Salon Industry in Danger? Here’s What They’re NOT Telling You!

Business is tough and the salon industry is facing multiple pressures, but if you believe the drivel we've been fed over the last few weeks, you would think that the sky was falling and we're all facing impending doom. Stick with me. As we debunk some of those myths, get to the bottom of what's really going on in the salon industry. If you're a salon business owner or work in hair, beauty, or aesthetics, you're going to want to hear this. Hello, hello, hello. Phil Jackson here, your queen of salons, coming in your eyes and ears again with another dose of my Wise Owl Wisdom. How on earth are we? Right here at the beginning of March. Achingly well, I hope. I'm having a bit of a rant today, my dears, and frankly, well, it's my show. I can do as I damn well, bloody please. But I've been reading some articles which have been troubling me over the last few weeks around the state of our industry, and I'm sure you've seen some of the headlines too, around the drive towards self-employment, bringing impending doom to the salon industry. How the whole industry is on the brink of crisis, how apprenticeships will be a thing of the past, and everyone's going to be walking around very, very hairy with dreadful grey roots because there'll be no salons left to service them. And a lot of these articles have been calling on the UK government to slash VAT. So for those of you, my international listeners, I will try and include you as much as I can in this, and I do think that a lot of these things are relevant to markets outside the UK as well. But we have a sales tax imposed on businesses over here in the UK called VAT, value-added tax. And VAT is reclaimable on some things, but not on labour. It's only reclaimable on materials generally, and sometimes on your rent as well. And also VAT has a threshold. So below a certain amount, which I think is about £90,000 a year, you don't have to pay VAT at all. And then when you hit that threshold, VAT is payable, or you collect VAT on behalf of the government and have to pay it over. And the articles that I've been reading have been asking the UK government to cut the rate of VAT for salons because we're a very labour-intensive industry, and it puts us on an uneven playing field. And the articles say that this is driving people towards self-employment, having smaller and smaller businesses that are below the threshold of VAT, and that somehow a cut in VAT is going to level the playing field a little bit.

And I have a few problems with these kinds of articles. Firstly, I wonder what the point of the article is, because frankly, most news outlets these days, let's face it, are completely self-serving. Now, in the old days, back in the 1800s when I was born, we only had news a couple of times a day. We would watch the 6 o'clock news in the evening or the 10 o'clock news over on the news at 10. And there was an editing process that went on. In fact, we were looking for things not to report because there was so little bandwidth for news. But with the availability of news 24-7 now and so many different streams coming towards you, of course, now we're looking to turn anything into a news article and anything into some kind of segment. And, of course, the more dramatic and scary it is, the better. So I do think that some of these articles are rather over-egging the pudding, my darlings. There will always be some kind of beauty industry. It may not look the way that it does now. But until we've got to the stage where we're living in a virtual world and nobody actually has to leave their houses anymore because their avatar is out there making love to people and earning a living for them, until we get to that stage, people are always going to be concerned with how they look and how they feel. And what we do very well, of course, in our industry is make people look and feel amazing. So the industry is always going to be there and it may not be recognisable in the future. It may be that some change is coming our way. But I think to say that the industry is on the brink of collapse is rather dramatic. The second problem that I have is that lots and lots of this has been put towards the UK government. So now let me say for now, I'm not a huge fan of our ruling parties here in the UK and I haven't been for quite some time. In the same way as the news industry is completely self-serving, I'm afraid we have a political class, which is rather self-serving as well. And government after government is so concerned with re-election that actually getting to the root of issues and maybe even making some unpopular moves doesn't seem to be on anyone's radar at all. Even if those radar, even if those unpopular moves are in the best interests of everybody. Sorry, I'm getting a bit passionate about this. So I'm tripping over my words. I will try and keep it together for you, though, my dears. So it's not that I'm a big fan of the UK government.

