Preserving Profitability When Staff Members Leave

As part of our Burning Questions series, we gathered our readers' hard-hitting questions and posed them to industry experts. Here, Eurisko's Leon Alexander tackles the sensitive issue of staff not returning after the shutdown or leaving the salon for other opportunities, and how that can impact a salon's profitability. See Leon's response and his prediction that a new salon model is soon to emerge.

Question: Some of my staff haven’t returned after the shutdown and others have left to work in suites. As a result, it’s affecting my profitability. What do I do?

The current beauty industry model has been disrupted and we look to COVID-19 as the disrupter. But that isn’t the only reason, it was just the tipping point. The growth of salon suites and companies like Amazon meant the current model had been disrupted and affected for many years. 

It’s difficult to see the existing model surviving for some salons, with increasing overheads, a changing workforce and a savvier consumer. The key is to make an attractive proposition for service providers to want to stay within the salon brand.

We need to formulate a series of solutions to the challenges of our industry and losing employees to suites is at the top of the list. If we are to create a new business model structured around good profitability, it works for all parties!

A number of individuals, who have left commissioned salons to own their own independent business, have had their own set of challenges. It includes a lack of business acumen, little marketing knowledge, no ongoing training, a shortfall in finance and they feel isolated. As a result, it hasn’t worked out for many who have made the change.

What is required is a duality strategy, a third way within a new business formula. This model would have to be profitable for the salon owner, desirable for the service provider and attractive for the consumer. There is no one system that is ideal for all salons. Each salon requires a bespoke solution.

Solutions

Going forward, we need to implement a new model that includes additional income opportunities over and above the current model. For example, retailing from the styling chair via an Alexa-type system built into the styling station; hair restoration, as it produces good margins; introducing additional retail items other than just wet products to increase the average ticket; collaboration with co-vendors for food and drink; and in some case, a hybrid salon that is not commission-based that gives the service provider more independence. This model will enable service providers to be in business with the support of the salon’s systems and programs. They will also be part of a brand and team community and makes them less likely to leave.

We must stop thinking we own a salon and start thinking we own a business that operates in the beauty industry. That business needs to operate on best business practices with profitability as the primary objective.