26 November 2022

The Hair Industry – Where We Are Right Now

The hair industry in the UK is at a critical crossroads. It feels that national and global events which are out of our control are conspiring to scupper our post-Covid recovery.

The Hair Industry

We spoke to Hellen Ward, co-founder and Managing Director of the award-winning Richard Ward Hair & Metrospa in London’s Chelsea. We asked Hellen to give us her view on the state of the hair industry and to share some constructive ideas on how best to face up to the current challenges.

What are the main challenges that our specifically facing our industry at the moment?

I believe we are at crisis level as our industry is facing a perfect storm. Changing client behaviour means clients coming less often. The cost-of-living crisis means clients are increasingly having services at home. Furthermore, many aren’t fully back in the workplace post-Covid, or have made life changes. Plus increasing utility costs, increasing supplier costs, reduced help and government support, penalties on debt repayment, soaring inflation and a recession! To top it all off, there is a change in the conception of traditional salon employment.

Salons are closing their doors or changing their business models to try and compete. Some have little understanding of the resulting impact. Only PAYE salons can employ apprentices, so unless we safeguard traditional salons, we won’t only face a short-term skills shortage but a long-term lack of staff. Add T Levels into the mix – reversing the traditional apprenticeship model of 80% practical/20% theory/classroom learning – and we will be in a very compromised position in 5 years’ time. The UK Government urgently need to start listening more to those people who are actually working at grass roots level.  They need to be aware that there is an urgent need for taxation reform and fiscal clarity.

I’ve long been a supporter of freelance workers in our sector. However, there needs to be urgent levelling up and parity when it comes to how salons operate. Some business models rely on ‘disguised employment’ as a form of tax avoidance. This isn’t helping the government’s perception of our industry and what we contribute to the treasury. It isn’t helping those paying their dues conventionally to compete on a level playing field. That’s why we set up SEA; to be the voice of salon owners who run PAYE schemes and pay VAT. We simply felt we weren’t being adequately represented. It is essential that salon owners have a voice.

Give us a couple of examples of the avoidable mistakes that are often made by hair & beauty business owners when attempting to temper the impact of increased short-term difficulties, such as those being faced at the moment?

I repeatedly see the same mistakes that salon owners make but I do completely understand why people make them. Firstly, there is the temptation to cull the payroll. This is what an accountant might suggest, as it’s the biggest expense we have. However, accountants generally they have no idea of our sectorial benchmarks, so they won’t understand we are a labour-intensive industry. Cutting staff can be devastatingly detrimental to the customer experience, so this should be a last resort. Normally, non-turnover producing staff are the first to go. However, stylists and colourists shouldn’t be leaving their client unattended in order to answer the phone, for instance. This is a huge compromise to the customer experience. Far better to incentivise support and admin staff to upsell services to pay for their salaries.

Secondly, ensure you don’t cut any costs which might compromise the customer experience. No client will notice if you change your credit card terminals, but if you have shabby towels and gowns you won’t sustain your price point. Breaking it down like this – i.e.. Into things the customer and see or will effect them versus behind the scenes expenses – will help give you real clarity on where to make savings.

Many salon owners are one-man-bands, and some don’t have a business partner to sound off to. Many don’t make time to properly get to grips with the business finances. My advice is always that as soon as you have the salon keys in your hand, you are no longer a hairdresser. You are also a business owner who just happens to work in the hair & beauty sector. As such, you have to make time to manage and run your business. That part of your job should be your priority. 

What are the fundamental steps that salon owners and managers can take to ease the additional financial burdens they currently face?

Even in economically buoyant times, I’ve never believed there’s a silver bullet to sorting out the finances and increasing profitability. Very often it’s a broad-brush approach of small and subtle changes that add up to making an impact.

At a very basic level, it’s good to remember that there are only 2 ways to increase profit – 1. increase turnover. 2. decrease costs. It sounds simple but when you can’t find a way, remind yourself that if you work a little on both elements you will get a result.

To break things down further, split out fixed and variable costs. Fixed costs (like rent, rates) must be met, variable can be impacted more easily. This helps focus on things you can remedy and the target turnover you need to meet your outgoings.

Short term fixes would include re-negotiating with suppliers (stock, utilities) wherever possible. However, the easiest fix is to look at your EPOS rates. Most people (98% for us) pay by card now, so get a better deal on the rates you are paying, and even if you get half a percent off you’ll be making a serious dent in your costs.

