Minimum Wage Is Killing the Salon Industry (Just Not How You Think)

The national minimum wage isn't killing the salon industry because it's too high, it's killing the salon industry because too many of you aren't paying more. Hello, hello, hello my salon friends! How on earth are you? Achingly well, I hope. As we steam through this month, heading deep into the midst of October, how's it going for you? Are you making lots and lots of money? Are we rich yet? Let's hope so. I hope it's treating you well. Hearing some good stuff from my salon owner friends. Hearing some nice positive results. I just hope that the half term towards the end of the month doesn't screw things up for us because sometimes when the kids are off school, things get a bit disrupted. I think a lot of people are going to be going away. I think that we miss that after moaning about the hot weather all the way through the summer. I think lots of us are missing it and could do with a few rays before the end of the year. Anyway, what are we talking about today? Well, a really nice gloomy subject. But bear with me, my puppets. Uncle Phil's here to take your hand and walk you through it without too many frowns. We're talking about the minimum wage. And when the minimum wage came in, I'm old enough to remember, my darlings, way back in the 1800s when I was young. When the minimum wage came in, we were all absolutely devastated. It kind of came as a bit of a short, sharp shock to the salon industry. And I have to say that I don't think that people come into the salon industry for the money. There are much easier ways to make what we earn than dealing with the general public, looking at vaginas or doing people's hair all day, every day. I really don't think that's why people are in the industry. They're in the industry because they love it. That said, no one's doing this for nothing. We're not working in charities. We're working in businesses and we expect to be paid properly. And I think people are panicking every time that the national minimum wage goes up because they're treating the minimum wage as a ceiling. They're basically paying their team that. And I think that's a huge mistake. I think we need to stop seeing the minimum wage as a cost problem because I don't think we should be paying the minimum wage anyway. I think it's a minimum, a national minimum, but we should be paying a lot, lot more than that. I know it sounds like treason and I know that you're struggling. But bear with me. I think there's a way through this. And let me make the argument, first of all, why we should be paying more than the minimum wage. And if you are paying minimum wage, by the way, I promise you're not in the minority. Most businesses that I'm brought into as a coach have at least some of their team earning the bare minimum. I'm getting a bit bored with the word minimum now. I have to come up with something else, but they're paying the absolute least they possibly can. And I think that sends a signal to your team members. It sends a signal to your stylist or your therapist really displaying how much you value them and value their skill. And I think that skilled people deserve to be paid properly. I think they deserve to be rewarded properly for the amount of time and effort they're investing in their industry. If you go to college for two or three years, if you're jumping on TikTok and YouTube to get free top up training wherever you can. If you're on the manufacturer websites taking their little online courses. If you're interested, invested and bought into our industry and being paid the absolute bare essential. I think there's a disconnect there. And I think it's no wonder that people are getting demotivated, leaving the industry sometimes, certainly leaving salons and shopping around for places that they feel more valued. Now, in my own salon business, I paid the maximum I profitably could. And that was a strategy that we set out. In fact, there were two parts to this strategy. We would always pay more than anybody else as much as we possibly could profitably. And the second thing was we would invest more in training than anywhere else. Now, you can't do everything, though. We're working and living in a commercial reality. And that means much as we would love to spend money on absolutely everything. We can't. There have to be some sacrifices when you make that kind of stand as far as training and wages is concerned. So, for example, in my salon, let's say you walked into the staff room one day and went looking a bit shabby in here, isn't it? The paintwork's starting to look a bit chipped and the walls are looking a bit scruffy and we could really do with a revamp. Well, guess what? We were not going to be paying a decorator to come in. It was going to be a trip to B&Q, two cans of paint. And who's free on Sunday? I'll buy the donuts. And we would get the job done ourselves. Similarly, when it got to the festive season, you can tell I've started buying advent calendars this week, can't you? But when it got to the festive season and I was starting to think about our Christmas do, some salons were hiring a limo, throwing all their stylists in there and driving them up to London for a very extravagant night out. By comparison, our Christmas do was a little bit shit. To be honest, it was generally a curry in the place around the corner and not much else because you can't do everything. But my team understood that the reason our Christmas do was a bit shit and we were getting paint on their favorite