I was talking recently to an accountant who does the books for his wife’s salon. During our chat, we discussed their urgent need to improve profits, so I asked him; “What’s the single most effective thing you could do to quickly grow your profits?”
Because of his profession I was sure he’d know the answer, but I was wrong because he said “we’ll have to find some new clients.”
THIS IS THE WRONG ANSWER…
It’s also a ‘Big Mistake’ because I’ll tell you right now, the single most effective thing you could do to quickly grow your profits is to cut costs in your salon.
You’ve got to be clever about it and avoid making inappropriate cuts that send out the wrong signals to your clients and staff, but the good news is I’ve yet to come across a salon that can’t easily save thousands without affecting the quality of the service they provide.
It’s one of the main ways I help my salon coaching clients and it’s also why I can confidently give them a guarantee that working with me doesn’t cost money… it makes money, simply because I know where to look for the savings.
Now I accept that every salon is different and the potential savings vary from business to business, but even the simple exercise of changing your utility or credit card suppliers can save you hundreds of pounds.
I recently did a like-for-like comparison on my card processing charges (that I thought I was on a good deal for) and found that by switching my provider, I’ll be saving £700 next year and that’s just one example!
What savings could you find if you started looking?
In terms of making a BIG difference quickly, you’ve got to look at all your costs. I always start with wages and stock, because they are by far your biggest expenses and move on from there.
By the way it also pays to realise it doesn’t make any sense to start chasing new clients until your costs are well under control. You have to cut costs in your salon first.
Because chasing extra turnover rather than cutting costs is like driving your car round in first or second gear all the time.
It’s inefficient and stressful … it just sounds and feels wrong!
You get your salon into fourth fifth and sixth gear by getting your costs under control, so that every new client you attract makes you a healthy profit.
You may think as long as your turnover holds up, you’re doing okay, but if your costs are out of control, you’re not… and you’d better do something about them, before it’s too late!
Simon Lotinga is a salon consultant and author with years of experience in running and owning salons. Have a question for Simon? Leave a comment below or contact him on firstname.lastname@example.org – #letsgrow