July 13, 2024

How to increase the profitability of your beauty salon

Running a beauty salon can be rewarding, however, it’s a combination of hard work and dedication that makes a salon a success.

With a value of £2.5bn in 2023 and only set to increase, the hair and beauty treatment industry in the UK is highly competitive and consumers are spoilt for choice. As a result, salons cannot afford to coast by but instead need to set themselves apart if they want to operate at a good profit margin.

As well as vast competition, the current cost of living crisis means that customers are now being forced to become more selective with how they choose to spend their disposable income. Therefore, salons cannot become complacent and need to consistently improve and deliver high-quality services in order to retain customers.

Here are just some of the ways you can increase your salon’s profitability:

Reduce your overheads

Overheads at a salon can stack up very quickly and so it is important to frequently assess them and take proactive measures to reduce them where possible. Some of the overheads you may want to consider include:

Energy and water – Understandably, salons are going to use high levels of energy and water, however, are there efficiencies that you could introduce to reduce your usage and costs? This could include switching to LED lighting and automating your lights, so they aren’t on when not required. Prioritising the insulation of your salon will also be useful in reducing energy usage.

Do some further research into ways to reduce your energy and water consumption and try to implement them over time. While doing this, make sure that customer experience is not going to be negatively impacted as a result.

Staff – If you don’t operate on a rent-a-chair model and instead have salaried staff, assess whether your current employee levels are optimal for profitability. It may be that you have too many staff compared with your number of clients. On the other hand, it may be that you need more staff to keep up with demand and to grow your client base successfully and sustainably.

Stock levels – Over-ordering of stock is a common issue that can cause significant cash-flow problems. While it is essential that you have the correct level of product to deliver all your services, make sure you are not over-ordering and disrupting your cash flow. To help determine this, look over previous orders and historical usage to establish how frequently you need to be ordering stock.

Introduce retail lines

Selling products is a great way to generate extra profit, while also providing convenience for your customers who may be buying the same products elsewhere. There are various ways you can introduce retail into your salon, including the following:

Add-ons – this involves upselling on additional treatments, for example offering gems or stickers as an add-on to a regular gel manicure.

Complementary products – these are products that will complement the treatment a client is already receiving, for example giving customers the option to purchase tan accelerators to use on the sunbed or cuticle oil to improve the longevity of their manicure.

Gift vouchers – selling gift vouchers is an effective way to generate additional profit and may also lead to new customers as those who come to use a gift voucher may then convert to regular clients.

Now you have read the following guide, how do you plan on increasing the profitability of your salon?