jeans on a Sunday, repainting the staff room was because we were paying more than anyone else and investing more in their training than anyone else. It's a little bit of give and take. If you're clear about your strategy and clear with your team about your strategy, they can make the choice. They want to work somewhere that puts them in a limo and drives them up to London for Christmas. Great. They don't have to work here. There's plenty of other options. But if they want as much spent on their training as possible, which actually is more motivating than you might think, and they want decent wages, this is the place to be. If you're underpaying, it means that you're more likely to lose your team members. And that's expensive. So I'm not here, my loves, even though it sounds like your Uncle Phil is lecturing you, I'm not here making a moral stand saying that everybody deserves to be paid more. What I'm after is a business argument on why it should be the case. OK, and I think there's a couple of elements to this. The first is the industry side of it. I think paying minimum wage and using that as a target for your wage bill drags the entire industry down. It makes our industry on a par with waiting staff and bar staff and people that are working in supermarkets. In fact, the supermarkets are paying more than minimum wage now. So what's the thing that's going on in our young people's minds? I can earn minimum wage working in a salon. And by the way, I've got to go to college for two and a half, three years and also invest in my own training. Or I can earn more money stacking shelves in Tesco's. I mean, it's not positioning our industry as a place to be. It's pulling the industry standing down. It's making us look less and less like a skill, less and less like a profession, less and less even like a trade. It's making us just look like a transactional business, like a fast food joint. And I don't think that's where we want our industry to be. But there's also a business case. I think paying more actually makes your business more profitable. How on earth would that work? How can we increase costs, Uncle Phil? Explain to us. Share your wise hour wisdom. How can we pay more but actually make more money? Well, properly paid team members are generally more motivated. They're more likely to do the things we want them to do. And my darlings, we're asking a lot from them. We want them to do the upsells. We want them to deliver amazing standards of service. We want them to stay late if that client turns up 25 minutes late at the end of the day. And they're not going to do that if they're not properly motivated. And pay is a big part of that. Also, they're more likely to stay. And actually recruiting in this market is an expensive exercise. Bringing someone into the business who isn't going to be profitable for a couple of months is expensive. Covering retraining because they didn't do their training with you in the first place is expensive. Don't think that by letting people go you're actually going to be saving any money because their replacement is costing you even if they're being paid the same or less. Keep hold of our teams, motivate them properly, pay them properly, boost our industry a little bit. That probably means you're going to have to look at your pricing model as well. I'm always banging on about how we need to be charging more in our industry. If we're paying more, we're going to have to. There's no choice about it. You can't increase your costs without increasing your prices unless you're sacrificing profit. My God, darlings, who wants to sacrifice profits? But let's stop using minimum wage as a target. It's killing your industry and it's killing your business. Let's pay over and above that price properly for the amazing, fantastic, sexy professionals that you and I both know we all are. Let's see our industry start to rise, shall we? That middle ground is very crowded. It's a dangerous place to be. You want to be top end so that you can afford the best training. You can afford the best cup of coffee for your clients and you can afford to reward your team properly. I was expecting you to hate me by the end of this episode, but I think that was kind of positive in the end, didn't it? If you want to get to grips with the figures in your business, head over to queenofsalons.com. Find the link that says links because I'm excited like that. There's a free cheat sheet there that gets you to grips with six of the numbers that you need to monitor to make sure your business is profitable. And in the meantime, what have I missed? Why not reach out and let me know? My email address is scrolling at the bottom of the screen right now. Phil at build your salon.com. If you're listening, I'd love to be talking to you about wage structures. If you've changed the way that we do things because the industry norm is wage plus commission. If you've come up with something different, perhaps if you're looking at team commission where everybody either gets paid a bonus or doesn't, or maybe you've sacrificed commission altogether so that you can afford a higher hourly wage for your team. Reach out and let me know. I'd love to be talking to you about that on a future episode of the build your salon podcast. I promise you it's not scary being interviewed by me. People come back again and again because they love it. Just a few short days until I'm coming all over the internet again with a slightly more positive dose of my wise hour wisdom. And until next time, take care.