What Not To Say If You Want To Succeed (Red-Flag Business Phrases)

There are certain things that I consistently see and hear from other salon owners that raise red flags in my mind and suggest the speaker (whether a newbie or veteran salon owner) does not have a complete grasp on their business or the tanning industry. Don’t be the person who makes the mistake of thinking any of the following:

1. “I don’t even consider that salon a competitor. They are dirty, have old beds, have limited hours of operation, etc.”

The reality is that every tanning bed being used outside of your salon is competition to you. If that salon “you don’t consider a competitor” is so unworthy, why do they have clients? Why don’t you have them all? What are they doing right to retain customers who could just as easily be tanning at your salon? And what are you doing wrong that you haven’t brought these customers over to your (superior) location? Never just dismiss another salon—including a multi-use spot like a gym, hair salon or video store. Face it—they are your competition.

2. “I’ll just pay cash for my build-out and equipment.”

It is rare that I see a newly opening salon that doesn’t cost more than expected, open later than expected, ramp up slower than expected (e.g. fewer customers, less revenue) or churn through more cash than expected. All I can say is: Save your cash and watch your expenses. So many new owners opening a salon start out spending money like it’s nothing—they get the rug service, they over-staff, they advertise without evaluating whether the ads are effective, etc. Then, six to 18 months in, they find themselves in serious financial trouble and have no place to turn for more cash.

Realize before you buy a salon that most new businesses fail in the first two years—in any industry. Be sure you are financially stable enough to “feed” your business for at least two years and still have enough cash to live on. If you don’t have to use those money reserves, great, but it’s better to have extra cash lying around than to lose everything because you weren’t prepared.

Leasing and loans are strong alternatives to cash purchases and should be considered by any business owner. However, do not use leases and loans to get in over your head or to finance a bad idea! Use them as an opportunity to build a business on someone else’s dime and leave your cash available for unexpected expenses.

3. “My customers are different. They like their 20-minute nap, they won’t upgrade, they won’t pay that much, they prefer minutes over sessions.”

If that’s true, you need different customers! You are in business to make a profit, not to be a missionary that saves the world from pale skin. Having too many 20-minute beds (or your version of Level 1), not being able to sell customers on upgrade equipment, under-pricing and/or selling minutes are all recipes for a non-profitable salon—you’re basically driving yourself out of business. Tanning is a very competitive marketplace and you have to be at the top of your game as a business owner to thrive. This goes far beyond running a clean salon or being friendly—it comes down to monitoring your costs and revenues as well as what works and what doesn’t in your area. Ultimately, you must understand that your salon is: first, a business; second, a retail-sales operation; and last, a tanning salon. Therefore, you need to focus on business and sales before tanning.

4. “I don’t expect to get rich doing this. I just want something for me/my wife/our daughter to do.”

If you go in planning for mediocrity, you will end up with even less. Honestly, if you don’t think that owning a salon is going to pay for your time, your effort, your money invested and then some, don’t do it. Retail is a 365-day-a-year (or close to that) commitment. From irate customers, dishonest/unreliable employees and slow season to cleaning, advertising, paperwork and bill-paying—it’s all on you. You should expect to put in a minimum of two years of hard work to get your salon up and running. And, as a newcomer, you will make many mistakes before you get it all running smoothly. It is not just “something to do.”

5. “Customers here won’t do electronic funds transfers (EFTs) because they don’t want to give out their credit-card information.”

If that is what is preventing your customers from enrolling, you are not properly presenting the opportunity to them. EFTs are part of a pricing strategy—you offer a lower-cost alternative to customers in exchange for them offering greater loyalty to your business. In essence, you agree to give them regular tanning at a discount; they agree to stick with your salon instead of switching to a location offering a special during a particular month.

EFTs are particularly helpful these days, because of the tough economy (customers pay less but still enjoy the same level of tanning and a few other perks such as lotion discounts) and the increased focus on vitamin D deficiency (customers can consistently attain full-body UV exposure—this is especially helpful to those who are unable to receive the exposure outdoors because of weather). However, bear in mind that EFTs will not work if:

• You have no upgrade equipment. Ideally, you sell the base-level bed as an EFT, and then upgrade customers when they come to tan.
• You or your staff can’t sell upgrades, lotion or other retail items. If you are just an order-taker, you won’t maximize the benefits of an EFT program.
• You have a very small salon. If you cannot handle volume and depend more on low traffic at higher, boutique-style pricing, an EFT program might not be realistic.

Barring those three things, most salons can increase their bottom line by offering an EFT program. Just remember: To really sell EFTs, you must convey a sense of stability and trust to your customers.

6. “My employees wouldn’t tan anyone for free, take money intended for the salon, use the Internet for non-work reasons, forget to show up for work, open late or leave early.”

That mindset leaves your business at risk. Ultimately, making sure your profits are maximized is more important than being friends with staff. Regardless of how much you trust your workers, the potential for abuse exists; fortunately, the technology to protect your business also exists—so, use it!

Knowing how to use your software goes beyond learning the basic program. You also should familiarize yourself with the special features, including security controls that allow you to set who can access different items—such as refunds, inventory and free tans. Lock down your Internet access (in fact, don’t even bother having access if you don’t need it for your POS software). There is no reason to put your salon database at risk for a virus. Finally, consider investing in a security camera. You can use it to monitor staff behavior, help prevent theft (or catch thieves in the act) and for general salon security.

Ann Wiggins Noe is a salon owner and vice president of sales for the tanning division of Boulder, Colo.-based Highline Capital Corp. She can be reached at (877) 422-4100 or anoe@highlinecapital.com.