Editor’s Note: This post was originally published in October 2018 and has been updated for accuracy and comprehensiveness.
Just like your clients, your business operation needs a good makeover every now and then to help increase profits for your salon and keep your bottom line healthy. Unfortunately, we sometimes let ourselves get into a rut, keeping the same systems and processes in place mainly because they’ve always been good enough. But is “good enough” really good enough in an ever-changing marketplace? Do you really ever have enough revenue?
Here are ideas on how to increase profits for your hair salon.
Implement a Revenue Management Plan
Is your salon backed up with more business than you can handle on Saturday but full of tumbleweeds on Wednesday? If so, maybe you need to take a look at scalable pricing instead of just charging the same flat price to everyone. Unless you’re ready to expand your business, you have a fixed amount of capacity each day because you only have so many chairs and so many stylists. That means the one tool you have at your disposal to manage supply and demand is your pricing. Don’t be squeamish about raising prices where you need to. If you’re turning away business because you don’t have enough capacity, that means you aren’t charging enough. If you don’t have enough business to fill the day, that means you might be charging too much. In a perfectly balanced supply and demand scenario, you should be running at close to 100% capacity and not turning anyone away because you don’t have open slots. Charge a premium price on high-demand days like Saturday and run discount offers on slower days to incentivize demand and pick up that incremental revenue.
Outsource What You’re Not Good At
Your accountant doesn’t do hair, so you shouldn’t be doing tax returns. There’s a saying in effective management training: only do what only you can do. Stick to what you’re good at and outsource other things that aren’t in your wheelhouse. Those things are time-consuming and draw your attention away from what you should be doing – growing your business. At the top of most lists of tasks to outsource is bookkeeping for hair salons because it’s both complex and time-consuming. An accountant is an expert and can probably do in an hour what might take you an entire day, so it doesn’t make sense to waste your productivity on that. This is where a partner like Xendoo can help you because we specialize in small businesses like yours for a flat price that’s often less than what you would pay an hourly accountant.
Do a Sales and Inventory Analysis
Do you know the sell-through rate of everything you keep in your inventory? If not, you should. Are you keeping enough of the right items in stock or too much of the wrong things? If you’re not sure, you might have too much money sitting on the shelf month after month doing nothing for you, so you need to do some homework. Print out some sales reports from your point-of-sale (POS) system and see which items are your best sellers. Most good salon software systems also have some inventory control features, so take a look at those to see how to increase profits. One key calculation you need is the sell-through rate, which is the ratio of inventory sold during the month to the inventory added in the same period. If your POS doesn’t have inventory control features, it might be worthwhile to look at upgrading to one that does.
Up-Sell and Cross-Sell Aggressively
When people hear about up-selling and cross-selling, they often have thoughts of trying to sell clients products they don’t need, but that’s not the case at all. Clients come to you for your expertise. As a salon owner, part of your job is to educate your clients about products and services they need but don’t realize they need. For instance, if a client comes in wanting a particular color treatment that you know from experience will be harsh and make the hair dry, you might recommend a conditioning treatment to help mitigate that effect. Once the client understands and sees the value proposition, it becomes a win-win: the client gets better service, and you get more money.
Spend the time to make sure that everyone on your team is intimately familiar with every product that you carry and can discuss them with clients appropriately. Also, encourage your staff to use the products you sell and promote them in conversation with friends and social media. People trust their stylists and often feel like they’re getting a little inside scoop by using the stylist’s same products.
Get Creative with Marketing
At the risk of stating the obvious, marketing is key to how to increase profits for your hair salon, and your strategy needs a refresh occasionally. If you’re in a mall or other high-visibility setting, create a nice-looking display in the window where passers-by can see it easily. Stock it with high-margin products you want to promote and put the most important items at eye level. Research has shown that “eye level is buy level.” That’s fairly traditional marketing, but don’t be afraid to get creative with it. Have you noticed that almost every store you visit these days wants to sign you up for a rewards program? Well, there’s a reason for that—they work. Customers love rewards and free things. Consider creating a loyalty program for your return customers and give them a $25 coupon after ten visits. Word of mouth is one of your most powerful marketing tools, and you can leverage that. Implement a referral program where an existing client who refers new business gets a discount on the next visit.
These are just ways on how to increase profits for your hair salon, but Xendoo can help you increase your profit in other ways, too. Contact Xendoo today to start your free trial and get your business on the road to maximum profits.