Why do salons fail?
Opening a salon is one thing. Being able to keep a salon open is another. Did you know that 8 out of 10 salons close within the first 18 months of opening? To stop hair salons from going out of business, owners need to make smart decisions.
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- No business plan
- Poor management
- Wrong Services and Pricing
- No Investment in Staff and Equipment
- Low Client Retention Rate
- Not Using Salon Software
- Ineffective Marketing
- Failure to Adapt to Change
No Business Plan
As difficult as it can be to discuss the boring business details, your salon will hurtle towards failure fast without a well-thought-out business plan.
Preparation is key to get people through your doors. You need to make sure your turnover is adequate to cover your costs and more. Unfortunately, not spending enough time on cash flow can be why salon owners fail.
Many new owners start a business with big ideas and a lack of funds in the bank. Assuming you're going to draw in clients as soon as you open your doors might cause you problems.
It takes time to build up a loyal clientele.
Salon profitability facts can be pretty scary when you take a closer look at them. Many successful salon businesses have a solid cash reserve to cover things like insurance, rent, retail stock, utilities, and, of course, money to live off.
Having a six-month buffer is a good idea, and a 12-month buffer will help ward off an unexpected problem.
TOP TIP: Put in place clearly defined goals, regular KPI checks, objectives, and a salon strategy that you can comfortably stick to.
In a competitive industry that thrives off being busy, it can be challenging for a new owner to relinquish control. Why would you pay someone to do something that you know you can do yourself? Besides, it's exciting when it's all yours!
While that feeling might last a month or two, without help, you can rely on; you could find your burnout fast. Seek out professionals with planning experience to keep your service organized and on-track. From a trusted accountant to a lawyer that can help you iron out any problems with your lease, you don't want to make costly mistakes.
Not being professional is one of the main reasons people will start to lose faith in your business.
Do your research, share out tasks, hire well, meet your goals, and don't refuse help.
Wrong Services and Pricing
In today's fast-paced and highly competitive market, you need your brand to stand out from the crowd. You want a brand that shows confidence, and you want it to fit in with the local clientele. It’s important you offer the local clients a service they need and something a little bit different.
To make real money, it’s important you think about who you want in your salon. If you know who you're selling to, you can get to know what they want their favorite salon to look like. You need to know what someone in the area will pay for treatment.
And don’t ignore the competition.
Rather than try to match your competitors' prices, work out what you need to charge and how many clients you need to get through the door to cover your expenses.
The reality is, things might be tight when you first start, and you might want to keep your prices low, to begin with. Luckily, you don't need to be everything to everybody.
If you're a superstar stylist that's the best in the industry at styling black hair, you might want to center your advertising collateral around that.
Many salons that are consistent with their prices retain their target clients quickly.
We recommend you to check out our post on hair salon for sale.
One way to put yourself out of business fast, is overstocking.
If you have too much product and not enough client’s booked in, you’re wasting money. Funds that are spent on the stock could be better spent on marketing, an automated salon booking system or a tool upgrade.
Salon Inventory management can go out of style quickly, it can expire and simply prove unpopular with your patrons. If you have ordered too much stock, you could always sell it off retail at a profit.
But this could take time.
Having less stock is always better than having too much.
You can order what you need when you need it without wasting expenses on products that go to waste.
To avoid high storage costs, order only what you know your client will need. Tracking your sales data will help you make informed decisions when making orders.
Studying your statistics will ensure you don’t waste money on the unnecessary stock.
No Investment In Staff or Equipment
A mistake that many new salon owners make is not treating their workers well.
It takes a lot of time, energy, and some cash to train a new staff member, so it's essential they like their job and want to stay. You want your team to reflect the personality of your business.
As one of the most significant expenditures on your line list, a loyal crew will save you so much cash in the long-run. A fast employee turnaround is a sure sign of failure, so you don't want to give anyone a reason to leave.
Lose your employees and you’ll likely lose their clients too.
As a modern boss with a solid vision, it’s also integral that you keep your equipment up-to-date. If you’re using dated tools and dusty equipment, your clients will notice.
You don’t need to buy the latest equipment every few months, just take stock and notice when things start to break down.
Low Client Retention Rate
Why hair salons fail is no big mystery.
Businesses fail when client retention rates plummet. Did you know it costs more to entice in new clients than it does keep the old ones?
To make sure your clients keep coming back, you need to improve their overall experience. Personalized newsletters, flexible booking, a team they can rely on, and a regular stylist they can always get an appointment with will quickly win you popularity points.
Get feedback from your clients any opportunity you can and try to include a personal touch in your service. If you have a loyal client who loves a certain stylist, go out of your way to give her the appointment time she requests.
Not Using Salon Software
One of the main reasons salons fail is terrible service.
If you're wasting energy on employees who forget to write down bookings and mess-up appointment times, it's time you switch up your salon software.
Salons that use scheduling and salon management software, including POS and inventory, like Zolmi Salon Software are always better organized. You’ll be able to track your missed appointments and any no-show rates you rack up.
When running a salon business, avoiding mistakes is vital. Forget to add in a client's appointment just before they go on holiday, and they'll probably never come back. Plus, they'll tell their friends about the bad service, which is terrible for business.
A good hair salon thrives off a good reputation, and a salon owner succeeds when they invest in a system that manages clients efficiently.
Many owners in the salon industry put too much emphasis on their shop window. A great shop window is one solid marketing strategy, but there's so much more you could be doing.
Successful salons with top stylists employ a variety of marketing strategies to become number one in their area. A streamlined strategy that doesn't waste money is the best approach.
Many salons with a consistent and ever-increasing booking-list pick up a lot of clients from a beautifully presented social media presence.
A consistent social channel that reflects your clientele will bring more clients in and, in turn, prevent salon failures. Think of your Instagram page as your online shop window!
Plus, it's a pretty affordable way to market. A big part of any successful business is a slick website that's targeted directly to your audience.
Most salons fail because they don't tap into tried and tested marketing tricks.
Failure to Adapt to Change
A good hair salon will stay ahead of the industry trends and keep their branding fresh and desirable.
Change is an inevitable part of business, so it’s important you roll with the punches. Stay up-to-date with your competition and keep your employees up-to-date with more training days.
If you're just starting out, you might be so concentrated on drawing in new people and clients you focus only on avoiding failure.
But what happens when you experience success?
As soon as things start going your way, you might want to consider more salon suites, expanding your team, and even opening up a chain of salons.
If you can adapt to change, your business will grow.
Being a new Salon owner comes with a unique set of challenges.
Why do salons fail? Well, there are many reasons, but we’ve listed a few crucial points in this article.
From hiring the right crew to choosing the best automated systems to invest in, things aren’t always going to go to plan.
To give your salon the boost it needs, apply some of the tried and tested techniques in this article to get your business back on track.
And if you love these ideas or have some other ideas that you've used in the past to promote your salon business, why not share it with the Zolmi community in the comment section below. We would also be delighted to answer your questions, as well.
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