It may surprise some of you to know that a lot of salon employees feel disempowered and disgruntled.  If you’ve got a high staff turnover I’m probably not telling you anything you don’t already know.

 

Some of the problem lies in the semantics of ‘empowerment’.  As an employer you may feel like you want to maintain control over everything.  Who can blame you?  It’s your business after all.

 

I’m in the business of helping salons reach their goals via harmonious team unity rather than oppressive fascist rule (call me old fashioned). That’s why I’ve compiled these tips on how you can empower your team without loosening the reigns on your business.

 

Include your team in goal setting

Daily service opportunity sessions will allow you as a group to set salon goals and make the team feel they have a stake in the outcomes.  Take some time to read Megan Geer’s article on how to create a mission statement and involve the team in the creation process.

 

Encourage suggestions and creativity

You’ll need an open mind and two open ears as you allow team input instead of just dictating how tasks will be achieved.

 

Hairdressing is a creative industry, and if you always dictate how things must be done, you’ll quash your team’s inventive spirits.  Take all suggestions on board, but the final word is always yours.  Thank everyone for their ideas and don’t shoot anyone down in front of the group.

 

Commend more than you criticise

Salon employees often say that their decisions and actions are second-guessed, and most if not all feedback they receive from their employers is negative.  Always acknowledge good performances, and reward initiative.  You’ll breed a hyper competent and confident team who can deal with anything thrown their way.

 

Give clear instructions and position descriptions

Many employers give mixed messages to their team.  Do you ask them to handle a problem or project and then criticise how they do it?  Do you find yourself saying “If you want something done properly you need to do it yourself”?  Are you trying to run your salon without written position descriptions, operations modules and handbooks?

 

Be sure the team really understands what you are asking for.  Stylists often report that they are not sure what they are being asked to do.  Your team needs clearly defined position descriptions, operations modules and handbooks outlining the salon standards and rules, positional duties and how you expect them to be performed.  They also need training and re-training, even if they’ve been in the industry forever!

 

Demonstrate trust in your team

You’ll notice I used the word demonstrate there.  You can’t just say you trust the team, you must show them.  Remember your actions speak louder than words.

 

Salon employees often feel like someone is always looking over their shoulder to make sure they do things right.  It’s almost impossible for creativity to flow when you’re paranoid about the boss’ judgment.  Allow the team to make mistakes and learn from them.  Let them know you really support their decisions and growth.

Listen and be interested in your team

Are you a chatterbox?  Do you do most of the talking?  If you’re talking at your team, you’re not hearing them.  If people feel they are not being heard it’s very bad for their morale.

 

Show interest in your team; their health, happiness, goals, wants, and career development.  If you’re interested in your team’s growth it will translate into salon success.  After all, if a team member succeeds, so does the salon!

 

Get off the Floor

You’ll be a better leader for the team if you’re off the floor.  It will give you more opportunities to delegate to them and train them.  If you’re off the floor you can step in and help when the salon gets busy or behind in the appointment book.  You can give positive feedback to your team because you’ll actually notice what they are doing.

 

The best way to empower employees is to stop managing them and start coaching them.  Let them know they are on the same team with you.  This route develops their skills and provides specific feedback to help them meet higher standards.  Be their coach and lead them to salon success!

 

For more information on appraisals and finding the right buyer for your salon. Contact a salon specialist broker today on 1300 366 521.

Benchmark Business Sales and Valuations

As my Nanna always said, “Only ugly people say looks aren’t important”, which is a strange thing for a woman sprouting long course white hairs from her chin to say, but that’s not the point.

 

The point is no matter how much you wish you could be judged by the content of your heart rather than the content of your bra; we live in a superficial world where people make up their minds about things within a few seconds of looking at them.  So who can blame you for wanting your salon to look hotter than Chris Hemsworth six pack (don’t pretend you haven’t noticed it!), when looks do matter so much?

 

The look and feel of your salon sends a lot of messages to clientele; as the old saying goes, “A picture paints a thousand words”.  A salon filled with wooden artifacts, earthy tones, oil burners, bamboo and stone features sends a different message and attracts a different market to that of a black white and silver minimalist fit out.

 

Before you go burning through your bank account buying the exact same furnishings as seen in Palazzo Versace, or gold plating all the basins, check out this handy guide to getting it right!

