Fiscal fitness

With a new year comes a new set of challenges; we need to come together as an industry to push for growth and professionalism, writes Hellen Ward

We all know that January is the time of year when we traditionally take stock of our lives – physically and emotionally. We hit the gym, set good intentions, plan goals and aspirations and try to look forward to a more positive future.

But while we are all used to making resolutions regarding our mental and physical health, relationships or finances, do we ever carry out the same level of assessment on our businesses? With what may be coming for many salon owners, we may have to.

The Autumn Statement was brutal for our sector in many ways. As someone who runs a traditional hair and beauty business model and employs staff on PAYE, as well as offering in-salon apprenticeships to train and develop the next generation, the effect the Budget will have on our business from April onwards simply cannot be underestimated.

Most employees don’t really understand the implications of employers NI, and I can’t say I blame them. They only understand the figure at the bottom of the payslip, not the one at the top. And they don’t realise that the top figure now has a whopping 15% added that is paid by only one person – the company owner.

Every action has a consequence, so taxing a nation that is largely made up of small businesses means that ultimately the consumer or end user will suffer.

Somebody must pay. Just like somebody had to pay for the aftereffects of Covid and the culture it created in consumer and working behaviour.

Add to that the increase in National Minimum Wage (NMW), which will undoubtedly affect our sector’s already dwindling levels of apprentices, and we are facing another challenging, perfect storm.

Changes to employment rights (the bill is due to ‘go live’ by autumn 2025, by all accounts) and HR will no longer be something most small companies can manage in-house. I, for one, do not have the expertise when it comes to employment law to feel confident any more to do it myself. Outsourcing is another expense – circa £500 per month for the number of employees we have.

A fair rate

I hate to be Dame Doom, but we do need to face up to the fact that anyone operating a legitimate business on our great British high street who is working in our sector is taxed (by the Salon Employers Association estimation) at five times that of any other retailer.

It’s not as simple as just passing on these costs to our customers if half of our turnover that comes in has to go back out in labour costs. We would need to double what we need to raise just to stand still and no consumer has the appetite for that sort of price hike.

So what to do? It would not suit our company ethos to operate a salon full of self-employed contractors that could not be under our control, direction or supervision. We are a family (soon to be employee-owned) company who grow the next generation of our team through in-house nurturing and development. Acorns to saplings to oak trees.

"The EFFECT THE BUDGET will have on our business from April onwards simply CANNOT BE UNDERESTIMATED"

I would be loathe to become a glorified landlord full of people coming and going. I must add, I fully support freelancers or self-employed contractors, but only if they are doing things legitimately. However, running that sort of business model wouldn’t work for us.

A new age

We are still working out how we are going to manage raising the funds needed to stand still, because safeguarding our future is what matters to us. I’ll let you know when I have a solution, but I can tell you, hiking up the prices won’t be the answer.

It is vital that the Government hears the right messages from our industry and that they understand that labelling it “the beauty industry” without making a clear distinction between services and retail is misleading and extremely damaging to salons. Slicing the data and caveating the blue sky from the grey is essential if we are going to be listened to. Licensing is, in my opinion, a good option to ensure that people operating legitimate businesses (of whatever model) are protected. In beauty, this is often down to the local authorities, who recognise our standard industry qualifications. But there is no such thing in hair, which is why we have many illegitimate barber shops operating that are a front for illegal activities like moneylaundering and even people trafficking.

We’ve already seen this in nail bars too. Finding a way to create a register of trained professionals is not as difficult as it might at first appear so watch this space.

Our industry is one I love. I have loved it from the moment I started going into the salon where my mum worked after school. I loved the gossip, the chat, the warm, welcoming environment – the laughs, the giggles and the feel-good factor.

Surely we need to come together to save that, not only for the benefit of our great British high streets through the cyclical, regular turnover and footfall we generate, but also for the one-to-one customer relationships that we know are so valued by our loyal clients, both physically and emotionally.

Hellen Ward is managing director of Richard Ward Hair & Metrospa in London, vice president of The Hair & Beauty Charity and co-founder of Salon Employers Association (SEA).