The Salon Revolution: How to Pay More AND Stay Profitable

Lots of hair and beauty professionals are really worried about the money side of things at the moment, so how on earth can I, with good conscience, sit here and ask you to pay your team more? 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. Hello my salon friends and welcome to the Build Your Salon podcast, my weekly dose of inspiration, knowledge, understanding, perhaps even a little shoulder to cry on from your old uncle Phil, your queen of salons. How on earth are you? We are into August. Is it your favourite month? Is it your least favourite month? Is it your busiest? And that's certainly the case for a couple of my one-to-one coaching clients where they're working in holiday hotspots. August is a big money earner and lots of cash coming through the till. So they're in full flow and barely any time to talk to me at all, which is wonderful, of course. Personally, I couldn't quite understand why people go on holiday and then have salon services. I get anxiety over changing the filling in my sandwich, much less trying out a new salon while I'm on holiday. But, you know, these things happen and we have to kind of go with it. Depends on your customer avatar, doesn't it? Or perhaps you're struggling with the opposite, which was always the case in my salon. Because my customer avatar, my ideal customer and the bulk of our clientele was made up with mums who have children of school age. And here in the UK, of course, August, all the schools are closed. As soon as mum struggles with childcare, we struggle on convincing her that she needs to come into the salon at all. So it was always a very quiet time. And I've said before in previous episodes that there is a rhythm to our businesses. There is a season to our businesses and we can either rage against it. So if you've got a quiet time in August, then August is your winter, your business winter. You can rage against it. You can market through it. You can push hard to get people to come in. But it's going to take a huge amount of energy and a huge amount of marketing effort to rage against the season. Or we can just go with it. And that's the decision that I made. I made the management decision that August was going to be a tough month financially. So we budget for that in the run up to August and make sure we're putting some money aside. Obviously, membership income helps. And, you know, I love talking about memberships. So if you've got questions about that, hit me up, phil at buildyoursalon.com. I'd love to hear from you.

But also, we just made sure this was when we encouraged our teams to take annual leave. It's when we booked external training. So if people were out of the salon, it was going to have less of an impact than it would have done during a busy month. So how is it for you? Let me know. I'd love to hear from you. And I hope whatever it is, it's ticking all the boxes as far as your business goal setting is concerned. But if it's a tight month, you might be a bit worried about money. So how on earth can I, when so many people are stressed about money, how can I, with good conscience, sit here and ask you to pay your team more? Well, there's a few reasons why I think we should be paying our teams more. Firstly, and most importantly, we have this massive recruitment problem. And I've said before that this is not something that you're struggling with on your own. It's not a local thing to your town or your city. It's not 100% across the board, but it is an international problem, in fact, that we just don't have enough young people coming into our industry. And we've struggled, we've always struggled, with retention in our industry too. There seems to come a certain time, a certain life stage when people feel the need to leave the industry. And I think there's a few things going on there. I think firstly, it tends to be when people are getting to the life stage where they're starting families, looking for mortgages, and all of a sudden, the industry is not financially rewarding enough to retain them. I think the other thing that we're pretty bad at is mapping out a future for our team members. And I think that's when team members feel the need to take their future into their own hands. If they don't feel that we've got one eye on where they're going over the next three to five years, then they take matters into their own hands. And that's when they leave, set up their own businesses, or leave the industry altogether. And I think that this perception that hairdressing, beauty therapy, and some of the aesthetics treatments are terribly badly paid, I think that is doing us a disservice. I think that's really working against us. So I would like to see all salons paying their teams more in an effort to show that actually it can be financially lucrative. And there are some people making a really, really good living out of hair and beauty. And they're not just the session stylists.

They're not just the celebrities that have got millions of people on Instagram following them. There are some people probably in your town that are actually doing okay financially. So let's make a bit more noise about that and make that a bit more normal in our industry rather than the exception. Now, of course, what I'm talking about is paying our teams more. But I don't want you to make a loss, darling. I don't want you struggling. I don't want you as the business owner not paying yourself properly anymore, because otherwise, what's the bloody point? There are easier ways for us to make a living than struggling when we can't make ends meet. So I want you to profitably pay your team more. And I think the first step to that is to challenge accepted wisdom. There are some things that happen in our industry, in the salon industry, where we carry on blindly following this accepted wisdom. There are things that we do just because they're the way that things have always been done. And it starts with our services, the services that we carry out almost across the board. Let's say in hairdressing, a cut and finish or a cut and blow dry is a 45 minute service almost across the board, almost internationally. There is barely any exception to that. Why is it 45 minutes? Why not 50 minutes or 40 minutes? I can't believe that five minutes in either direction isn't something that most team members could get used to. And yet we've got this accepted wisdom. When did you actually look at how many times you're running ahead or running behind on a client and actually start tweaking the timings in your book? And I've done this with a one-to-one client of mine who was a nail salon, a nail salon operating at 100% capacity. I mean, they were just fully booked all the time, couldn't get any more clients in. There was no more physical space. And yet the salon owner wasn't hitting the financial targets that they wanted to. So what do we do? We tweaked the timings on their popular services. And there was uproar. There were people saying, this isn't possible. We're going to run behind. We're going to lose clients because they'll be waiting longer, blah, blah, blah. So we said, OK, we're going to try it for three months and we're going to see how we get on. And we will review as a team how the salon is running after three months. And guess what happened after three months? Everyone had adjusted to the new times and the new times were what became a permanent part of that business going forward. There's a lot that we accept. There's this three times rule that people that a stylist or a beauty therapist should be bringing in three times their wage. Why three times? Actually, I think you'd struggle to turn a decent profit on someone who's bringing in three times their wage. Why not four times? Why not five times?

