How to prepare your beauty business for the NZ wage increase
In February, Prime Minister Chris Hipkins announced the minimum wage would increase, coming into effect from 1 April, 2023. The adult minimum wage will be rising to $22.70 per hour – an increase of $1.50 per hour from the current hourly rate of $21.20.
While hair and beauty is a people business, and we support all efforts to attract and retain quality talent in the industry, we understand salary increases can pose a big challenge, particularly for small to medium-sized businesses.
Wage bills are one of the biggest costs of running a business. With inflation hitting its highest level in 33 years, it’s small business owners who will feel the greatest impact, believes New Zealand workplace relations specialists, Employsure.
“It’s easy for some to say the impact of a wage rise is inconsequential, but it is small and medium businesses who struggle to offset the costs, especially those who have been decimated by the events of the past three years,” said Laurence McLean, Employsure New Zealand Associate Director.
BusinessNZ spokesperson Catherine Beard agrees: “Since 2020, the minimum wage has gone up about 20%. Over quite a short period that’s not insignificant. What tends to happen is that it gets extrapolated through the business because you have to keep the wage relativity. With all the additional costs that businesses have had, with the supply chain, I think it does put the pressure on.”
Tips for preparing your business ahead of the wage increase
From wage increases to a recession, a proactive approach is paramount. Often, beauty businesses are prepared for changes that affect their specific industry but stumble when it comes to larger policy changes.
Review your revenue mix
Salons and clinics will need to really review and trim their costs wherever they can in tandem with looking at their revenue mix. If you don’t do e-commerce yet, now might be the time? Consider virtual skin consults, takeaway products, a new mix of services and offerings or memberships. Any and all potential revenue streams.
Take this opportunity to review your running costs, from equipment to wages and consumables, while considering their service prices. Carry out an expense audit to check whether there are any obvious savings to be made. Can you save on any bills by swapping providers (like internet, water, power etc.)? Other unnecessary expenses include electricity outside opening hours or while appliances are not in use.
Increasing prices is the most obvious option, and also the one many small business owners will resort to first. Unfortunately, if employers’ costs go up and they pass these onto the customers by raising prices, it means that despite the increase in wages, life will be like it was before wages went up. However, if raising prices is the only way your business can survive, you’ve got to do what you’ve got to do. Take some comfort in knowing that your competitors are in the same boat and will have to cut costs, reduce employees, or raise prices.
Offer a better service and experience
If you’re going to hike prices then show a willingness to offer higher value. While most customers will be understanding and empathetic of the price increases, many will expect a better level of service. Invest time in training and education – from ensuring team members can confidently explain and sell products to providing opportunities to upskill.
Tweak your treatments
It might be that certain treatments are more of a hindrance than a help when it comes to making a profit. Are you buying an expensive product that isn’t being used enough and is then expiring? Often, it’s better to cut back on unpopular treatments and specialise in the ones that are.