How to Boost Your Salon Profits Instantly

Your job as a hairdresser or beauty therapist is to make your customers feel or look better, but your job as a business owner is to maximise the profit that your salon business makes. Here are my tips on boosting your salon profits. Hello, hello, hello, my salon friends. How on earth are you? Achingly well, I hope. Enjoying some sunshine, I hope. Finally, getting a few glimpses of decent weather here in the UK after a very grotty spring. And how's business? Because today we're talking about profit. And I think it might be a bit of a cultural thing, but here in the UK, I don't think we're very good at talking about profit. I think there's a level of embarrassment around profit. And we're not very good at talking about money either. And I know that when I look back to my childhood, money was a vulgar subject. It was something that wasn't a topic for discussion in polite company. You would never talk to somebody about what they earn or question what they spend. So it's no wonder that we grow up with a level of discomfort when it comes to financial matters. But of course, that doesn't serve us well as we start our salon ownership journey, our business ownership journey. I think also we get a little bit of embarrassment when we start thinking about our customers or our teams. I think we feel like we need to hide our profits away somehow. And particularly with team members, I think that's actually quite a big mistake. I think that what we want to be showing younger people coming into our industry is that they can make an amazing living in this incredible industry. What we don't want to be showing them is that after 20 years in the industry, you drive a crappy car and can't afford to go on holiday for two weeks. We should be inspiring them. And I'm not saying that we rub their noses in what we're earning and what we can spend our money on. But we should be aspirational as business owners. And all of that relies on us making a decent profit. It's always staggering to me how little idea lots of salon owners have around the profits that they're making, particularly during the year. They seem to wait until the very end when their accountant finally tells them how profitable the business has been. So my first call to arms, really, if you want to see an instant increase in your profits is, my God, you've got to get to grips with where you are at the moment and have a really clear idea,

not just on turnover, but how much profit your business is generating. And normally that means having a really clear handle on the money coming in and out of the business yourself. Or you need much better reporting from your accountant or bookkeeper during the year. Myself, I've delegated all of that to a bookkeeper. I've been running my own businesses now for over 20 years and I have never, ever done my own bookkeeping. Even though I have a degree in banking and finance and I'm very comfortable with the numbers, it's just not what I want to spend my days doing. And I don't think you should be either. So I would be delegating that to a bookkeeper, but it's not enough just to delegate. You need the reporting back. So my bookkeeper gives me a report every single month telling me how much has come into the business, how much has gone out of the business and on a cumulative basis, how much profit is being retained in the business for two things. Firstly, so I know what I can spend or take out of the business. But secondly, so that I understand what I'm going to be taxed on by His Majesty's Revenue and Customs at the end of the year, too. So I promised you some tips on how to increase your profits and I've tried to focus these tips on things that you can implement in your business quite quickly. And essentially, there are only two sides of a coin as far as profits concerned. We either focus on getting more money into the till or we focus on reducing our outgoings. And I'm going to start with reducing our outgoings. I want to get this out of the way because reducing outgoings is a bit miserable and a bit gloomy. Trying to squeeze an extra few pence profit by cutting back and cutting back is something that I used to avoid. And I think that was kind of a sign of the times. I think that's because I started my business way back in the beginning of the 2000s. And business was pretty good for almost the entire industry. Business was kind of booming for a while there. So I always thought that if I needed to make more profit, the easiest way to go would be to grow the business, to bring more money into the business rather than scrimping and saving. That story around money has changed for me over the last five years or so, as it has for lots and lots of business owners since the pandemic and since the cost of living crisis here in the UK as well. And I think we're much more aware that we need to be cutting back as well. So I've got a few areas where I think we could be cutting back.

The first is the number of subscriptions that you have. And these get hidden away in our businesses without us really appreciating that, you know, just a few pounds here and there on different subscriptions can soon mount up. So have a look at what you're paying for. Have a look at the... Actually, there's a couple of things that I want to bring up here. The first is have a shop around and figure out whether there's a cheaper way of doing it if you don't take the business option. And I get really cross. If you jump onto, let's say, the Vodafone website and have a look at Vodafone Business, the tariff that you will pay for your mobile phone and your broadband is much, much higher for a business than it would be for a domestic person or somebody who was operating outside a business for a personal account, which seems deeply unfair when you're providing the same service. But also bear in mind that something like a mobile phone, you can still claim that back, even if it's on a personal contract, just by putting the invoice through the business. It doesn't have to be a business rate in order for that to be an allowable expense, or at least that's my understanding of the situation. So have a look through your subscriptions. Figure out where you might be able to save a few pounds here and there. Literally, I would about every three months go through your bank statement line by line and figure out what you're paying out on these subscriptions. I got in a bit of a pickle because lots of times the name that we see on the bank statement isn't the name of the business that the subscription applies to. So I got very muddled on what I was paying and to whom. What I've got now, though, is a virtual debit card on my business bank account just for subscriptions. So I bank with a bank called Monzo here in the UK. I'm not affiliated to them. I get nothing for recommending them. They haven't sponsored the video or anything, but they do allow you to have an indefinite number of virtual debit cards. So I have one just for my subscriptions. So I've got a really close eye on how much I might be spending. Similarly, while we're cutting costs, it might be time to shop around for a different manufacturer or supplier and also have a look at lifetime deals for things like your email marketing. So if you're slavishly paying away for something like MailChimp month after month after month, there are providers out there that will charge you once for lifetime access. And I have this for my social media scheduling software and I have this for my email software as well

