At the beginning of every year, salon owners worldwide tell themselves that this year is going to be their best year yet.
This is a fantastic goal, but like all goals, if it’s not actioned, then it’s simply a dream. And unfortunately, dreams seldom turn into reality.
So to get you kick-started for a better year ahead, you need to consider the 2 simplest ways to enjoy greater profits.
While many salon owners think it’s a bit crass to think about making money, and believe their role is simply to deliver beautiful effective treatments to their clients, the reality is that without that all-important money, their business will cease to exist.
The need to make a profit is a reality that everyone must come to grips with if they’re to stay in business for the long term, and if you can do that by doing what you love at the same time, then even better.
Let’s take a look at the 2 most straightforward ways to boost your salon profits.
1. Increase your service prices.
When I speak to prospective coaching clients, I always ask them how long it’s been since they’ve had a price increase. Very few say ‘less than 12 months’ and the majority say 2 years or longer.
This is crazy.
Yes, your customers will love the fact that you haven’t increased your prices for years, but they won’t love it so much when you can no longer afford to keep your salon open.
Actually, the truth is they’ll be upset for about 2 minutes, and then ring up one of your competitors and continue on their merry way.
Every business needs to keep pace with inflation. As prices increase around you, you must pass that onto your clients, because if you don’t it will eat away at what is already the very small profit margin that salons make.
On a regular basis, you have to cope with paying extra for items such as rent, electricity, wages, products and just about everything else that you have to have to run your business.
Where does all this money come from? Your profit margin, of course.
If you haven’t increased your prices in the past 12 months, then it’s time to put on your big girl panties, bite the bullet and up your prices.
2. Decrease your expenses.
Every penny you spend in your salon eats away at your profit margin.
Savvy salon owners know exactly what they’re spending their money on, and are constantly looking for ways to reduce those expenses.
Expenses such as EFTPOS charges, bank fees, electricity costs, telephone costs, consumables, products, and sometimes even rent, can all be negotiated to find a more economical solution.
And of course, one of the very biggest expenses in any salon is wages.
The sad part is that most salon owners are not even aware of what their wage cost is as a percentage of their revenue (earnings). This is a figure every salon owner needs to monitor closely and constantly to ensure that huge sums of money aren’t being wasted on unnecessary staffing costs.
You should not only know what this percentage is for the salon overall, but you must also monitor it for individual staff members.
Once this figure begins to creep over 35%, you need to take immediate action to reduce this expense. If you don’t, you’ll end up joining the ranks of the many salon owners who haven’t taken home a decent wage in years.
And there you have it. Basic profit building 101.
Increase your revenue and decrease your expenses.
This is what will keep more money in your bank account and you in business for the long-term, doing what you love.
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