Phil Smith, founder of Smith England, shares his advice on boosting salon business and safe-guarding finances post-lockdown
“Business is likely to be busier than ever when we start to emerge from the Covid-19 pandemic. If the after effects of the last lockdown are anything to go by, we’ll be flat out and making good levels of what seems like profit. But don’t be fooled into thinking we’re out of the woods. In fact, we need to treasure that turnover like never before. Why? Well, in the first three months of this year you’ll have made a loss. Let’s not forget, it costs money to stay closed during lockdown. Rent, utilities, bills and running costs on an empty salon amounted to around £5,000 a month in my case, and that’s after taking into account Government grants.
Many of us opted to take advantage of the Government bounce back loans. It was free money for a year – why wouldn’t you? But suddenly, businesses who may have never carried debt before will be having to find ways to pay back sums of up to £50,000.
Personally, I feel this is unfair as we have only taken on debt as the Government ordered us to remain closed. On the plus side, the Government has recently announced extended term deals on those loans. Take advantage of anything that can spread repayments while you get a grip on how cash flow is going to look. If things improve better than hoped, you can accelerate those lump sum payments.
Don’t forget, we’ll effectively only be recouping losses from the first three months of the year during April, May and June – so that’s half of 2021 already written off. It’s only really in the third quarter we’ll begin to see the first glimpse of true profit. But trust me, we need to be treating every penny like gold dust.
In the short term, my advice is to go through your bills with a fine-tooth comb. Try to re-negotiate deals in every aspect of your business. That includes contacting your landlord and asking for discounted rent or payment plans until you’re back on your feet. Also, talk to energy suppliers about rates and whether you can reduce costs. IT suppliers, licencing deals, insurance, phone providers, professional indemnities too. Shop around or switch until you get a better deal. Bargain hard! Every business will be doing this, not just hairdressers, so suppliers won’t be surprised you’ve asked.
In those critical six months, cashflow will matter more than ever. Check how much stock you’re carrying and be scrupulous about what you need. Consider ordering weekly rather than monthly – it will take more organisation but will free up cash in your business. And lastly, inform and educate your team about the precarious position the business is in. Even savings of £100 a week amounts to around £5,000 a year. Now is not the time to get complacent about how much clients may have missed us. If anything, we need to raise our standards. Every salon will be fighting for business – I’ll be making sure myself and my team are doing everything to save ours.”
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