It’s often said, we avoid certain areas of our businesses, to avoid potentially harsh realities. We tend to steer clear of these things out of fear of failure, ego, and rejection; and for those reasons, we somehow find some sort of comfort in the avoidance.
The things we fear the most about our businesses, are the very things that are holding us back, in achieving the success we’ve always dreamed of. And although you have goals for your business, in order to get where you want to be, you have to first know where you are.
Will this article bruise your ego? Maybe. Will it show you that your business is currently “less than perfect”? Probably. But, what it absolutely will do, is help you gain a new perspective on how to truly learn the ins-and-outs of your Salon & Spa, and show you that “not knowing” is never better than “knowing”, when it comes to your business. No business is ever perfect, but all we can try and do, is make our business the best version of “imperfect” as we can.
So, let’s get to it. These 5 questions will give you an idea of just how well you know (or don’t know) the inner-workings of your business. Don’t fret, if you don’t know any of the answers, we can help you with that… After all, that’s our business.
1. What is my Break-Even Point?
This one is pretty straight forward, however many salon & spa owners are also service providers first and foremost. The reality is, they became a salon & spa owner because of the passion they have for the industry, not the number crunching. If this is you, you’re definitely not alone. However, if you can’t even ballpark your break-even point, now is the time to learn. Ask us how, and don’t worry, we’re not going to try and turn you into an accountant.
2. What is my Services vs. Retail Sales Ratio?
This one is pretty big, yet often overlooked. It’s a big one, for nothing but profit potential alone. Knowing the breakdown of your revenue not only helps you get an idea of profit forecasts, but also provides you with the ability to set clear goals. A strong retail presence in your salon & spa is the ticket to significant profit growth. Think of it this way. Let’s say your total revenue sales were $100k. 80% of those sales came from services, and the remaining 20% from retail. Did you know that generally speaking (industry averages), you earn just as much profit, if not more from the $20k in retail, that you earn from $80k in services? Learn your revenue breakdown. Grow your profits.
3. What is my Client Retention Rate?
Your clients are literally the lifeblood of your business, and it’s imperative to measure the loyalty of these clients. How often are they returning? And why aren’t some returning at all? Without getting too heavily into the math, the importance of this is simple. When you lose a client, you must replace them. And each time you need to replace a client, there is a cost associated with acquiring that new client. Cost-Per-Acquisition is a common marketing term that outlines how much it costs your salon & spa to bring in a new paying client… So, the more clients you need to “replace”, the more money you need to spend. Once again, the math here gets a little tricky, but we make that part simple, with our Salon & Spa Suite, so make sure you check it out.
4. What is my Average Client Ticket?
Once you have a few basics under your belt, your Average Service Ticket helps serve as one of those “Go-to” stats you can use, to monitor the growth of your business on the fly. This is because, once you know the overall picture of your business, the simplest way to grow your salon & spa, is to grow your Average Client Ticket. Keeping an eye on this number, and putting measures in place to grow it, will ensure your business revenues continue to grow. Learn this one, and remember it!
5. Are my Prices Properly Set?
This one is a little deeper, but the concept is simple. Too many salon & spa owners set their pricing, based solely on what their competitors charge. The only thing this accomplishes, is letting everyone know that you see yourself as no better than the salon & spa down the street. Should you consider your competitors pricing? Absolutely. Should you set pricing based on multiple other factors as well? Most definitely. An important factor when setting your pricing should be “schedule availability”. The fuller your book, the less “supply” you have to offer, therefore the more valuable your time. Supply and demand isn’t just a saying, it’s a reality, and your pricing should reflect that. Do your homework, and set your pricing accordingly.
Hopefully, this post has been helpful, and if you’re struggling with how to determine some of these metrics, don’t hesitate to contact us. We can absolutely help!