How to adapt your business to survive recession

Published 20th Jan 2023 by PB Admin
How to adapt your business to survive recession

Given the current economic situation, it’s no surprise that many businesses are looking at how they can adapt to survive. We asked successful beauty business owners for their top tips on making changes without compromising on service.

Running a beauty or spa business can be expensive, especially with large amounts of water, electricity and gas being used, along with the need to purchase expensive equipment and keep products stocked up. 

With rising costs in all areas, it’s a tough time for the beauty and spa industry at the moment; increases in utility bills, rent, stock, wages, insurance and training costs all impact the profitability of your business,” says Debbie Wilson, owner of Polished Nail and Beauty Boutique in Marske, North Yorkshire. 

Unfortunately, the solution to this isn’t as simple as putting up your prices. Raising treatment prices can increase business turnover, meaning some smaller businesses may pass the VAT threshold, and it might also impact your clients’ spending choices. 

In putting treatment prices up, it’s a worry that you may not retain or attract new clients,” says Wilson. 

“Clients are becoming more selective about where they spend their disposable income. They now choose between treatments and lunch with a friend, for example,” adds Kerry Hole-Stuart, salon director at Transformations Hair, Beauty, Aesthetics and Day Spa in Ilminster, Somerset.

“12 months ago, they would have had the treatments and then gone for lunch. Some of those who are lucky enough not to feel the effect in their pocket feel guilty and are cutting back too because they feel they need to have a less indulgent lifestyle. This has resulted in an overall downturn in bookings for salons.”

Of course, the current cost-of-living crisis doesn’t just affect business owners and customers – staff will be impacted too.

Another key challenge for business owners may come from rising pressure from staff for an increase in wages and salaries, as well as the changes in the national minimum and living wages. Wilson agrees: “Being able to pay a fair wage and retain your employees can be a concern.” 

While business owners will want to continue providing stellar service and looking after their staff, the money to do this needs to come from somewhere. 

1. Make small changes to save money

Making drastic changes to your business can be daunting, and if you’re already stressed about finances, the last thing you want to do is worry about a complete overhaul. 

Gemma Holt, owner of Lily’s Beauty Salon in Whitchurch, Shropshire, says that small tweaks can have a bigger impact than you’d expect: “Little changes we’ve made include making sure we only put the washing machine on when it’s full rather than a half load, and switching lights off in treatment rooms when they’re not in use.

"We have also fixed a standing order with our electric and gas supplier, so we pay a reasonable set figure each month and we don't get caught out with a large bill!”

Another simple place to start is by checking whether you can save on any bills by swapping provider. 

With the current energy crisis, it’s unlikely that you’ll be able to save by switching energy providers, but it’s still an option for things like broadband and insurance – use a few different price-comparison sites to shop around for the best option for your business.

“Look through your bills and see if there are any changes you can make to instantly save money,” says Gemma Smalley, Midlands region trainer at Sienna X.

“Are you paying for subscriptions you had forgotten about, or can you pay less per month for your card machine? You’ll be surprised just how much you can save by taking some time out to pick through your finances

A closer look at your taxes could also yield results.

“Look at your business rates – many that qualify for business rates may not be being charged correctly or fairly,” comments Hole-Stuart.

“It is worth a review with a legitimate company to see if you can get a rebate; however, act fast because the cut-off to challenge this coming year’s rates is in March.”

It’s also worth looking at your retail strategy. Hole-Stuart explains, “Review what sells and what does not, and ensure your holding is at the correct level according to your sales patterns.

"I’m a huge fan of retail and run training for therapists to learn to retail. However, stock on the shelves is not money in the bank. Ensure you are doing a monthly stock take and providing this to your accountant for your accounts.”

Looking for more tips on saving money in your salon? Check out our experts’ top tips.

2. Change your treatment offering

While some might think that you need to completely switch up your treatment offering to attract and retain customers, this isn’t the case – focus should be on the quality of service you provide.

Hole-Stuart explains,Adapt your treatment offering to be unique and different to your competitors. To survive in today’s market, you need to offer something completely different to anyone else.

"This does not mean you need to have ‘shiny object syndrome’ and purchase every machine on the market. You simply need to offer a unique experience.”

However, it could be the case that you could make small changes to your treatment menu to improve profits.

“This is a good time to revise your treatment list,” says Wilson. “We have implemented a small price increase, which we are going to notify our clients of in advance, explaining that’s it’s inevitable due to rising costs. Our clients are very understanding and trust that we would only do this if it’s absolutely necessary.

