PROFIT is the most important aspect of any business. Turnover is necessary but if there is no profit or not enough profit the business is not sustainable.

photo credit: thomaswanhoff

Unfortunately most salon/spa owners focus on the turnover and the money that is brought into the business on a daily basis but very few really give attention to what the actual profitability of the business is. Without a good profit, cash flow will be the first to take strain and once your cash flow starts taking strain; well I don’t really need to keep going as I think you know what can come next.

Listed below are just 5 of the top examples of profit munchers in the spa/salon business and in fact if not kept strictly under control and monitored on a daily basis these items below could very well be the cause of your business closing down.

1. candles
2. telephone calls
3. poor bookings
4. discounting
5. product wastage

1. Candles
Candles are almost a must for the spa and salon business. They create an amazing ambiance and add to the relaxation and anti-stress aspect that consumers look for when coming to your salon. These gorgeous flickering lights are a major fire hazard, can get messy and hot. Candles are also the number one profit muncher in your business as they are a consumable that carries a huge cost but is completely necessary. Do a small exercise and calculate your total candle expenditure over the last 12 months and you will be very shocked at the figures. My suggestion here is to invest in good quality rechargeable candles. They come in different colors and flicker just like a real candle.

What’s even better is that you have a full range of votives to choose from to house your rechargeable candle. They come in sets of 6, 12 and 24 with a charger unit just like a cell phone charger unit. Initially the investment is much higher than purchasing candles however long term they work out much cheaper and safer. The worst that can happen if you leave a rechargeable candle burning is that it runs out of charge but at least your salon wont burn down over night!

2. Telephone Calls
Without a telephone your business cannot function and you are cut off from the consumer that you need to get in through your doors. Once again I am sure that when you look at your telephone bill every month you really want to cry and keep saying over and over again to your staff to try and cut the phone bill down but it never seems to decrease. Here are a few ways to cut your phone bill for sure:

a) Take out a business package from Telkom that gives you a certain amount of free minutes similar to a cell phone package.

b) Install a premi cell line. This cuts your cell phone bill by at least 40%. And I am sure that most calls are to your clients cell phones.

c) Choose only one method of booking confirmation that works for your business be it either a phone call or a sms message but don’t do both as that is an unnecessary expense.

3. Poor bookings
You are probably asking yourself right now how can you loose profit with poor bookings? After analyzing only 1 spas bookings for a week we worked out that the business was loosing approximately R50 000-00 worth of business in that week. This works out to R200 000-00 in a month! The booking/reservations element of your business is a whole department and training course on its own but let me try giving you a few pointers on effective bookings:

a) Always fill your appointments in the morning first. You must offer your client a time and not just jump at the first time slot they ask for. It’s very much like calling your doctor for an appointment, they offer you times and you pick one of them so do the same in your business and always try fill from the morning first.

b) Do NOT allow 15 minutes gap here and there as this costs you dearly at the end of a day. You must insist the client comes in at the time you have available as they can shuffle their day with 15 minutes but you lose major turnover for those few minutes and especially if there are 4 or 5 of those kind of gaps in a day.

4. Discounting
Have you ever heard of your doctor or dentist sending out a sms offering you a discount for appointments? No I did not think so and if you did receive that type of message would you not assume there was a problem? Discounting cheapens your business and almost gives the message that you need desperately to get feet in the door.

You will also begin to attract the discount hunter type of client that is not really the type of client you want to keep long term as they begin to expect discounts permanently. A very easy and simple way to offer a so-called discount to your client is to rather give added value free of charge which in essence is the same concept as discounting but instead you are ensuring to keep the client in your salon longer by giving them another service free of charge they would normally not have booked for. This also exposes them to other services in your salon and can ensure loyalty and continued bookings.

5. Product wastage
This is the most difficult profit muncher to control but it can be controlled. Remember if you don’t pay for something out of your own pocket, you don’t really feel the responsibility towards it so don’t get disheartened when you see product wastage in your business as this is very common. There are a few ways to try and reduce the amount of product wastage namely:

a) Do not stock each room with all the products. I repeat, Do Not Stock Each Room With All the Products! I cannot stress this point enough and have often had the situation where the spa/salon owner feels it too much effort to implement a stock control system and simply fully stocks each treatment room only to call me a few months down the line asking for help as their stock is either missing or depleted with only a few treatments. Keep facial kits in your store room, these are boxes which can really look gorgeous either in leather, timber or tin which contain all the products necessary for that particular treatment.

Depending on the number of treatment rooms you have is how many of each treatment box you will keep. For example a hydrating facial is very popular so you may keep 3 of these boxes but only one oily skin box. Any professional treatment that is packaged in bulk such as a 10kg bucket or 20 sachets of a particular mask in a box, this will not be kept in the treatment boxes but rather be ordered out of the stock room by the therapist. The stock room must have an in and out register and every person taking or replacing stock must sign in the register.

I would also recommend putting a CCTV camera in this room. For manicures and pedicures I would decant into small containers the exact amount required for the treatment as this prevents the therapists from using more product and also stops the client from wondering why the therapist is only using such a small amount of product not realizing the quantities required. I would also issue each and every therapist with her own tool kit and consumable kit which she will replenish weekly also keeping her on her toes as to wastage and as for the tools if they go missing the therapist has to replace the tools from her own pocket. For very expensive treatments with a very high product costing I would keep the products in the managers office and all staff performing those treatments would request the treatment box.

I would like to motivate you to really try and implement these systems listed above if you have not already done so in your business and I can assure you that it will make a difference.

