Get in the habit of reviewing your numbers
Financial statements tell us so much about our businesses. We learn about trends in our numbers, see snapshots of activity, a story of where we’ve been, and a look into the future. Timely and accurate financials are vital to sustainability.
The pandemic gave us another reason to deeply understand our numbers and have financials at our fingertips: awareness helps to make uncertain times feel more controlled and planned out.
Here, the experts at World Class Financial Services set your challenge for today.
Your challenge: Take charge and do a monthly review of the following numbers and more. Benchmarks within financials are key to understanding where you are at and how you are trending month-on-month.
Profit and Loss
- Back bar as a percentage of service sales: Take your total back bar for the month and divide by service sales. If you’re a Phorest user, you can find these numbers in the “Sales By Category” report.
Ex. $5,000 in back bar expense with $75,000 in service sales = $5,000/$75,000 = 6.67%
Overall, back bar + station + tech should be in the 8% to 12% range. Your number may be higher or lower depending on your services or product range price points (value vs premium).
- Supplies as a percentage of total sales: Salon/spa and office supplies can get away from us each month if not properly tracked and budgeted. COVID-19 impacted this expense category perhaps forever. We invest quite a bit of money in PPE supplies these days. What is your percentage of supplies to total sales? Take your total supplies and divide by total sales. If you’re a Phorest user, you can find these numbers in the “Sales By Category” report.
Ex. Salon/Spa Supplies = $750, PPE = $250 and Office Supplies = $250 = total of $1,250. Total sales (service and retail) = $100,000.
$1,250 Supplies/$100,000 Total Sales = 1.25%.
- Profit percentage: What is your profitability goal? Do you know what your current profit percentage is? Take your bottom line profit and divide by total sales.
Ex. $10,000 net profit/$100,000 total sales = 10%.
- Inventory: What is your current value of inventory in Phorest? Does this number match your inventory asset on your balance sheet? If you’re a Phorest user, you can find these numbers in the “Value of Inventory” report.
Gift Certificates: Gift card sales and redemptions increase and decrease a liability on your balance sheet, updating your outstanding gift card balance each month. What is your total outstanding gift card balance? Does this total match your gift card liability on your balance sheet? If you’re a Phorest user, you can find these numbers in the “Gift Cards Outstanding” report.