Experience is the hardest teacher, but one of the wisest. So why not take advantage of others’ hard-earned advice when you have the opportunity? We asked several industry consultants what the most common mistakes are that salon owners make, and how our readers could avoid them.
How many times, growing up, did you ignore your parents’ advice-only to wish you had followed it, after all? You know, like the time bed or you’d fall and hit your head (and it smarted, didn’t it?). Or all the times your dad told you to look both ways twice before backing out of that parking space? It wasn’t until that little fender bender busted up your savings account that you took the advice to heart. Experience is the hardest teacher, but one of the wisest. So why not take advantage of others’ hard-earned advice when you have the opportunity? We asked several industry consultants what the most common mistakes are that salon owners make, and how our readers could avoid them. Here’s what they had to say.
1. WORKING WITHOUT A PLAN.
“Customers will not automatically or magically show up every day,” says Larry Oskin, president of Marketing Solutions (Fairfax, Va.).” Set up at least five to 10 new strategic goals and objectives for your salon each year. Plan your work, and work your plan!” According to Jeff Reichenthal, president of Synergy Consulting (Boston), a business plan includes four key components: finances, operations, sales and marketing, and leadership.
“A financial plan should answer what the financial projections are for the business, as well as other key information such as compensations and benefits, product cost of goods, and cash flow,” he explains. “Most importantly, what is the break-even point of the business? How much business must each salon professional do per day for the salon to earn a profit? This is a simple number to track,” he notes.
“An operations plan details how many of each service should be offered, and includes the number of service stations and treatment rooms. What will the average ticket per service be, and how will this relates to total capacity,” he says. “What are the hours of operation, should there be multiple shifts and, most importantly, what will the pricing structure be?”
“The sales and marketing plan will answer how the salon gets new clients, keep them, and generates referrals from them,” he continues. “The leadership plan details how the owner will effectively build a high-performance salon or spa team.”
“By working with a plan it’s easier to step into the role of business leader and have staff involvement,” Oskin notes.
“Fortune 500 companies call this ‘strategic planning. Set measurable goals, and give everyone in the salon an action list with things they need to do every day, week, or month.”
2. PAYING WORKERS MORE THAN THE SALON CAN AFFORD.
According to Reichenthal, the most common compensation mistakes include paying too high of a commission, implementing scaled commissions, and giving raises through increased commissions.
“Most owners pay too much in commission,” he explains. “The problem is that owners and salon professionals focus on the commission percentage and not the net pay potential,” he says. Would you rather have a 40% commission in a salon with an average ticket of $80 per service, or a 60% commission in a different salon in which the average ticker is $40? In the first example, the technician would earn $32 in the first salon vs. $24 in the second.
Salon consultants say salon owners need to forecast the salon’s projected gross income and then subtract from that the salon’s fixed and variable expenses (except for payroll). Then, use this number, which is the amount available for payroll and profit-to determine what commission you can afford to pay, while still making a profit.
“There’s no simple solution, but it’s been proven over and over that salon professionals don’t leave, in most cases, for financial reasons if everything else is good in a salon,” says Carol Shanks, a salon owner and consultant in Denver, Colo.
“Competing with the higher commission of a salon down the street is a death sentence. The solution lies in giving your staff an education in financial realities. Show them what the salon can afford to pay what it can’t.”
3. FORGETTING TO KEEP WHAT YOU HAVE.
“Most owners spend so much time trying to get new clients that they spend little of their resources trying to maintain their existing clients,” Reichenthal says. “If owners would realize that over 50% of their new clients come from referrals, they would pay more attention to servicing their core.
“Ironically,” he continues, “once most owners have spent the money to acquire new clients, they spend none of their resources to ensure they will come back. Owners must focus on systems that ensure new clients return at least three more times.” Such strategies range from follow-up calls or thank you notes to reminder calls and incentive promotions such as discounts or free products/add-on services at the third visit.
To Oskin, a key factor in client retention is "quality customer service becomes a culture that includes everything from the way you dress to the way you greet clients, which should include offering them a magazine and something to drink,” he says. “Make sure your station is clean, show clients how you disinfect, and conduct a professional consultation. Customer service is a thousand little things, all of which have everything to do with client retention.”