We have these accepted bits of wisdom that float around and they're actually really quite dangerous to your business. So the way that we pay our teams is this kind of accepted wisdom that there's a commission structure or a wage plus commission structure. And those levels of commission seem to be just taken from other people's businesses, even though they've got a different labor market to operate in, maybe even a different regulatory environment to operate in, certainly a different cost structure. And yet we just adopt things from other people's businesses. And ultimately, my message to you across all of these podcasts is if you want a different result to everybody else, and let's face it, in our industry, making a decent profit would be a different result to everybody else. But if you want a different result, you can't keep doing what every bloody person is doing on the high street. You can't do what everyone else is doing and expect to get that different result. So let's challenge some of this accepted wisdom. Let's challenge some of the ideas that are just given to us from other people's businesses rather than blindly following. I do think that there's something to be said for ditching the commission structure altogether. And this is something that's in the early stages in my mind, and I would love to hear from you. If you've got rid of commission in your salon business, I would love to hear from you. I'd love a discussion about it. Perhaps we could even do a little interview for the podcast if you'd be open to that. But I'd love to hear how it's working for you, because I think as soon as we get rid of commission, it changes the flavour around what we can expect from our team members. It's no longer, I would like you to get busier so you can earn more. It's more, this is what I'm paying you for. I'm paying you for your time. This is my expectation of what you're going to achieve in that time. I think it changes that performance management conversation, and I'd be really interested to hear how that goes. And then also, if we're running, let's say, a hard-hitting promotion, and I'm not saying for a second you would want to do this, darling, but let's say we're running a hard-hitting promotion with a really big discount, your commission guys, they're going to be kind of pissed off at that. They're going to be getting a bit cross that they're carrying out all these services. Unless you've convinced them that there's a long-term opportunity here, they're going to be pissed off with doing these services at a massive discount. But if I was paying you for your time, it doesn't really make any difference what each customer is actually paying. And then I think it just changes the flavour of expectation as far as our team members are concerned.

So have a little look about how you're paying people at the moment to figure out whether we could be tweaking something, making it a bit more transparent to what people could actually be earning in the business as well. Also bear in mind that money isn't the best motivator, certainly not on a long-term basis. And if you've ever had somebody who's come to you and asked for more money, if you've given in and given them more money, I promise you that's going to be a temporary fix. They're going to come back and ask for more money again because I don't think people come into our industry for the money. I think it's because they're either looking for a creative way of making a living or they're looking for something that has a lot of people involved, that they enjoy those social relationships. They tend to be much bigger drivers. Now, I'm not saying that we shouldn't be paying our teams properly. And there are certainly team members who I've had who have been temporarily driven by money. I can remember one guy in particular who was never particularly driven by money, was never financially driven in that kind of way until it got to the stage where he was getting a mortgage. And then it was all about the money, but only temporarily. It was about 18 months where it was very much around commission and targets and how can I be earning more and reflecting that in my pay slip so I can go to a mortgage company. Once those things had settled, we went back to the old ways of motivating him and he went back to his old drives. So have a little look at other ways we could be motivating people. Sometimes we're using financial reward as a way of recognising good performance. So there are lots of ways we could recognise good performance. Now, there are some people who would hate to be dragged up in front of the rest of your team and held up as an example of a shining star and named employee of the month. But equally, there are other people who would absolutely thrive on that. And that's cost you almost nothing. So find different ways of motivating your team, different ways of celebrating success. But here's the biggest driver for this. This is why I think being really clear about us paying as much as we possibly profitably can is actually, this is the favour I think it's going to do you, is it stops those conversations around money. No one's ever going to come to you and ask for a pay rise because they know you've communicated really clearly that you're paying as much as you profitably can. So next time somebody comes to you and asks for a pay rise, it's going to be a really short conversation. I can't profitably do that, so no. I hope that's giving you some food for thought. I'm not asking you to act on anything that I've said. I just want to plant some seeds so that you can start thinking about your business in a slightly different way.

And of course, if you're taking financial advice from a free video on YouTube or a free podcast, you're daft anyway. So you should always get qualified, indemnified help as far as anything financially to do with your business is concerned. Now, a call to arms. I want you to be sending your questions in. Next week's podcast is going to be my first Q&A and I need some Q's so that I can A. So send in your questions, phil at buildyoursalon.com or hit me up over on Instagram, philjacksoncoach. I would love to hear from you. I'd love to connect. It's where I tend to hang out the most. Just seven short days until I'm coming in your ears again. If you've enjoyed this episode, don't forget to hit follow or subscribe depending on which platform you're on. And maybe if you're listening to me on the podcast apps, perhaps you could give me a little review as well. I love reading the reviews. It really will make my week, nay, my month if you leave me a five-star review. I always think five look best on the screen. And don't forget to leave a comment too. And if you've enjoyed this episode, perhaps share it with one of your salon friends. I will speak to you in just seven short days. 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.