£540 per day break even, London beauty salon

dh141437

New Member
#1
Hi all ,

as part of my business plan it seems like my monthly break even will be around £550 per day .

My salon will be offering

Laser hair removal
Laser Facials
Massages
and other non surgical beauty treatments

From the experience of the people here at Salon Geek how much will the average customer spend In The salon ?

How many clients a day will be needed on average to generate £550 for break even ?

The salon will be based in London .

Any ideas you share will be greatly appreciated .
 

BannerPenguin

Well-Known Member
#2
£550 per day?! Admittedly I don't run a salon but that seems a crazy high amount and totally unsustainable.

Are you sure that's right?

I've only done real rough sums and done £550 x 365 (which I know you don't work every day) is £200,750 per year.
 

TheDuchess

Well-Known Member
#3
It typically takes 6-18 months to achieve traction in the marketplace. During that period you will need enough resources to keep your doors open.

Assuming 5 days a week I'm guessing you're looking at a spend of £11k a month. There aren't many Beauty businesses taking this in income, never mind costs. I'm not aware of any members posting here with incomes around £40k a month which is what you'll need to acheive. I'd work backwards - how many clients can you service based on 60% room capacity and calculate minimum average spend targets. When you first open you might be looking at 40% capacity or less so calculate your cashflow on that.

With your treatment menu you need to think like a restaurant wine list. On a wine list the second cheapest wine has the greatest profit margin because it's the most popular. I find most of my facial clients go for the mid priced treatments. It doesn't seem to matter what the actual cost is. I make more money from these than my most expensive treatments. I sell more products to my more expensive facial clients, so their facials are excellent value for just a little bit more money than my mid priced treatments.

You're looking to invest around 500k overall. I suggest you don't pin your business plan to advice from random strangers on the Internet - this hardly counts as research I'm afraid. Instead visit business with the turnover you're looking to achieve, have a treatment and ask the therapists a few questions. As a lot of businesses fail within the first 3 years I'd research companies that have been trading for at least 3-5 years.

There are quite a few beauty and business awards which will give you a shortlist of suitable businesses.
 

dh141437

New Member
#4
Thanks for the replies ,

@BannerPenguin The costs associated with opening a salon in London can easily reach 15k per month see below:

High street shop Rent: £2,000
Rates: £1000
Salary x 3 : £6000
Equipment lease: £2000
Marketing, insurance, utilities, and everything else :£4,000

@TheDuchess thanks for the reply there is no doubt that before Opening a business full market research will be done to get real facts.

If break even is £15,000 then surely £25,000 monthly revenue (£800 per day) will be a good target to achieve ?
 

BannerPenguin

Well-Known Member
#5
I'm from Essex so I know London is hellishly expensive.

Hypothetically, again super rough, say each day you have 3x staff (presuming all therapists) working 7.5hrs paid on an 8hr day means you have 22.5hrs to monetize your target of £800/day revenue. It means if there was 100% efficiency (which obviously never really happens) and everyone was booked back to back the average treatment cost would need to be £35.55.

Starting out you could be only looking at 10-20% uptake rate.

Obviously, I have no idea what your personal finances are like but to keep you going for a couple of years you want £300-500k laying around as Duchess said.

For me, it's too rich for my blood. Turning £25k/mo regularly is a major feat. Many other businesses I'd run that are more profitable at these kinds of figures.
 

dh141437

New Member
#6
Thanks for the replies ,

@BannerPenguin The costs associated with opening a salon in London can easily reach 15k per month see below:

High street shop Rent: £2,000
Rates: £1000
Salary x 3 : £6000
Equipment lease: £2000
Marketing, insurance, utilities, and everything else :£4,000

@TheDuchess thanks for the reply there is no doubt that before Opening a business full market research will be done to get real facts.

If break even is £15,000 then surely £25,000 monthly revenue (£800 per day) will be a good target to achieve ?
I'm from Essex so I know London is hellishly expensive.

Hypothetically, again super rough, say each day you have 3x staff (presuming all therapists) working 7.5hrs paid on an 8hr day means you have 22.5hrs to monetize your target of £800/day revenue. It means if there was 100% efficiency (which obviously never really happens) and everyone was booked back to back the average treatment cost would need to be £35.55.

Starting out you could be only looking at 10-20% uptake rate.

Obviously, I have no idea what your personal finances are like but to keep you going for a couple of years you want £300-500k laying around as Duchess said.

For me, it's too rich for my blood. Turning £25k/mo regularly is a major feat. Many other businesses I'd run that are more profitable at these kinds of figures.
Hi Banner Penguin ,

Thanks for your input
 

salonfrog

Active Member
#7
If you want to PM me your business plan, I’m very happy to give it a second set of eyes. We have Clients in London (we’re their accountant) so I can see how it compares.
 

