Opening a salon is exciting – especially if it’s your first – but it’s important to get it right from the very start.
We have seen too many salons open up and be out of business within the 1 year because they hadn’t thought it through.
Actually this is an interesting current statistic..
As per the Australian Bureau of Statistics, more than 60 percent of small businesses stop their operation within the first three years of their startup journey.
We don’t want you to be one of these statistics, so we need to dig deep and get to work and get you knowing your numbers back to front.
Unfortunately, 80% of salon owners when they start their salon, work out their pricing on “comparison” only.
They look around at other local salons and they slot themselves somewhere in between. OR they try and undercut everyone because they think that’s what clients want.
The unfortunate thing about working out your pricing this way is that you very well could be pricing yourself out of business.
Pricing needs to cover all of the expenses below and also the profit you are wanting to turnover, needs to be built into your pricing also.. (because if you haven’t factored profit in, then where else is it coming from??)
The Salon you have compared prices to, may have much cheaper rent, less staff than you, and they may have a cheaper colour line than you.. yet you are priced the same!
Get where we are coming from??
Are you starting to understand why doing it this way is a bad idea?…Once you work out what ALL your expenses are and what profit margin you are wanting to achieve, we then divide that amount by how many hours a week you trade. (How many hours a week your doors are open)
Then we are left with an hourly figure of what the salon needs to turn over.
( This figure should align with your service timing and cost.)
When we look at your weekly turnover, it is also calculated on 44 weeks (not 52)
The reason is that there are 4 weeks annual leave per year, and with public holidays and sick days etc that equates to another 4 weeks off…. So! Your business needs to make sure that over 44 weeks, you can cover all of your expenses.
You may find thinking about your numbers a bit boring, but they are fundamental to the survival and success of your business.
Here are the essentials you need to think of when opening a salon.
Determine Your Break-Even Figure
How much will it cost for the salon to run weekly or monthly? To calculate this, list all your outgoings:
- rent
- business rates
- heat/light
- product costs
- staff costs (wages inc tax and super)
- insurance
- the wage you need to live on
- loan repayments
- accountancy fees
- bank charges
- refreshments
- cleaning, etc
- Subscriptions
- And anything else you pay for.
Make sure you include absolutely everything that you pay for from your business.