What are some of the best ways you can save money this year? We asked experts Michael Riley, partner, Keeping Account, and Jade Spehr, business coach, JadeStart for their top tips on how you can save money in your salon.

How to save money in your salon this year

Saving money is a vital part of running a business. The economy fluctuates and recessions come and go, so having enough in the bank to get you through leaner times means you can keep your salon afloat. But what are the best ways for a salon to save money? 

Separate spending 

A good way to start saving is to separate your personal spending from your business spending. By separating personal spending entirely away from the business, you’ll get a much clearer picture of how your business is performing.

“If you’ve got obligations like tax, staff or pensions to pay, then have two bank accounts,” says bookkeeper Michael Riley. “Put that money aside and pretend it’s not there. You’ll probably always overestimate what you have to pay, you never have to worry about fulfilling that obligation.”

Client retention

Hold on to your existing clients. You’ve invested a lot of time and energy into building relationships with your clients, so make sure you keep them coming back

“Your rebooking rates should be well over 70%,” says business coach, Jade Spehr. “That means you’ve got a really loyal customer base that aren’t going anywhere. They’re coming back when you recommend they come back and you’ve got the right processes to keep them coming back more frequently and spending more money.”

“Your rebooking rates should be well over 70%. That means you’ve got a really loyal customer base.” Jade Spehr, JadeStart

Rebooking your clients while they’re in the salon or through automated follow-up messages is a good way to ensure customer loyalty. It’s one less thing for them to worry about and you can send out reminder messages closer to the time to ensure they turn up.

Evaluate your services

Honesty is the best policy for your salon. Regularly review the services you offer and whether they’re profitable, there’s little point in offering a service that isn’t making you money any more. 

“It’s important to do price checks in this industry,” says Michael. “Be honest with yourself, maybe some of your services are just not profitable. They might need to be reassessed.”

Don’t be afraid to put your prices up. You’re a business, not a charity!

“It’s important to do price checks in this industry. Be honest with yourself, maybe some of your services are just not profitable.” Michael Riley, Keeping Account

Check your spending

It often happens that the more money you make, the more you spend. When it comes to business spending, you need to see your spending through a critical lens. 

“A lot of people are really bad at stock management,” says Jade. “They order things when stock runs out and have to pay for express delivery. Order in bulk and find the cheapest supplier. You’ll be surprised how much you can get your costs down.”

Look at wages and rostering

Another key element is wages. Jade advises that wage cost for an optimised salon should be 20-30% of your income. 

“A lot of salons’ wage bills are too high – around 50%. This puts a lot of pressure on business owners because it eats into their profit margins,” says Jade. “You can reduce it by managing your rostering.”

Jade recommends being very critical with your rostering. Look at the hours that your staff are working and what you’re paying them for. 

“These are uncomfortable decisions to make, but don’t have a lot of full-time staff members if you don’t have work for them,” she says. “If you don’t want to make people redundant, maybe you can share the work, make everyone part-time.”

Get personalised advice

The best thing to do, Michael advises, is to get advice specifically for your salon. 

“It will save you money in the long term,” says Michael. “Whether you’re a small salon or a big one, get advice. Even if you have to pay for it, it’ll give you knowledge and knowledge is power.”

How much do you need to save?

It’s good to have a buffer for your business. Jade recommends having enough in your bank account to cover a few months of operating expenses.

“This includes your rent, utilities, staff wages, all of those things,” says Jade. “When you have a few months saved up it means you have some breathing space to make smart decisions. And when you don’t have savings, people make frantic decisions.”

Start saving

As times become leaner, lots of businesses are going to need to find new ways to make savings. Whether it’s through checking wages, separating spending, or getting an expert involved, now’s a good time to sit down and check your incomings and outgoings. Look at everything with a critical eye and start making savings for the future of your business.

Find out how Timely helps salon owners run a successful business, deliver incredible client experiences and grow revenue.