Financial Pressure for Salons in 2025...

If like many salon owners you’ve received your 25/26 business rates statement, or you are currently waiting for it to land, I suggest you brace yourself! With some salon owners reporting a 60% increase its time that salon owners stopped being stylists that own a salon, and become business owners that are great stylists…

So, what can you do meet the challenges of 2025, here our thoughts:

Why Hair Salon Owners Must Stay on Top of Their Finances in 2025

Running a successful hair salon has always required creativity, skill, and exceptional customer service. However, in 2025, financial management is more critical than ever. With rising costs, shifting consumer behaviour, and increased competition, salon owners must stay on top of their financial details daily. More than just tracking expenses, they need to be proactive in cutting unnecessary costs, optimizing their pricing strategies, and ensuring their business remains profitable in a challenging economic climate.

The Importance of Financial Awareness

Salon owners are not just stylists; they are business owners. Like any business, success comes down to financial stability. Many salons fail not because of a lack of talent but because of poor financial oversight. Without a clear understanding of income, expenses, and profit margins, a business can quickly spiral out of control. So firstly, let’s get the basics right, Management Accounts and KPI’s are a must. Having a consistent weekly and monthly baseline from which to monitor and identify both positive and negative trends is a key tool in the business owner’s toolbox!

Key Financial Metrics to Monitor

1.       Revenue Trends: Are sales increasing or decreasing month-over-month? Use the Management account template to track your revenue and expenditure trends

2.       Stylist Productivity: If your stylists are not working at or towards 75% productivity then they are costing you money. Monitoring this monthly and adjusting quarterly stylist hours, will enable you to manage white space more efficiently, and keep your payroll cost under control.

3.       Cancellations & No-Shows: Last minute cancellations and no-shows are salon killer, if this is a regular occurrence consider implementing a deposit scheme, especially for high ticket services like colour, ensure you have a documented cancellation policy, and create a client waiting list that you can call upon in the event of a no-show or last-minute cancellations.

4.       Pricing Strategy: Whilst business owners must always look at the competition, they must also have a good understanding of their own cost of operation, and this must be reflected in your overall pricing strategy.

5.       Expenditure: Just as good revenue is a must; the best and lowest cost of operating cost is essential. A business owner should know their operating costs inside out and they should always be reviewed. Competition for the services that make up your operating costs is fierce, and therefore there are always saving to be made. These include phone & broadband, bank & card charges, business insurance, utilities and obviously your wholesale product supply.

By keeping a close eye on these numbers, salon owners can make informed decisions, reduce operating costs that prevent financial struggles before they start.

The Need to Cut Costs Every Day

Inflation, labour costs, and supply chain issues continue to affect the beauty industry. The price of professional hair products, utilities, and rent can add up quickly, cutting into profits. Salon owners must actively seek ways to reduce costs without sacrificing the quality of service. Here’s how:

1. Smarter Product Purchasing

Buying in bulk, negotiating with suppliers, and switching to cost-effective yet high-quality alternatives can lead to significant savings.

2. Energy Efficiency

Simple adjustments like using energy-efficient appliances, LED lighting, and scheduling peak energy usage wisely can cut down utility bills.

3. Reducing Wastage

Managing product usage carefully and training staff to use only what is needed prevents unnecessary waste and expense.

4. Maximizing Staff Productivity and Setting Targets

A salon's biggest asset is its staff, and ensuring they perform at their best is crucial to financial success. Owners should set clear performance targets for stylists, such as the number of clients served, average service value, and product sales per week. Regularly monitoring and reviewing these metrics can help identify top performers and those who may need additional training or motivation. Implementing commission-based incentives, rewards programs, and continuous education can boost employee engagement and drive revenue.

5. Leveraging Technology

Using salon management software can automate booking, inventory, and payroll, reducing administrative costs and errors. These systems can also track individual staff performance, allowing owners to analyse data and adjust strategies accordingly.

Future-Proofing the Salon Business

The beauty industry is constantly evolving. Staying ahead financially means planning for both growth and unexpected challenges. Diversifying services, offering memberships, and investing in digital marketing are just a few strategies that can help sustain and expand a salon business. Additionally, ongoing staff training and performance tracking ensure that the team remains motivated and aligned with business goals.

By keeping a firm grip on their finances and working to lower costs daily, salon owners can build profitable, resilient businesses that thrive in 2025 and beyond. A strong financial foundation, paired with a high-performing team, is the key to turning passion into long-term success.

We’ve included a management accounts template for you to use as you need. Management Accounts Template 2025 & expenditure table if you would like access to our business tool folders drop us an email.

The Salon Works Team