4. NOT DEVELOPING A UNIQUE SALON NICHE
While your instincts may tell you to offer the widest possible range of services to as big a piece of the population as you can this approach most often results in a bland salon that gives no one a compelling reason to visit.
“When salons try to be all things to all people, they end up being just another shop on another street corner, and it’s a yawn,” Oskin says. “Try to develop a niche. For example, while almost everyone now offers spa manicures and pedicures, those who were doing it five years ago were way ahead of even the manufactures. Or, you could set up a great retail boutique and become a merchandising salon. If you have staff that is expert at airbrushing or natural nails, specialize in one of those. If you or your staff wins a lot of competitions, position yourself as the award-winning salon in town.”
The opportunities to specialize abound. For example, you could focus on becoming the nail salon for the college crowd by choosing the decor and music that appeals to that demographic, and by extending your hours to accommodate their schedules. Or, you may cater to the professional woman with early and late hours as well as “express” services and even adding extra phone jacks for their laptops and a fax machine for their use. But don’t let us tell you what they need-once you decide to focus on a particular demographic, invite a sampling of them to attend a focus group, sweetening the pot with a free service to demonstrate what you can do. Once you have them, find out all about their wants and needs, and implement those that make sense and are practical from a financial and marketing point of view.
5. NOT RAISING PRICES
Most salons go years without raising their service price. However, business expenses such as rent, product, and advertising continue to rise, not to mention that you and your staff’s personal expenses (food, mortgage, gas, etc.) continue to go up as well. Most clients not only don’t mind a nominal annual price increase, they tend to expect it as they see prices rising everywhere else. To ensure their acceptance, couple your price increases with an increase in service levels. For example, emphasize your investment in new sanitation systems, add scented lotions and essential oils to each service, and increase the time you spend on massaging their hands or feet. Do whatever you think your clients would perceives as adding value to the service while incurring, minimal or no cost on your side.
Whatever you do, don’t be afraid to lose your clientele. “Sometimes raising your price gives the community a better perception of your business,” Oskin notes. “Sure, if you do it wrong, you might lose 2% to 7% of your clients, but you stand to attract new clients, as well as gain new employees because you have better prices on commission.”
6. HAVING NO WRITTEN POLICIES AND PROCEDURES
“Policies and procedures are the guidelines and rules you and your staff have agreed to work by,” Cindy Angelly of Spa & Salon Systems (Houston) explains. “So often salon owners don’t put these in writing because they feel it’s too 'corporate America,' but policies and procedures are what help you and your staff grow.”
A policies and procedures manual should include your guidelines and expectations on all salon procedures, covering everything from salon image and personal cleanliness to how paperwork should be handled. Other topics to cover include job descriptions, guidelines on how clients should be greeted and checked in/out, dress codes, salon hours, who owns client information, and your policies on tardiness and absences, staff meetings, ongoing education, cleaning and laundry detail answering the phone, employee services, etc. There should be a method and means for every action in the salon, and those should be clearly outlined. By doing this, both you and the employee will know where you stand upfront.
Conversely, your policies and procedures handbook also should detail your commitments to your staff, including the salon’s mission statement, the compensation structure, review schedules, perks and benefits, disciplinary procedures, opportunities for growth, and your accessibility.
The handbook should be updated as necessary, but at least once a year, to address new situations that arise or to just keep them in step with your evolving business.
7. PROVIDING NO LEADERSHIP TO THE STAFF
“Salon owners try to be managers instead of leaders,” Reichenthal says. “Managers do things.” Among other things, a leader creates the business vision, works with the team to set goals, and them to set goals, and then works with the team to achieve them.
Leaders also lead by showing, not telling, Angelly notes. “If you expect a particular behavior from your staff, you’d better be setting the example. Many owners lecture their staff about the importance of running on time, yet are guilty of being chronically late themselves,” she says.
Another integral part of leadership involves making sound decisions. “Many decisions in the salon are made emotionally rather than by gathering information, studying, and making an educated decision,” Angelly says. “To avoid making decisions emotionally, the best thing is to have at least one day a week where you can review information and make decisions. You should also make a list of criteria for your business to guide your decisions. With a list of criteria and objectives and goals set out in your business plan, Angelly says you can avoid making decisions off the cuff that you might later regret.
