Running a hair salon can be a huge achievement but it’s not without its challenges. Whether you’re a new salon owner or well-established in your industry, understanding the current challenges will help ensure future success. Sam Kendall, Chief Operations Officer at SalonIQ, breaks down the biggest challenges salon owners face, and how to overcome them…
The hairdressing industry was brought to crisis by the Covid-19 pandemic in 2020 and four years later, it still faces significant challenges in its recovery. In fact, just last year, The Guardian reported that more than a quarter of hairdressers were considering closing sites or downsizing, as stylists struggled with high bills and fewer clients.
While there is no doubt that salon owners are facing tough times, the hair industry has always shown resilience, and there is hope for those who are well-prepared and willing to weather the storm.
With that in mind, here are four of the biggest challenges many salon owners are currently facing, and how to overcome them.
1. Financial Pressures
Financial pressures on hairdressing businesses are still high following the pandemic, with rising business costs such as National Insurance contributions, National Minimum Wage and National Living Wage, as well as the huge increase in energy costs, forcing many to cut other costs wherever they can.
According to a survey by the comparison site, Uswitch, two-fifths of salon owners said they were anxious about the future, with almost a quarter struggling to pay their energy costs and one in five having to ask family and friends for financial help.
Independently owned hairdressers and beauty salons have been by far the hardest hit by rising energy bills and consumers spending squeeze among independent retailers, with a net 624 closing in 2022, according to the Local Data Company.
Furthermore, last year the National Hair & Beauty Federation (NHBF) said about a quarter of salons were making a loss, up from 19% in Autumn 2022, with two-thirds expected to put up prices amid more uncertainty about business survival. As a result, everyone in the sector is looking for ways to navigate these economic pressures and make their business finances work.
There are several steps that can be taken to ease the financial burden of salon ownership, from renegotiating supplier contracts and implementing energy-saving measures to lower utility bills, to diversifying services to increase revenue streams.
The key for salon owners will be to stay adaptable and proactive in managing their finances. This means regularly assessing the financial health of their business and being willing to make tough decisions when necessary. For example, they might need to adjust pricing strategies to reflect rising costs, while still offering value to retain clients.
2. Skills Shortages
Multiple issues are coming together to create a skills crisis for the hair and beauty industry, as highlighted in the ‘Careers at the Cutting Edge: Tackling the Skills Shortage’ report by the NHBF.
The report highlights multiple interlinked factors that have been steadily growing over time, including a fall in the number of apprentices coming into the industry over the last five years due to 16–17-year-olds having to stay at school, the rise in self-employment (meaning fewer employers to take on apprentices) and lower levels of funding. It states that, if current trends continue, there will be fewer than 3,400 hair and beauty apprentices in the UK by 2025 – a worrying statistic.
While the power to address this skills gap fundamentally lies with the government and industry bodies, there are still actions salon owners can take to help mitigate the impact on their businesses.
One effective strategy is to invest in the ongoing training and development of current staff. By providing opportunities for advanced education and professional development, salon owners can help bridge the skills gap from within.
Offering specialised training programmes or certification can enhance the expertise of existing employees, making them more versatile and valuable to the business. Additionally, creating clear career progression pathways and promoting from within can boost staff morale, increase retention rates and attract high-quality talent.
Embracing new technologies and modern practices can also help alleviate some of the pressure from the skills shortage. Implementing advanced salon management software, for example, can streamline operations and reduce the administrative burden on staff. Investing in state-of-the-art equipment and tools can improve service quality and efficiency, allowing salons to better compete with others in the industry.
3. Changing Consumer Behaviour
Consumer behaviour is constantly changing, and understanding these shifts is crucial for salon owners to stay competitive and meet evolving client expectations.
One big change we are seeing is clients increasingly seeking personalised and customed experiences. This presents an opportunity for salons to go beyond merely offering tailored consultations to understand individual needs and preferences. Consumers want a personalised experience from start to finish, and this may mean introducing customised treatments and bespoke services that cater to specific hair types and concerns.
Salons that cater to a wide range of hair textures, styles and colours are gaining popularity as consumers seek inclusive spaces, and many are also increasingly looking for salons that use environmentally friendly products and practices.
The takeaway here for salon owners is to properly get to know their customers – what matters to them, and how they can make the experience so uniquely tailored to clients that they wouldn’t dare to go anywhere else? By engaging with clients on a deeper level, salon owners can create memorable experiences that not only meets but exceeds their expectations, ensuring loyalty for the long term.
4. Client Retention
Social media has expanded the reach of salons to a broader audience, but the real challenge lies in ensuring these new clients keep coming back.
For most salons, a significant portion of their revenue comes from loyal customers who return regularly, rather than one-time visitors. Some clients have a preferred stylist they trust, while others benefit from salons that keep detailed records of past appointments to ensure consistent results, regardless of which stylist is assigned.
To ensure clients return, exceptional customer service and maintaining high staff performance standards are crucial. However, a well-crafted client retention strategy is also essential for both sustaining and growing a salon business. Utilising advanced salon software can greatly enhance efforts in retaining clients and supporting business growth. Additionally, offering clients the opportunity to rebook their next appointment before they leave can help ensure their continued loyalty.
The current outlook for hair salon owners presents its challenges, but it also offers opportunities for those who are prepared to adapt and innovate. While the industry is still holding out for more positive times ahead, today’s environment does provide a chance for forward-thinking salon owners to differentiate themselves.
By embracing new approaches and technologies, salon owners can navigate the complexities of the industry and seize the chance to grow and succeed, no matter how turbulent times may seem.
