Six Mistakes Beauty Salon Owners Make

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I had lunch today with someone who suggested I write down my experiences of the mistakes I’ve made running a beauty salon, and those I now see others making.

Of course, making mistakes in any business is a great way to gain experience, and, it’s even better when you can learn from other peoples mistakes and not lose money along the way. So, here goes (feel free to disagree in the comments section below):

1. Cash Flow and Money Management

Cash flow is one of the biggest problems with many small and growing businesses and the beauty industry is no different. Seeing cash coming into the tills is all well and good, but, understanding where it has to go to (and when it has to get there) is essential. You must get your head around cash flow.

By the time suppliers, rent, rates, etc. are paid (not to mention VAT), cash can quickly go out of the salon door as quickly as it can come in and bills can start to mount.

Learn to understand your regular monthly expenses and keep your records up to date as much as you can. Beauty salon computer systems (such as iSalon, Short Cuts, etc.) can deliver you fantastic income data, but knowing what is needed for bills, when they are due, and making sure you have money available is essential.

If you are not inclined towards numbers and accounts, find a book-keeper who is who can guide you and help you manage this essential aspect of managing your beauty salon.

2. Spending Too Much On Salon Brands and Services

If you’ve ever visited one of the big beauty industry trade shows, you are probably well aware of how hard the skincare companies and equipment resellers work to sell their products into beauty salons with the promise that “all my salons make lots of money selling this”.  Don’t be fooled!

A lot of the large skincare brands want an investment of around £5,000 to stock your salon. That’s a lot of money to recoup. It may not sound it, but you need to sell a lot of facials and body treatments (as well as retail) to get that investment back. Relying on these skincare brands is not as good a bet as they would suggest.

The same applies to products and equipment. For instance, I had a conversation with a salon owner recently who had spent £36,000 on a specialist bed/bench for her salon as it was sold as such a great investment at a show.

Be ruthless and don’t be fooled into the sales pitch. Which brings me to my next point…

3. Not Focusing on The Money Making Beauty Treatments

As technology develops – both in professional beauty equipment and the skincare and nail care products; and, as new trends / fads come and go, it’s easy to think that there needs to be a constant investment in the latest treatments, otherwise your beauty salon will fall behind.

[This is the most important piece of advice on this page…]

You will make most of your revenue from bread and butter beauty treatments, such as waxing and manicures (which usually cost the less).

In the past, I have invested money into training (and supporting products) because a therapist has told me that “all our clients are asking for it” only to find out that £1,000 later, no-one is actually booking.

Obviously, the beauty treatments you offer depends on your specific salon – as well as knowing your client base –  but, to give you an example, in one of our beauty salons, Facials and Body Treatments (the most expensive treatments to deliver) make up less than 20% of the income. Waxing on its own makes up 28%.

If you were to measure over a month how much money a beauty treatment brings in and balance it against how much you spend on products (and time) to deliver it, you may well be surprised.

This is where you may need to be ruthless and potentially cut treatments from your salon. It may upset the odd client, but you can not base your beauty salon treatment offering (and your livelihood) on the wishes of one or two people.

4. Don’t Become “The Offers” Salon

When things are slow, it is very tempting to run offers in your beauty salon. You need to play this one very carefully.

About three years ago, I had a manager in one of our salons, and I was not ‘in’ the business as much as I should have been. As such, the feedback I was getting from the manager was that the salons was not busy at all.

So, we started offering (what I thought were) very good monthly offers for clients.

The problem was that we became the ‘offers’ salon. The cheap beauty salon where you could grab a bargain.

Make sure you value your beauty salon brand, otherwise you will get the wrong kind of reputation.

The same applies to Offer sites such as GroupOn. I have heard nothing but bad stories for salon owners about running these kind of offers and we nearly fell into the same trap, until I worked out the maths of the GroupOn offer and couldn’t work out how it would benefit us in any way.

5. Running Ineffective Marketing That Isn’t Measured

In the old days, companies selling advertising, such as newspapers and directories, found it a hell of a lot easier than today because:

  • Your customer had less choice in where to look for beauty salons – they only had local papers, yellow pages, etc.
  • Most businesses paying for advertising couldn’t / didn’t measure the results.

But, the Internet has turned these restrictions on their head and there’s no going back.

Anyone selling advertising to you will be able to give you a great success story when they go through their sales pitch – don’t be fooled. Yes, experiment with marketing and advertising ideas but make sure you implement measurement, such as ‘old fashioned’ coupons.

