SMALL STEPS BIG DIFFERENCE

Hellen Ward explains that when we address multiple small wins, it can add up to making a real difference to your bottom line

I’m a great believer in the saying that there is no silver bullet when it comes to business – no one single issue will solve-all. Sometimes in my consultancy work, salon owners come to me looking for the big solution rather than realising that identifying smaller problems and sorting them will give the same result. From my experience, it’s far more likely that looking in detail at the pennies will really pay dividends in saving the pounds. It’s hard to see the wood for the trees when you are looking for a big answer and hoping to nail it in one fell swoop, but going through the minutiae is essential.

What is critical is being objective and not just examining the costs but analysing the income too, because a lot of answers in how to grow and increase sales are there in your turnover, just waiting to be identified. Small gains here are obviously the easiest place to start, but interestingly most people bypass this all together and go straight to chopping the costs.

I’ve never met an accountant yet that truly understands our expenditure. But being sector specific, we know that payroll is our greatest expense, so a lot of the advice an outsider would give to increase profitability is to cull staff. Not necessarily true, as traditionally 50-65% of our net turnover will go to paying our employees (inclusive of all liabilities), but if we don’t have good staff we simply don’t have a brand or business, and this is little understood. However, there are exercises we can do to ensure our benchmark costs on payroll are in line.

HELLEN’S QUICK BUSINESS WINS

1 Analyse productive/non-productive costs

Turnover-producing staff (productive hairdressers, barbers, therapists, basically any operator running a column) are key. Without them we lose revenue. But non-productive staff (assistants, reception and admin staff) should be kept in-line if we want to remain profitable. It’s always worth incentivising those team members to produce revenue of their own, through retail sales or up-selling, for instance.

2 Discover untapped revenue streams

We generate a very healthy turnover that helps us to meet our not unsubstantial overheads through our online sales, and I’m not talking about retailing the big brands that are available on all websites now (sadly even the professional brands). Niche products that are exclusive to you are key, as is encouraging Gift Voucher sales for your salon. Offering incentives here just breeds customer loyalty and helps you secure future income.

3 Re-negotiate EPOS costs

I would estimate 95-99% of all UK salon clients pay by card now and banks/service providers will take a direct percentage of that turnover. Regularly re-negotiating your Electric Point of Sale system costs is the quickest win there is, because even if you shave off 0.5% you’ll be making a serious dent in your costs. There is a common misconception that you have to bank with your service provider, but you don’t. Best of all, these sorts of costs don’t impact the client experience, so diarise an annual or even six monthly call to get the best deal. Make sure you have your figures in front of you, because if your spend has gone up (the volume of your transactions) you will be more likely to get a better deal.

4 Ensure you operate commission-related pay

Nobody wants to be stuck committed to a hefty take-home salary, so ensuring all productive staff are on good commission deals will pay dividends; they will work harder and you will both create a partnership where employer/employee thrive equally. Never forget to spell out the benefits of employment: workplace pensions, paid holiday, maternity pay, parental leave, etc – all of this has a huge value and as an employer it’s your job to sell the perks and ensure staff understand what material value they have. Be generous with your commission and shout about what a great incentive you offer compared to the rent-achair business model.

5 Brand loyalty pays

Most salon owners are good at shopping around for the best deal on their utilities, but being loyal to one supplier should pay. If your spend is diverse across different brands, look at pooling your purchasing power and seeing how you can grow your custom with just the one manufacturer. Then ask for a better deal. Don’t be shy to demonstrate what a good customer you are.

FINAL WORDS

Discovering the quick wins is a work in progress and never a done deal. If you are a salon owner don’t try and fit this exercise into your working day – take a bit of time to go through the points regularly.This can’t be done while tackling a column. Some salon owners tell me they don’t have time to conduct this analysis, but I would argue they could make savings that would quickly make up for any lost income from their column, so take time to run your business. Remember, the minute you got the salon keys in your hand you were no longer a barber/colour technician/ hairdresser/nail technician or beauty therapist.You became a business owner who happens to work in the sector.

ABOUT THE AUTHOR

Hellen Ward is a private consultant in the hair and beauty industry for prominent salon and spa owners, manufacturers and suppliers. Hellen is the co-founder of the largest and highest grossing independent salon in the UK, Richard Ward Hair and Metrospa.