June 16, 2015

Tips to Reduce Overheads in Your Salon

Overhead is something that every business owner and manager must deal with. Having a large amount of overhead will hurt profits in the long run and will reduce the flexibility of the business in general. There are several steps that any business owner can take in order to reduce their overheads. For salon owners, there are business specific steps to take in order to reduce overheads in their business and to add profits to the bottom line. Over the long run small changes made to reduce overheads in the business can make a huge impact on the profitability of the company.

Reduce Waste

One the most simple way to reduce overhead in a salon is to reduce waste. There are many varieties of waste in a salon business, and some hurt the bottom line more than others due. For instance, losing beauty product inventory by way of improper storage is one good example. Another example of waste in a salon would be not maintaining equipment and having to purchase it much sooner than they would otherwise have to. Reducing waste is a culture change in many businesses, so starting small may be the best solution here.

Understand What Drives Overhead

In order to make the biggest sustaining improvements to overhead in business, it is important to know what exactly is driving overhead costs in your business. Conducting a vertical analysis which shows what percentage of activities cause what per cent of expenses is a great way to do this. If there is a certain expense or activity that causes five times more expenses than any others, this should be targeted first. Going after the biggest drivers of overhead expenses is the best way to quickly reduce overheads in a salon.

Keep Customers Top of Mind

In a rush to reduce overheads, it is important that a salon owner keep the customer top of mind when making any changes to the business. For example, although it would be cheaper for the business just to have one employee working at the store, the customer service may suffer greatly due to this. If customers have long wait times at a salon, they may be discouraged from coming back due to bad customer experience. There are many things that a business could take out of their daily work that would, in fact, make them more profitable in the short term but hurt business in the long run. It is important that any salon owner keep the customer top of mind when making these sorts of changes.

Change the Culture

The last and most important tip is to change the culture of the salon business in order to have employees and managers that are concentrating on reducing overhead while enhancing the customer experience. Valuable employees that understand the business and customer are difficult to find and should be treated well if they are found. At the end of the day, it is up to the employees of the business to execute the vision of the company.



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