You’ve dedicated your time to mastering the art of cutting hair and doing nails in school, but the business side of the salon industry was never part of the curriculum. Why do hair salons fail? The challenge of sustaining a salon’s success is distinct from its initial opening. It’s a fact that the salon industry is highly competitive, with around 80% of salons closing their doors within 18 months.
However, owning a salon suite can be an incredibly profitable venture. To be among the 20% who succeed, it’s essential to understand and avoid the typical challenges that salon owners face.
Why do Hair Salons Fail – Seven Reasons
Within this article, we’ve compiled a comprehensive list of factors that influence the triumphs and downfalls of hair salons. You’ll discover the reasons why do hair salons fail, as well as gain valuable insights into effective marketing tactics and sound business strategies that will help you keep success within reach.
1. Failure to understand the market
Understanding the market and, consequently, your target audience is a fundamental aspect of operating a thriving business. Recent data highlights that 42% of small-to-medium enterprises (SMEs) falter due to a lack of market demand for their services or products. This is especially critical in the United States, with over 300,000 salons, where your salon’s success hinges significantly on customer satisfaction.
It’s imperative to invest the time in conducting local research to discern your audience’s desires. For example, if your salon is situated in an affluent neighborhood, your patrons will undoubtedly expect premium services and an exceptional customer experience. On the other hand, if your salon caters to areas primarily surrounded by offices and retail businesses, customers may seek quick and budget-friendly services.
2. Poor Management
In a fiercely competitive industry where success often hinges on staying constantly engaged, it can be tough for a new salon owner to let go of control. Why pay someone to handle tasks you believe you can do yourself? Moreover, there’s an initial thrill in having it all to yourself!
However, that initial enthusiasm may wane after just a month or two, and without reliable support, burnout can set in rapidly. It’s essential to proactively seek out professionals with relevant experience to keep your salon operating smoothly. Whether it’s a trusted accountant to manage your finances or a lawyer to assist with lease-related issues, avoiding costly mistakes is paramount.
Maintaining a professional image is critical to retaining trust and confidence in your business. The key to success lies in thorough research, delegation of tasks, prudent hiring decisions, goal achievement, and a willingness to accept help when needed.
3. Wrong Services and Pricing
One critical pitfall to avoid is failing to establish the right pricing for your products and services. You must determine the kind of salon you want to be: an affordable option or an upscale establishment providing high-quality services. Regrettably, you can’t successfully be both at the same time. It’s perfectly fine to choose one path over the other, but making this decision is crucial.
It’s unrealistic to offer the most budget-friendly haircuts in your city while hiring the most expensive stylists and using the priciest products. To set your prices effectively, conduct thorough research on the pricing structures of both high-end and low-end salons in your local area. Once you’ve gathered this information, you can define a clear business model and establish prices that align with the standards in your community.
4. No Investment In Staff or Equipment
One common error that many new salon owners make is neglecting the well-being of their staff. Training new team members requires a significant investment of time, energy, and resources, so it’s crucial that they enjoy their work and want to stay. Your team should be a reflection of your salon’s identity.
Having a loyal and content workforce is not only a substantial line item on your budget but also a long-term money saver. High employee turnover is a clear signal of potential failure, so it’s essential to provide your staff with reasons to stay.
Remember, if you lose your employees, you’re likely to lose their clients as well.
As a forward-thinking salon owner with a clear vision, it’s also important to keep your equipment up-to-date. Outdated tools and dusty equipment will be noticed by your clients. You don’t have to purchase the latest equipment every few months, but regularly assess your inventory and make replacements when things start to wear down.
5. Not Using Salon Software
If you find yourself expending energy on employees who frequently forget to record bookings or mishandle appointment times, it’s high time to consider upgrading your salon software. Salons that employ, encompassing Point of Sale (POS) and inventory features, tend to maintain superior organization.
In the salon business, error prevention is of utmost importance. A simple oversight like failing to schedule a client’s appointment just before their vacation can result in them never returning. Moreover, they may share their negative service experience with friends, which can significantly harm your business.
A successful hair salon thrives on its reputation, and salon owners achieve success when they invest in an efficient client management system.
6. Ineffective Marketing
Merely having a storefront isn’t sufficient to expand your client base. Proactivity and a well-thought-out marketing plan are essential. Marketing initiatives are the key to attracting new clients, retaining current ones, and elevating your brand’s visibility.
For salon suites, there are several straightforward yet powerful marketing strategies to consider:
- Initiating an appealing referral program
- Promoting online reviews from satisfied clients
- Maintaining active and engaging social media accounts
- Organizing local contests, like offering a free prom makeover, to tap into the prom market.
7. Failure to Adapt to Change
A successful hair salon remains at the forefront of industry trends and continuously refreshes its branding to stay appealing.
Change is an inevitable aspect of business, and it’s crucial to be adaptable. Staying current with your competitors and providing ongoing training to your employees is essential.
When you’re just starting out, the primary focus is often on attracting new clients and avoiding failure. But what do you do when success comes knocking?
Once you start experiencing success, it’s worth considering expansion possibilities, such as adding more salon suites, growing your team, or even establishing a chain of salons.
For your business to flourish, being flexible and open to change is imperative.
Embarking on a journey as a new salon owner presents a distinct array of challenges.
The question of why do hair salons fail has several answers, and this article highlights a few critical factors.
From assembling the ideal team to making well-informed decisions about the automation systems you should invest in, it’s important to acknowledge that not everything will proceed as intended.
To give your salon the necessary push in the right direction, consider implementing the proven techniques outlined in this article to steer your business toward success.