Every salon owner dreams of a busy salon floor. They want every chair in their salon to be occupied and have back-to-back appointments.
Most salon owners don’t get into the beauty business because they are good at the craft. They solely get in because the beauty business seems glamorous.
When they see retail flying off their shelves, and a full schedule on the salon booking system, they often feel like they have arrived and have tasted success.
Let’s burst your bubble a little. A full calendar doesn’t guarantee profit. If you’re exhausted by the end of the day, and if your bank account still doesn’t reflect the effort, there definitely is something amiss.
A busy salon doesn’t directly correlate to profit. In fact, the truth is that you might be even struggling to breakeven or are losing money.
It’s high time you stop confusing activity and a busy schedule with profit.
If you’re a salon owner who has every chair full and is still wondering where all the money went, this blog is for you.
Key Takeaways
- A full schedule and long work hours do not guarantee profit. What matters is how much profit you are making after subtracting all the additional costs and overheads.
- When you price your services, make sure it covers all the costs that you’re incurring on a regular basis. If your prices do not cover basic costs, you’re probably at a breakeven or even worse.
- Great revenue on paper doesn’t guarantee profits.
- A profitable salon taps the potential of the best salon software. Salon owners who do everything themselves create exhaustion not scalability.
Top Reasons why Salon Owners are Losing Money Despite Being Busy
1) High Operating Costs
A major financial challenge faced by salon owners is high operating costs. If your salon is located in a top building where the price of real estate is high, the rent too will be high.
It doesn’t end there, rent is only the beginning of it. Besides this, you will need to spend on the interiors of the salon which may be a one-time cost but as and when you upgrade salon equipment, you will have to incur those costs too.
In short, operating costs include fixed costs such as utilities, rent, software and insurance. When costs increase across various industries, these too get higher.
2) Working Longer for the Same or Lesser Money
When you see your salon appointment software fully booked, you feel like you’re profitable. Well, are you really?
In certain cases, you may be. However, you know what’s really weighing you down? Low prices, frequent discount programs, services lasting more than an hour and thin margins.
This is the reason why you may be working for longer and are still not making any profit.
A common misconception salon owners have is that if they offer their services for cheap, they will have more clients come through the door. While this may be true, it’s eating up your profits.
You need to offer your clients more value and increase your prices. When you give them more, they will realise they’re not getting such a service elsewhere and will automatically keep returning to your business.
Work towards building a special client experience, and your clients will not mind paying a little more.
3) Inefficient Scheduling
Another major culprit is inefficient scheduling. When you run a beauty business, having a booking system for salons is an absolute must.
The reason you’re missing out is because you are still following paper-and-pen appointment-taking methods.
The consequences of still using traditional/obsolete methods include double-bookings due to poor appointment spacing, clients forgetting their appointments which can result in missed revenue, long service times and last-minute cancellations.
Missed appointments = Lost Revenue
Inside a busy schedule, empty chairs also end up being lost or hidden. With salon software, no chairs are hidden. Your salon staff and clients can clearly see which slots are available and which are not.
It ensures there is enough buffer time between appointments so that your staff too don’t end up feeling overworked or overwhelmed.
4) Poorly Priced Services
Many salon owners price their services emotionally instead of strategically. They believe their clients won’t pay more or they fear they will lose out on their clients in case they charge more.
While this move might bring you clients, you might end up losing revenue in the bargain. It’s important for your price to cover rent, utilities, staff pay, marketing, product costs, taxes, insurance, wages, and so on.
If the price of your services does not include the above, your business will suffer and you too as a salon owner will feel exhausted by the end of it. The sad reality is that you end up working for nothing.
5) Spending Too Much Time on Redundant Tasks
We understand that your salon is your baby. However, sometimes, spending too much time can backfire.
As a salon owner, you need to focus on working on the business not in it. A few reasons you’re busy all day but still not making profit is because you’re single-handedly managing clients, staff, bookings, marketing, inventory, feedback and other things.
Did you know? Your salon business can even thrive on autopilot. All you need is the right technology. Salon computer software can solve this problem for you.
No matter which stage you’re at in your business journey, you need to focus on growing with a system in place. Growth without systems will only complicate your business. It just increases chaos and gives you very little breathing space.
6) Lack of Financial Tracking
The only metric salon owners track is daily revenue. That is why they’re still not making profit. The only way to fix leaks in a beauty business is by tracking every number.
For this, clear financial tracking is imperative. Besides revenue, other metrics you should be tracking are cost per service, profit margin per service and per stylist, retail-to-service ratio, repeat rate and client acquisition and retention costs.
You don’t need to manually track these figures. Your salon billing software should have all these details.
Tips to Improve Profitability in your Salon
1) Switch to System Operations
As a salon owner, the first step you should be taking is to simplify salon tasks. If you’re manually managing basic salon processes, you are going to be feeling exhausted by the end of the day.
Thus, first things first, invest in the best salon software to take some of the load off your shoulders. It systemises operations and makes your salon run on autopilot. You don’t have to be physically present all the time.
When you invest in technology, you will make more money and your growth trajectory will also be upwards.
2) Rework Pricing, Make Bundles & Create Packages
Sit down with your manager and team, and rework on your pricing. You need to focus on how you can add value to your existing services while charging more.
Always remember, your clients are ready to pay a price for value and outcomes. Besides pricing, you even need to make bundles.
In the beauty business, bundles help you sell more. You can have service and product bundles. You can even run offers such as 3 for the price of 2. It’s a win-win for your business as well as your clients. Ensure that the bundles you create are for high margin services.
Packages also make your salon feel profitable. Besides fixed packages, you can even create customised packages for clients and their events. When you’re creating packages, you should audit product usage and costs.
3) Training Can Be your Profit Multiplier
Believe it or not, training can multiply your profits. Invest in adequate training. It also helps you improve speed in your salon without sacrificing on quality.
Hold training sessions every month to let every employee know what is expected of them. Teach them how to cross-sell and upsell in between appointments. Once they master the art, your revenue will soar. Retail sales contribute a significant amount to your overall revenue.
Well-trained staff also create smooth client experiences. The small steps your staff take is noticed by your regular clients. They can even tell when your salon is barely holding together. The aim of you and your staff is to make your salon run like clockwork.
A positive client experience always translates to bookings. This means that even after the seasonal rush ends, you will have clients walk through your door.
In Summary
A full calendar might feel and sound like success but quite often it doesn’t end up paying the bills. What really pays those bills is profit.
To become a profitable salon, you need more than bookings. You need a system that will manage your salon round the clock even in your absence. Salon360App, salon management software, can do this for you. It optimises operations, simplifies tasks, drives growth, tracks performance and enhances productivity.
It doesn’t make salon owners and managers feel exhausted. In fact, it gives them more time to concentrate on their business.
Ready to unlock the profit potential of your beauty business? Discover a free demo of our app.
