It’s a sad fact of life that not all businesses succeed. Financial company Bloomberg actually estimates that up to 80% of all new small businesses don’t last more than 18 months. For owners of small businesses, survival is a constant, uphill struggle.
As bad as it sounds, it’s pretty easy for your salon business to fail. New competition, unexpected increases in business costs, tax-related issues, and other financial problems can make it difficult enough for your salon to ever recover. Poor planning and mismanagement, of course, also have a hand in many of the debilitating problems salons can face.
The Small Business Administration (SBA) Online Women’s Business Center cites these additional causes for the closure of many new salons across the country:
- Inadequate cash reserves. Many owners fail to take into account that they need a six-month cash reserve to carry them through that period in the beginning when they’re not making any money yet.
- Failure to properly anticipate proper cash flow. Some suppliers opt to require immediate payment for their products and services, especially if they’re dealing with new businesses. This can seriously deplete your cash reserves faster than you think.
- Failure to set appropriate, profit-friendly prices. You have two choices: be the cheapest salon or be the best salon. Trying to be both, according to the SBA, guarantees that your salon will fail.
- Failure to define and understand your target market. For your salon to succeed, you need a clear understanding of your market, your customers and their needs, along with their buying habits.
- Failure to quickly react to competition, new technology, or other marketplace changes. It can be easy to let yourself fall by the wayside in terms of business trends and new technology, especially if you’re busy. But if you’re not adaptable to trends, you’ll find it difficult to adjust and cater to a younger, trendier crowd, especially since new trends in hair styling and nail design are regularly emerging.
- Try to do everything yourself. As the owner, you have a clear vision of how you want your salon to run. And what better way to achieve that vision but to do everything yourself, right? This is precisely why many salon owners fail. You must realize that you can’t do everything yourself and that delegating tasks is an indispensable part of running a business.
But let’s not focus on the prospect of failure. Focus, instead, on the fact that there are many things you can do to increase the chances of your salon succeeding.
One thing that made a difference, according to many salon owners, is help from professionals like accountants and business managers. You can hire these professionals so they can provide expert advice on properly running and managing your salon. Those professional fees may seem frivolous at first, but they’re definitely worth it in the long run; with a business manager or accountant overseeing your business, you can focus on what you do best.
You’ll also benefit from learning as much as you can about business management. Take some business management courses at your local community college or university. Knowing the basics of accounting, marketing, finance, and other similar topics can help you make the right business decisions when it comes to your salon.
“I really wish I would have understood business better when I started rather than just having industry-specific knowledge,” says one salon owner in New Jersey. “… General education focusing on sound business principles is really better because [if you’re like me,] no matter how successful you are, your success always feels like luck.”
As a small business owner or entrepreneur, you’ll also benefit from joining associations in your area. This will put you in touch with other business owners, who can provide valuable insight and expertise. This will also give you the opportunity to learn from other business owners’ mistakes. You might even find that the most successful salon owners were once just like you. Once you join an association, you can go to conventions and regional meetings and start networking, too.
Successful salon owners provide a lot of advice for newbies in the salon business. One suggests taking a closer look at the salon’s layout, so no extra space is wasted. In retail, sales per square foot is an important metric, and it may be applicable to your salon, too.
Other salon owners recommend separating yourself from your salon, especially in the early days when business is more unpredictable. Avoid taking failures personally, for the sake of your mental and emotional wellbeing.