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Budget Highlights for Salon Owners Nov 2017

Written by Ryan Fox, Published by Hairdressers Journal 1st Dec 2017

Lower growth forecasts coupled with wage stagnation and lower productivity rates provided the backdrop to the recent Autumn Budget. Here Ryan Fox, Salon Consultant explores the implications for Salon Owners and how it’s relevant to them.


Budget Summary

In his Autumn Budget, Phillip Hammond set out a number of changes including support for more housebuilding. His view is that the economy continues to grow and continues to create more jobs, however he acknowledged that growth forecasts have slowed, and that action needs to be taken to improve productivity (which is forecast to only grow at an average of 0.7% a year up to 2023). He also believes it is key that the country now looks forward and focuses on opportunities that our changing relationship with the EU could bring, particularly by harnessing and using technology to become world leaders in that field.



So how is productivity relevant to the salon owner. Productivity means the amount of work produced per hour worked, so in fact it is highly relevant to how successful a salon is. In fact, it’s one of the key industry measures.


What to do

Put simply, if you do 1 hour haircut appointments you would be producing 1 cut per hour, however you could reduce your appointments to 45 mins and hence become more productive producing 1.33 cuts per hour. There are many ways to become more productive and this is just one example.



Increasingly technology plays a greater part in all our lives and that includes your clients of course. Technology is something we are good at in the UK and, as an advanced economy it’s one of the ways that we will stay ahead of other countries. Similarly, for a salon, it’s a way of keeping one step ahead of the competition.


What to do

Connecting with your clients in the places they increasingly “hang out”, i.e. social media platforms for example, can give you an edge over other salons and help keep your clients loyal to you. Or as another example, using your salon software to measure the performance of your stylists can enable you to improve the delivery of your service, make you more productive, produce growth and make you more profitable.


Lower Growth

Growth forecasts for the UK for 2017 have been revised down from 2% to 1.5% and for 2018, 2019, 2020 and 2021 are revised down to 1.4%, 1.3%, 1.5% and 1.6% respectively. This means that with inflation forecast at around 2%, you can’t rely on the economy to grow your salon over the coming years as inflation cancels out any growth.


What to do

You will need to look at ways of growing your salon to move forward or to even stop yourselves going backwards.


Wages & Employment

Unemployment is at its lowest level since 1975 at around 1.4 million and there are another 600,000 people forecast to be in work by 2022. However, wages in real terms have fallen by 0.4% over the last year and many workers find that, after taking inflation into account, they are earning less they were 10 years ago. So, despite wage increases brought about by the increases in National Minimum Wages, workers are not earning enough to keep up.


What to do

You will need to improve the productivity, utilisation and profitability of your stylists if they want to earn more otherwise you will have to fund wage rises from your own profits. With so many squeezes on salon profits with increasing rents, product costs and additional wage costs from min wages and things like the workplace pension, as a salon owner you cannot afford to fund wage rises from your profits. Instead create an environment where stylists can generate their own pay rise from generating more income. You can do this by working on a combination of your Pricing Structure, Wages and Targets.


We offer solutions to all the issues raised here to help you grow and an Accountancy Service specifically designed for Salon Owners to help manage your finances…


For more information see Services


Ryan Fox 

07702 208 311


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