The Salon Magazine contacted us to ask a simple question: “From what Salonfrog has seen, what do our most successful salon owners do, to make their salons successful?”
We started telling them, and they soon asked us to write an article for their magazine; and what started as a 400 word request soon became an 800 word answer!
We’ve include the article below the pictures (plus links to the magazine at the bottom).
What do successful salon owners do all day? Salonfrog explained that in their accountancy practice they see that some salon owners are more successful than others, here they reveal the steps to all-round salon success.
The successful business owners have usually made a conscious choice to be successful. Here’s what they do that most don’t.
Define what success means
Successful owners pick their definition of success. They ask themselves why they have a salon.
What does success mean to you? Do you want a steady income, or do you want to take a risk and open other salons? What services are you really selling? Why sell these and not others? Your answer might reflect the age of the business. In the growth phase, you want to survive, flourish and expand. If you’re in a maintenance period, things ticking along, you may be happy with the status quo. If you want to sell or retire, you may want to restructure the business in readiness.
Smart owners constantly revisit their definition of success. They bring their idea of success to their accountant, who will tailor advice, allowing their plan to be created.
The best owners have key performance figures and compare these to their plan. They know they can control only what they measure. They also know they can’t measure everything, so they pick key measurements carefully.
Here’s some you might choose:
• Monthly sales target
• Staff utilisation – overheads walk on two legs!
• Retail sales rate – does your stock sell before you have to pay for it?
• Average customer spend – upselling transforms profits
• Repeat Client rate – are you winning long-term fans?
• Client growth rate – is your marketing and word-of-mouth working?
Again, pick a measure that reflects your plan.
No-one’s ever died of delegation
Why do so many salon owners never really grow their business? The answer is delegation. In Michael Gerber’s classic book, The E-Myth Revisited, we see how every small business owner has three conflicting sides to their personality: an entrepreneur, a technician and a manager. The entrepreneur wants to open a chain of cool salons; the technician just wants to cut hair; and the manager just wants everyone to stick to the rota, dammit. All three get in each other’s way; all three are disillusioned and want to quit. They’re all found in the same person – you.
Gerber’s bold solution is for salon owners to remove themselves from the business and really commit to delegation and outsourcing. Our most successful owners use Gerber’s ideas often (whether they know it or not). There’s a ton of stuff that accountants can take off an owner’s hands, so delegate it to them! As we say, “You can do anything you want, but you can’t do everything”. Hi-growth salon owners will delegate even those tasks they enjoy. They work ‘on’ the business as much as they work ‘in’ it.
Watch your cash
Many businesses go bankrupt while making a good profit. That’s a strange idea for novice owners to get their head around, but they soon do, once they hire staff and premises. That’s when they discover their money comes in gently and goes out in sudden, awful spikes.
To run out of cash is to run out of time. If you’ve got cash but no customers you can always try again tomorrow – but if you’ve no cash, there is no tomorrow. Your staff, your landlord and HMRC want paying today, and if you can’t, you’re done.
That’s why the best salon owners watch their cash like a hawk. They ask their accountant to do a cash flow projection, which is a sort of calendar with a theoretical doomsday marked on it. Few want to read it, but there’s no arguing with it. Profit is mere opinion, but cash in the bank is always a fact.
Have a not-to-do list
Everyone has a to-do list. You’ve plenty on yours, so you might not feel like making another – but all the best salon owners have a ‘not-to-do’ list. They use it to highlight red flags that can come between them and success. And they share their not-to-do list with their staff too.
A good not-to-do list might include:
• trying to please everyone and worrying about what they think
• ducking difficult decisions, maybe about staff
• doing what’s trendy and interesting, rather than profitable
• ignoring your health and never taking time off
• thinking the screen is your job (email is simply a list of someone else’s priorities!)
• take meetings without a clear purpose, preferably yours!
If these five best practices sound like too much to do, we should say that successful salon owners are often the happiest and fulfilled among all the clients we know. It’s just that some owners know how to grow a salon. It is a knack. It starts with knowing yourself and knowing that you can’t do everything.
Andrew Barraclough is from Salonfrog, a salon specialist accountancy firm which provides a full array of services wherever you are in the UK. Head to salonfrog.com for more details.