How to Deal with Decrease in Turnover in Brow Business? (Expert Suggestions)
Author: Holistic PMU Research Center, fact-checked and reviewed by an expert panel.
Contributor: Siiri Tabri
It’s time to be calm and smart…
Seasoned artists navigate economic ups and downs very differently than those just starting out in the business. Let's delve into their smart choices, as opposed to the common pitfalls that often trap new artists.
“Never underestimate your ability to make a challenging situation even worse, no matter how dire things may seem.”
Background
This article compiles insights from interviews with 27 top-earning PMU artists. These artists belong to an exclusive 3.5% of individuals who, after undergoing Powder Brows or microblading training, capture more than 80% of the local market share. Moreover, our selected experts have successfully grown their businesses for at least four years, with some even extending beyond that duration. Those artists were primarily located in the EU but also in the UK and the US. Regarding strategies for coping with fluctuation in turnover, there were surprising similarities when it comes to seasoned artists, regardless of their location.
This article aims to offer concrete guidance from these seasoned artists on managing fluctuating demand and possible downturns in business due to economic cycles. When it comes to approaches of different artists, we saw that the starkest differences were not even among the beginners and more seasoned artists, but most of all between the artists who had lived through an overall economic decline and those who had not.
Budget and Expensive Credit
First Step: Create a Detailed Budget
Many artists aren't fully aware of their actual expenses. A study among newcomers revealed that 86% had underestimated the cost of starting their business. They realized the actual expenses only a year after training. Managing costs might feel like a snake pit you'd rather avoid, but you can't.
Even established artists often lack a clear understanding of their ongoing expenses. Research shows that while artists rarely admit it, they often don't know their actual outlays.
So, the first concrete step is to create a detailed budget—essentially a comprehensive list of both business and personal expenses. Many seasoned artists emphasize the importance of tracking personal expenditures along with business-related ones. These categories often overlap, leading artists to underestimate their true costs. A faulty budget can be misleading and counterproductive. Make sure to include all actual expenditures, even if they seem unrelated. For instance, if you regularly spend on beauty treatments like hair, nails, or lashes, consider these as part of your overall business expenses.
Understanding the True Cost of Credit
Many experienced artists admit they were unaware of the actual interest rates they were paying on credit cards until they did the math. When dealing with irreversible obligations like loans, leases, and credit card balances, it's beneficial to make a detailed list outlining the true cost of the credit.
Surprisingly, many artists discover massive differences in interest rates, sometimes even tenfold. While you might be accustomed to making monthly payments without thinking about the underlying credit costs, it's crucial to know these figures broadly and precisely.
Prioritizing High-Cost Credit
Once you've "called all your chickens home," it's time for a thorough review. The first question should be, "Can I eliminate this expense?" Some items might be returnable or sellable with minimal loss, mainly if they come with high credit costs. If you can't get rid of such expenses, focus on paying off the highest-interest debts first, regardless of their emotional value to you. For instance, if you're paying exorbitant interest rates on a phone lease you don't want to sell, tackle that debt before reducing your home loan balance. As one savvy, seasoned artist shared, "I thought the interest rate was annual when I leased items. I was shocked to find out it was monthly."
Fixed Costs
"Fixed Cost is Your Worst Enemy," According to Many Seasoned Artists
When it comes to improving your overall financial well-being and the ability to weather fluctuating economic conditions or a decline in business, much depends on your fixed costs. The general consensus is that taking on these fixed costs is ten times easier than getting rid of them later. The second most important list you need to make should rank your month-to-month fixed costs from the highest to the lowest. While this might sound like a basic step, many artists don't do it. Once you have created this list, you should look at it open-mindedly. This means that you should not automatically consider any of these costs as permanently "fixed."
Always Consider That There Are Alternatives
Having this open-minded attitude has greatly benefited many artists. Those who have successfully reduced their fixed costs later admitted that what they first believed was "impossible to change" usually turned out to be a matter of facing uncomfortable or inconvenient circumstances.
For example, let's talk about studio rent. If you don't own the place where you work, the cost of rent is always open for negotiation and alternative options. When is the best time to find out about alternative market prices for studio rent? The answer is simple: make it a regular practice. When you begin with the mindset that there are always alternatives, you may find ways to eliminate some costs altogether.
Rational vs. Emotional Decision-Making: The Studio Location Example
When considering your studio and work location, it's essential to critically evaluate how much more money you generate because you conduct procedures in that location. Studies have shown that while a professional setting in the studio influences client attitudes, there's virtually no difference to the client regarding who owns the space or under what terms you're paying the owner (assuming you don't own the premises).
Many costs have a significant emotional component. For example, for many artists, giving up a fixed salon location feels like admitting failure. But it's crucial to focus on the actual financial factors at play. Studies indicate that clients are generally willing to drive approximately 1 hour and 15 minutes for a pigmentation procedure. And since most clients visit only a few times a year, a less costly location might be an intelligent option. In other words, changing your approach to having a fixed location could be seen not as "giving up" but as "making a smart financial decision."
