Tips on How to Reduce Salon Expenses in 2021

The question of how to reduce salon expenses is never far from the minds of most salon owners. Even when your salon is a great success, you’re probably always looking for ways to cut your overhead costs. If not, then you should be.

As with any small business manager, you’ll need to keep an eye on the money that’s coming in and going out. With the amount of equipment, staff and space needed for salon services, it can be all too easy to let your hair salon monthly expenses creep upwards.

So, what can you do to lower your salon operating costs without compromising your income or customer experience? Keep reading to find out.

 

What You Will Learn

We’ll go over some of the most common salon expenses, as well as some strategies to help you lower or eliminate these.

 

Jump to The Section You Like

  1. Hair Salon Expenses List Example
  2. How to Reduce Your Salon Running Costs?
  3. Conclusion

Hair Salon Expenses List Example

 

If you want to cut costs and lower your salon’s bottom line, it’s a good idea to figure out where you spend money first. Keep in mind that every salon is unique, and your budget might look a bit different than this.

This will vary a lot, depending on the size of your salon and the beauty related services that you offer. Here’s a list of some of the most common expenses that the average salon owner or manager can expect to pay.

 

Payroll

This is probably your main business expense. Given that your average stylist in the U.S. is paid almost $30,000 annually, salons spend a lot on employee salaries. Add payroll taxes to this, along with wages for other staff.

 

Rent

This expense will vary a lot, depending on your salon space, business location, and whether you’re in a major city center or a small town. Some landlords will include things like internet or laundry facilities in the cost of rent, so make sure to ask.

 

Licenses and Permissions

The licensing laws will be different in each state or province, so take a look online and find out what the fees are in your area. Make sure to pay these, as they’re not a major cost and can save you having to pay a hefty fine, later.

 

Training and Development

This could mean updating a service that you offer, getting your stylists comfortable with new salon software or even offering to send them on professional courses. Work with your team to research and carefully select these.

 

Salon Software and POS System

This is an investment, rather than an expense. Good salon software will save you a lot in terms of time and overhead costs. A POS system allows you to take credit card and debit card payments more efficiently, but still requires equipment, such as computer upgrades or receipt printing. Do your research and plan for these.

 

Utilities

Depending on your location, utilities could cost you anywhere from $150 or more for electricity, and $45 to $150 for water. The size of your monthly utility bills will naturally depend on the size of your business.

 

Internet

Sometimes, this is included in rent or building fees. Often, though, it will be up to you to get your own internet connection set up. You’ll need to think about the price of both the internet and a phone line. Customers really appreciate wifi, so it’s a good idea.

 

Equipment Purchases

You’ll need to decide whether to lease equipment or buy it outright. If you choose to purchase your own, it will probably cost you at least $27,000 for the basics. You may be able to use credit or a business loan to cover these expenses.

 

Equipment Leasing

Instead of buying everything you need, many companies offer the option to lease things like chairs, drying stations, etc. You’ll pay a monthly fee, then have the option of buying it or leasing something new, at the end of the contract period.

 

Supplies and Inventory

This covers both your retail inventory and the supplies you’ll use on clients. You’ll need enough of both in stock to make some sales profits, as well as having products ready for each service.

 

Marketing

Marketing can be done for less than a hundred dollars (almost free), or it can cost thousands. This depends on whether you want to do your own email marketing, set up a website yourself, or hire a professional to help.

 

Insurance

There’s no way around it. Insurance is a necessary thing. It protects your business, your customers, your employees and you. Depending on your salon size and number of employees, you might pay anywhere from $500 to $700 a month for this.

 

Credit Card Processing Fees

This is another one that’s hard to avoid, unless you only take cash payments (I don’t recommend that, by the way). Although 1.5% to 2.7% is common, some companies charge 3% or more for a credit card transaction.

How to Reduce Your Salon Running Costs?

 
 
How to reduce your salon running costs
How to Reduce Your Salon Running Costs?

If you want to keep your profits up, you need to think about how to be cost effective in a salon. Remember, profit isn’t just about making money, it’s about reducing expenses and eliminating waste.

Some salons do things like including product charges for salon employees in their commission, but this is entirely up to you.

The best owners are always looking for ways to bring down their business overhead expenses. This can be done without affecting your clients or compromising your brand. In fact, it’s often environmentally friendly, too.

Different salons approach this in their own ways, but here are some great ideas to get you started:

 

Understand Your Expenses

Look at your budget and track your business costs regularly. Hold meetings and ask your staff what they think the biggest or unnecessary expenditures are. Come up with a plan to cut these, together.

 

Keep an Eye Out for “Low Hanging Fruit”

These are small, easy opportunities to improve your business or save money on expenses of hair salon operation. Consider putting a suggestion box in the break room.

 

Use Salon Software and a POS System

You can handle online bookings, track and order inventory, process transactions, check profit margins and schedule appointments all in one place. This will increase overall efficiency and make everyone happier.

 

Manage Inventory

Only keep the retail products on hand that you can sell in a reasonable time. The same goes for products you will use. Determine your minimum needs and set up automatic reordering to eliminate waste and save space.

 

Eliminate Downtime

Schedule appointments closer together and ask staff to help with cleaning or other tasks when they’re not with a client. This will also reduce overstaffing.

 

Cross-train Your Staff

Show them how to help out with other tasks, such as reception or updating the salon’s website or social media. With many people to help, everyone will have more time to focus on clients.

 

Create a Budget (and stick to it)

This really helps when it comes to avoiding unnecessary spending and keeping your profits on track. A good budget and awareness of your salon finances will also help when it’s time to file your taxes. You may want to use a salon expense calculator and financial spreadsheet to help with this.

 

Use Salon Space Well

Make sure that everything is well laid-out, easy to see and not cluttered. This will make your workplace safer as well as helping to keep expenses and losses (wasted products and wasted time) to a minimum.

Conclusion

 

Keeping your salon expenses down is one of the most effective ways to make the most out of the cash that’s coming in. We’ve looked at just a few of the many ways that you can do this. As with most things, the key is to go into this with a plan and get your staff on board.

When you consider how to reduce salon expenses, remember that information is your best friend. Communicate regularly with your team and clients. They’re your best sources of new ideas.

 

Citations

Pre-Operating Expenses and Section 174: Will Snow Fall
https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/txlr27§ion=35

Should nonprofits seek profits?
https://europepmc.org/article/med/15724577

Profit priorities from activity-based costing
https://www.academia.edu/download/44182487.pdf

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