3 Tips To Recession Proofing Your Business

When we take a step back and look at the past two years, it's clear that the pandemic was an immense learning curve for all of us. Throughout times of social, personal and economic uncertainty you trusted the process and stuck it out by offering your clients the best services possible. The industry has proven once again to be built off the backs of resilient and tenacious individuals like you! So kudos to you and your team!

Now as things move forward, we find ourselves with a new outlook of uncertainty. 

Words like recession, inflation and volatility are dominating the news as of late, and it's becoming clear that the shaky economic climate we are living through could be here to stay for a while.

So what does this all mean for you and your business? Let's break it down ⬇️

So what is inflation?

Inflation is when the cost of goods and services increase while the value of currency decreases, leaving you paying more for everyday items like we're seeing today.

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What's a recession? 

 A recession is a business cycle when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending followed by inflation or hyperinflation. Historically, the demand for hair colors and other salon services have been steady during times of economic uncertainty. However, the landscape can look completely different with the rise of inflation. 

What does this mean for you?

With the cost of products for your business rising and the power of our dollar decreasing, this means that you need to stay on top of your margins more than ever in order to remain profitable. The pandemic had a detrimental toll on the industry and has made the challenge of remaining competitive even more difficult.

So in other words, this sucks.

Everything inside and outside the salon is costing you more money and the only way you can stay on top is to ensure pricing and cost management keeps you alive and thriving is to charge your clients higher prices. Alongside adjusting your rates there are other moves you can make to ensure your future profitability through volatile times. 

At SalonScale we can't predict the future and we don't have all the answers for the future economics of the world. However we do know that there are effective steps you can take to help fight this pesky inflation and keep more money from walking out your front door.

1. Assess your inventory 🔍

Products and inventory are such an essential part of our lives that we can easily forget how critical their costs are to our bottom line.

While having the right inventory is critical for success, it's just as important to adapt your costs of goods towards inflation. Getting caught up on having everything on hand all the time can cost you thousands of dollars of revenue every year.

Taking the time to understand your inventory costs per month, per week and per session can save you time and money in the long run by not holding unnecessary overhead.

The best time to take control of your inventory is yesterday!!

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2. Adjust your rates to inflation 📈

If you want to beat Inflation you need to have a critical understanding of your revenue streams.

First, you need to assess which of your services are in higher demand and which ones could use improvements. Breaking down your services and determining what is bringing you in the least and most cash flow can be a helpful step towards profitability and give you a road map for which rates you could increase to boost your bottom line. 

Many stylists have an emotional connection with their clients and raising your rates can trigger some guilt, however in today's market in order for us to remain competitive we have to raise prices to bridge the gap from inflation.

Without adjusting your session rates you are slowly allowing money to leak out of your business!

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3. Map out your expenses 💸

We all know that Cash is king. 

One of the best ways to ensure that you have cash on hand in your business is to stay on top of your expenses. 

Opening up your google calendar and plugging in recurring dates throughout the month that you know you will need money can be a great reminder and help you plan for future expenses.

By failing to prepare, you're preparing to fail!

Understanding how money is moving in and out of your business allows you as a business owner to gain more control, But also to prepare for future expenses and understand where you have the opportunity to create more cash for your business!

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Summary

Being a stylist or a salon owner has never been an easy career path. The current economic climate and the challenges that it presents are another testament to the resiliency of this industry and the people like YOU that make this profession so special. These difficult times will not last forever and you will come out of them a better stylist and a person because of it.