financials 1

Are you planning for profit?

27 Jul 2015 by Brenda Perham

When you own or work in the hair and beauty industry it’s easy to let your feelings and emotions run your business rather than your numbers. But at the end of the day you own a business and a business needs to make a profit to survive, grow and of course give you a return on your investment. Now is a good time of year to step away from the feelings about your business and look at the cold hard facts… how are you tracking so far in 2015?

As a salon business mentor I work one on one with salon owners to help them identify the strengths and weaknesses within their business and then to create a strategy to implement culture change and embed successful systems and habits. Of course every salon is different but there are some areas of weakness in business practice that weave a common thread through the salon industry.

If you’re up for some self analysis then here are 4 key areas you may want to give your business a “health check” in:

  1. How much does it cost to open your doors each week? If you don’t know this then ask your accountant! You can then take this number and work out how much it costs to run your salon each hour. How does this align with your pricing structure?
  2. What is your wage percentage? Generally the two big overheads in a hair salon are your stock and your wages. Ideally your wage percentage should be around 30 – 35 % of your turnover. If this is out of whack then you either have a problem with your pricing or your productivity or both.
  3. Pricing correctly is vital. Your pricing structure should allow for extra time and product usage. You can’t take a one size fits all approach to pricing – extra grams of colour and extra application time costs must be passed on to the client. Also watch the time allocation – if you have stylists stretching booking times you run the risk of losing profit on those appointments.
  4. Keep your stock control under control! Set up your stock on Kitomba and run the stock reports monthly to keep an eye on your stock turn and usage. Set yourself a monthly budget and stick to it. Create your orders on Kitomba so you know how much you have spent month to date. No surprises or stress when the supplier bill arrives!

Once you have all this sorted you need to cement your smart business practices into your salon culture. A policy & procedure manual is vital to communicate your processes and expectations with your team. It should be a living document, accessible to all staff and intertwined with your everyday actions – not a dusty book lost somewhere in the back room.

Now is the time to take action, the busiest months of the year are heading our way and your business needs to be “fighting fit” so you can maximize all the opportunities and clients that will be coming your way!

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