7 Ways to Reduce Salon & Spa Costs

Invest Strategically to Grow Profitability

July 6, 2017

Cutting Costs for Salons & Spas

In order to establish and run a business, you will inevitably need to invest in numerous areas including your facility, staff, inventory, and marketing. While minimizing costs is always a good idea, it is even more important that your operating budget is being utilized effectively.

1. Be Strategic

There should be a valid reason behind every decision you make. Do the benefits outweigh the consequences (e.g. financial costs)? Are there any alternatives?

For example, consider your TV and magazine subscriptions. In addition to the associated subscription prices, they may be limiting upsell opportunities and costing you potential revenue as they distract clients’ attention from your product displays and salon menus. They may make time seem to go faster while clients wait, but is it worth the cost? It may make sense for some salons & spas, but for others, cancelling these subscriptions may be an opportunity to both save and earn more money.

2. Retain Your Employees

From writing job descriptions to interviewing candidates to training new hires, recruitment is often an expensive and time-consuming activity. When going through the recruitment process, take the time to find someone who fits with your salon and who you believe will stick around for at least a few years.

To encourage employee retention, invest in your team’s skills and careers. Beyond reducing recruitment costs, it will also enable you to provide better services, to charge more, and grow profits.

3. Maximize Productivity

As a service-oriented business, the revenue of salons & spas is directly related to how much employees can accomplish. Although they may be working hard, are they making the best use of their time?

From a revenue perspective, your business would benefit when a Senior Stylist can serve a couple clients at one time. He or she can start working with a second client when the first is in the processing stage. In addition, you can bring on a shampoo assistant to help free up your stylists as well.

At the front desk, a lot of time may be unnecessarily lost by answering calls and leaving voicemails to remind clients of appointments. Tasks such as these can be automated with online booking and text message confirmations. Utilizing salon & spa management software can help your employees to accomplish more tasks in less time and to maintain their focus on clients.

4. Understand Demand

Have you ever been stuck with boxes of inventory that you can’t seem to get rid of? By having surplus inventory, you will have money tied up in products that you will not be able to use to cover other expenses. Further, any volume discounts you received may be negated by the discount you offer in order to clear out leftover stock. On the other hand, it can also be more costly to more frequently order smaller quantities as you may not qualify for volume discounts and possibly need to pay for shipping.

Take the time to understand the demand for products so you will have an appropriate quantity. Purchase in bulk if there are certain staple products that you always need. For seasonal products, purchase in smaller quantities, perhaps enough for one month at a time. As sales for individual SKUs grow or decline, you can adjust your next order as necessary. Many software programs including Insight will help you track and order retail & backbar products.

5. Reduce Waste

Do your stylists understand that there is a cost to the supplies they use? While you don’t need to deduct supply costs from their commissions, it’s crucial that they understand the business aspect. An extra pump of color may not seem like much, but if it happens with each service, it could mean that you need to spend a couple hundred dollars more than necessary each month.

And it’s not only for supplies and products. Consider your utilities. While electricity and water are necessary for the services you provide, are there ways that you can use less? For example, do you leave lights on after business hours to showcase your salon interior? Turn them all, or at least most of them, off to save on your electric bill.

6. Utilize Your Space

Retail businesses place emphasis on the sales they make per square foot. Much thought is given to how and where products are placed to maximize sales. Similarly, are you using your space efficiently? While you certainly don’t want to cram things together, perhaps you can modify the layout to add an extra salon chair or another retail display to help generate more revenue.

Looking to freshen your salon interior? Instead of repainting the whole salon or replacing the furniture, you can create a new appearance simply by painting an accent wall or adding more natural lighting. You can then hold off on new equipment or extensive renovations until it’s really necessary. If you’re renting or leasing, the property management company may even be willing to give you a credit for facility upgrades.

7. Watch Your Advertising Spend

How do you get more clients into your salon? Are you tracking which mediums are working for you and which aren’t? Don’t focus too much on client acquisition either; prioritize customer retention! It is cheaper to retain a client than to attract one into your salon.

A few of the most cost-effective marketing ideas for salons & spas include:

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