"We’ve identified the most cost-effective treatments and adapted our treatment offerings accordingly. The key to success is adapting; being flexible and open to change.”

Some businesses might be in the position to make more of an investment by offering services that have a high initial outlay but provide considerable long-term profit. 

Roy Cowley, founder and managing director of supplier 3D Aesthetics, explains, Beauty salons should consider reviewing their treatment offering to see which services generate more hourly revenue.

"There's no doubt that aesthetic treatments can be more profitable than other treatments with lower profit margins.

"Our experience shows that beauty salons are striving to offer more aesthetic treatments and adapting to new trends as these treatments have a better ability to withstand the recession.”

Not sure where to start with aesthetic treatments? Find out which one is best for your business.

3. Analyse your marketing approach

“Take the opportunity to drive creative thinking and innovation to connect with your customers,” says Wilson. “Consistency is key to creating a brand that your clients will recognise and relate to.

"What we want to promote to our clients is the customer experience, which is unique to our salon – this is what’s important and what you are selling, so keep it professional and appeal to your target audience, promote what you have to offer and show off your business in its best possible light.”

Holt explains how she’s maintained her clients’ relationship with her salon: “Sending out regular emails and posting on social media. We find if we are having a quieter week, putting our staff availability in an email or a story on our socials is really increasing bookings.

"Also, we find posting reels of us doing a treatment on our socials is attracting new customers – for example, a recent video of a lash lift attracted a customer who had recently moved to the area, and now she comes in once a week for a range of treatments.”

However you choose to market your salon, consistency is key.

Have a clear strategy and hold strong,” says Hole-Stuart. “Stick with the strategy, even if it takes time to see the rewards of your consistency, it will work.

"For example, you have an amazing facial treatment that’s £200 and you talk about how amazing it is continuously for the first month. Do not then panic in the second month and discount it to £99 because you have empty booking spaces.

"Never market your discounts or offers on your social media platforms because it instantly devalues your brand – keep offers as a reward for loyalty for your current clients.”

4. Take advantage of financial support

The Government has offered some financial support to beauty businesses, although what is included, and the amount of money provided is subject to change. 

For example, in January, the Government announced its latest Energy Bills Discount Scheme, with businesses with an energy contract discount on wholesale prices of up to £6.97 per megawatt an hour for electricity and £19.61 per megawatt an hour for gas – this is applied automatically for eligible businesses from March 31. 

There are also grants available from beauty organisations to help develop your business, such as the Beauty Backed Trust Grant Programme’s Support Grant which can be awarded to “established businesses and freelancers that need additional help and guidance to grow their business.”

Hole-Stuart adds, “It is worth touching base with your local council’s small business support hub too – some councils offer grants of financial support or free business courses. I am currently working on a project with my local council to support small businesses with free mentoring.”

Additionally, some brands offer packages to make it easier to invest in products or equipment, such as interest-free finance options or buy-now-pay-later. 3D Aesthetics, for example, offers the ‘3D Business Stimulation Package’.

5. Get your staff involved

“Your employees need to be aware how tough things are currently. It is important they step up to the challenge; they need to ensure they are meeting their key performance indicators and financial targets to ensure the business succeeds,” says Hole-Stuart

Although motivating your staff may seem like a tough task when money is tight, there are ways to get them more involved in boosting the business. 

Cowley comments, “Beauty businesses need to appreciate the competition and ensure they're working on increasing staff retention – this can be an opportunity for developing a commission plan for their staff. Staff investment in the business gives more opportunities to review pay or salary favourably and can help with retention.” 

Acknowledging the value of your staff is key. “Regular team meetings and one-to-one reviews are essential in identifying any problems your employees may have. Be open and honest with them. We offer our employees flexible working and the option to increase their take-home pay by offering overtime hours if needed,” says Wilson.

“I would like to think I am always here for my staff and that they can come and talk to me about anything,” adds Holt. “We have one staff member who is a single mum, and the cost of her bills has gone up, so she asked if she could have some extra hours to help with the rising costs. Of course, there is always room for someone to do extra hours.”

Wilson concludes, “Ensure your team feel valued and appreciated. Looking after their welfare, giving tokens of appreciation, celebrating milestones and giving praise where deserved means they will be more willing to actively contribute to business goals and commit to the business.

"A happy workforce will forge a healthy culture, which highly contributes to employee retention and satisfaction.” 

How have you adapted your business to cope with the economic crisis? Let us know in the comments…

Don’t miss: Everything you need to know about setting up a beauty salon and should you raise your salon treatment prices in 2023?

PB Admin

PB Admin

Published 20th Jan 2023

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