Will the Summer Statement 2020 Benefit Your Hair Salon Business?
UK Chancellor Rishi Sunak outlined his Summer Statement on 8 July and salon consultant Ryan Fox reveals exclusively with HJ how the key points will benefit you and your hair salon business.
The UK Government’s focus was previously on growing the UK economy and maximising the opportunities presented by the UK leaving the European Union. However, the whole focus of the Summer Statement 2020 has turned to the impact the emergency financial measures for coronavirus will have on the country and what can be done to restart the UK economy.
Summer Statement 2020 Summary
Emergency measures such extra funds for the NHS, additional central and local government funding, business rates freezes, business grants, supporting the furlough scheme, help for self-employed workers, increases in benefits and various other measures all come at a cost which is predicted to be more than £300bn just for this financial year. This will have huge implications for us all as it will need to be paid for, probably partly by tax rises.
The UK economy is now predicted to shrink by between 9% and 14% this year which would be the biggest fall for 300 years and there are fears of the deepest recession on record. There is so much uncertainty that it’s difficult to predict, but it’s certain there are difficult times ahead for many industries.
It was recently announced that hair salons could be left £9,000 out of pocket due to coronavirus, so, with all the doom and gloom following coronavirus and lockdown, is there anything positive for you and your hair salon business as we enter the ‘new normal‘?
How will the Summer Statement 2020 benefit your hair salon business?
Reflection – The past three months have been a chance for reflection, but also a chance to make positive changes. Many salon owners have taken the opportunity to revamp their salon décor, do refits and think about making improvements to their service delivery. If you’ve made the right changes, you could come out stronger. It has been a good time to reflect on whether you have the right team and make changes where appropriate.
Prices – One of the changes you should have made is to put your prices up. If all you’ve done is add a PPE supplement this was the wrong thing to do. Building it into prices means you will gain a long-term benefit – not just a short-term fix.
Cheap loans – The Bounce Back Loan Scheme eventually came through for many salon owners. It is probably the cheapest loan you will ever get.
Survival of the fittest – Not all salons will survive, but for those that do there will be less competition and more good staff available, something that has been holding the whole industry back for many years.
The Furlough Scheme – This has been very helpful for salon owners who employ staff as they were able to furlough them and receive 80% of their wage costs back from the UK Government. This is now more flexible, so can help you bring the team back gradually if needed.
Job Retention Bonus – The UK Government have now announced the Job Retention Bonus which will be a welcome bit of extra help. If an employer brings someone back who was furloughed and continues to employ them between November and January, the government will award a £1,000 bonus for each worker. Employees must earn at least the lower earnings limit for national insurance (£520 per month) between November and January in order for employers to be eligible for the pay-out.
Kickstart Scheme – This could be a helpful scheme if you are looking to take on more staff in the salon. Under this scheme, employers will be able to subsidise the wages of people aged 16-24 that are claiming Universal Credit and at risk of long-term unemployment. Funding available for each six-month job placement will cover 100% of the national minimum wage for 25 hours a week and employers will be able to top this wage up. Under the scheme, which is opening for applications in August. The first jobs are expected to commence in the Autumn and run until December 2021, after which the scheme may be extended.
Apprentice Incentives – The UK Chancellor announced the UK Government would give companies £2,000 each to encourage employers to hire apprentices, and £1,500 if they hire apprentices over 25. This could be even more useful for salons looking to build their team up again from the bottom up.
The Stamp Duty Freeze – This freeze on house purchases may help any salon owners who are looking to move house in the very near future.
What are the negatives of the Summer Statement 2020 for your hair salon business?
Grants – Not every business was eligible for the UK Government grants that were mainly linked to premises. This was quite unfair on many.
Company Directors and some Self Employed – Many salon owners did not receive any financial help personally from the UK Government, so it’s been a challenge to keep going with their own finances. This also sent a message that many hard-working people have been left out again and the UK Government doesn’t care about them.
Further Debt – Many salons did not get a grant or any personal financial help from the UK Government and for those it helped, it wasn’t enough to survive so many have been forced to take out additional debt which they will be paying off over the coming years.
The Furlough Scheme – This will be phased out in October so salons will need to make sure they “cut their cloth accordingly” and have the right size team to make a profit.
VAT Cut – The temporary cut in VAT to 5% for six months only applies to food, accommodation and attractions. This could have been a good opportunity for the UK Government to look at cutting VAT for labour intensive service industries such as the hair and beauty sector which has long been called for, but alas no.
The Eat Out to Help Out scheme – The “Meal Deal” scheme only applies to restaurants so it’s no use to salons.
Summer Statement 2020: Ryan Fox’s overall conclusion
It’s a mixed bag in terms of how the Summer Statement 2020 will benefit your hair salon business and will depend on how the cards fell for you and how well you managed your business during lockdown. In the end there will be winners and losers and the hardest bit is yet to come for hair salons. Once the initial mad rush of clients is over, strong leadership and sound judgments will be the key to survival and success.
Ryan Fox is a Hair & Beauty Salon Consultant who offers practical help to salon owners. For more information go to www.umbrellaconsulting.co.uk