and my task management software. So I don't use Trello anymore. I have one called Infinity, which had a lifetime deal. I don't use MailChimp anymore. I have one called SendFox, which was a lifetime deal. So have a look for these deals. But when you're looking at your manufacturers and suppliers, it might be time to shop around. And I know that in hair it used to be there was quite a big difference between hair suppliers for a lot of time and it wouldn't be unusual to go into a hair salon and they would have one range of color, which was their core range. And then we would have some L'Oreal color because their reds lasted longer and we would have some Weller color because their high lift blondes were better. It's just not the case anymore. There isn't a supplier out there that doesn't have great gray coverage, that doesn't give you long lasting reds, that doesn't give you nice clean high lift blondes. So I think we can afford to shop around. And the benefits for staying loyal to a manufacturer have been eroded over the last few years. We get much less for staying loyal than we did maybe five or ten years ago. But the biggest cost in lots of our businesses is, of course, our wage bill. And I'm not suggesting that you start laying team members off, but it might be time to start looking a little bit more closely at performance management. And it was written into our contracts when I was employing a team. If they had too much utilization, if they had too much spare capacity, we reserved the right to reduce their working hours so that we could basically squeeze the clients they did have into a smaller space and increase their capacity. I think it's unacceptable for you to be carrying people. Listen to me ranting. My goodness, you get me riled now, darlings. But I think it's unacceptable for you to be carrying a team member and them think it's OK for them to be just 60 percent booked up. That level of utilization needs to be in the 80s, I would say, as a minimum, depending on your business model. But 85 to 90 percent of the push is that sweet spot for utilization. I've coached salons, good salons, where they've got team members on 55 percent utilization. And I just don't think you can afford that. Anyway, let's move away from cutting costs and look at some ways where we can get some more money in to the business, can we? And if it's been more than six months since your last price review, my quickest, easiest way to increase your profits is to increase your prices.

It doesn't have to be by very much. We should be, I think, reviewing our prices twice a year because it means increases can be a bit smaller and we get to tweak and change. I don't know what my costs are going to look like in 12 months time, and I don't think you know with certainty what your costs are going to look like in a year's time either. So let's stop guessing. Let's get much more used to continual price tweaks, continual price reviews so that we don't have to lump or burden our customers with massive price increases once every year or two. Look for add-ons. Look for something that you can build into your services, which doesn't take you much time or product, but increases your average bill quite quickly. For us in hairdressing, conditioning treatments. If you're not doing conditioning treatments on at least half of your customers during the day, you are missing a trick. Because there's a huge range of conditioning treatments, a huge range of price points for that. They all tend to be extremely profitable. Sometimes they don't increase the service time by very much at all. Your customer enjoys a better service. They enjoy the benefit. They enjoy just the scalp massage sometimes, let's face it. In beauty, you're going to have to work a bit harder. There isn't going to be one add-on across the board for all of your services like there is in hair. But there will be stuff that you can build into your services to increase that average bill to get a little bit more bang for your buck from every customer that comes through the door. While we're talking about increasing money, let's talk about not giving quite so much away. It's time to ditch the discounts, my darlings. I promise you, if you haven't listened to my episode on discounting, which was about four or five weeks ago, go back. I did three episodes about profits and in the Profit Trilogy, there was one called The True Cost of Discounting. If my editor is listening, can you please find the link and drop it into the description? You'll be shocked by how much a discount actually costs you in business terms. So let's ditch the discounts. I inherited a business which had discounts for OAPs. It had discounts for students. My God, there was nobody paying full price in this business. And if you don't want to increase your prices to increase your profits, let's get rid of some discounts instead. While I'm talking about it, let's finally stop kidding ourselves that loyalty schemes work. If you've screwed up somebody's beauty treatments, if you've hurt them when you're waxing, if you've cocked up somebody's hair colour, I don't believe that having a few points on a loyalty card is going to save that customer. It's essentially just a discount hiding under a different name.

So let's get rid of the loyalty schemes and let's get back to proper pricing for everybody. And finally, I want to talk about retail and this. OK, I promised you some instant tips that you can implement in your business very quickly. This might take a bit longer, but I want you to start looking at what you're retailing, because there might be some products in there that we can either find alternatives that have a higher profit margin. Or what I'm really excited about at the moment in my own business is white labelling. Now, I'm not pretending that we can white label all of the retail in reception in my business, but there are some core products in there that I think I could be doing an awful lot better by having the white label version. For example, bear in mind, I'm a hairdresser, so you're going to have to translate into the beauty industry. But we use something called a clarifying shampoo and a clarifying shampoo is basically a no additive shampoo. Nice, clean, clear hair. We use it a lot before chemical services, but we also use it when people have been swimming to get chlorine out of the hair or if they've been swimming in the sea to get the salt out of the hair. And clarifying shampoo, to be honest with you, is pretty much just a pure shampoo. There's not one that's achingly better than another one. And yet if I white label that product, the profit margin doubles if I'm going to retail it at a similar price to the branded version. Plus, I get to reinforce my branding by having my name on a bottle in the shower every time they're using that shampoo as well. So have a look at white labeling some products. I think you'll be very pleasantly surprised. I looked at this a few years ago. Honestly, darlings, the products were pretty shit, to be honest with you. The quality wasn't there. Things have changed hugely over the last 10 years. So do yourself a favor. Have a look at white labeling. See if you can't get a bit more bang for your buck with your retail offering. So what have I missed? Reach out. Let me know. Phil at buildyoursalon.com. You know I love hearing from you guys anyway. Also reach out if you would like to be a guest on a future episode of the Build Your Salon podcast. And also with your questions for my Ask Me Anything episodes. Just seven short days until I'm coming in your eyes and ears again with another dose of my wise owl wisdom.

And until then, take care. Sit down and see what's going on with the queen of salons. Hair, beauty, and more successful tips for business owners. All on Build Your Salon.