Beauty Salon Computer Systems give you the option to measure marketing campaigns and this measurement will help you refine how to spend your cash.

The web is the obvious route to reach customers –  as it’s where most of them will look to find you – and having a good website can offer a great way to reach new clients. Make sure you invest in a good website and make sure it delivers something you can measure to your business.

6. Investing In The Wrong Relationships

Too many salons work on trying to bring in new clients, rather than concentrating on the ones they have. Learn who your customers are and what they want and don’t see them as the enemy that needs conquering. Create a two-way conversational relationship with them and invest time and effort into how you communicate.

The Internet allows for a much more powerful consumer. They can rate you, share experiences with their friends and tell the world about you. If you invest in the experience your clients have, the comments they share will more likely be positive.

People Training

If your business has a training budget set aside, invest just as much as you do in treatment training into getting your therapists to be able to communicate effectively with clients.

I have delivered a retail communications course into our salons (developed by Daryll Scott) and although it wasn’t cheap, it was amazing value for money.

Our beauty therapists understand how to interact more effectively with clients (and feel more comfortable and confident in doing so). They are more welcoming, more personable and as a result they get better feedback, increased re-bookings and they sell more products.

Meanwhile, because the therapist has listened and asked the right questions, the client leaves the salon feeling they have received amazing value and a truly personalised experience.

At the end of the day, great client relationships are the lifeblood of a beauty salon and need to be nutured.

Summary

I hope these help you in some way. If you are struggling to make your beauty salon work and are wondering how to increase your profile and revenue, these ideas have helped us optimise our business and increase profits for the beauty salon business.

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About Author

Working in Hampshire (UK), myself and my wife have a beauty business.I'm the guy that sits in the office doing marketing and numbers. My experiences are based around these skills.

19 Comments

  1. I completely agree with above, especially number 2,3,4 and 5 absolutely match with what I have experienced in 2 years as a Salon owner. Thanks. I found it very useful. Salon owners should always keep point number 2 in their minds.

  2. I have just been having a scout through your articles, would just like to compliment you on your straight forward-no beating around the bush information. I have been in business 3 years now and have learnt a lot of what you have said along the way, it’s reassuring to see that these kind of issues are global and not just restricted to little me in New Zealand :) Will definately keep an eye and share this website to other business owners

  3. nicole harden on

    just start plan open up a solan 2 mile from my home have location now fine every I need to put to it plus market and stylist

  4. I bought my salon before my 21st birthday and made MOST (points 2, 3 and 5) mistakes listed above. So easy to do when you are filled with excitement and pride in your new venture. I had to close the business after 5 years as I was operating on a loss with 9 months. Myself and my partner are hoping to open a small, basic tanning and beauty salon next year and this time I’ll have my eye on the ball.

  5. very good points made although with point 3 it depends on the location. i am in ghana and many people here care about their skin, pedicures and nail extensions. the only waxing which is very popular is for the eyebrow. i think it depends on what ur salon is known for. our facials alone made more than half of our total monthly earnings.

    • Hi Carol. I agree. The waxing reference relates to us but it is the same for you. Focus on the treatments that make you money and don’t spread your service offering.

  6. I have a question please can u offer advice. I would like to know what is the correct way to remunerate employees how does it work salary and commission wise? And do u subtract product usage please I need advice…….

    • Hi Talita,

      Every beauty salon is different but we pay people a decent wage that is competitive with other salons and then a generous commission on both sales of treatments and products.

      This is tapered so it is zero up to a certain amount (weekly) then 5% on sales, then 20% when they go over a target. The balance is that each therapist has to earn their money. But, you if you pay too low, you will not attract a good enough quality, or if you do, they’ll leave.

  7. Hi there. The points above are brilliant. I’m quite lucky that I’ve never really fallen into these categories. Apart from the one about not doing offers?

    I do a monthly offer but that’s all I do. I don’t do any of this ‘take this appointment at 2 tomorrow and you get 50% off’
    I just stick to my monthly offer and that is it. This month it’s Indian head massage with free mini facial.

    Is this sort of thing creating the wrong image for me and my salon?

    Thanks

    • Hi Nicola,

      If your salon is making profit, I’d say no. At the end of the day, the less offers you need to do the better.

