Inflation is inevitable so leverage your influence.

I spotted a LinkedIn status from our heroes at L’Oréal stating how they were going to use influencers and spend millions on internet advertising so they can sell more of their products to your customers. Essentially telling us, it’s not personal, it’s business. We are cutting you out of the loop and your presence in the supply chain of retail is over.

Inflation explained like you are 5.

So, Imagine my surprise when I log onto Facebook into the groups and I can see the growing discontentment to L’Oréal’s whopping 3.5% inflation busting price rise across all products. Remember we are all in this together. Product companies literally don’t delay in telling you their prices have gone up. This is a feature. Not a bug.

Pretty alarming that they are so brash with their intentions to go after your customers. They are telling you exactly what they are going to do. Many hairdressers do not seem to realise that they are the influencers as they have the clients who the big brands are going after. If it wasn’t for us hairdressers many brands would never have got the introduction to our clients in the first place. Influencer is not a new term for someone on the internet. Hair and Beauty professionals in fact anybody with a clientele is an influencer. Retail brands that don’t have us professionals, really don’t have much.

Let me explain. Inflation. It’s an illusion that’s bad for you and your business.

Product companies selling a physical item can merely reduce the amount of ingredients or use technology to make the process more energy efficient. Hence they are able to dodge the burden of inflation on their inventory. Which is great for them, it secures their growth models across time. I have zero problem with this approach. It’s just the consumer does not seem to understand inflation as being a tax that the 99% cannot get away from.

This inflationary economy we are currently in is devastating to those who work in a time based service economy. Our appointments are from 30 minutes to 60 minutes and no change in technology can shorten our appointments. We are human after all. Yet the government insist we should pay VAT on our time based services such as cutting hair and then we can never claim it back. Unlike the product companies who can claim back their materials and enforce the consumer to pay the VAT on the product. Product companies are unaffected by VAT they get everyone else to pay it.

The government like to tell us that inflation is good for the economy and that an inflation target of 2% is preferable. Now I don’t want to go into why this is a complete nonsense, but how they calculate these figures is a scam See here Consumer Price Index is a scam or visit the Mises Institute for a rabbit hole or two. The way the definition has changed in the last century is just part of the story but it does not end there. The chart below shows that the true measure of inflation should include everything we need, fuel, education, medicine, real estate. If the Government were to measure those things real inflation per annum would be up at around 15%-20% per year. And that would create some real problem headlines for whoever is in charge. Hence most the politicians collectively act dumb on this measurement.

Inflation is huge on the things you need and small on the things you don’t.

How can we mitigate inflation when we sell time? The answer is we cannot and we have to look at inflation as another form of TAX. Inflation is taxation without representation. This form of TAX the product companies can mitigate while the hair & beauty professional cannot. So what are you going to do about it? Go to the government with your begging bowl? Start a campaign moaning about how unfair this is and yet this has been the way for decades. Why are you only talking about this now?

We need to remind ourselves that the Government work for the people. We do not work for them. We have to establish the economic policy that works for all of us. Small businesses are the life blood of every strong town. What’s good for the individual is good for the collective.

Governments only ever increase taxes because they never decrease spending. Each government spends more than the previous government in an attempt to keep the people happy. Combine this with increasing inflation and you get a situation where over time those at the bottom suffer from this inflation the most simply because wages do not go up as fast as your expenses do. This is the same for most salons. Salons prices never go up enough to counter the inflation. Look at lockdown, Before the reopening my colleagues were confused with what to do with the extra PPE costs. Should I pass it on to my customer? They asked. Of course you should. Because if you don’t it means you are accepting a pay cut. Be like L’Oreal. Pass it on.

Our costs go up annually due to inflation and when you increase the price of services by a measly 3-5% they get swallowed up by inflationary increase of energy, products, sundries etc. Yet Wage increases are zero when measured against REAL inflation rate of 10%. In fact if you are not increasing your prices by 10-15% it means you will never get ahead of inflation. And your real life wages will decline until the day you decide to hang up your scissors.

Average Wage Comparison

Real wages in the industry are not competitive compared to wages in other sectors. I could get a job at Lidl tomorrow stacking shelves working 40 hours per week and earn in excess of £22,000 per annum. The Average wage of a hairdresser in England according to Hair & Barber council’s recent survey is around £20,000 pa a full £7,000 less than the average wage in the UK. Let’s not forget that hairdressers tend to work much longer hours than most other sectors are even allowed too. So the hourly rate is EVEN worse than this paragraph suggests.

There are many reasons for the decline in hairdresser wages over time. There is some truth in the fact that your clients that stay with you for years & years. When that tricky question of a price increase has to be announced to your loyal customers, many feel compelled not to increase your prices for fear of losing them. Some are even charging the same price they were when they first met them. Mental. Eventually you begin to resent them coming in. Increase your prices, if you lose that loyal customer, big deal. You have now created an opportunity to get a new client that will pay your current price. Which is a win. If they really valued you they will think nothing of paying the price increase. Win-Win.

Another solution is to use your influence like an asset. GoSalon is the first bit of salon software that is not a liabilty. It’s an asset. Let me explain. If you use it, it earns you money. If you don’t. It costs you nothing.

A car is a liability it costs you in petrol and insurance etc. Every month. It eats into your bank balance like a flesh eating virus. Yet if that same car was a taxi it would be an asset vomiting money on top of your bank balance.

Alternatively GoSalon is the medicine for your flesh eating inflationary bug.

Sign up today and leverage your influence. To be a wonderful performing asset.

I thoroughly recommend two books on this subject that will open your eyes to this issue.
The Price of Tomorrow: Why Deflation is the Key to an Abundant Future

The Bitcoin Standard The Decentralized Alternative to Central Banking

Gosalon GoSalon is a platform that enables you to sell via recommending whatever you want to your customers. We make it easy for you to earn money from your favourite products. It’s brand new & It’s free to join and is available by reserving your namespace here

About the author @aarondornhair
Aaron Dorn is a hairdresser with twenty years of experience. A background in finance and computers. He continues to cut hair and is a consultant for several companies within the hair and beauty industry.