Beauty Businesses

The 6 Secrets That Will Help Your Hair Salon and Day Spa Succeed

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In Start Your Own Hair Salon and Day Spa, the staff at Entrepreneur Press and writer Eileen Figure Sandlin explain how you can launch a successful full-service hair salon and day spa, a business that can be personally rewarding, makes a lot of people happy and can be very lucrative. In this edited excerpt, the authors reveal the six aspects of your business that can help make your salon or day spa profitable.

It’s never too soon to start thinking about some of the operational issues that will impact and contribute to the success of your business. To begin with, you must consider your hours of operation carefully so you can accommodate the maximum number of clients during the business day.

You undoubtedly already know the beauty business isn’t a 9-to-5 kind of industry. Typically, hair salons in metropolitan areas are open from 10 a.m. to 9 p.m. seven days a week and from 10 a.m. to 6 p.m. in smaller communities. By design, Sunday and holiday hours often are the same as those of local retailers like malls and department stores, and generally run from noon to 5 p.m. Lunch hours and early evening hours tend to be the busiest times for salons. You also may need to have hours to accommodate special needs. For example, if you do a lot of wedding work, you’ll probably have to be open earlier on Saturday mornings, say at 7 a.m., for brides who have to get to church for a 10 a.m. service.

Salon owners who manage their time in a way that enhances their money-making ability will find their business will grow and prosper faster. Focus with laser-like intensity on income-generating activities. As a new owner, you’ll be tempted to try to do it all yourself—from working behind the chair, to managing the books and overseeing your staff. Instead, hire skilled staff (both business and salon professionals) to handle the day-to-day work, then delegate responsibilities so you can devote yourself to tasks that can help you grow the business and make more money.

Another important part of your salon development plan is the appropriate pricing of your services. Set prices too high, and you’ll limit the number of people who can afford them; set them too low, and you’ll limit your profit potential and possibly put the business at risk.

Setting prices requires more than visiting other salons in your target market, collecting service menus, and pricing your own services so they’re competitive. Rather, you must consider the three factors that will influence your prices: labor and supplies, overhead, and profit.

1. Labor costs for salons/spas include salary and benefits costs for both your stylist/spa staff and administrative people. Your own salary is included as a part of this cost. This cost is generally expressed as a price per hour and can vary depending on the amount of time it takes your employees to cut hair or perform other services.

2. Overhead costs, which consist of all costs required to operate the business other than labor. This includes your mortgage or lease payment, utilities, and so on. It’s reasonable to estimate that your overhead will be from 40 to 50 percent of your labor and materials cost.

3. Profit. Salon owners generally can expect to have a net profit of 11 to 15 percent (although you can certainly make this profit figure higher or lower as you see fit). To arrive at the net profit you want, you have to add a markup percentage factor so you’ll arrive at the approximate gross amount you’ll earn.

One critical task that’s required to uphold the image of your salon is regular maintenance. It’s not enough to sweep up hair clippings after a cut or to wash and fold towels—you have to keep the salon looking and smelling fresh and clean so it’s inviting at all times, no matter how much traffic comes through the door or how bad the weather is.

Some salon owners prefer to have a maintenance crew come in to handle everything except the basics like sweeping and folding towels. The cost can be high, at up to $200 per visit, but the benefits truly do outweigh the cost. Alternatively, you could hire a person whose job is to clean up, do laundry, and otherwise keep the salon tidy. Many owners make daily maintenance, from vacuuming to taking out the trash and dusting counters, a responsibility of every person in the salon  It doesn’t matter if you’re cutting hair or folding towels—everyone is expected to pitch in. 

How would you like to help your salon make extra money each month with very little effort? According to industry experts, retail products can make your profits grow significantly. Other than ordering the product, arranging it attractively on shelves in your reception area, rotating product, and controlling inventory, there’s not much more involved in product retailing. But you do have to educate your staff to sell the products they use on their clients, make the products easily accessible in the salon, and sell a wide enough assortment of products to appeal to most customers.

One aspect of salon sales that can generate serious income is gift certificate sales. Many salons offer either plastic gift cards or low-tech paper gift certificates as a way to corral more cash during those all-important gift-giving seasons, like the December holiday period, Valentine’s Day, and Mother’s Day. What appears to be typical is a gift certificate sales rate of about 10 percent of overall sales.

The beauty of gift certificates is that they bring in a lot of cash for a very small investment. Be sure to budget the initial gift certificate purchase money wisely so you’ll easily be able to handle the increased operational costs that could result when they’re redeemed.