The coronavirus outbreak has disrupted small businesses across all industries, including salons, whose operations are all but impossible in the face of social distancing and stay-at-home advisories. But while widespread business closures have left thousands of cosmetic service providers fearing for the futures of their companies, there are several relief options available. Here are best practices for salon owners as they navigate this unprecedented period of financial uncertainty to safeguard their companies while also setting them up for success when business eventually resumes.
Trim Unnecessary Expenses
If the pandemic has yet to prompt salon owners to reevaluate their spending, now is the time to start. The ability to withstand current business closures will depend upon salons maintaining enough capital to reopen as close to normal functionality as possible, so owners need to identify and decrease any business or personal expenses that do not serve them while they are closed. To maintain positive relations with partners, salon owners should first try to renegotiate the terms of their plans to delay or forgive payments, rather than cut ties altogether.
Maximize Available Resources
While some routine payments to vendors may be out of the budget so long as salon operations are on pause, other vendors’ offerings may prove to be valuable proponents of business’ continuity plans. It may not be a reality for brands to invest in new technologies during this time, but they should still contact their current providers to learn about any coronavirus-specific initiatives they have launched to sustain business remotely, such as telecommunications tools for counseling clients from a distance.
Appeal to Outside Support
If salons’ money-saving measures aren’t doing enough to protect their businesses, the Small Business Association is available to help navigate the pressing financial situation. The SBA offers a number of loans – many of which are deferring their initial payments during this time – as well as guidance on how to refinance existing ones. Refinancing can be an attractive option for businesses to access low-interest capital for keeping their company afloat in the coming months. For those who already have a non-delinquent SBA loan (either 7(a), 504 or a microloan), the SBA will pick up those payments for the next six months. And for those who do not have an SBA micro-loan but would like one, the SBA is also issuing new owns from now until September 27, 2020, at low rates to help businesses to survive this coronavirus turmoil and then thrive in its aftermath.
Apply for CARES Loans
As part of the recently passed CARES Act, a program designed to deliver relief funding to citizens and businesses currently facing financial hardships as a result of the pandemic, the SBA is facilitating payroll loans via the Paycheck Protection Program and disaster loans via the Economic Injury Disaster Loan Program. Although both programs have exhausted their funding, the federal government is renegotiating their balances, which means business owners should be educated and ready to act if they require additional support. These loans require no personal guarantees, meaning that defaulting on repayments will not impact borrowers’ credit ratings. To qualify for CARES funding, a business needs to have been operating in the U.S. as of February 15, 2020, have fewer than 500 employees and have suffered substantial economic injury as a result of this declared disaster – though, for an industry that relies on face-to-face interactions, that may feel like nearly all of them.
So long as businesses are closed, the PPP incentivizes salons to keep their workers on payroll by providing them with funds to do so despite revenue disruptions. Up to 25% of the amount granted can be also used for facility rent and utilities, and no repayment is required for the first six months. The program mandates that if borrowers (including those who are self-employed or independent contractors) abide by all terms of the loan, such as repayments at a 1% interest rate, then the lender will ultimately forgive the amount loaned after two years. Applications must be submitted through a lending agent. The alternate option, EIDLs, do not replace lost sales or revenue, though they can assist with the repair and rebuilding of disaster losses by providing businesses with the funds needed to maintain reasonable working capital that can be used to meet outstanding financial obligations.
Prepare for Reopening
Despite challenges posed by the pandemic, salons need to assure they are prepared to handle inevitable influxes of customers. A strong starting point is solidifying their booking systems so that they can begin to secure appointments. One option is a digital booking platform, which allows salons to manage up-to-date calendars and anticipate reopening hours and staffing that fit client demands.
Additionally, salons need an effective means of communicating to customers to alert them to when they will be back in business, as well as which services will be available at that time. To make sure they don’t miss anyone in their databases, salons should set up message blasts via email or text, which they can also easily deploy through a dynamic digital platform.
The ongoing coronavirus outbreak is forcing salons across the globe to reevaluate how they operate and find ways to be more efficient and economic, propelling them to even reach out to external lenders where needed. While it may seem impossible now, maintaining capital and employees will be critical for salons to emerge from this crisis on the right foot. Working with partners and applying for relief funding, salons can not only protect themselves from financial disaster but also position themselves for success when their doors eventually reopen.
About the Author: Jeff Dickerson is CEO of DaySmart Software, the makers of Salon Iris Software, a leading salon business management software for appointment booking, staff management, payment processing, marketing and customer communications for pet professionals worldwide. Thousands of salons use Salon Iris Software to run and grow their business. Jeff has 25+ years of experience building software companies and developing technology that empowers and drives real business results for customers.
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