I'm not a big fan of Keir Starmer and his Labour Party. But then frankly, I'm not a big fan of the alternatives right now either. But to call on the UK government and say that it's their fault that our industry is on the brink of collapse is frankly naive, heading towards the ridiculous. Part of the problem is the bigger picture of how people are spending. And we've been seeing the decline of the high street for years and years and years. Pre-COVID, we had a decline in our high streets and there's been little working parties trying to resurrect the UK high street for generations now with varying degrees of success. And of course, the high street has served salons very, very well in terms of walk-in appointments and keeping everyone ticking over in the quiet times. And with less people spending money in town, of course, we're going to feel that. And that's not necessarily down to the UK government. That's down to our customers, God bless them, spending money in a different way. And I love the way that everyone wrings their hands and says, oh, God, the high street isn't serving us anymore. Salon owners even wringing their hands and saying the high street's dying. What are we going to do? And they're the same people that are ordering their supplies on Amazon, which, of course, is a big part of the problem. So it's not down to the government to change the way that people are spending money. And I think trying to artificially influence that is a hiding to nowhere as well. Are you ready for some predictable in your salon business? Do you want to know the secret to steady salon income? I'm Phil Jackson, your queen of salons, your undisputed queen of salon memberships. And I've helped hundreds of salon owners just like you turn their businesses from a very spiky takings graph into something much more steady and predictable. My Memberships Made Easy program will help you stop chasing new clients and wasting your time on social media, turning your existing clients into more profitable raving fans who support your business even in the quiet times. My proven membership framework gives you everything you need. Ready to use membership templates, pricing strategies that actually work, even scripts for selling your memberships by email and in person. The program's backed by my signature 90-day no quibble guarantee. Take the program, take the bonus coaching call I'm including. And if you're not ready to launch your Memberships program at the end, I will coach you myself until you are. If you're ready to offer your clients something truly exceptional, ready to build that predictable stream of salon income,

head to queenofmemberships.com forward slash podcast for a very exclusive rate on my best-selling program. Head to queenofmemberships.com forward slash podcast. Let's get started, shall we? The other problem that I have with these articles is that it's calling for this cut in the VAT rate for salons. And frankly, my darlings, you'd have to be so stupid to think that the government has the kind of budget to start cutting VAT rates for a specific segment of the industry. It's just completely naive. The country is absolutely on its knees financially, and the government is looking for ways to get more money from our industry, not less. So what could we be asking for instead? Well, if you want to level the playing field, well, at the risk of pissing off a huge number of my listeners, I'm afraid I would want more of you paying VAT, not less. In fact, if you think about it, what we've created with the VAT system as it is, is an artificial suppression of growth. We now have, and I coach lots of them myself, we have lots and lots of salon business owners who are artificially keeping their takings below a certain level because all of a sudden they're going to become much less competitive when they hit that VAT threshold. But what if we made that VAT threshold something much, much lower? And actually, if you look across Europe, our VAT threshold is quite high compared to lots and lots of countries. People think of the UK as a very high tax regime. Actually, compared to many markets, we actually pay a lot less tax, believe it or not. But if we made that VAT threshold something like 10,000 a year, suddenly there would be a huge number of salon businesses brought into paying VAT. Now that would level the threshold. I think then it would also take the breaks of a lot of these industries, a lot of these businesses rather, who are artificially suppressing their takings. Suddenly, I'd have no incentive to keep my takings at 85,000. Now I can go to 100,000, 110,000 without feeling I'm going to break through some kind of artificial ceiling. And also, it would increase revenues for the government overall. And maybe if we dropped that threshold and included more businesses in VAT, perhaps we could see a reduction in VAT for the entire economy. Perhaps instead of paying that 20% VAT, we could bring that down to 18 or 17%. In fact, I can remember, because I'm extremely old,

I can remember the VAT rate being 15%. Heck, even 12.5% at one stage. These things are within living memory, my darlings. But frankly, asking the UK government to take one segment of the economy and drop the VAT rate is naive in the extreme. The other problem that we are highlighting in these articles is the death of apprenticeships. Now, this is, again, not down to the government, I'm afraid. Gosh, I'm letting the government off the hook for all sorts of things. And trust me, they're fucking up in lots and lots of different areas, but this isn't one of them. It's not the government's problem that we are no longer seeing people wanting to go into apprenticeships. I'm afraid it's the young'uns these days. They don't want the apprenticeships. It doesn't matter how many apprenticeships we make available. It doesn't matter how many schemes are funded through government and through salons. It doesn't matter how attractive we make it for salons to take apprentices on. There just isn't the market there. And in the same way as we can't artificially create markets for your services, we can't artificially create a recruitment market either. Unfortunately, the number of people who are willing to invest years of their lives into a set of skills in order to earn mediocre pay is very, very small. And when we do come across an apprentice these days, my God, they're like hen's teeth, a decent apprentice. We should be paying an awful lot more because there aren't many of them around. Unfortunately, our younger people want a much quicker return on their investment in education. And they also want something that's got a lot more flexibility. People want to be able to work the hours that they want to. They want to be able to be location independent. And our industry doesn't serve people very well like that. But I do think there is one thing that we could be asking the government for, and they may well be open to. And that's starting to look at maybe some of the age restrictions around our apprenticeships and age restrictions around the minimum wage because it's very unattractive as a salon to take over a person with some maturity to take them on in some kind of apprenticeship or learning role. And unfortunately, it does lead to age discrimination in the recruitment process.

