Currently, there are approximately 85,000 salons in the U.S., and about 26,000 spas. Salons and spas are the types of businesses that are often started by people who are passionate about this industry, perhaps having been a technician or therapist themselves, and they are relatively easy to start. You just need an idea or concept, the wherewithal to procure a shop license, and some money.
However, staying open, and becoming successful, is not as easy. The US SBA estimates that approximately 1/3 of all new small businesses fail within the first two years, and another 17% are shut down voluntarily. Even if your business does not fail, it may not achieve the financial results you were hoping for.
The single biggest mistake that is commonly made by new owners is underestimating the amount of cash it will take to operate the business until it can manage on its own, which is typically 6-9 months after opening. But once you’ve passed that hurdle, here are some of the common pitfalls that impede success for spas and salons in the long term.
1. Lacking a Clearly Defined Identity – Yes, you’re a salon, but so are 84,999 other businesses. Why should clients patronize yours? Spending time and energy crafting a solid mission and vision strategy for your business will pay off in the long run.
2. Old-School Staff Compensation Plans – Labor is the single biggest expense of operating a beauty business, so it’s important to get this one right, from the beginning. While your staff may lead you to believe otherwise, there is not one “typical” method to compensate therapists and technicians. Just because the neighboring beauty businesses are paying their staff 50% commission doesn’t mean that you should. That untenably high rate does not come with any benefits such as health care contributions, paid time off, or education stipends; obviously, those are not affordable.
Perks and benefits are what keeps the staff around for the long term, so you’ll need a plan that takes all of that into account. Seek professional advice on this matter – it can be the difference between success and failure for your business.
Hourly rates for support staff will be consistent in a geographic region, and generally range from $10-$15/hour.
3. Social Media as Savior – Yes, Facebook, Instagram, and Pinterest, et al, are wonderful tools to market your business and grow your community. But those alone do not a marketing strategy make. You will still need to invest in high-quality printed collateral, events, and even the occasional direct mail piece. And don’t forget one of the most impactful business-growing tools available – exemplary customer service.
4. Not Supporting the Team Ecology – You know the saying, there is no “I” in team, and there is not an “I” in the spa business either. Hiring “stars” for their books, or having different sets of rules for different people, creates a situation where the staff is running the business, not management. Invest in HR infrastructure such as employee handbooks, written job descriptions, specified advancement criteria, vacation policies and regular staff meetings, and have a set of operational rules that apply to everyone. Create guidelines that optimize and support the growth of the business as a whole, not one specific person or department. Staff don’t own their chair or treatment room, the business does.
5. Hoping Problems Will Solve Themselves – All businesses that have humans as employees or customers experience operational challenges from time to time, and some of the challenges are not even caused by a specific person or situation, but by external circumstances. In any case, remember your high school physics lessons – a body in motion remains in motion.
Once headed in a certain direction, things don’t change without active intervention. Regular staff meetings and communication should be a part of identifying challenges and coming up with solutions. Addressing and solving issues as a team cements the team culture you have been working hard to create, and which will be fundamental to your long-term success.
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