So many salons spend so much time and effort in trying to attract new people that they neglect the clients they already have! Invest in these clients and keep them happy, after all, the internet has generated a much more powerful consumer – they can rate you, share their experiences with their friends and have much more of an effect over your reputation than they ever have been able to before! They are your cheapest form of advertising, keep them sweet and their friends will hear about it!

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