Since April 1st 2016, employers throughout the UK, including salon owners, now have to comply with the new National Living Wage (NLW) legislation. In some parts of the country, up to one third of employees will get a pay rise, as workers over 25 that don’t currently receive NLW could receive almost £1,000 extra per year.

While this is great news for your employees, the pressure this could put on your salon is a cause for concern. Research from the Federation of Small Businesses (FSB) reveals that 38 percent of small employers expect the NLW to negatively impact their business, whilst just 6 per cent think it will have a positive outcome.

Along with pension auto-enrolment and the apprenticeship levy, the increased wage bill could add another burden to the UK’s already cash-strapped small businesses.

We have put together the following steps that salon owners should take to mitigate some of the more negative effects of the NLW:

1. Gauge the impact on your salon

While all salon and barber shop owners will have to comply with the NLW, businesses operating in particular locations, and of certain sizes, will bear more of the brunt of this new legislation. Micro firms like salons and barbershops (those fewer than 9 employees) are likely to be disproportionately affected. On a positive note however, analysts have predicted that the retail and leisure sectors will see an £8bn boost due to low-paid workers spending more. With this in mind, salons and barbershops affected by the wage increase could also be the ones set to gain from a boost in consumer spending – so hopefully more clients through the door and spending more.

2. Forecast for additional costs

With higher employment costs on the horizon, it’s now more important than ever for you to prepare forecasts. Good quality forecasts can provide clues to future income and expenditure, allowing you to invest with confidence and make the bold decisions you need to grow your salon. According to our own research, small UK firms that prepared forecasts in 2015 grew by a third more than those that didn’t.

3. Focus on productivity

As a seasoned salon owner, you know there are two ways to balance the books – save on expenses, or raise extra income. Many businesses are in a very difficult position when it comes to passing extra costs on to customers in competitive markets, so when wage bills have to rise, it's important to increase productivity. The answer here is innovation. Whether you’re innovating by offering new and valuable services to clients or making changes to your business model, a change in approach, geared towards productivity is needed.

As with most new legislation, the NLW will affect some businesses more than others. Our key piece of advice is to be prepared. Keep up to date with the implications for your salon or barber shop, undertake careful financial planning and ward off rash decisions.


  • Does the National Minimum Wage and National Living Wage confuse you? Members of the NHF can download the National Minimum Wage guide for free to help you on this area.
  • Request a quote from NHF Trade Members KPMG Small Business Accounting and find out how their accountants can help with the National Living Wage and any implications for the financial management of your salon.