Industry • Best Practice
Riding out the Recession: How Salons Can Cut Costs Without Selling Their Souls
By Boulevard Staff
Follow these 5 practical tips to help your business emerge stronger from rough economic times
Some economists think we're approaching a recession in the United States. Whether you’ve been here as a beauty business owner before, or this is your first time keeping a team afloat through a period of economic shrinkage, it’s OK to be scared. First, take a deep breath. Know that the hard work you’ve already put in is going to keep paying off — especially because you chose to be part of a surprisingly recession-resistant industry.
Your salon plays a unique role in your local community and likely serves as a vibrant micro-community all its own. You owe it to your clients, your staff, your neighbors, and yourself to do what you can to keep that community alive. And you can do it without sacrificing the values that got you here in the first place.
Cut your costs without shearing staff
As someone who is invested in the lives of the people who work at your salon, you’re likely already committed to avoiding layoffs wherever possible. But keeping your staff as your first priority isn’t just the morally right thing to do; research proves layoffs have a strongly negative impact on workplace productivity, motivation, and loyalty for employees who remain. In other words, avoiding layoffs could be the difference between your staff mentally checking out or banding together to ensure the business survives even in tough times.
So, layoffs are off the table, but the recession remains. What can you do to help your business come out in the green even as budgets tighten?
Tweak your menu based on training and data
Expanding services probably sounds like the last thing you should do in a recession, but remember that your stylists may only be using a small portion of the broad knowledge base they acquired in beauty school. A small investment in tools and refresher training for those dormant skills could start bringing in new clients and capturing more of your current clients’ beauty spend (especially with budget-friendly bundle deals). As for optimizing the services you already offer, the lipstick effect tells us that people are inclined to make room for little luxuries in their budgets even during tough times. Emphasis on little luxuries: to use the original (and now somewhat dated analogy), think designer lipstick instead of big fur coats. What can you do to make more of your menu feel like lipstick instead of a fur coat? Turn to your reporting tools and see how each offering shakes out in terms of price, cost of materials and labor, and frequency of use, then start tweaking.
Prioritize fast-moving products
Think about your shelf space like an investment portfolio. You want to buy and hold products that are in demand, moving quickly off your shelves and paying dividends for your business. You want to divest yourself from products that sit there collecting dust. Don’t just wait for these less-in-demand products to sell out passively (by their very nature, that may take a while); instead, take a more aggressive approach by giving them “closeout” price reductions. Then you’ll have more room on your shelves for products that generate revenue at standard prices.
Optimize your staff and store hours
Every time you turn the key in your salon’s front door, it costs money (metaphorically speaking, unless you have a pay-as-you-go plan with your deadbolt). And every hour that door stays unlocked, it costs money to keep the staff working, the hair dryers blowing, and the Spotify playlist bumping. These are the realities of doing business, but it doesn’t mean you have to be complacent. Consider keeping the salon closed on days of the week that are slow anyway, or chopping off an hour at the beginning or end of your standard work day — your reporting tools will be handy for visualizing when the least business happens. Favor booking software that works in the background to intelligently minimize downtime, which will be a boon even after the recession’s over.
Look for grants and lines of credit
There’s nothing wrong with asking for financial help when you need it. Do some research into programs whose raison d’etre is helping out businesses like yours. Depending on the size of your salon, who owns it, and who it employs, you may be able to find grants that will provide your business essential funds without any expectation of repayment. Even if your salon isn’t eligible for grants, you may be able to find a loan with agreeable terms from your state or local government, as well as the U.S. Small Business Administration. Failing all that, you can always apply for a loan from a private bank, but be careful not to let demanding interest rates set your business up for even rougher times down the road.
Rethink, but don’t reduce, your marketing
You’re in the salon business, not the telling-people-about-your-salon business, so your marketing budget may seem like a natural place to start chopping when times are tight. Resist this temptation! A century’s worth of research shows businesses that keep advertising during recessions get more value for their marketing money; companies that cut down on ads during economic downturns tend to substantially slow their growth compared to companies that don’t. Look at the channels and campaigns you’re using now and assess their performance. One hot tip to get you started: While social media gets a lot of the buzz in the beauty industry, email marketing is hard to beat anywhere dollar-for-dollar.
Committed to building your salon even in the face of a recession? You’ve already got the grit, now get the wisdom with the Ultimate Growth Playbook for Beauty Businesses.