Salons and Hairdressers Closure and Rescue Options
Salons and hairdressers operate in a demanding industry where common financial challenges often cause issues for directors. From fluctuating customer demand, ever increasing operational costs, the need for a highly skilled workforce and a diverse means of bringing in revenue, it’s a demanding industry. If your salon or hairdressing business is struggling, understanding the available options is essential for navigating these difficulties effectively.
This guide offers tailored advice to help you address the financial pressures salons and hairdressers often encounter, providing the knowledge you need to make informed decisions about the future of your business.
Common financial challenges for salons and hairdressers
We can help advise on specific financial issues your salon or hairdressers may be facing, including but not limited to:
- High staffing expenses
Salons and hairdressers both depend on attracting and retaining skilled stylists, which requires a competitive salary, training, facilities, incentives and recruitment costs all of which can put pressure on company payroll. We understand the importance of ensuring that staff understand their redundancy pay entitlements and how a Transfer of Undertakings Protection of Employment rights (TUPE) would work during company restructuring. - Equipment maintenance and replacements
Industry equipment like hairdressers’ chairs, wash basins, and cosmetics require regular maintenance and replacement, and are a constant ongoing expense. Faulty or outdated equipment can lead to regular service interruptions. These are common cashflow problems that can lead to insolvency. We can help you assess whether your company is solvent and advise on the best procedures moving forward. - Marketing and customer retention
In a competitive marketplace, salons and hairdressers must be inventive and invest in marketing strategies, promotions or loyalty programs to both gain and retain customers. An inability to keep up in the marketplace, can undoubtedly lead to a loss of customers, negatively impacting your cash flow. We can help advise on the appropriate rescue options if your company is struggling. - Bounce Back Loans (BBL)
The Bounce Back Loan Scheme was a vital lifeline for salons and hairdressers during the COVID-19 pandemic. However, many are now facing difficulties with repayment alongside other financial pressures. We can guide you through your repayment options and explain how these loans are managed in different insolvency scenarios, helping you find the best solution for your business.
How we can help rescue your salon or hairdressers
Below are two formal insolvency procedures, which would allow your salon or hairdressers to continue trading whilst being protected from creditor action:
- Repay your company debts in a payment plan via a Company Voluntary Arrangement (CVA)
A CVA is a formal repayment plan between a company and its creditors that allows your company to repay its unsecured debts in instalments tailored to what it can afford monthly. When in place, all interest and charges are dropped and creditors in the arrangement cannot take further legal action. The procedure would allow your salon or hairdressers to continue trading and retaining all your company’s goodwill and reputation with customers. A CVA can last for up to five years, and once concluded, any remaining unsecured debt is written off.
More on Company Voluntary Arrangements - Restructure your company through Administration
Administration is an insolvency procedure for companies that are insolvent. Entering the procedure, your company will be in a temporary state of protection by a moratorium that halts creditor action, giving your company the breathing space to continue trading. We will act as administrator and our primary purpose is to rescue your company as a going concern, attempting to restructure and turn it into a leaner more profitable organisation. If rescuing the company isn’t a viable option we will also look at the most appropriate exit strategies from administration, whether that be a potential sale of the business, assets, the whole company, or transitioning to an alternative insolvency procedure.
More on administration
How we can help close and liquidate your salon or hairdressers
The liquidation of your salon or hairdressers would draw a line under its operations, dissolving the company and clearing its unsecured debts.
- Close your salon or hairdressers down via a Creditors Voluntary Liquidation (CVL)
A CVL is a formal insolvency procedure designed for insolvent companies. The process would see your salon or hairdressers cease trading operations and close down in an orderly and legally compliant manner. We will assess and realise the company’s assets to raise funds to pay creditors, while terminating outgoing payment agreements, such as loans and leases and once completed, the company’s unsecured debts and arrears will be written off. If eligible, employees and directors can apply for statutory entitlements such as redundancy and holiday pay. If the company cannot afford to pay staff entitlements, claims can be made through the Redundancy Payment Services.
More on Creditors Voluntary Liquidation - Close your salon or hairdressers down and start again via a Pre-pack Liquidation
A pre-pack liquidation is an informal term for a type of liquidation where one company agrees to the pre-purchase of the assets of an existing company, which is then liquidated. This procedure would enable your salon or hairdressers to continue trading in a new limited company, without any historical unsecured debt, causing minimal disruption to the business’s brand, customer base and operational activity. The new limited company can also retain key assets such as leases, equipment, as well as the potential transfer of employees under TUPE regulations. In some cases, you may reuse your company’s trading name, but this can be complex. We can advise you on these processes and how it works.
More on Pre-pack Liquidation
Commercial finance for salons or hairdressers
If your company has an otherwise healthy cash flow, but a large, upcoming payment risks pushing you into a negative position, commercial finance could be a viable solution. There is a range of finance options that can potentially help cover a one-off expense or a gap in the company’s incoming payments. Speak to us for a more detailed breakdown of which commercial finance options would best fit your company.
More on commercial financeHow to get in touch with us: The next steps
If your salon or hairdressing business is experiencing financial challenges, understanding the various recovery and closure options is essential. Our initial advisers will guide you through the available solutions, providing a detailed explanation of your choices. Our experienced consultants will then work to tailor these options to suit your business’s unique circumstances.
- Speak with our initial advisers
Contact our team via phone, filling out our form, or online chat. We will assess your circumstances and, if suitable, arrange a free consultation with a consultant to discuss your company’s situation. - Initial assessment
During the consultation, we will advise on the available solutions and which we feel is the most appropriate route forward or whether alternative solutions better suit your company’s problems. - Formally engage with Wilson Field
If there is an appropriate solution, we will confirm the necessary steps to start the procedure and will issue you with the relevant documentation for you to formally engage us.
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