Most team members could up-sell services and fill their white space and instantly increase turnover, but you’ll need to remind them and incentivise them to do so. Increasing the existing client spend is the most sure-fire way of increasing turnover. Don’t be tempted to price-match or discount, and don’t make the mistake of focusing on retail sales (it’s increasingly hard to compete with online when brands are going direct). The client is already sitting in the chair so they are already buying into your salon brand and it’s services; you’ve already hooked them in so focus on them first. Services are the most profitable so make sure this is where you spend your marketing time. We sell time, not products. That mantra has to be at the forefront of all our business thinking.

Staff retention continues to be a major issue for business owners in our industry. How can its effects be alleviated?

It’s a challenge. But as a sector we don’t often talk about the positives of employment. There are so many reasons why people might want to stay working in a salon, but it’s the employer’s job to remind them that they won’t automatically be better off if they go self-employed. It’s a misconception.

Showing CPD (Continual Personal Development) and succession planning is vital to staff retention. We have an unprecedented length of service amongst our team – 18.5 years’ average amongst our senior team -and it’s what we are most proud of. If staff are ambitious, they need to know there is earning potential and opportunities for them to thrive. That’s why creating a culture that celebrates continuity of service and team development is critical. Once our trainees qualify, they know that there are lots of different management and creative routes they can take in the company and that commission is uncapped. They can earn as much as they like, but it hinges on developing a sound client base. We track KPI’s (Key Performance Indicators) and tier our commission rates so they increase in line with progression – the more people progress the more they can earn.

Tell us more about the importance of structured training and education as a tool to help staff recruitment and retention?

If you want to embrace the ‘grow your own’ culture you have to be willing to cultivate it in the long term. It’s the acorns to oak trees scenario. You only create a true ‘tribe vibe’ if you start with the apprentices in your team and encourage them to develop their own acumen and specialism within your salon culture. We developed our own in-house training programme hears ago and it’s long and detailed. But 75% of our styling and technical team have come through it, and now educate it. You cannot underestimate the impact of that on not just staff and team members carrying it out or going through it, but the ethos it creates. Creating a company culture is key – and the lived experience makes it real.

What are the positives that make our industry so durable and resilient?

One huge positive is that we don’t have to wait to get paid. When we started Tangle Angel we realised the challenges manufacturers have – waiting 60, 90, sometimes 120 or more days from invoice to get money. Our sector is thought of as being a cash cow industry because we can look at our columns and practically work out the value of turnover we have booked, and that money will be in the till by closing time, which means cash flow security.

Client behaviour may have changed, but if you provide a great in-salon experience, there’s no comparison in my opinion. We aren’t very good in showcasing that on the whole as a sector, so my advice is to make sure all your marketing shouts about your client experience. Your length of service, your brand ethos. That’s what makes us unique; the client relationship. Sell it as a strength. Market your team length of service and the client journey as the predominant piece on your home page.

No other industry is as fun and diverse as ours – there are so many spin off careers and no other profession cultivates and nurtures young talent like we do.  That’s why we stay young as hairdressers and everything else seems boring. I’ve been in this industry since I was 16 and I love it. It gets under your skin and I am fiercely protective of it as a career.

Lockdown taught us just how valued we are as an industry – not just physically making clients feel better about themselves but on a holistic level we really do contribute to people’s emotional wellbeing. We should really start capitalising on that as an industry and shouting about how incomparable visiting a salon is.

About Hellen Ward

Known as one of the hair and beauty industry’s foremost business gurus with over 30 years’ experience at the helm of the largest and highest grossing independent hair and beauty salon in the UK, Hellen Ward is co-founder and Managing Director of the award-winning Richard Ward Hair & Metrospa in London’s Chelsea and its retail brands – Tangle Angel (sold globally in 40 countries) and RW Salon Professional (for Waitrose).

Author of the highly successful Ultimate Salon Management Series of books for City & Guilds, Hellen is also a long-standing columnist for Professional Beauty magazine and regularly appears on TV (including BBC Breakfast, Good Morning Britain and GB News) and in print media as the ultimate industry authority. Hellen also educates, lectures and regularly conducts sell-out business courses and seminars on best practice salon management for salons and manufacturers both in the UK and internationally as well as running a hugely successful consultancy business advising on profitability, human resources, brand positioning and marketing in the sector.

Hellen is co-founder of SEA (Salon Employers Association) a body set up by her to push for legislative change for VAT registered, PAYE salon owners. Amongst her sectorial roles, Hellen was the first fully serving female Chair of the Fellowship for British Hairdressing, she is also Beauty Ambassador of the NHBF (National Hair & Beauty Federation) and Vice-President, Trustee and Director of The Hair & Beauty Charity. Hellen is also Vice President and board member of BAWE (British Association of Women Entrepreneurs) and in 2019 received the prestigious FCEM Mondial award for her work.

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