 

Budget

It’s tempting for some to buy nothing but the best of the best to create their dream salon, but before you break the bank, you need to ask yourself, “Is it going to be worth it?”

 

If you’re in a small salon which simply cannot service hundreds of clientele a week, you shouldn’t pay out huge amounts on a fit out.  You’ll never make your money back and you won’t cover the cost of the fit out on your salon sale price should you choose to sell one day.

 

To avoid losing money, you should make a salon price list (if you don’t have one already).  Then assess how many team members you’ll have working and the potential forecasted income of the salon.  Be realistic about how long you’re willing to work in arrears to recoup the money spent on fit out.  Work out how much you’d get for the salon if you sold it the day after fit out was complete.  A clear knowledge of these figures will give you an indication of how much you really can afford to spend on salon beautification.

 

Always aim to spend less than your budget.

 

Fit outs are notorious for blowing out beyond your budget.  If you aim to spend only 75% of your total budget, in a scenario where something ends up costing more than originally quoted or anticipated, you’re not left penniless, or with a half finished job.

 

Don’t be a bargain basement Betty!

 

The flipside of blowing the budget is going too cheap.  Quite often cheap items look nasty, don’t last, and in the end make your salon unattractive to high end clientele.  Buy the best gear you can reasonably afford without blowing the budget.  Seriously, you’ll thank me later!  I shall now point out why through a parable…

 

My best buddy and I went shoe shopping.  I spent $120 on a really comfy pair of black flatties which would go with just about every outfit I ever wear to work.  She told me I was crazy for spending so much on shoes, “After all, you’ll just wear ‘em out and chuck ‘em out”, she said.  She bought a pair of similar looking $20 cheapies from a big discount chain and laughed at me for ‘wasting money’.

 

Three weeks later she wanted to go shoe shopping again because the cheapies she bought had broken.  In fact, when my shoes eventually did die three years later, we realised in the time my $120 shoes lasted, she had purchased nine pairs of cheapie shoes to replace the original black flatties.  Her grand total?  Just over $200.

 

The moral of the story:  cheaper in the short term does not always equal cheaper in the long term.

 

Secrets of Attraction

Research your salon suburb’s target demographic, and match the fit out to their tastes.  Sure, it’s important you like the look and feel of the place, but it’s a million times more important that your target market love it.

 

A young funky demographic will be attracted by a different look and feel than one which will appeal to the Polo set.

 

It’s also vital you don’t send mixed messages.  Don’t bother trying to be everything to everyone – you’ll send yourself mad or broke or both!  Ask any politician; it’s impossible to please all the people all the time.

 

If you’re going for earth friendly, natural, and fresh, then stick with it!  100% commitment to the theme will result in a far more impressive finished ‘picture’ than a mish mash of modern, earthy, colourful, young, conservative, avant garde, kitsch and antiques.

 

Having a clear theme will also make it easier to create branding and marketing campaigns later down the track and in the end will send a more understandable message to the market.

 

The Architecture of Desire

Always consult an architect before undertaking any major works. It will save you time and heartache down the track and ensure that your fit out is of a high quality.

 

A good architect who understands salons will also give you a design that is ergonomic and efficient to work in, making the work environment a real pleasure once it is completed and increasing the efficiency of your team.

 

Work closely with your architect to focus on things such as client flow through the salon, the efficiency of the workplaces such as basin areas and colour stations, storage for stock, technology and towels etc.

 

Also check that you have all of the relevant council approvals to undertake the work.  This will ensure that the tradesmen you have hired have clear directions and no excuses to make anything up as they go along!

 

“You must be onsite practically all the time. I was the project manager and I was very hands on, I did jack-hammering and all sorts of things.

 

I was at the salon before the tradesmen got there in the morning and I left a long time after they left for the day.

 

I would leave the site one day a week to work elsewhere and that was the only time things went wrong. If you are there they can ask you questions but if you are not there then they try and do things themselves and get it wrong. That is when you have trouble. So have someone onsite all the time or you will end up with a nightmare.”

Susan Coleman of ICON head, Albion Qld.

Be a Control Freak

I’m giving you permission to be a control freak – just this once!

 

Dealing with trades people can be quite stressful, especially if you are not an expert in each particular trade. But there are a few tips you should know that will help make the fit out process easier.

