We all know the beauty industry was rocked by the pandemic. Shutdowns, uncertainty – it wasn't pretty. But hey, those government loans (PPP, EIDL) were a lifesaver, right?  

Kind of.

Sure, they kept many businesses afloat. 

But here's the thing: that extra cash might have masked some deeper issues.

Think of it like a financial Band-Aid. It stopped the bleeding, but there's still healing to be done.

Read on as we unpack the impact of COVID-19 on the beauty industry, how it’s still affecting businesses today, and what you as a business owner can do to move forward.

Remember those government loans? Let's talk about what happened next...

Paycheck Protection Program (PPP) 

Those government grants (PPP) were a lifesaver during the shutdowns. They kept many salons and spas from going under. Maybe you even felt like you didn't need the second round, but hey, free money! 

The result? 

A lot of salons ended up with some extra cash sitting around. Some used it to pay off debts, spruce up the place, or just build a bigger safety net.  

EIDL loans: Another helping hand (with a little catch)

The EIDL loans were another government program that helped a lot of salons/spas stay afloat. Low-interest rates and easy repayment sounded pretty good at the time, right? Especially if your business was hurting. 

But here's the thing…

That money came with a price tag. Some owners were able to pay those loans off early, but others are still dealing with those monthly payments. Kind of a lingering reminder of those tough times.

So, the loans helped... but then things got REAL!

Staffing went from bad to worse: Remember the struggle to find good help before?  Yeah, well, buckle up! A lot of stylists and therapists decided to strike out on their own, renting booths or going solo. This left even fewer people looking for traditional service-provider jobs. Finding talented staff suddenly felt impossible!

Clients got pinched too: On top of the staffing headaches, the whole economy went a little haywire. Rising prices and those Fed interest rate hikes meant clients had less money to spend on self-care. So, they started stretching out those appointments, hurting your bottom line.

The money bandaid hid some deeper issues: All those government loans (PPP, EIDL, ERC) were a lifesaver, for sure. But, they covered up some existing problems.  Salons/spas relied on them so much, they didn't have to take a hard look at how things were really running. Commission-based pay, for example, became a bigger issue when operational costs went up.  Prices had to increase, but that meant service providers took home less money!

Okay, so how do we move forward?

Here's the deal: to truly thrive, salons/spas need to be sustainable in the long run. That means ditching some old habits and embracing new strategies. 

Here are a few to get you started:

• Ditch the checkbook shuffle:  Stop flying blind with your finances! Too many owners think they can manage cash by monitoring bank account balances. If you’re one of the many owners who frequently check bank account balances, it’s an accident waiting to happen. Why? Because bank account balances don’t reflect checks/payments that haven’t occurred … or upcoming expenses that need to be paid such as payroll and rent. Creating and living a 12-month cash-flow plan is a non-negotiable in business today.

• Pay your team what they're worth (and keep your budget happy): Payroll in a service business is, and always will be, the elephant in the room. It must be controlled. The overreliance on commission pay methods makes payroll hard, if not impossible, to control. The simple act of implementing a price increase reveals the inherent flaw of commission because service providers get raises automatically leaving only a portion of the price increase to cover increases in operating expenses. The solution is implementing Strategies’ Team-Based Pay Business Model.

• Get smart about scheduling: When commission service providers come and go as they please, they’re essentially “employees” working as independent contractors. Salons and spas sell time. It’s impossible to plan and manage productivity and cash flow when hours available for sale are at the whim of when service providers decide to work. We'll help you develop scheduling strategies that maximize productivity and keep your cash flowing.
• Build a loyal following that loves your COMPANY:  The explosion of booth rental and suites is the direct by-product of the industry’s obsession with building individuals and “their” clientele. If you’re tired of seeing chunks of your business follow service providers, it’s time to start building client loyalty to your company and brand. Strategies’ Team-Based Business Model is 100% about growing companies … paying people well, and building dynamic cultures.

The pandemic was a tough time, but it also showed the beauty industry needs to change.  We need to adapt, get creative, and focus on building businesses that can last. By facing these challenges head-on and being willing to embrace change, salons and spas can come out of this even stronger and more resilient than ever before!

Need help pulling your salon/spa out of the COVID hangover? We’ve got you covered. 

Book some time to talk to us and we’ll provide you a game plan to move your business forward.

Schedule a Call Today

Check out our related resources below: 

• Watch the podcast episode: The Beauty Industry's Wake-up Call: Powering Growth in Your Beauty Business Post-Pandemic
• Six Ways to Control & Increase Salon/Spa Cash Flow
• Team-Based Pay: What It Is — Why It Works
• What's the Best Commission Rate for Salons/Spas?