Scott White Fitness Equipment and Day Spa NLP Certification

Article Source: ArticleSpan

Change your Day Spa and ask yourself these questions so you understand how to run a day spa business.

1. Are you happy with your current business model?
2. Are you happy with your profit margins?
3. Are you happy with your turnover?
4. Are you happy with the interior design and layout of your business?

photo credit: stevendepolo

The Health and Wellness Industry is no doubt still one of the fastest growing industries in the world! With this in mind I am sure you are feeling like competition is getting stronger, the spa goer is more educated on different types of treatments and service expectations are much higher than they have ever been.

Start with the basics! Yes, analyze your business for a few hours and ensure that the basic fundamental business systems and procedures are in place before you start looking for any complicated strategies and marketing plans to make your business grow.

Check your business against some basic fundamentals listed below and implement any systems you are not currently following. I promise you that if you take them seriously and really put them into action, you will see the results and your business will change.

1. Have Weekly Staff Meetings
Start now and if you are not having weekly staff meetings where you give your staff feedback and let them know where they stand and where the business is heading. Share figures with your staff. If you keep your companies turnover figures to yourself you are not making your staff a part of the business. Your business can only grow if your staff make it grow and by making them a part of the business by not hiding what the business is doing is the first step. Share each individual staff member turnover figures with all the staff and in this way you can help praise excellent achievers and build those needing some help.

Ensure your meetings are not boring and only your voice is heard. Give different staff members different sections of the meeting to cover and then have an open forum where you go round the room and each staff member has their say over the previous week.

2. Consolidate your Product Ranges
If you are a small or medium size business and stocking more than two product lines, then its time to clean up and clear out. You cannot focus on four or five product lines, be careful also not to get into the trap of stocking bits and pieces of different product lines that you assume sell well, this does not send a clear message to the consumer and you may find they only end up buying those bits and pieces from you but their main product range from another salon.

If you have a large size business then you should not be stocking more than three full product lines. If you are, carefully consider the ranges that are not moving so fast and get them out. You will find your staff can focus better and the consumers will appreciate your clearing up the clutter.

3. Average Docket Value
This is one resolution that can dramatically change your business. If you are not checking average docket value on a monthly basis and then doing something about that average then I am not sure why you are in business.

Average docket value is about the most valuable piece of information you can have in your business. It tells you what the average spend per client is where you can then compare each individual staff member average to the business average to see how each staff member is performing in relation to the entire business.

Below is a basic table showing how average docket value is analyzed.

No of clients Total turnover Average per client Services Retail Retail %
Total 10 3500 350 3000 500 15%
Therapist A 3 600 200 550 50 8%
Therapist B 4 1500 375 850 650 43%
Therapist C 2 650 325 500 150 23%
Therapist D 1 750 750 220 530 71%

Which is your best therapist? Why?
Which is your worst therapist? Why?
Tell me about Therapist D?
Is the salon Retail % to total turnover good? Why
Is the total Salon Average Docket per client good? Why?

4. Clear Out The Negative Energy
If there is a staff member that is negative, get rid of them once and for all. Remember one rotten fruit will contaminate the whole bunch in time. Plus don’t wait and start the process immediately to clear your business out of negative energy.

5. Book Refresher Education Classes
Book every single member of staff on refresher training for the product houses you stock. Make it compulsory salon policy that they attend yearly and ensure to get feedback from them on their return. I have a form I give staff where I ask them to list 10 new things they learned at the training they attended. This gives you an idea of what made an impression in their minds and then you can build and work on it.

Please do not assume your staff are adequately trained or they have been working with a product house for 20 years so they know exactly what is going on. Don’t be fooled, technology and ingredients progress quicker than we think and you can never ever know everything!

6. Plan Your Promotions for the Year
If you plan your promotional calendar with your staff and suppliers a year in advance it makes it easier just to simply implement the promotion every month or quarter or season.

Decide whether you will offer monthly, seasonal or quarterly promotions and then make each staff member in charge of that promotion, from the ordering of the promotional stock to the printing of fliers or posters to the sms the promotion message to clients to the incentives for the staff, etc.

This takes a bit of pressure off you to always do everything and you may be surprised at the pro-activity of your staff. Always be sure to give parameters in which to work for example you can allow them to order the promotional stock but if it comes to higher than R2000 they have to get your approval.

7. Plan at least one Funtion
Plan a salon birthday cocktail function, a charity fundraiser, a 2 hour 40% sale, a bring a friend and win! Whatever, the point is do something, just one function per year where you go out of your way to do something more, different and bigger and get your clients involved and remember to give them adequate notice!

8. Purchase A Piece of Profitable Equipment
If you don’t already own a piece of equipment that generates high profit then you must seriously and carefully analyze your business. The fact is that consumers WANT machines that produce results! So act quick and invest in a non-surgical face lift machine, cellulite removal machine or even an IPL.

9. Get Online
If you salon is not computerized and you are not able to receive and send emails or go on the internet, then please sort yourself out and get with the program! Technology is power today and I can assure you that your business will benefit from a salon computer program and internet accessibility.

10. Complete Your Standard Operating Procedures Manual
This is no doubt the MOST valuable operations asset you can give your business and the sooner you get down and complete this manual the better it is for all your staff. This manual is the bible of your business and clearly outlines all service standards and clearly explains exactly what is expected of each staff member. If I can motivate you to do ONE important change in your business this year I would like you to draw up your S.O.P manual. Once it is done it will be of no value if you don’t train your staff on each procedure and implement strict evaluation systems.

I hope that you have found at least one resolution to make in your business for 2009!

Scott White Get Your Business Online and Personal Trainer Spa Consulting Services

Article Source: ArticleSpan