 

Have a written contract with all of your trades people which clearly lists your expectations and the obligations of the company doing the fit out for you.

Never pay the full fit out amount until after the job has been completed to your satisfaction. You have a right to withhold a percentage until a certain period after the work has been done to ensure all work lasts and is effective. For example, you can make it part of the contract to withhold 10% of the total charge for 3 months to ensure workmanship. A tradesperson is more likely to accept a term like this on a big job.

Drop in regularly and ask questions to clarify and learn as much as you can about the process. Be present as much as possible or have a project manager who can be around to deal with questions.

If you are responsible for providing any materials for the tradespeople, ensure that you have the materials there well in advance of when you are expecting the work to begin, to avoid any delays.

Regularly check with the architect’s plans to ensure that construction is sticking to the plan.

Budget for and allow time frames at least 25% more than you would like! Carefully consider the order you book tradespeople to do their part of the job.  Poorly timed jobs result in damage and repair bills.  An example would be to paint the walls before laying any floor covering to avoid paint splash on your new floors.

Consider parking issues and site access.  Tradespeople will take up car park spaces and depending on access may be blocking loading zones or streets.  Depending on your location you may need to organise parking permits.

Try and get references for tradespeople before hiring them, and ask what other similar jobs they have done before.

 

Finally, remember not everything always goes to plan.  Unexpected problems may come your way during fit out, so stay cool, calm and under control so you may solve the issue.  Nothing was ever solved by freaking out during a fit out!

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Business Sales and Valuations

The buying of a salon can be quite a stressful exercise and it is vitally important that you are prepared for the rollercoster ride that awaits.

 

Preparation is the key – Make sure that you speak with a broker to determine what type of salon will suit you … eg Managed, Partly Managed, Owner Operator, Franchised etc … Once you know what you are looking for it is much easier to find it!

 

Budget and Finance is important so you know how much you can spend and you must take into consideration… Purchase Price + Stock Value + Some Money in the Bank + Rental Bond (3-6months rent) + 1 Month rent in advance + some repairs if necessary.

Now location is important. You need something that suits your budget in your desired area and this can be difficult.

 

Leasing is also key to getting the deal completed and this is where we find most applicants/buyers fall down. Have your asset and liabilities prepared and signed by your accountant, business plan, cashflow forecasts, a resume of your experience and 3 references for the landlord.

 

Staffing is the most important key to running salons and you need to look after the current staff and make sure you have a few back up options before you settle on the business.

 

Get all these components lined up and you’ll be well on your way … Goodluck and happy buying …

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

Benchmark Salon Sales – Selling salons Australia Wide

I’ve spent my life traveling around the world helping salon and spa owners improve their businesses and now I will tell you my secret. I can reveal right here what it is I do to make things better…Are you ready? I measure. I measure everything. I print out every report I can find and I measure them against each other, I measure them against the same reports from the year before, I measure them against industry benchmarks, I measure the time it takes for services, I measure the depth of bills in the owners in-tray, I measure the marketing responses, I measure everything, measure, measure, measure…

 

You get the picture. It is practically impossible to run a successful business and have it grow unless you are measuring what’s going on in it.  These days just about any salon software will give you a good set of reports by which to watch your business grow. It certainly makes it easier for us business consultant types! And I tell you – it’s Magic! As soon as you start watching the figures, they go up! As soon as you start informing your team of the figures and setting them new targets, they go up again! You can get a very clear picture of why your business is struggling and exactly where you need to focus in order to move forward. Its very powerful and exciting stuff!

 

Below are some key industry Benchmarks that makes you a Salon Guru overnight!

 

 

