It fascinates me when I see two seemingly identical businesses in completely different financial positions. While one flourishes, the other flounders. Oftentimes, a little probing into failing salons will reveal that the differences come down to the systems and processes in place. Fortunately, when things start going wrong, there are warning signs that every salon, clinic & spa owner should look out for.
Listen to the audio version of this blog, and subscribe to the Phorest Blog here:
Recognising Failing Salon Trends & Acting Before it’s Too Late
1. You don’t have any cash reserves
Symptoms: You’re missing supplier payment deadlines and starting to worry about how to pay your team. Money that comes into the business is instantly swallowed up, and you may be injecting your own cash to pay the bills.
Causes: Over-spending and lack of budgetary planning.
Remedies: As the saying goes, ‘cash is king.’ This means staying on top of your cashflow to ensure you always have enough to cover your costs. The easiest way to do this is with a cash flow chart. All you need is a simple spreadsheet that tracks your current and pending expenses over the coming months, against expected and actual revenues.
Whether you choose to approach your cashflow issues with a mentor, accountant, or bank manager, please don’t be afraid to ask for help. There’s no point suffering in silence. The same goes for suppliers – if you’re struggling with bills, suppliers far prefer setting you up on a payment plan than to see you default entirely.
To get back on track with your cashflow, it’s important to scrutinise every expense, both large and small, to ensure you’re getting the best possible rates and terms. You may be surprised at how much you can save. Also, stop spending! Only buy the absolute essentials to keep going. Budgeting does change your buying habits for the long term. Consider whether you need to raise your own prices, too. A structured, strategic increase can have a huge impact.
2. You start questioning your leadership skills
Symptoms: You look around and feel overstaffed, despite feeling like the busiest person in the business. Team meetings only take place when something goes wrong. Your time is consumed by looking for ways to fill the appointment book and, at the end of the month, you’re always the last in line to get paid. The team doesn’t know whether they’re having a good day or a bad day – and neither do you. It’s general chaos.
Causes: I hate to say it, but, as a leader, the responsibility lies with you. You must regain your confidence, step up, and take back control.
Remedies: As a rule of thumb, a good benchmark is that the value of services provided by an employed beauty therapist/stylist should be equivalent to three times net or four times gross of their weekly salary. At that level, with what equates to roughly 85% average occupancy, employees become an asset to the business rather than an expense.
It’s critical to your salon’s success that everyone on your team is on board with your goals and strategies. Book regular group and one-to-one meetings to ensure staff stay positive, engaged and clearly aligned with your business direction. Don’t forget to ask for their ideas. You may also need to think about making staff cutbacks, rather than the constant pressure to try to fill white space in the diary.
3. You need more clients
Symptoms: Empty appointment books and a revolving door of new clients coming into the salon, never to be seen again- it’s a salon, clinic, or spa business’ worst nightmare.
Causes: No mechanism for soliciting and acting upon feedback from clients. Limited attempts to keep your business at the front of clients’ minds.
Remedies: First, a sanity check: is the problem really that you need more clients? Do you understand where all your existing clients have gone and why they haven’t returned? You need to dig into these problems and fix the root causes to stop the cycle from continuing. Start by getting honest feedback from the clients you still have, as well as those you think have vanished. You can do this by using your Phorest reporting features to track client retention and lapsed clients.
Investigating the reasons for clients not returning may feel like a distraction from the day-to-day running of your business, but with today’s hectic lifestyles, it’s more important than ever to keep in regular contact with your client base through good marketing. Otherwise, it’s easy for them to let you slip from their minds.
Think up new salon marketing ideas and give them a go, actively encouraging your clients back into your business. There are so many things to try before you start discounting: special invitational events, bring-a-friend promotions, add-on treatment trials, launching a loyalty programme, teaming up with other local businesses… Compose a thorough marketing plan that maps out the year ahead – don’t make reactive decisions just to fill tomorrow’s appointment book.
Alongside marketing, rebooking clients while they’re in the salon, ensuring you’re sending appointment reminder messages, and making sure you’re providing a stellar in-salon experience for clients are all important factors to consider when trying to encourage clients back into your business.
4. You’re overstocked
Symptoms: You have shelves and stacked boxes full of dusty, unsold products. Some of the branding is out-of-date. You may also have under-utilised and expensive equipment getting in the way.
Causes: It only takes a few over-eager orders or a couple of days excitedly flashing your credit card at a trade show to run into this problem.
Remedies: It’s so easy to make inaccurate buying decisions as a business owner- especially when you’re busy, tired, and ordering in a rush. This can impact cash flow and clutter up your business premises. Don’t act hastily here; take the time to get a real handle on the situation and react appropriately. Get rid of retail lines you no longer want to stock, and be ruthless about redundant equipment. Try selling them in bulk. Alternatively, create new ways of selling stock, such as with an online store.
Another great way to shift stock while also creating attractive promotions is to bundle excess product with limited-edition treatment packages. For more information on moving retail stock in your salon, clinic, or spa, you can consult our Salon Owner’s Guide to Retail Sales.
5. You aren’t sleeping
Symptoms: You turn off the light and shut your eyes, but the problems are still churning around in your head. You spend the night anxiously tossing and turning, waking with the same thoughts immediately springing to mind- if you do manage to eventually go to sleep. It’s all-consuming, all day.
Causes: It’s easy to say, I know, but this is the outcome of focusing wasted energy on worrying, rather than creating a healthy plan to resolve the issues. It could also be a symptom of burnout.
Remedies: To remedy this, it’s important to write down the issues you’re facing, the worries you’re spending time on, and the things that are overwhelming you. From there, it’s time to sit down and design an action plan with clear steps in place to correct the imbalances in your business. This could range from hiring more staff or creating a solid marketing strategy to scheduling a holiday and having a rest.
When dealing with stress related to your business, don’t be afraid to reach out and ask for help- from a friend, family member, or professional. At the end of the day, you’re only human, and can’t do it all. You need to look after yourself before you can look after anyone else.
Final thoughts
Constant fire-fighting drains your energy and distracts you from all the positives your business can have Take a moment to remind yourself of them. List what you do well and magnify each success. Write a statement that makes you feel good about your business and look at it regularly. Life and business ownership are supposed to be fun, but sometimes you have to take a few knocks to set yourself back on track. Take the lessons, learn from them, and keep doing your best every day. Whatever issue you’re facing, there’s much more help around than you realise, so don’t feel alone, speak to someone.
Here’s to your great business success!
Looking for personalised advice? You can always email Susan at susan@susanroutledge.com or via https://www.susanroutledge.com. Got general feedback? Let us know in the comments below!
Interested in partnering with a salon software that helps your business thrive?
