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.
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.
Candles are almost a must for the spa and salon business. They create an amazing ambience 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.
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.