BENCHMARKING

Vital Business Number	Benchmark HAIRDRESSING	Benchmark BEAUTY & SPAS
Number of clients per team member per day	6 minimum	6 minimum
Number of clients per fulltime team member per week	30 minimum	30 minimum
Number of services per team member per day	8 minimum	8 minimum
Number of services per team member per week	40 minimum	40 minimum
Team member service sales per hour	$70 – $80 minimum	$75 – $85 minimum
Employee wages vs their total salon income	3 – 3.5  times their gross wage inc. Super & work cover etc	3 – 3.5 times their gross wage inc. Super & work cover etc
Fulltime senior employee service income per week	$2100 – $2300 minimum	$2200 – $2500  minimum
Fulltime senior employee product income per week	$250 minimum 15% service total	$550 minimum 25%-30% service total
Average client spend	$10 – $15 over the price of your top selling service	$30 – $40 over the average price of your top 5 selling services (excluding courses)
Rebooking percentage	65% minimum	65% minimum
New clients per week for the entire salon	minimum 30% – 35% of total client visit	minimum 30% – 35% of total client visit
New client referrals from existing clients per week for the entire salon	50% minimum	50% minimum
New Client First Visit Retention	50%	50%
Client Retention Overall (Quarter)	75% minimum	75% minimum
Client Retention Overall (Year)	65% minimum	65% minimum
Client Retention (To the same team member)	65% maximum	65% maximum
Client Sharing (To another team member)	30% – 40%minimum	30%-40% minimum
Client Loss (Non returning)	20% max	20% max
Client Card Accuracy	90% – 95% minimum	90% – 95% minimum
Percentage of Sales Growth Above Last Years Figures	15%-20% minimum	15%-20% minimum
Total Cost of Goods inc professional & retail products vs Total Sales	15% however 10% is target	15% however 12% is target
Wages (inc owner) vs Total Sales	40% – 42%	40%% – 42%
Operational vs Total Sales	10 – 15%	10 – 15%
Rent vs Total Sales	10% in strip shop, 17% shopping centre	10% in strip shop, 17% shopping centre
Marketing vs Total Sales	5%	5%
Profit vs Total Sales	15% – 20%	15% – 20%
Mark Up on Retail Products	80% – 100%	40% – 60%
Services Pricing Vs Hourly Wage	4	4
Services Pricing Gross Margin	66%	66%
Team Member Productivity vs Scheduled Hours	80%	80%
Salon sale price appraisals	1 x net profit for owner operator – 2 times Net Profit for managed	1 x net profit for owner operator – 2 times Net Profit for managed

 

 

Here enters the second part of the process – the managing. Once you are aware of your key business figures; you can now highlight areas in your business that are doing well, that need improvement and that need urgent action! Write on the reports where you would like the figures to be at then make it happen. Reports are not just something your accountant needs to look at every now and then. A good system of report reading in your business can help you make key decisions in your business such as “Who will I market to this quarter?” Why are my product sales down?” “Is someone stealing all my professional stock!!!?”

 

I could do the usual and quote heaps of areas where the businesses we helped improved. But I won’t bore you, I just want you to understand that all you need to do is get a handle on one key area of your business and once you understand it, move on to another while still keeping an eye on first one. It’s really very easy … you just have to get started.

 

Key business figures to look for

 

Rebooking – What percentage of your clients are rebooking, is it enough?

Client retention – Are you keeping your customers or are they leaving in droves?

Wage versus sales for each team member.

Rent versus sales – If this is too high you need to increase turnover to lower rent percentage or just sell up and move.

Retail sales and Mark-up.

 

If you are serious about doing business then you need to get enthusiastic about marking and managing your reports and business figures. It’s all just a game and these are your scorecards, so start keeping score today. The other important thing to remember is that when you go to sell your business it will be worth more to the buyer if you have an organized set of reports and a management strategy that showed clear growth in the past.

 

If you find all that business stuff daunting call in a professional to help you break it down into easily understandable chunks that will give you and your team clear direction and growth strategies.

 

If you don’t have a computer to print you out these very useful reports, I suggest you invest in one. Short of that, a very good accountant is needed to give you the kind of information you need. However an accountant won’t help you write targeted marketing letters or give you your rebooking percentage. So if you are in business for the long haul, get a computer and a dedicated salon software system. I can guarantee that when you combine it with strong operating procedures in your business it will save hours of time, buckets of sanity, and will make you more money. Hopefully one day you’ll even be able to sell it for a fortune!

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling salons Australia Wide

It’s sometimes baffling and always frustrating to see a salon client running a promotion in a half hearted manner.

 

Allow me to extrapolate.  Imagine a salon running a promotion to bring in new clientele.  Then imagine the new client is not given a client card to fill out, they are not asked to re book and they are treated like a ‘bargain hunter’ and given a half hearted service from their stylist.

