ledGood salon operators always try to maximise money in and minimise money out of their businesses. But can minimising investment on the wrong things actually be costing you potential revenue?

I believe it can, and in this article, we’ll take a look at several different areas in your business where too much scrimping may be hurting your salon profits.

Salon Products

Building your business around cheap products that don’t deliver promised results is a sure-fire way to lose hard-won clients.

If you want to build your reputation around delivering services that impress, you need to invest in a quality skin-care line.

But I don’t want you to think that because a product is the most expensive, that it’s the best product for your salon.

That’s absolutely not the case.

Yes, the products you work with and retail must deliver what’s promised, but they must also be attractive to, and affordable for, your target market.

And last but not least, they must also deliver a good profit to your business.

So before you let a smooth talking sales rep (oh sorry, they’re called Business Development Managers these days) talk you into spending $10,000 dollars on a very expensive opening order, you must do your research.

Talk to other salons that are using the product to see what they have to say.

Check the active ingredients and the volume of those ingredients.

Ensure the retail price is affordable for your target market, because if it isn’t, then there’s a good chance that your clients simply won’t buy.

My advice is to do the research and look for great quality at a price you and your clients can afford.

Team Members

Can your salon afford to hire the best? Maybe not, but can it afford to hire the worst?

Choosing new recruits based solely on what you’ll have to pay them on an hourly rate, is truly a recipe for failure.

Yes, that girl straight out of college (or maybe still in college) is cheap to hire, but in 9 out of 10 instances, their lack of life skills, experience, practical skills and people skills will result in them simply becoming a cost to your business rather than an asset.

I often hear salon owners say they’ve just employed someone cheap to look after their reception.

What a huge mistake they’ve made.

The receptionist is one of the most important people in your business.

They’re responsible for making your clients feel good both when they arrive and leave, and this is invaluable.

They’re also accountable for re-booking clients, selling retail, upgrading and selling additional services at the time of the booking, and making sure your clients actually turn up; just to name a few of many important roles.

All of these things can dramatically affect your revenue.

When done well, your sales will increase, and when done badly, your receptionist just becomes an added expense.

That cheap receptionist is not looking that cheap now, is she?

Similarly, very young and inexperienced therapists can have issues delivering a high standard of quality to your clients.

It’s not their fault of course, but all the same, why would your clients pay an equivalent price to your salon to receive an inferior treatment, to what they would pay at the salon down the road for a seasoned professional?

Quality often does cost a little more, but if it allows you to charge more or retain existing clients, then it’s a good investment in your business.

My advice is to look for therapists who not only come with a great attitude and smile but who can deliver quality treatments to your clients based on their experience.

Training

There’s only one thing worse than spending good money on a team member’s training and then she leaves, and that’s not spending any money on updating her skills and then have her stay.

Poorly trained therapists equal average treatments and lack-lustre retail sales, all delivered with mediocre customer service.

The beauty industry is leaping ahead with new and more active ingredients delivered using high-end technology.

If you’re still delivering treatments like you learned at beauty school 20 years ago, then don’t expect your clients to hang around for long, because clients today want to see results, and see them fast.

This means of course that your therapists must be up to date with new innovations and ingredients, so they can deliver what your clients expect.

Not forgetting customer service training, Theodore Roosevelt said “People don’t care how much you know until they know how much you care”, which makes this training the most important of all.

My advice is to prepare your training calendar for 2015, keeping in mind the direction you want to take and the level of professionalism you want to achieve.

Salon Website

Do you know what the true purpose of your website is?

It’s not just the internet version of a static brochure; it’s actually your # 1 client attraction strategy.

Every single salon owner I talk to asks me for ideas on ways to attract new clients into their salon, and so I shudder sometimes to see the exceptionally poor quality of some salon or spa websites.

Misspelled words, misaligned text, dead hyperlinks, no way to capture visitor’s details, no blog/articles, no downloadable first visit vouchers, boring content, and inappropriate or poor quality images.

One website I visited was even infected with a virus, so I definitely won’t be going back there.

Trying to scrimp on a quality website simply means you’re ignoring the very best way to get new clients into your salon.

My advice is that unless you’re also a website guru, you invest some money in a quality website that does what it’s supposed to do for your business.

In many ways, no website at all is better than a bad website, because it destroys the image of a quality salon.

Stationery

Beautiful salon, serene atmosphere, talented therapists, quality skin-care, crappy amateur home-printed service menus.

And it was all looking so good until we got to the cheap and nasty stationery.

Home-printed Service Menus may have been acceptable 10 or more years ago, but today they just scream amateur.

Your Service Menus, along with all the other stationery you use in your business, form a huge part of your branding, and it’s your branding that tells your prospective clients what to expect if they come to your salon.

