how much is your business giving you? Let’s face it... most of us opened up shop underfunded. Even with emptying our savings accounts or getting a second mortgage, it probably wasn’t enough, was it? Honestly, we didn’t even know how much it was going to take to get our business off the ground and finally supporting itself, so it could support us It all starts with the dream, doesn’t it? A “one-stop-beauty-shop” filled with dozens and dozens of salon spa professionals, a stunningly beautiful building, a great waiting area, perhaps a yoga studio or smoothie bar, dozens of chairs, people flowing in and out buying, buying, buying. Our spending (in general) is WAY out of alignment with our sales. Since we assumed our business would be profitable right away our focus was on making it the nicest place in town. This meant we spent a TON of money on buildout, and if not that then expensive equipment. The nicest, newest equipment, with the latest technology. We also have the largest inventory (we had 10 hair lines at one time... only to find it also being sold in Sam’s club!) and the best amenities. We dream big and ASSumed that would lead to a big payout. Once opened, life began and the bills (which seem to be never-ending) piled in... and they’re not small either. All these large purchases and expensive plans seem to add up to more money going out than is coming in. Our spending choices are now adding to our underfunding problems... The single largest expense any of us have is most likely compensation. Often we were stylists or therapists ourselves and we wanted to give what we always dreamed of getting, the best pay at the best place in town. Our generosity turns out to be our biggest liability. Often the cost of running a salon spa BEFORE anyone takes a penny home at all is about 65%, so that leaves 35% to be SPLIT between your professionals, support staff, management and yourself (that’s about 9% each). If a single group of these four were to get more than 9%, let’s say 50%... how would you ever make anything for yourself? The answer? You wouldn’t. It’s simple math. If your staff happen to be bringing clients to you, that’s another story. But if you are supplying all the clients, it’s impossible to compensate that way and see a penny for yourself. The inability to overcome this hurdle is what has lead to thousands of salon spas closing their doors over the last couple years. Don’t become the next one to do so, get help and fix your compensation now! UnProfitable Products Looking at the above lesson, it’s silly that most owners (the ones still around) can see that overpaying staff doesn’t work, but then make the same mistake and overpay for products. If you pay 50% for product, then 5% to ship it to you, 5% on processing charges, 10% commission PLUS it’s share of rent for the space it takes up plus staff pay to answer questions about it and ring it up... you’re left with practically nothing. Then what do you have to do with your “profit”? Buy more inventory. It’s ridiculous! Find a line like ours (Alexandra) that is highly exclusive, offers up to a TRIPLE markup (so more pay for you AND more comission for your staff at the same time), works wonders, is incredibly high quality and clients (as well as staff) LOVE the results... and you’re all set. Products (especially skincare) can be a hidden profit center that nearly every competitor of yours is overlooking. Most places even advertise for the product companies by highlighting their product instead of themselves in their ads! Instead of having a low-markup line that is a cash-flow problem and huge expense, find one that makes you instant profit and gives you another advantage over everyone else.
Posted on: Sat, 05 Oct 2013 10:41:59 +0000
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