How Much Profit Do Salons Make?

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Whether you run a hair salon or a beauty salon, making a profit is the reason you probably took the risk of setting up your business and if you already run a salon, the chances are you know that making money is one challenge – keeping the cash in the business is another one altogether.

My own personal goals for our salon business are based around these two key things (with many things that go into making it happen).

Maximising Sales

The services and products you sell in your salon, plus the way you go around getting new clients in (and keeping them) is the lifeblood of the business.

Making sure your marketing and sales campaigns pay and your beauty therapists realise their role in securing repeat bookings and making sales is essential.

Minimising Spend

There is a saying in business…

Sales is vanity, profit is sanity

If you are the one in your salon business who writes the cheques and pays the bill then you know there are two sides to every story.

I try to hammer it home to my salon managers that sales is not everything. Although we set sales targets for each beauty therapist and each salon, these don’t necessarily turn into profit that week or month.

Managing stock, for example, can seriously harm your cash flow. We have actually stopped carrying some salon brands because of lack of sales, mainly driven by clients going online.

Other Tweaks

As our business started to grow, we also looked at other ears of the business can be saved. They may seem futile, but these things (together and over time) can save you money. Some simple examples include:

  • Changing our payment process provider from the banks default provider saved us around £960 per salon per year.
  • Changing our bin collection from weekly, to a larger bin with two week collection saved us around £360 per year.

By analyzing every payment  you make, you may find savings, especially with utilities like gas or electric.

Consolidation

Another area we have exploited is consolidation. By growing our business, we now have three beauty salons. The business still needs one accountant, one solicitor, one website and one lot of marketing. The savings soon start adding up quickly.

Summary

Although beauty is a great business to be in, you do have to work harder to make profit than hair salons, simply down to the cost of overhead. Floor space needed for beauty is much higher than hair, to rent and rates is automatically much higher.

But, with the right combination of sales and cost management, you can increase profit. Personally, when our business stabilises from our investment into growth, I will be aiming for around 22-25% net profit each year.

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About Author

Working in Hampshire (UK), I have a beauty business with four salons. I'm the guy that sits in the office doing marketing and numbers. My experiences are based on these skills.

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