TheDuchess

Well-Known Member
#8
Ok so if your overhead is £15,000, assuming 20 working days a month, you need to take a minimum turnover £750 a day.

Allowing for breaks, set up time and end of the day closure routines including hygiene and disinfection, you can't book each therapist for more than 6 hours of client treatments realistically. This gives you theoretically 18 hours of bookable treatment time, but don't forget to allow for statutory holiday for your therapists. For your business this will work out at around three hours a day (12.07% per hour) and of course that's bookable treatment time lost, so do your sums ion maximum 15 hours bookable treatment time a day.

£750 divided by 15 is £50 per hour.

Then you need to cross check that with the realistic revenue each therapist can generate. The industry usually works on 3/4 times salary. You've allowed £6000 for wages which gives you £18,000-24,000 therapist targeted revenue. £25,000 is probably unrealistic. Don't forget to deduct VAT. Of course you deduct VAT paid from VAT collected, but mostly you'll be paying over close to 20% of your revenue. So turnover £24,000 which is the maximum you can generate on your staffing ratios gives you gross income of £20,000 and realistically closer to £15,000 which is your break even - no profit for you.

It's very difficult to set up this kind of business successfully. Most grow organically from a hero entrepreneur therapist who drives the business with her passion and charisma. If that isn't you and all you are bringing to the businesses is managerial and business acumen then you can't add enough value to draw a reasonable ROI.
 

dh141437

New Member
#9
@TheDuchess thank you for your detailed reply .

My wife will be the face of the business she is a qualified beautician and has over 7 years of industry experience .

Her speciality is sales she has made over £1.5million in beauty/cosmetic sales within the last 7 years .

We are still at least one year away from opening a salon and we still have at least 8 months to make a final decision .

As you rightfully said the real research needs to come from within the clinics themselves .

What is your background ? You seem to be very knowledgable .

Thanks again ,
 

TheDuchess

Well-Known Member
#10
I'm a small salon owner. I opened 6 years ago and relocated into a secondary City Centre high street location after 3 years when my previous landlord sold my first premises to become a hotel. I found a good spot: between an upmarket cafe and a hairdresser, opposite a car park and Hilton Hotel and less than 100 yards from Waitrose.

My daughter worked for me for a couple of years - she retrained from being a stellar sales consultant in her previous employment - ranked no 1 in her company (no 2 achieved half her sales income). She's gone back to her previous employer after Mum management Boot Camp. She couldn't add as much vallue to my business as she'd hoped but she's now doing really well as a Sales Team manager. My husband works for me occasionally if he's "resting" between freelance contracts. Clients like speaking to a man on the phone we notice, he's great at upselling treatments.

Like many geeks I have a previous career. My background is business risk analysis. I used to be a management consultant - specialising in governance and entrepreneurship. I set up my Salon not planning to actually provide treatments myself but I trained so that I understood the therapist perspective better and discovered I'd missed my vocation.

I love what I do but I'd be much better off financially if I ran a clinic or Spa for someone else! I can't draw as much out of my business as I could earn for a corporate employer with a decent bonus scheme. I retail about 50% of my service income, my daughter did 30%, my next best therapist manages 10%. Overall retail is about 23% of our turnover.

When I opened, I imagined that I'd basically be a retail skincare shop, with "services ancillary to retail" downstairs in the basement. It's these beauty services which have saved my financial bacon. I still have unsold sales stock from when I opened - we do a little dance every time we sell a candle.

I'm now looking for new premises paying less per square foot for a better treatment space and not bothering with high street frontage - we get our new enquiries from word of mouth and the Internet. We never seem to get quality walk ins. It's a good time to look as rents just off the centre have softened in real terms.
 
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dh141437

New Member
#11
@TheDuchess thank you for your valid input . Good luck with your endeavours
 

TheDuchess

Well-Known Member
#12
Thank you and keep us posted about yours. This is a great forum for sharing ideas and experiences. I learn a great deal from fellow geeks and I'm always happy to share with others. I'd love to hear about your journey as it unfolds.
 

dh141437

New Member
#13
@TheDuchess I will update through here but for now our timeline will be pretty quiet . My wife is finishing her NVQ 3&4 by January. Then she will be working in a clinic for at least 6 months.
 

#14
Impressive!

How much you earn all depends on how much you're spending on your equipment.

For me, this is the difference between breaking even and turning over £4000/month just on my hair removal treatments. That may seem a lot but that's before wages for my girls are deducted. I feel like all I ever do on here is recommend HPT lasers but really I'm such an advocate for them. My machine works perfectly and it's ridiculously affordable compared with the sopranos and ellipses. They worked prices out for my area and if I sell just one treatment a week I would be able to afford my finance payments. And it's not a LEASE, when my contract is up in a few years the machine is mine to keep.

I recommend you look them up, they'll do a demo at your salon anywhere in the country. Best of luck!
 
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