The Recession: Who Will Survive? What All Businesses Should Know

THE RECESSION: WHO WILL SURVIVE? What all businesses should know

In the past the beauty industry has proven to be recession proof, but there is no question that the recent economical crisis has left salon and spa owners across the country feeling a lot of pressure. Here are a few tips to help you focus on what you can and should do during this time for your salon or spa:

Use This Time To Re-evaluate
Be assured that the economic crisis we are facing will come to an end. And when it does, you have two choices. You can choose to come out as a stronger business with an edge over your competitors or complacently continue on the same path as before. Your choice depends directly on the actions you take now. Like all businesses, salon and spa owners who choose to use their time wisely in the face of adversity are and will continue to be the institutions that are the “ones to watch”, the “trend?setters” and the ones who “set the standard of excellence for others to follow.” With less clients coming through the doors of your salon or spa, your newly?found time should be looked at as an opportunity to revisit areas of your business that have been neglected. Time well spent now will solidify your foundation for the future and guarantee you are better equipped to know how to thrive when faced with the next economical hardship.

Conduct a Financial Analysis
Your first “investment” should be to revisit your finances. Often times during a recession, owners ask themselves, “How can I generate more revenue?” When the economy is not able to support sales via your clients, cutting costs alone can be the solution you need until the economy stabilizes. Some questions to ask yourself when doing a financial analysis of your business include:

• How can I increase my ROI (Return on Investment)?


• What are my current expenses?


• Where can I decrease costs without compromising quality?


• Do I have effective budgets in place?


• When was the last time I did a competitive analysis of my supply vendors?


• Is the cost of payroll too high and is my current pay structure effective?


• Are my employees effectively meeting their sales goals and being held accountable?

The answers to all of these questions are no surprise to a salon or spa owner who runs a successful business. If you don’t know the answers to all of these questions off the top of your head, it is an indication that you need to grow in order to help your business survive. Overcoming an economical hardship does not take a miracle, only a proper plan that is followed on a daily basis and re?evaluated periodically to update it as needed. Analyzing your past financial records will give you the best indication of if you are gaining prosperity, breaking even or heading for a loss. Know where you stand at all times. A financial analysis is the most valuable investment you can make and now is the time to do it.

Marketing Solutions and Team Execution
When sales are down, the first instinct of many business owners is to invest in a marketing campaign. The intention is to offer an enticing discount that will generate a large volume of clients to make up for a lack of revenue. This may be a good solution, but if business is slow due to a

crumbling economy, you have to be strategic in your selection and execution of the right marketing promotion (see my other article). Some important questions to ask your self when planning a marketing campaign to generate business on a tight budget include:

• What is my target market and what method of advertising will best reach that demographic?


• Is the cost of this marketing campaign higher than the expected rate of return?


• Is my offer enticing enough to bring in the volume of clients I need and can I afford such an enticing discount?

These questions, among others, are critical to ask yourself before launching any marketing campaign and the answers will determine what type of campaign, if any, you choose. Radio advertisements and direct mail pieces often reach the largest volume of potential clients while less formal SMS campaigns could be more cost effective and allow you to target your customers more effectively. Be strategic with everything from the length of time and dates you run your promotion to having a plan in place on how to retain these coupon-savvy clients when they do come into your salon or spa.

Schedule a mandatory staff meeting to inform your team about all details of the current promotion. The meeting should
emphasize that it will be the goal of each employee to rebook the clients they receive from this promotion and therefore retain the new client. After all, having the clients come back is the goal. A well?informed staff demonstrate intelligence, good communication and is key to making a positive lasting impression on a new client. Set up an incentive program for the team member who rebooks the most clients during the duration of the promotion. Remember, your team is feeling the crunch of the economy too and a little incentive can make a world of difference. If you don’t opt to use a monetary reward, schedule your highest re?booking producer a day of salon services with a complimentary lunch.

If you haven’t already got salon management system now might the time to invest in one. The technology can help you capture valuable client data, monitor financial performance, identify weaknesses with your business, reduce overheads, implement staff incentives, design promotions, send out promotional data via SMS and evaluate the effectiveness of campaigns. All of which can help improve your bottom line. The Studio Tracker software system encompasses all these features and prices start from just £9 a week. Check out www.studiotracker.co.uk for your free 30 day trial or contact lauren.mather@studiotracker.co.uk for more info.