The only way to make money in your salon is by charging enough to cover all your costs and make a profit, says NHF/NBF Chief Executive Hilary Hall.
Be cash flow confident
“You must take control of your cash flow if you want your salon business to thrive and grow,” says Hilary. “Running out of cash is a major cause of business failure and even a profitable salon can fail because of poor cash flow. It’s the single most important issue for any business.
“Do get help if you need it, but take the time to create a cash flow forecast,” says Hilary. This will include details about your expected incomings and outgoings for the next 12 months. Your forecast will help you plan for peaks and troughs and you can check that you are charging enough to pay your bills, including wages, while still being profitable.”
Find out more about how to get cash flow control in your salon: nhf.info/cashflow
Getting your prices right
Accurate pricing is essential and you need to fully understand your costs. You must be sure that the price you charge for a service covers the cost of the stylist’s time, the products used and all your other bills including tax and VAT.
“Salons with a number of staff should consider offering tiered pricing based on the level of experience each employee has,” says Hilary. “This will help to increase your profits and will offer a clear career path to help inspire and motivate your staff. It also gives more price-sensitive clients the option to select a stylist according to their budget.”
Using an accountant can save you thousands of pounds in the long run. Find out more: nhf.info/accountancy
Increasing your prices
Don’t be afraid to increase your prices if you need to, says Hilary. “If possible, do this at the start of each new financial year in April, especially as this is when wage increases take effect. This will make sense to clients and be more acceptable to them.
“Your aim should be to attract and keep a growing number of loyal customers who are happy to pay the prices you charge because they value the quality of service they receive in return.”
Find out how to increase client loyalty: nhf.info/client-loyalty
“If you’re spending more than 60% of your turnover on wages, consider reducing staff numbers or working hours,” says Hilary, “but always take legal advice if you are considering this option.”
NHF/NBF Members have access to free 24/7 legal advice: nhf.info/legal-advice
You must pay your staff the correct National Minimum Wage or apprenticeship rate. If you break the law you could be fined and publicly named and shamed. Find out more about the latest National Minimum Wage rates: nhf.info/nmw-rise
For less than 75p a day, the NHF/NBF will help you boost your business while keeping you safe, legal and bang up to date with all the latest business laws. You’ll wonder what you did without us! Find out more: nhf.info
Join the NHF/NBF before the end of September 2019 and quote PHS25 to get £25 off your membership fee.