Because if you have two people side by side, one of them is 17 and one of them is in their 30s, even though they may on paper both be willing to do the job, there is a big financial disincentive to take the older person on here in the UK. And I think if the older person is willing to work for an apprenticeship wage, if the salon is willing to take them on as an apprentice and train them up, well, that should be between them. I don't think the government should be interfering in that. So I would like to see some changes around who can call themselves an apprentice and who can receive the apprenticeship wage in employment. And I do think that apprenticeship rate needs looking at as part of the national minimum wage as well. So there is some stuff that the government could be doing to protect our apprenticeship industry. But I think there's some stuff that we need to be doing as an industry as well. I'm afraid the years like when I look back to when I was an apprentice and I wasn't an apprentice for very long. I was in my 20s. I was skint. I had rent to pay. I needed to get a bloody move on, darlings. So I had to get through my apprenticeship very, very quickly. But when I first started going to college for the first year of that apprenticeship, you weren't even supposed to be picking up a pair of scissors, my dear. We were talking about sweeping up and shampooing and conditioning treatments and learning to blow dry. And there was no sign of any cutting or colouring going on for really quite a long time. There's no reason for that particularly. And I'm just pointing out hair examples because that's my background. But if you think about it, actually, you could be learning blow drying while you're learning cutting. It's easier to blow dry a cut that you did yourself anyway. So I think if we could make these apprenticeships a bit more interesting, a bit earlier on, then perhaps people would be a little bit more inclined to come into the industry. The other thing I would like to see, and we've seen it with barbering over here, but I would like to see a fragmentation of some of these apprenticeships as well. I don't think we need to be qualified, for example, in every aspect of beauty, particularly if you're only actually interested in hair removal. There's no reason for you to go through a couple of years or three years or four years of apprenticeship to get qualifications if actually you're only interested in one small segment. And if we had more tailored qualifications, I think that could keep people interested too. And then we could be adding to our portfolio of skills later on if we wanted to. Don't kid yourself. There are some people who don't want our industry developing in the way that I'm describing.

There are some people who are very, very happy about the fragmentation of our industry. There are some people who are extremely happy about lots of people being self-employed, the gig economy. It serves some people very, very well. So who could be doing well out of the gig economy in salons? Ask yourself the question. Follow the money. And I'm going to point my fingers very firmly at our manufacturers. And our manufacturers don't owe us anything, OK? I would like to point out that most of the manufacturers that are selling products to salon businesses are also selling products direct to our customers, to the same customers who are supposed to be beating a path to our door. And make no mistake, the market for them to sell directly to our customers is much more lucrative than the salon professional market. There is a bigger market out there. They can serve them much more easily and cut us out of the picture on every available opportunity. And the pattern used to be for a lot of years that the professional market would pay for things to be developed. We would be paying for the technology that got poured into skincare or got poured into a new way of colouring hair. And then that technology would make it into the consumer market and people would be going to the chemist to buy the self-same thing. For a lot of years, that was the pattern. Now, that's not the case because actually it's much more efficient for them to be developing products to go straight to consumer and cut us out of the picture altogether. So make no mistake, these big manufacturers actually don't care about us anywhere near as much as you would like to think. Also, it serves them very well to have lots and lots and lots of small businesses and less bigger businesses. Because if you think about it, I'm going to go back to a hair example again. For me to have a salon business employing, say, 10 stylists, I would have a certain amount of colour stock. Now, if those 10 stylists all decide to set up their own business, they're all going to be placing opening orders. They're all going to be maintaining a level of stock. There's an inefficiency there. They're going to be carrying a lot more stock as individual businesses than we would if we all clubbed together and bought that as a collective. So our manufacturers do a lot better out of small businesses than they do out of big ones. They don't want to see us grow. They don't want to see us do well and employ lots and lots of people. They like it that we have this fragmentation in the industry. So let's not kid ourselves about who's on our sides in all this. Your manufacturers, trust me, are your biggest competitors and have been for a very, very long time.

So how do we get past that? Well, we need to get past the snobbery that we have around other businesses in our area. We need to start working together. We need to start cooperating with people who we've seen as our competitors. The biggest competitor is not the salon down the road. Trust me. It's your manufacturers and it's the people that are putting these products straight into people's homes. So we could be cooperating, buying products together, buying services together, outsourcing together, making sure our industry is looking after itself because there's no one else out there apart from your Uncle Phil who's looking out on our behalf. So what do you think? Who have I managed to annoy in this episode of the Build Your Salon podcast? Reach out and let me know. I would love to hear your thoughts on this because I can't be the only one who's been frustrated with what I'm reading recently. My email address, phil at buildyoursalon.com, scrolling at the bottom of the screen right now. Also reach out if you'd like to be a guest on a future episode of the Build Your Salon podcast. Otherwise, you're going to get lots more episodes of me just ranting at you and you will only, my darlings, have yourself to blame. 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.