If your salon was around in 2008-2009, you’ll remember the doom and gloom that was triggered by the Global Financial Crisis. When it comes to saving money in the family budget, luxuries are usually the first to go and often, a visit to the salon falls into that category.
With experts predicting another recession to hit in the coming year or two, there are steps you should be taking now to ensure your salon is as prepared as it possibly could be when the next financial crisis Rolla around.
Create your emergency fund
Stockpile as much cash as possible, and keep it reserved to keep the day-to-day running of the salon in check. Be vigilant on collecting receivables and be overly cautious when extending credit to clients. It’s a good idea to hold back on investing overly in inventory – stick to the necessities and hold back on the products that don’t tend to sell through quickly.
Investigate alternative revenue options
Bookings will decline in a recession, we know that. Consider targeting different markets. For example, half-price Tuesdays for university students, two-for-one deals for clients that bring a friend to their booking. Alternatively, consider the option of renting out one or more of your treatment rooms to freelance therapists.
Forward-plan your finance options
Banks aren’t likely to extend credit during a recession, so this may be something you want to look into now. If you’re planning to apply for a loan or line of credit, be sure there isn’t any interest accrual until funds are actually drawn. If you do need to apply for funding during the recession, try to leverage low-interest rates.
We know, in a recession, money is tight and morale is low. But you do need to offer the same level of quality to ensure clients feel they are getting their money’s worth, and will be willing to stick by you. In addition, maintaining your reputation as a high-quality salon is going to be imperative post-recession, when the economy moves into a recover phase.
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