A poorly branded salon that reeks of cheap is going to convince prospects that this is what they’ll get if they become clients.

Cheap and amateur services delivered by average therapists in an average salon. I wouldn’t think that this is how any salon would want to be seen by their prospective clients.

My advice is to let go of past bad habits, and invest in professionally worded, designed and printed Service Menus and stationery that will impress those considering doing business with you.

A small investment that will improve the profile of your salon.

Salon Marketing

This is a great saying… ‘You can’t sell a secret’.

If you haven’t figured it out, what this means is that for people to buy from you, they must first know about your business.

Opening up the doors of your salon and expecting clients to simply flood in, is a fantasy.

Even if you have the best treatments delivered by the most professional therapists, people have to know about it before they can buy it.

By holding back on spending money on marketing your salon and services, you’re choking off your supply of new clients as well as sales of your services to existing clients.

Salons that don’t market their services are salons that are restricting their revenue.

My advice is to find out what kind of marketing provides a great return on investment for your salon, and then use it to market like crazy.

Guidance

Being a business coach, I just couldn’t leave this one off the list. The fact is that most salons are owned and operated by great therapists; not by great business women.

No matter how many times you’ve read it on Facebook, being great at what you do for your clients, does not guarantee business success.

Doing the business module in Beauty College does not prepare you for the real world of owning your own business.

Many salon owners have discovered this the hard way, by making mistakes that have caused them to shut up shop and go back to working for others.

My advice is to find a great coach or mentor who can steer you away from expensive mistakes.

If you follow the advice of a professional coach, you should reap the rewards, and find that you have a supportive silent partner in your business who will keep you on the straight and narrow.

The truth is that there are some expenses in every salon that can legitimately be minimised without affecting your business, but there are key areas that you should never scrimp on because when you do, it’s going to cost you much more than you ever thought it could.

The majority of hairdressers and beauty therapists love being creative and caring for their clients.

They are passionate about their treatments and their customer service, but unfortunately, that same passion does not seem to extend to “doing the figures” in their business. It’s simply something they don’t enjoy doing, and they find it frustrating and boring.

However, without at least a basic understanding of your figures, what they mean and how they can impact on your success, you may be headed for heartache.

When it comes to understanding the numbers in their business, many salon owners adopt the head in the sand approach.

For some reason, the idea of looking at numbers sends a quiver of fear running down many people’s spine, but you don’t have to be an award-winning accountant to understand some basic facts that will help you guide your business in a better direction.

There is really only two ways to make more profit in your salon or spa and that is to either reduce your expenses or increase your revenue.

Decreasing Salon Expenses

One area that is often overlooked is business expenses.

This is where things can go horribly wrong for some salon owners.

They allow their expenses to get out of hand, with too much outsourcing and money wasted on things that don’t generate a return on the investment made.

I have not yet met a business that didn’t need to trim their expenses!

It’s a great idea to talk to your accountant to see how much of your revenue should be eaten up by expenses.

If you are over the recommended percentage, you might want to review what you are paying for, and look for ways that you can reduce your costs.

Small savings over many areas can amount to quite a lot of money, which in some cases determines whether or not you take home a wage for yourself.

Another area within expenses that shows itself to be a problem is the staff wages.

Wages are generally the biggest expense in most salons and spa’s, and while you most definitely need to employ people to help you increase your revenue, you must also be very aware of how much they are returning to your business.

Every staff member has to be making you money in some way, and I personally believe that if their wages are costing more than 30% of their takings (without GST) then you are paying for time that is not being properly utilised.

Even your receptionist should be making money for your salon or spa.

In fact, I prefer to no longer call them a receptionist, but instead, I like the term Front Desk Salesperson.

Why is that?

Because it’s their job to sell, sell, sell.

They must be able to sell Gift Vouchers, additional treatments at the time of booking, retail products as they are checking out clients, additional appointments to existing clients and so much more.

Even though they may have other jobs that they must also do, selling should be their number one priority.

Increasing Salon Revenue

By understanding where your money is coming from, you have more opportunities to increase it.

If you know what your average client spend is for both services and retail you can create strategies to help you increase those figures.

You can look for ways to attract more clients, retain more clients, get clients to visit the salon more often and also ways to get clients to spend a little more each time they visit.

But to do this successfully, you need to know where you currently are so you can set new targets and measure your success.

Often, it takes only very small improvements in each of these areas (as little as 5%) to make a huge difference to your revenue.

So there you have it. The simple formula for a more successful business begins with understanding your expenses and revenue.

Now might be a great time to dig out those accountants figures for the last financial year.

You may feel a little shaky at first when you start, but you will soon realise that there is power in knowledge.

If you can’t figure it out by yourself, talk to your accountant and get him or her to explain what those figures really mean to your financial success. It’s worth the investment of your time.