“Every decision you make should be a financial decision.” That sentence, to me, is a motto. It’s a way of thinking, and it helps me revisit what works and what doesn’t without any emotional attachment. Most importantly, though, it allows me to stay within budget.
As you may already know, I’ve started hosting a series of webinars in collaboration with Phorest Academy. We’ve called the journey the Salon Manager Development Series, and in the first webinar of the six (‘How To Manage Your Staff’), I explained how important it is to go back to basics. Of course, this time of the year is hectic for salons and spas, but thinking of your 2018 business strategy can become motivating, helping you to put some structure in your head and your business.
5 Key Focus Points To Help You Make Clearer Decisions
Work Out Your £/€/$ Per Rooms/Chairs
Take your turnover for 2016; for this exercise, we will look at £/€/$250,000. Divide this figure by 52 weeks. That’s £/€/$4,807 per week.
Now divide that by the number of rooms/chairs you make money from. In this instance, let’s say we have 5 hair chairs, which gives us this: £/€/$4,807/5 = £/€/$962 per chair per week.
Why did I get you to do this exercise, you may ask? Analysing this figure allows you to understand what your strategy should be for 2018:
- Is it crucial to keep the 5 chairs?
- Can you introduce another expert service?
- Are your staff productive enough?
- Should you employ someone just for the busy times to generate more money?
- Does the revenue reflect the customer demand?
Of course, without analysing your business in greater details it’s difficult to answer, but that’s what a financial decision allows you to do: start somewhere.
Productivity Of Each Team Members
Evaluating productivity is crucial for effective management of the team because you will need to create a plan of action for the underperformers. How a team performs also allows you to review your objectives for the coming year.
If everyone is performing well and you still feel like you’re ‘underperforming’ on busy days, then perhaps it’s a matter of recruitment. Could you add another team member for important days or hours?
To Make A Good Financial Decision, You Must Know Your Costs Inside Out
What are your yearly costs? Ask your accountant to work them out for you on a weekly basis. This will allow you to know the minimum revenue figure you need to achieve to survive (and thrive). It’s also essential that you review your spending and look at your suppliers. In short, get to know your numbers better and make yourself a plan of action.
It’s the basics of going back to basic.
Is your rota is efficient? Are you looking at your hourly rate to understand what you are generating from morning to evening? Reviewing your rota’s efficiency is crucial: don’t assume. Get your figures and ensure your decision is precise. Doing this will guarantee you’re staffed in your business’ key times.
Emotional Decisions Are A Thing Of The Past
Any business decision you make must be a financial one, not an emotional one. It might sound funny, but I used to say to my team: “Give me the black & white paper evidence.” It’s important to be able to take a step back and generate a clear plan of action for 2018. Being emotional will hurt your business in the long run. A financial decision won’t.
Typical Mistakes In The Salon/Spa:
- Expensive machines that are bought because we think they are going to save the salon. It’s important to ask yourself: Can I afford it? How much will it bring me? Is it worth the investment? What is my marketing plan? How do I train my staff? There’s no point in buying something that will sit there and generate no money in a couple of years.
- Over-budgeting on staff because we think need it, but when you look at the figures, the revenue doesn’t actually cover the cost.
- Wrong opening hours led by staff dictating the hours rather than the business leading them.
For 2018, make a pledge to yourself that your business is an asset that needs business decisions backed up by hard financial facts.
Thanks for reading!
Valerie Delforge is a Business Strategist, Commercial Trainer and Coach for the Spa, Beauty and Hair industry. Valerie specialises in creating specific workshops to support managers. Founder of Delforge + Co, she is keen to support the industry in achieving its best. For support with your 2018 Business Strategy, visit Delforge + Co. or contact firstname.lastname@example.org. Also, Delforge + Co is proud to announce the modules available in The London School of Beauty & Make-Up, which you can sign up for here!