Four Musts to Make Money in a Salon or Spa

From pedicures and haircuts to massages and facials, salons and spas offer a variety of services to enhance their client’s mental health and physical appearance. With every service, there are daily expenses to keep a business running in addition to unexpected emergency expenses, payroll, and inventory management. With so much to do and worry about, where should you focus to help keep your business profitable? 

Check out four of our favourite tips for helping you earn more money!

Pricing services can be tough, so it’s important to do your research. First, start with searching your competitor’s prices. You’ll want to research multiple businesses that offer the same quality services and products in your area. Compare their prices to yours to make sure you are competitive in the market. Who knows, you may find that you’ve been selling yourself short! 

Next, calculate the costs for the products from your chosen supplier in addition to compensating how much time it takes for an employee to complete a service. Be sure that you’re covering those costs while charging a fixed percentage of profits above operating costs to keep your cash flow strong. You can’t work to break even, or you’ll never get ahead.

There are a variety of salon/spa business models entrepreneurs can follow, including commission-based structures, booth rentals, independent contractors, and staff who are paid hourly. Choose the best system for you and your business plan. Ideally, by making payroll a controlled fixed expense, business owners have the ability to plan for rate changes, raises, etc. One of the most proven payroll models for salons and spas is known as team-based pay. Team-based pay offers consistency, profitability, and increased employee loyalty while helping to create a team that works toward common goals.

Cutting costs is a great way to increase your revenue. After you’ve been in business for a few months, you’ll be able to track and understand the ebbs and flows of your daily operations. Perhaps you need more product on hand during the holidays or need to cut back on staff during slower days.  Maybe you have clients who book 6-8 weeks in advance for their services, while booking, ask if they need more products. If yes, you can order those specific products on demand, instead of having to pre-stock the shelves with inventory that may take months to sell. Understanding the times when product and service sales are higher allows you to purchase and plan ahead for those times while simultaneously allowing you to cut back for the less productive sales months.

With all of the money you plan to save by reducing spending on unnecessary costs, it’s important to put those profits to work right away. Budget and plan to put a certain amount of your surplus from your business account into a reserve or business savings account. Look at it like you’re paying yourself, but really, you’re providing your business a safety net. If you save 4-6 months’ worth of operating expenses, you can sleep easily at night knowing you don’t have to worry if a pandemic unexpectedly hits, or structural improvements are suddenly needed at the salon. If all goes well, nothing will go wrong, and you can save for other big investments that will help your salon to grow in the future. However, it’s better to be safe than sorry.

Improve Salon Profitability with Royal Metis Consultancy

Opening and running a salon is an exciting time in your life and career, but it’s always important to stay on track with a business plan to keep things running smoothly. At RMC (Royal Metis Consultancy), we help entrepreneurs develop their business from concept to creation. If you need assistance with developing a business plan to help your business become profitable, let’s talk! 

Contact a member of our team to learn how we can help you.

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