 

Then imagine me on the phone to the salon owner who is complaining wildly that the promotion attracted the wrong demographic, everyone using the promotion was a ‘bargain hunter’, and that no one rebooked.  It’s probably not hard then to imagine me slapping my forehead and vowing to run away to join the foreign legion.

 

Salon owners rarely like to admit a failed promotion had anything to do with them or their team.  In a way, the salon owner is right to say, “That promotion was a waste of money”.  What’s not right is to blame the promotion itself for the failure.

Let’s look at how you can be sure the salon promotions you run will be a success.

 

1 – Concept & Design

All promotional materials from the copywriting, to the photos and the actual promotional concept itself MUST appeal to the right target market.

Professionally designed and written promotions will get a better response from your demographic.  Stop using your talented friend or your butcher’s kid to design your promotions… unless they happen to be marketing professionals.

One more note from my marketing brethren.  If you hire a professional, listen to them and respect their opinions and advice.  They know what they are doing.  They are well trained and have experience in their field.  Remember the saying, “Why buy a watch dog if you’re going to go outside and bark yourself?”  Stop barking.  Let the dog do it.

 

2 – Training & Implementation

To make the most of your promotion it is essential that all of your team is aware of the terms and conditions.  They should confidently adhere to the promotion terms and be prepared to answer questions about them.

What’s more important is making your team aware of the standard of service you expect clients to receive, and making sure they deliver that standard every time.

It’s best to re-train everyone on re-booking and product recommendation procedures prior to running a promotion.  You may even want to spot check these procedures are being followed in your absence by sending some mystery shoppers through the salon.

Customers contacting your business for the first time are usually apprehensive. They may be concerned that the promotion offer will not be honored, or that staff will treat them less favorably, perceiving them to be ‘bargain hunters’.

Your team needs to be committed to treating everyone with care and respect.  No one is to make a judgment on a client, or to treat them like anything less than a VIP.

 

3 – Evaluation

Finally, I recommend conducting a promotion evaluation.  Once the promotional period is finished its advisable to ascertain its value.  Promotion evaluation allows you to determine which promotions work best for you, and therefore which promotions to run in the future.

Look at figures of how many new clients were introduced to your salon, what the promotion cost you to implement, how many people rebooked from the promotion, how much retail was sold and other pertinent figures.  Some promotions concentrate on rebooking, others on product sales and so on.  Establish whether your promotion goals were met and analyse what did and did not work.

Last of all, I need to tell you some good news and some bad news.  Bad news first…

In any promotion you run to attract new clients you will find not all of them will rebook.  If you get a 100% retention rate from such a promotion I want to congratulate you on your outstanding rebooking protocol.

Set a realistic goal for your promotion.  Don’t expect the world.  Some promotions are designed to raise brand awareness, some to promote your salon ethos, some to sell more retail, or bring in new custom.  Be aware of what your promotion is designed to do and don’t expect it to do anything else.

 

The good news is this…

 

Even if someone does not respond to the promotion you have on offer, they may have taken notice of your salon name or location for their future reference.  Raising your brand awareness in the community can bring in referrals unrelated to the promotion for months to come.

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling Salons Australia wide

Too many salons put the cart before the horse.  Concentrating on attracting bulk numbers of new clients through the doors, before you’ve got your Customer Service and Rebooking procedures streamlined is a waste of time and money.

In our last issue I examined how to improve your client retention.  So now that you know how to keep a client, let’s look at how to attract a client in the first place.

In marketing circles, you never start a campaign without first identifying who your target market is.  Naturally the perfect demographic will vary from salon to salon, but your new clients will all fit one of these categories:

They don’t have a regular salon

They are unhappy with their current salon

Although these clients are most likely to try out your salon, they often come with a bit of ‘baggage’.  These poor dears have probably been ‘hurt’ before, and like heartbroken lovers, they’re scared to jump back into the game.  That’s where you come in.

Understand that everyone in the categories above is likely to enter your salon feeling nervous and vulnerable.  In the past they may have been hit with the hard sell, overcharged for salon services or just be naturally nervous about letting someone else ‘control’ their image (let alone anything else).

 

It’s your job to help them feel…

 

Relaxed, welcome and ‘at home’ in the salon

You’re genuinely interested in helping them look their best

You’re not going to pressure them to do or buy something they don’t want

Great copywriting of your advertising materials matters.  Identifying your demographics needs makes copywriting easier.  Let’s look at the information we have above and create some headlines.