  8. I agree except for the groupon, we do a small limited amount on a monthly bases and it is a great way to advertise to new customers. Every one said not to do it but, we have found that a lot of people shop this way. They like to try before they buy. And don’t want to spend a lot of money on a service that might not be good. We get about 40% returning and there usually good tippers. I truly believe it has helped our business reach markets and people we other wise would not have. In the last 6 moths we have grown by 25% where before we where stagnant. You do have to offer amazing world class service though, and have up sells available. Dont treat people less because they are coming in on a deal. We also appreciate the reviews as we get the good and the bad… ( apart from yelp..hate that site) Our salon is in Vancouver, Canada. I mention this because I realize that peoples habits differ in different cities, so other experiences may differ.

    Emerson @ the googh

  9. Hi I have learned so much just by reading all your comments. I myself is in the process of setting up my own home beauty salon. I am still at college hoping to finish soon. I am hoping to use my own skin care products in my salon, I am a private label skincare provider. I have already build up a client base by selling my skincare through spa parties. I am hoping to convert them into customers for my other treatments that i will be offering.

  10. Hi. I’ve learned alot here. I’ve been working for myself for almost 3 years and recently had to move to a different location as I rent a room inside a hairdressers salon to run my beauty business. My mistakes in my first location were 2, 4 and 5. I had to move as I wasn’t making much money and now I know why.
    I think point number 3 depends on how you look at it. If there’s a new treatment out that you know will attract lots of new clients, why not get it? Or if there’s a new piece of equipment which you know will make your job a 1000 times easier without costing too much, why not get it? Obviously don’t splash out on things that nobody wants but what I find really useful is to run a optional survey and give a form for my regulars to fill out about new treatments or simply discuss possibility of new treatments with clients to see if they’d want to have it done

    • Hi Simona, I agree on taking a chance, but personally, I always step in with a negative viewpoint, IE. Can I afford this if it goes wrong. From experience I have once too many times heard people say, yes, yes, yes to new treatments (clients and general feedback) only to find out that after investing the money, the people prepared to spend money on it didn’t justify the return. There are some examples where I have been completely wrong, such as High Definition Brows, and CACI, although the second one is contextual. We didn’t make as much as we were told we could expect, but we do make profit.

  11. Hi Craig can you tell me if I buy products (nail tips, polish, in a range of colours) can I put down has an expense, or if I have used them on a client to complete a treatment/nail job is this a re-sale, I don’t fully understand.
    If I buy a nail polish range just to sell then I understand that I will put a mark-up on it and then sell it for profit. Can you please explain because I have HMRC trying to tell me that I have too much stock and it must be for re-sale.

    • If you buy any product that you need to perform your services, then yes, it is an expense. We split all product purchases as either treatment stock or retail stock. Depending on how much you have, I am only guessing it’s the valuation of the stock, rather than the amount.

      For example, at the end of our accounts year, we have to estimate our stock values. For retail, it’s easy as you buy a product and it doesn’t change. You can say, I have 10 x bottles that cost me £5 each = £50. But for treatment stock, you may have used half a bottle of something so the actual stock value of that product becomes minimal. To some respects you have to guess it and it has pretty much zero resell value.

      I can only assume this is your issue. IE. you have estimated your stock value too high. This becomes part of the value of your business.

      If you have spent (for arguments sake) £1000 on treatment products over a year (the products you need to perform your services), it’s a valid business expense. But from a stock perspective, I would say any opened products have zero stock value.

      Hope this helps. You may just need to explain that you buy the products to perform the services.

  12. Hi Craig

    You clearly know what your talking about. I’m currently looking into buying a hair and beauty salon so this document has been very helpful. The salon has been operating for many years and appears to be very successful for its size and location.

    Are there anythings specifically you would look out for in purchasing a salon?

    Many thanks

  13. Hi

    I’m looking to buy a hair and beauty salon which appears to be fairly successful for the size and location. Are there any things you would specifically look out for in a purchase?

    I’m currently undertaking the due diligence now but wanting to make sure Ive covered everything before making a decision.

    Thanks

    • Hi Bev, Typical things I look for are:

      1. Staff – how long have they been there and what are their contracts. Tupe means you need to take them on and the transition can sometimes leave you exposed.
      2. When the owner leaves, will you lose business because of it?
      3. Stock valuations (is it included or extra).
      4. Vouchers – what is the amount of outstanding vouchers that you’d need to honour. Arguably, this is debt you are taking on.
      5. Check with suppliers that you can get trade accounts.
      6. Is the business making profit? Effectively, buying a beauty salon is either buying goodwill alone or assets.

      If I think of any more, I’ll post them.

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