We're unlikely to see much, if any, economic growth in the UK and Europe during 2024 so you need to make sure your business is able to do more than just survive in the current economy. However, it is all about consumer confidence and if interest rates do come down earlier than expected this will provide a welcome boost.
During 2023 we saw a real move from employed status to self-employed status for those working in salons. Although this is likely to contiue we believe it will do so at a slower rate as Government catch up with the disparity in tax rates for self-employed vs employed models, and importantly, more enforcement action is taken to shut down those who use it for tax avoidance purposes. There are loads of examples coming from the Courts where self-employed workers are being classed as having been employed and all of the tax implications that this brings.
Consumers are likely to contiue to prioritise value so you need to make sure that every interaction is well spent. If a customer feels short changed around any element of their service they will lose trust and you're much less likely to retain them. Decisions aren't only made around value for money though, as convenience and accessibility are also really important. Focus on what makes you different and better!
We are also seeing a real focus on sustainability and eco-credentials (this started before Covid but like so much was paused) from large numbers of consumers. If this is important to your customers make sure you are telling them all about your successes, whether small or large, as well as your plans for the future.
We will see a general election in the UK during the year which may well lead to a change of Government. However, before then we have a budget on 6th March at which we are likely to see tax cuts and policy changes. The impact of this is unknown but could lead to a boost in consumer confidence. In the run up to an election working with organisations like the Hairdressing Council has never been more important, as they are able to lobby for change on your behalf.
Amid the uncertainty of a potential new government in 2024 and funding challenges, business owners need to strike a delicate balance between short-term financial goals and long-term strategic planning.
Having an up-to-date business plan is key – while this may sound like common sense, we all too often see businesses leave it too late to rethink their strategy when faced with changes in their market. This is important both to protect yourself, but also to make sure you aren’t missing opportunities as they arise.
If you have a clear plan, both short and long-term decisions become much easier. It’s possible then to make decisions based on whether they truly align to your aims, and you’ll be less likely to get distracted by any unexpected opportunities that crop up, but which aren’t really in your long-term interests.
People are central to the success of almost every business but managing them isn’t always smooth sailing. In 2023 we saw the war for talent continue, but we believe this will start to tail off throughout 2024. More focus will be put on retaining and engaging employees, as they become more aware of their rights than ever before and continue to request more flexibility with a focus on health and wellbeing.
Sickness absence levels reached a 10-year high in 2023 and we don’t see there being a drastic change in 2024, if anything we expect the situation to continue to worsen. Sickness absence can cause many businesses a headache – from the obvious issue of being short staffed and concerns over quality, not to mention the cost of absence, and is likely to remain a key challenge throughout 2024.
Stress was said to be one of the biggest causes of workplace sickness in 2023 and salon owners will need to work closely with their teams and managers to improve wellbeing, working to reduce stress levels across the board. Whilst stress at work is sometimes unavoidable, continued periods of high stress and an increase in sick days is not only a health issue but a business performance challenge.
Wellbeing initiatives are a critical aspect of employee retention and is something that will become more and more important in every workplace. It’s a good time for salon owners to prioritise and take an active role in supporting your team’s mental and physical wellbeing. A happier and healthier team is often a more productive one.
Inflation is likely to remain a key challenge for businesses throughout 2024. Whilst the International Monetary Fund believe global inflation is expected to fall to 4.3% in 2024, this is still well above the Bank of England's target.
Whilst the slight fall is a positive prospect for businesses, the beginning of 2024 will likely be a time to manage the backlash of the cost-of-living squeeze and inflation hikes.
Revisit your pricing strategy: The rising cost of goods and services has made companies reassess their pricing strategies. Businesses should be prepared to have open and honest discussions with clients about necessary price increases. Communicating these changes transparently is vital to maintaining trust and long-term relationships.
Manage cash-flow effectively: Managing cash-flow effectively is essential for the success and sustainability of any business, especially in times with soaring inflation and interest rates.
Maintain forecasts: Maintaining detailed cash flow forecasts is paramount. Business owners should project future inflows and outflows, considering factors such as sales cycles, payment terms, seasonality and external factors including inflation and interest rates. Regularly reviewing and updating this forecast allows for proactive decision making and early identification of potential pinch points and issues.
Businesses feeling the economic squeeze may find themselves with no other choice but to restructure or reduce headcount. Sometimes, making redundancies is the best business decision but owners must approach this delicate issue with sensitivity, ensuring the process is carried out fairly and in a way that minimises the negative impact on those who are leaving and the morale of those who remain.
If you do find yourself needing to make redundancies, ensure you follow the legal redundancy process meticulously, preventing discrimination and potential complaints. Be transparent with your team, share your business plans, and provide support to alleviate their worries.
If you are a Good Salon Guide member, you can call us anytime for help with redundancies!
In times of economic uncertainty and high inflation, it’s likely that your customers will also be feeling the pinch and re-evaluating their spending habits. To stay profitable and maintain customer loyalty, businesses should re-evaluate how they look after their clients and what else they can to do make their offering more attractive without spending.
For some, it may be inevitable that you need to increase your prices, but it’s essential to justify these increases with added value. Providing exceptional customer service, personalised solutions, and products that align with customer needs can help justify higher prices.