Finally, being a leader means not being a friend. While you want to be friendly with your staff, as the leader you must be the one to enforce the policies and procedures to ensure the business thrives. That’s not to say you should rule with an iron fist, but always maintain your position of authority and stay on top of situations like tardiness of sloppiness on one person’s part before others begin to take advantage as well.
8. WEARING TOO MANY HATS
Too many salon owners spread themselves too thin, trying to be the owner, manager, operator, marketing expert, bookkeeper, and janitor.
“Instead of doing 20 things really well, salon owners tend to .do a thousand not so well, “ Oskin says. “You must delegate responsibilities to your staff to maintain your sanity and personal life, and personal life, and to help develop your team.”
Instead of trying to do everything yourself, assign different stag members to police areas like the restroom and other common areas and keep them clean. Other can take inventory and merchandise retail displays, and yet others can take a torn at planning the next salon promotion. Even with a very small staff, you can offload some of your burden, which will allow you to focus your energies on a shorter, more focused “to do” list.
9. RECRUITING STAFF ONLY WHEN THERE’S AN OPENING
“You need to market your salon and recruit new staff all the time because it gives you options,” Shanks says. “You shouldn’t hire people when you don’t need them, but you salon and getting new people interested in working there.” Constant recruiting accomplishes two important objectives. First, when one or more nail technicians leave suddenly, you have a list of “pre-qualified,” interested candidates to call on. Second, your exiting staff will be more motivated to work hard and have a good attitude when they know there is someone else who wants their job if they don’t.
“You need to be involved with your local school and invite students to visit your salon. When they do, interview them,” Shanks continues. “Perhaps you can’t hire them right now, but they need to know who are, what the salon offers, and what it’s like to work there.”
Second, you need to be doing all you can to retain your current staff and protect the investment you’ve made in training and promoting them. “Create the culture that makes people want to stay,” she says. “Find out what’s important to them. For example, a lot of the young people coming into this industry want something other than the conventional 40-hour week, so consider flexible scheduling.”
“The other thing to have input I’ve observed is that the upcoming generation wants to have input on how the salon is run. They have a strong entrepreneurial sense. I’ve also found life learn thing I’ve offered my staff is education in areas like basic budgeting, financial planning, time management, and health and nutrition.” These three things alone can contribute much to a positive salon culture, and while they may create more of a burden on management, they cost almost nothing and, in the long run, can make the salon much more profitable.
10. NOT CONTINUOUSLY INVESTING IN THEIR STAFF, THEIR SALON, AND THEMSELVES
People change, styles change, trends change, so how come so many salons look the same years after opening? Too many salons have dinged and dirty walls, scarred floors, marred workstations, and an overall dinginess about them. Likewise, too many nail technicians neglect to continue their education through attending classes and trade shows, and salon owners themselves often keep doing business the same way year after year, even though they may be realizing mediocre results. Survey your clients for their preferences on everything from new services to their favorite music, and spruce up the salon. If money is an issue, just a deep cleaning and a fresh coat of paint can have a big impact. Then, Oskin recommends anywhere from 1% to 5% of salon sales for things such as new equipment, new floors, or whatever you think would have the biggest impact.
Next, if you haven’t already, set up a training program for technician to orient them to the salon and services. “Even experienced techniques they should follow, and how long to spend on each step,” Shanks says. For example, your hand massage may be 10 minutes, and how is a new technician going to know that if she’s not trained?
At the same time, establish a policy on advanced education for your current staff and yourself. “You can tie this into your benefit or incentives program,” Oskin says. “There are many different ways to do it. Some salons put all the retail commission into an education fund, while others will match up to half what the employee pays.” Oskin also recommends creating a rewards and recognition program for your staff. “Have contests for whoever does the best cross-marketing of services or on whoever has the highest increase in clients who get nail art,” he says. Reward winners with a paid day off, a cash bonus, a dinner out, or even a pat on the back. “Just rewarding people by recognizing their talents does a lot. For example, if you have someone who is very strong in retail sales, recognize that strength by asking them to teach a class on closing retail sales,” Oskin says.