This episode of Hair Life is a companion piece to the last episode in which Nathan talked about the ten biggest business learnings he’s had over the years. In this episode he points out the top ten reasons salons and businesses fail and how you can avoid them.
KEY TAKEAWAYS
- Growing too fast: While growing your salon is a desirable thing to do, over-expansion can be a serious error. Taking on additional overheads can spur you to overextend your business financially. Set yourself realistic goals and expand only if your needs dictate it.
- Failing to track your finances: Many businesses that failed took on too much debt. Learn to pay strict attention to your finances and keep careful records of all money coming in and going out, particularly at the beginning phase.
- Overspending: Many new salon/business owners burn through their start up capital before they get into a cash flow positive situation. This happens because of misconceptions around how salon businesses operate. You might have a really great week, but then you have two quiet weeks and you go into panic mode.
- Be prepared for the unexpected rise in costs of things – utilities, materials, labour: Have enough reserve cash to carry you through unexpected times or seasonal slow downs. Try to put 5% away every week in a rainy day fund.
- Poor choice of location: Don’t let a cheap lease tempt you into choosing the wrong location, consider your competition; how many similar salon businesses are located nearby? Is it accessible? Is the area really well served by great road access, plenty of public transport, good footfall, free parking? Ultimately people don’t want to walk too far after they’ve had a £200 cut and colour.
- Poor execution: Poor guest services and overall team incompetence will quickly sink your business, make sure your team place a huge amount on delivering a premium guest service, make sure as an owner/manager that you develop systems and processes for how tasks should be accomplished that everyone can follow and deliver, and internal measures to monitor them.
- An inadequate business plan: A one-to-five year plan that is well thought out will force you to think about the future and the challenges that you’re going to face. It also forces you to consider your own financial needs, your marketing financial plans and your competition, also your overall strategies. Keep chasing it, your plane will always change.
- Failing to adapt and pivot with the times ahead: The ability to recognise opportunities and be flexible enough to adapt is crucial to surviving and ultimately thriving. Learn how to wear multiple hats, respond nimbly and develop new areas of expertise in your salon, what extra services could you offer? Keep asking your guests to see what they want.
- Ineffective and inadequate marketing: Your guests can’t do business with you if they don’t know you’re there. It doesn’t cost a lot to advertise and promote your business through online marketing, social media, email, local searches, reviews and so much more. There are so many free and cheap advertising tools. Use them wisely and spend time really looking at your audience, but also look at how your audience perceives you, how do you look from the outside, do you attract your target audience?
- Underestimating the competition: Your competition can be an effective source of business, but customer loyalty doesn’t just happen, you have to earn it. Watch your competition and stay one step ahead of them, if you don’t take care of your guests your competition will. Now more than ever the hair industry is all about guest experience, if...