Understanding Fixed Costs in Terms of Lost Time
Another way to think about fixed costs, particularly those that aren't 100% unavoidable, is to translate them into time. What does that mean? Simply put, you can calculate how many procedures you must perform each month to cover fixed costs like rent. If you also factor in Customer Acquisition Cost (CAC), you may be surprised to find that you spend a significant amount of your working month "working for the rent." In some cases, this can even exceed half of your work time.
Many artists fail to consider that the time and money spent on marketing to acquire those clients are also part of your fixed costs. These can also be translated into time spent "working for someone else's benefit."
Understanding the "Cost" of Later Customers
What many artists don't realize is that not all customers are created equal when it comes to acquisition costs. Studies show that each additional customer in a given month becomes more challenging and costly to acquire after a certain point. These "later customers" require more marketing reach and must often be moved more quickly down the sales funnel. What does this mean in simpler terms? You'll have to put in extra work to acquire these later customers, and that time comes from your profit.
Cold-Fact-Based Calculations for Comparing Alternatives
Therefore, performing a fact-based calculation is crucial to assess the impact of reducing or eliminating certain fixed costs. For many seasoned artists, the tipping point to actually cut costs came from a "moment of realization" when they saw the numbers on paper. Some even found that renting a table at a higher cost per procedure in a better location made sense. They didn't lose customers but reduced fixed costs and eliminated the end-of-month scramble to find "extra customers."
Not making matters worse
Steering Clear of Desperation Moves
For artists less experienced in navigating a business through economic cycles, revenue fluctuations often trigger a "desperation factor." What does this mean? The artist starts to think that something is lacking in their business input and believes that making an additional investment will solve the problem.
It is expected that feeling anxious often pushes artists to make hasty decisions that don't help but instead make their situation worse. You might think buying a more expensive PMU machine or taking another training course will change everything. It usually doesn't. It's not that the machine or training is bad; they don't change market demand enough to improve your financial situation.
Wrestling with the "Negative Delta"
Sometimes, these rushed decisions include continuing to invest in things that aren't necessary for sustaining your business. For instance, spending money on higher-than-average beauty treatments or buying designer clothes. These actions contribute to what's known as the "negative delta," the gap between your high expectations and reality. This usually only makes you feel more disheartened and can contribute to a cycle of desperate actions. Cut out these kinds of expenses; they rarely help attract new clients.
Avoid Adding New Fixed Costs
Be very cautious when adding any new fixed costs. Despite what some new artists believe, adding fixed costs usually doesn't save your business; it burdens it. Listen to those who've been in the business longer and be extremely critical when it comes to adding such costs.
Use Your Existing Assets
Instead of seeking new expenditures, look at what you already have. You may have skills from past trainings that you haven't utilized. You might have social media assets you haven't fully activated or even equipment for services you currently aren't offering. These untapped resources could make a considerable difference if you put them to use.
Don't Slash Your Marketing Budget
Contrary to your opinion, don't cut your variable marketing costs. Many artists find that costs for things like search engine marketing (SEM) or maintaining social media reach go down when other businesses cut their budgets. This creates an opportunity to reach a broader audience without increasing spending. Even if a smaller percentage of those people become customers, the overall impact on your income isn't as harsh as it could be.
Learning to Bargain Politely Yet Unapologetically
For many artists who haven't navigated through economic cycles or downturns, the idea of saying "no," bargaining, or refusing expenses can be emotionally taxing. Often, they would rather rationalize unnecessary costs than face the discomfort of negotiation. This is a critical error. When any offer is presented—be it figuratively or literally—you should not readily accept it. It's essential to hone your negotiation skills. Politely but firmly question the initial offer: "I'm considering multiple options; could you re-evaluate if this is the best price you can offer?" A simple query like this could save you thousands of dollars over the course of a year. You can also counter with your own price proposal. In most cases, you have nothing to lose by attempting to negotiate.
A telling example comes from one of the wealthiest, seasoned artists we know. She's confirmed to be a millionaire with no budget constraints. When she asked her husband, "Can you remember the last time we paid the asking price for anything without negotiating?" he couldn't recall a single instance.
Conclusions
To navigate economic cycles and fluctuations in revenue, top-earning seasoned artists recommend strategies that can be grouped into three main categories.
First, identify and eliminate the "most expensive money." This involves understanding the actual costs of your credit and working to reduce those that are exorbitantly high, such as unfavorable leases or credit card debt.
Second, critically assess the time it takes each month to cover your fixed costs. Understanding this can lead you to shed some of these costs, significantly impacting your business.
Third, avoid making your situation worse. Don't take on any new fixed costs, and be cautious about investments that may seem like game-changers but don't actually help your bottom line. Instead, audit what you already have and put it to use better. And remember, don't cut your marketing budget.