Running a hair salon can be an expensive endeavour, with high overheads for rent, staff, products and utilities. However, there are several ways salon owners can work to lower costs and increase profit margins. This article will provide tips on reducing expenses in key areas of your hair salon business.
Review Rent and Location
For many salons, rent is one of the highest regular outgoing costs. When starting out or considering renewing a lease, think carefully about the ideal location for your business. Prime high street spots often command very high rents but may not always translate into higher client numbers.
Consider moving to a slightly cheaper area nearby or looking at rental options a little further from the city or town centres. This can drastically reduce your overheads. You may also want to negotiate the length of your lease – longer leases sometimes mean the landlord will agree to a lower monthly rent.
Also, review the size of your salon space. Do you need your current square footage? To reduce unused space, could you operate with fewer styling stations and a smaller reception/waiting area? This is an easy way to reduce rental costs. If you’re really struggling, you could close the doors to your salon and offer mobile hairdressing services until you find your feet again.
Manage Staff Costs
After rent, staff wages are likely your biggest expense. There are a few ways to improve this without compromising on skilled staff:
- Carefully review opening hours – are you paying staff for any periods when the salon is quiet? Reduce hours during typically slow periods like Mondays and weekday mornings.
- Avoid idle time – use an appointment booking system to ensure stylists have a steady stream of clients rather than gaps. This will maximise their time.
- Cross-train staff to perform multiple roles, such as receptionists who can also blow dry. This gives you more flexibility in scheduling.
- Set commissions or bonuses for stylists who attract new clients or build their book. This incentivises them to bring in more revenue.
- Consider renting chairs to self-employed stylists instead of employees. They manage their own tax/NI contributions but have a good location to offer their services.
Reduce Energy Costs
Energy bills for heating, lighting and running electrical equipment can be substantial for hair salons. There are a number of ways to cut these costs:
- Switch energy providers regularly – never auto-renew contracts. Use comparison sites to find better rates on business electricity and gas.
- Install energy-efficient LED lighting – it uses up to 90% less electricity than traditional bulbs. Use motion sensors so lights turn off automatically when not in use.
- Use smart thermostats – program these to turn the heating on only during working hours. Turn down temperatures a few degrees overnight and on closed days.
- Insulate the salon – ensure walls, roof space and windows are adequately insulated to retain heat in winter. Install double glazing if needed.
- Switch off or unplug electricals – computers, cash registers, blow dryers, etc., still draw power when idle or on standby. Get in the habit of turning them fully off.
- Invest in newer energy-efficient equipment – new hairdryers, AC units, etc, use less energy. Upgrade old, inefficient models.
- Let in natural light – open blinds and curtains to maximise daylight. Avoid turning on unnecessary lights.
- Look into solar panels – they can generate solar energy to offset purchased electricity. Also, consider switching to a renewable energy provider.
- Schedule heat-generating appliances carefully – avoid using multiple high-energy appliances simultaneously.
With some upfront investment and consistent energy saving practices, salons can realise significant savings on monthly energy bills. This directly benefits the bottom line.
Buy Products More Strategically
Haircare products, colours, tools and other supplies are a major cost. Review spending and inventory regularly:
- Order bulk for discounts – team up with nearby salons to buy larger volumes. Stock core products you use regularly.
- Avoid waste – closely monitor usage and stock levels so products don’t expire and get thrown out. Use older stock first.
- Renegotiate supplier deals – shop around other wholesalers and don’t automatically renew existing contracts. Be willing to switch for better pricing.
- Use professional discounts – many brands offer discounts for stylist cards or salon membership schemes. Sign up to save 10-15%.
- Sell retail products to clients – this provides an additional revenue stream to offset costs. Focus on promoting products used in services.
Switch Business Water Supplier
Water bills for sinks, basins and cleaning add up. But there are ways to pay less for the water your salon uses:
- Compare business water suppliers and plans – The Business Water Shop makes this easy. Input your usage, and they find the cheapest-suited suppliers.
- See if a water meter can be installed – you’ll only pay for water used instead of a fixed rate. This usually saves salons money.
- Check for leaks – dripping taps or malfunctioning toilet cisterns can substantially increase water wastage and bills. Do regular checks.
- Install water saving taps/cisterns – these use less water per use. Flow restrictors on taps also help cut wastage.
- Use rainwater collection – simple water butts on downpipes provide free water for non-potable uses like washing hair.
- Ask your business water suppliers about discounted business tariffs – some offer special rates for hair/beauty businesses using water sinks frequently.
Avoid Waste to Reduce Costs
Salons can accumulate significant waste from food and drink, leftover products, and items like disposable capes or gloves. Minimising waste helps the environment and cuts costs. Try these approaches:
- Audit rubbish to identify top waste sources. Set targets to reduce the most substantial categories.
- Go paperless where possible – use online booking, digital forms, email receipts, etc.
- Buy reusable instead of disposable items – cotton gowns instead of plastic, reusable pump bottles for products etc.
- Recycle as much as possible – separate paper, cardboard, glass, metals and plastics. Ensure staff use proper bins.
- Compost food and plant material waste – coffee grounds, tea bags and plant trimmings can be composted if space allows.
- Donate excess usable products to charity – local shelters often accept unopened products or towels.
- Repurpose and upcycle empty containers – glass jars or tins can be reused for storage or decor.
- Review inventory management – tighten controls and ordering to minimise expired or unused stock being discarded.
- Provide minimal single-use items – use dispensers for hand wash, cotton swabs, etc, rather than individual portions.
- Educate staff on reducing waste – train them on best practices and why it matters financially and environmentally.
Build Client Loyalty
The most successful salons have a strong base of regular, loyal clients who come back repeatedly. This provides reliable income. Some tips:
- Offer loyalty schemes – give stamps for visits, booking packages online, etc. Reward with discounts or free treatments.
- Send email/text reminders about upcoming appointments – this reduces no-shows. Include promotions to incentivise rebooking.
- Gather feedback online and in-person – use this to improve services based on client preferences.
- Reward referrals from existing clients – give the referrer and referee incentives like discounts.
- Personalise the experience – greet regulars by name, offer their regular beverage, remember personal details. Make them feel valued.
- Adopt CRM software to better track client data, such as purchase history and preferences. Use this to optimise your offerings and marketing.
Controlling costs does not have to mean cutting corners or sacrificing quality. Small tweaks across rental, staffing, inventory, utilities and client loyalty can cumulatively add up to big savings. Be proactive about reviewing spending and margins. With some smart strategies, it is possible to run an upscale, profitable hair salon business while keeping expenses in check.
