4 problems why your salon is not profitable

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Richard McCabe

Being a salon owner in todays world is scary, with a lot of you struggling to cover bills and pay your staff correctly, and then there’s the added pressure of your cash flow being so tight, you’re desperate to get clients in your salon fast.

You even resort to heavily discounting your prices to make this happen.

This is the start of your demise and takes you further and further into the War Zone.

There are many reasons why your salon is NOT giving you the rewards you want, no matter how hard you work.

Your salon needs to generate a profit to stay healthy and be able to absorb the odd bad weeks when they eventually happen.

Unfortunately many salons do not run at a profit and some salons owners’ think this is normal. With 65% of salons closing in the first 3 years the odds are stacked against you and you do have a fight on your hands.

I call it the War Zone and the majority of salons battle every day to find staff, get their staff busy, pay wages and bills, find clients and more importantly stay open.

So what prevents salons from being profitable?

1. Low prices

Most salon owners open their salons with the understanding that if they are cheap they will be busy. How wrong they are. There is always someone who is willing to do it cheaper than you. If this is you then you need to learn how to give your clients more value and start increasing your prices. But don’t just put them up, you need to give the clients more first. We do this with ‘the client mastery’ program and help our salon clients that we coach to build a client experience so special you can raise your prices and the clients love it.

2. Wages too high.

This is the biggest problem that stops salon owners making profit. It should be the first thing to check if your salon is not giving you great profit. Aim for 30%-40% wage percentage and I promise you the money in your account will rise.

Take a close look at your staff, they may look busy in your appointment book but are they really productive? As a rule of thumb each staff member should be doing between 26-30 clients a week. Most salons I see when I start to coach them in our Lifestyle Salon Systems are over staffed. The two ways to instantly fix this is to sack a staff member or learn how to attract more clients through the door. Either way doing nothing will just put your salon in danger of falling too far behind.

3. Fierce competition

Far too many salons are fighting over the same group of people to get their attention. It’s easier to reach people so all salons are doing it, problem is with all salons doing it you’re not getting seen anymore.

Many years ago when good quality salons had less good quality salons to compete with, all you had to do was have good trained staff, and it was really easy to fill the salon. You had the good salons who were often referred to as ‘the big boys’, they were upmarket, expensive and trained frequently and by the best. Then there were the smaller salons who were less expensive, you might even say they were cheap, their training was not very frequent, if at all in some cases, training costs money and these salons didn’t have the spare cash that ‘the big boys’ had! The clients knew which salon they wanted to go to and it was easy for them to decide and people recommended you, they talked about you all day long and recommended their friends to go to ‘their’ salon.

But that was then and this is now! Now everybody wants to own a salon, and it’s much easier to open in your home, or in a suite, or even rent a chair, and the problem is all these salons are chasing the same clients, your clients.

Resulting in the War Zone, everyone trying to under cut each other to get ahead. You can see the War Zone, it’s full of salons all after the same clients, well that zone many years ago was almost empty with salons and there was plenty of clients to go around.

TIP: The ratio of people to salon is 2000: 1 The average salon needs 2000 people living in their town per salon to make a good living.

To fix this you need to look at what clients want from a salon and be able to let them know you are the salon of choice because you get them, this does take a little work, but it sets you apart.

Not many people are willing to put in the effort to get there, but that also means that it will never be over crowded, it will always serve you well.

Just start to set yourself up as the salon of choice and your salon will be different from everyone else’s in town. You’re not there doing specials like everyone else, you’re different and clients can see that, you’re out there saying to the fish, “Come to me I can solve your problem, this is what I do and who I help”, and they’re just swimming into your nets, happy days!

Simple, but not easy, otherwise everyone would be doing it.

Most people prefer the easiest route.

Be that expert.

You get better quality clients that seek out experts, they’re willing to pay a lot more, and if they know that you’re an expert in what they want they will stay around for longer because they’re not going to be pulled away by the latest special.

The salon owner who attracts clients the old way by being cheap are always in danger of losing their clients to other salon owners who are cheap.

4. Inconsistency

With salons losing around 26% of their regular clients due to indifferences it soon affects the salons takings as gaps appear in the appointment book.

One of the biggest problems salon owners face, is that they opened their salons because they were good at what they did. Someone may have set the seed that they should open their own salon because they will make lots of money and have lots of freedom.

That seed was set and you started thinking because clients love you and you found it easy to build a clientele, it seems like the best thing to do. Don’t get me wrong it’s great that clients love you, and you’re good at what you do, and your desire to open a salon and service more clients is great. But the reality is, you’re so busy looking after clients that you don’t have the time to build a business, and your clients are so demanding that they will not give other staff the opportunity to look after them.

So the business becomes all about you. Your business is you, and if you’re not there the takings will drop, things will go wrong and the clients will not want anyone else to look after them and they are happy to wait until you get back in to work.

One thing is for certain you’ll never be able to grow your salon into a Lifestyle Salon on your own, taking your salon from good to great, you will need help from others, you’ll need a team.

There is only so much time you have in your day and if you’re fully booked working the floor, eventually you will burn

out.

One of the key strategies to getting your salon to earn you more while you actually work less is the remarkable service that you offer.

You’ll be able to grow your salon and increase your income without adding any more hours to your day.

This is about making your salon the destination not you.

You need to make your staff perform to their best ability on your busiest day and on your quietest day, whether you’re there or whether you’re not there.

You need to guarantee to the client that your salon will run impeccably to a high standard regardless of what time of day they arrive and regardless of whether you’re there or not.

If you cannot replicate yourself and get your staff to be able to do a remarkable service then your clients will not try your staff they’ll just demand that you look after them taking up more of your time.

You will eventually lose your passion or burn out, I have seen this many times before, and your staff will get very bored and may even think about leaving you.

Professional salons get two things right:

1. If you’re more professional you’ll get more 5 star reviews as your clients will want to tell the world about your salon.

2. You’ll get more money, you can charge more and you will get more referrals because clients will refer people to you if they know you give a professional service time and time again. If you want to charge more in your salon then you need to act more professionally.

Richard

Are you looking to grow your salon and have a great lifestyle that isn’t ruled by your business?

Before you do anything else I want you to grab your FREE copy of this short book I wrote on attracting your ideal clients: http://bit.ly/2Ma38tc

1. Check out the website for more details of what we do https://lifestylesaloncoach.com

2. I’m putting together a new salon case study group at Lifestyle Salon Systems this month… stay tuned for details. If you’d like to work with me on your salon growth plans… just send an email and put Case Study in the subject line and I’ll get all the details to you rmccabe3@me.com

3. Watch this FREE webinar on what it takes to get your salon fully booked in todays world. http://bit.ly/2vK451d

4. Work with me and my team privately. If you’d like to work directly with me and my team to increase your salons takings by 30% in 12 months… just send an email and put Private in the subject line… tell me a little about your salon business and what you’d like to work on together, and I’ll get you all the details! rmccabe3@me.com

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