There are so many things to think about when running your own salon or barber shop – keeping both staff and clients happy can be a task that takes up most of your day!
But, at the top of your list should be one very important thing – profit.
Your salon profit is what you need to keep the doors open every day. It’s also vital that you make enough money to invest back into your business, ensuring that you always stay ahead of the game.
So, we’ve collected some advice for anyone who is wondering how they can improve profit and make more money in their hair salon this year.
Is a hair salon a profitable business to run?
If you are running your own hair or beauty salon, you should already know that it can be perfectly profitable.
According to one report in 2017, two thirds of hair and beauty businesses had an annual turnover of up £99k. The highest proportion of salons had a turnover of £50,000 to £99,000, while 27% managed to take between £100,000 and 249,000.
Of course, the amount of revenue you make is important. But what is more important is how this translates into profit. And, this depends on how closely you manage the numbers and finances of your salon business.
How much salon profit should you be making?
Salons can earn an average profit margin of 8.2%, which is actually higher than the general business average of 7.7%. Of course, salons that are best managed can earn well above this average. A 10% profit margin is usually the minimum aim, though the better you can manage your salon finances, the higher this can be.
How to improve profit & make more money in your salon…
So, are you looking to improve your salon profit this year? Take a look at these tips for making more money in your salon….
1. Grow your number of clients
The number one way to generate more profit is simple. You need to get more clients into your salon and keep them.
Yes, growing your client base is essential. But, this only works if you convert those new customers into loyal spenders.
The cost of acquiring new clients is high. You will likely need to spend on marketing or give away offers to get new faces through your doors. So, the last thing you want is to have that money go to waste. Losing any client can be a financial loss.
For example, imagine you have a new client who books a cut and finish for £40.
If they returned for five further appointments that year, you’ve generated £200.
If you aimed for 10 new clients that month, all of whom remain loyal, this could be £2,000 of new revenue. If you achieved this every month, that’s a boost of £24,000 over a year!
On top of this, you could also make more from upsells, cross sells and retail revenue.
Now, imagine you lost all of these new clients. That’s a lot of money you could have made in a year, gone with them.
So, what can you do to help get new clients into your salon?
Try introducing new booking methods. If you don’t already, set up an online booking feature on your website, or consider using a salon booking app service.
Expanding your salon offering can also attract new clients and profits. How about testing out the demand for vegan salon treatments in your area or showing off some new hair colouring techniques from your team?
For more ideas, we have a full blog on attracting new clients to your salon.
2. Increase the amount of money your clients spend per visit
Along with increasing the number of clients you have on your books, the next best way to improve your salon profit is to increase the amount of money your existing clients spend per visit.
It’s a fact that your most loyal clients are more likely to spend more with you. So again, working on building up a relationship with everyone who visits your salon is vital.
If you want to boost the profit you get from each treatment, take a look at what you are upselling. Things like a nourishing hair mask at the wash bowl or a moisturising hand massage during a manicure can all add up to extra profit.
Don’t forget about the importance of salon retail as a revenue stream, either. For beauty salons and spas, the industry average is 5% of revenue coming from retail sales. If you think you could increase your retail sales, set yourself a target and train all of your staff on how they can help achieve it.
Finally, look at your pricing. Does it need to change? It could be that you have upgraded to better, more expensive products or your reputation has been growing.
Have the confidence to raise your prices if you need to increase your profit and the demand for your salon is there. If your clients are all delighted with the services they receive, they should be more than understanding.
If any clients aren’t willing to pay more for your expertise and talent, it’s likely that you will attract new clients who are.
3. Encourage your clients to visit your salon more often
Just as you want to get as many repeat clients as possible, you also want to maximise the amount of times they come to your salon. The more they return to you, the more profit your salon will make.
There are a few simple ways to start doing this. Ask every client if they want to book in for their next appointment before they leave. Don’t underestimate the power of client loyalty schemes, either.
Adding new treatments to your salon can also give your clients a new reason to return. If they already love coming to you for their hair, for example, they are more likely to come to you if you offer other beauty treatments, too.
If you do expand into new areas, consider holding a client event in your salon to get the word out there – we also have a guide on how to introduce new treatments to your beauty salon with more tips.
4. Reduce your salon overheads
The other points we have mentioned are all about getting more revenue to add to your profit.
But, equally important is to trim away anything that is eating too far into your profit margin.
Every year you should analyse all of your overheads and identify any points of unnecessary spending. Always check you are getting the best deals for your fixed costs, such as energy bills and insurance, too.
Break down each area of spending by percentage so you can keep track of any areas that are creeping up. For example, staff should cost no more than 60% of your turnover. If this number starts to creep up, take a look at why – do you need to train your team up on retail sales? Or do you have too many unfilled appointment slots?
Last but certainly not least, be aware of how much stock you order. Over-ordering can seriously disrupt your cash flow as well as making your storeroom untidy! Order what you need on a monthly basis and do regular stock checks to ensure your spending is as efficient as possible.
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