According to new industry research a quarter of hairdressers are thinking of closing due to a combination of higher bills and fewer clients.
40% of salon owners said they were anxious about their future with 25% struggling to pay rising energy costs with 20% admitting that they have borrowed money from family and friends to help support their business.
The Local Data Company found that among all independent retailers last year hairdressers and beauty salons were the worst affected with a net 624 closing. The next worst affected, newsagents, saw a net reduction of 225.
The National Hair & Beauty Federation said that about a quarter (25%) of salons were making a loss, which is an increase of 6% from the Autumn. An additional two thirds of members said they would be raising their prices this spring amid uncertainty around the prospect of business survival.
In their latest membership research, 93% of hairdressers said that energy costs are their main concern with 77% of them paying more for energy than they were six months previously. Of these more than half saw their costs rising by 40% or more.
The NHBF is lobbying the government along with other industries to show how rising energy bills are specifically impacting the hair and beauty industry.
Chief executive Richard Lambert said: “One of the points we learned during the pandemic is that you can’t assume the government understands the sector.
“We need to work hard to educate them. We’re using the findings of our member surveys to give the government a real sense of how price increases are affecting the sector.”
Hair/Beauty business insolvencies since 2019*
*classed as Personal Service Activities
|Number of insolvencies
Since 2019 there have been 3,164 insolvencies in the sector with 38% of these occurring in the last year alone.
2022 also saw a 43% increase in the number of insolvencies in the sector from the previous year.
We’ve previously written about how thousands of small and medium sized UK businesses are paying more for energy because they signed up to fixed rate deals when the market was at or near its peak for pricing.
The latest corporate insolvency figures for March also show that an unprecedented number of companies are deciding to close rather than restructure which will certainly include a lot of hairdressers and beauty salon owners too.
Chris Horner, insolvency director with BusinessRescueExpert, said: “One of the oldest pieces of career wisdom used to be “people’s hair will always grow”.
“But even that hasn’t been enough for the thousands of hairdressers and beauty salon owners who have tried to save their businesses with an administration or a CVA.
“The latest figures from The Insolvency Service are showing that more directors than ever have decided that closing their business through a creditors voluntary liquidation (CVL) is the only viable way forward for them.
“It will see all their unsecured debts written off allowing them to start over with a clean slate but several will reflect on the unfairness of it all.
“They might be the best hairdresser or beautician in their town and it’s not their fault that energy prices are sky high, that inflation is still in double figures and that interest rates look set to rise even higher meaning that servicing existing debt will become more expensive and make obtaining credit even harder.
“Sometimes the most logical decision – to use a professional to oversee a liquidation process efficiently and effectively – is the hardest to take because of everything they have achieved in their career before this point.
“But the previous three years have been absolutely unprecedented for nearly every industry – even one as essential and universally needed as hairdressers. So the path forward might be to put feelings to one side, close the current business down then begin again with a clean slate and this experience in their pocket to help them create a stronger business next time around.”
We offer a free initial consultation to any director, business or salon owner who wants some friendly, professional advice about what options they have for their business.
They might have more choices than they may have thought but the sooner in a difficult situation they get advice, the more they generally have.
The later they leave it, the less likely it will be that they can rescue or restructure their company, meaning that closure and liquidation might be the only options left for them.
We guarantee an appointment for anybody who wants one – just get in touch here!