 

For the client who doesn’t have a regular salon or is unhappy with their current salon because they are worried about being ripped off and leaving the salon looking average:

 

You don’t have to spend a fortune to look a million bucks!

 

For the client who doesn’t have a regular salon or is unhappy with their current salon because they’ve never felt welcome and never felt that the stylist genuinely cares to improve their image:

 

At <Salon Name> you don’t have to thank us for making you look fabulous.  You’re welcome!

 

I could play the Headline game all day, and as you can see, once you identify who you want to attract it’s easier to create the right advertising copy.

 

Another vital factor in your salon advertising materials is the image you use.  Unless you’re prepared to charge bargain basement prices, you will need a professionally designed logo and professional photographs of your work.  Poor quality images or a logo your nephew knocked together on his Mac will send a clear message to potential clients, “Our salon is cheap.”

 

It matters little what your taste is, and what images you like.  What matters is which images are attractive to your demographic.  Photos of young punky looking people will not attract the polo set to your salon.  When in doubt, investigate.  Ask people in your demographic to rate your images.  Look at the advertising and images that work in magazines aimed at your target market for inspiration.

 

Now we have the words and images sorted out, I’ll reveal three tried and tested promotions designed to get new people through the door of your salon:

 

Cross Promotion

Organise a cross promotion with a restaurant, sports club or other local business.  Agree to promote them in exchange for them promoting you.  You may want to swap vouchers for free services or ‘value add’ offers for first time visitors to your businesses.  Make the offer on the voucher attractive to potential clients.  Keep it local and make sure the business you cross promote with appeals to your demographic.

 

Remember to add the words “For first time salon customers only” on any promotional vouchers or cards to deter people who may exploit the promotion.  Explain to any business you cross promote with that if too many people try to abuse the promotion you will have to withdraw it.

 

Word of Mouth

Turn your existing clientele into walking advertisements for your salon.  Give a client a ‘refer a friend’ card.  The card may be for a complimentary cut for first time salon visitors.  Reward your client for referring their friend by offering to add value to their next service.

 

VIP Card Sales

Send a team of door to door salespeople out to sell VIP Cards.  We’ve all seen these before: new clients pay a fee to buy a card entitling them to receive a bunch of services from your business.  The VIP card concept represents a low cost, low risk option for salon marketing because you will be using surplus time and effort to impress people.  The purchase price of a VIP card is designed to put off the dreaded bargain hunter, yet not deter the serious customer.

 

Before you get all cranky because I am telling you to give away a free or discounted service, remember this:  the client does not think of themselves as ‘just another freebie’ and neither should you treat them like a second class citizen.  If you want the client to return and pay money for your services, you’d better impress them on their first visit.  The price of the service or discount is your advertising dollar being spent wisely to bring in new clients, not ‘just another freebie’.

 

Unless you’re in a high traffic location, you’re unlikely to get a lot of walk in clients.  That’s why it is prudent to lure new clients with a good offer.  Compared with many other forms of advertising, letting a potential customer try your salon for free makes more sense and costs less.

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling Salons Australia wide

Reading an advertisement for a salon for sale can be a very confusing exercise. Below is a list of all the common phrases and abbreviations so you know what you are looking at.

1. Rent per square meter (sqm) – a key area in any business is rent paid vs the location of the business. It is essential to have a good location but make sure you are not paying too much for it. The easiest way to benchmark rent is to break it down into a dollar value per square meter. For example a salon in Sydney CBD Westfield Shopping Centre would come in at around $2700 per sqm. Some might say that’s expensive but that rent guarantees millions of people each year walking past your door. Most shopping centre rents are in the vicinity of $1500 per sqm. Strip Shops around $1000 per sqm and boutique (not on main road) sites can be as cheap $150 per sqm.
2. Stock at Value (SAV) – this is often tacked onto the price of a business and suggests that you will be required to purchase the salon at a certain price plus you will be required to purchase the current stock in the business as well. Eg – Sale Price – $100K (By the way K means thousand) + SAV
3. Walk In Walk Out (WIWO) – the other option when buying a business is to purchase it on a WIWO basis where all the stock is included in the sale price. This often happens if the business does not have a lot of stock (less than $5000) or the owner just wants to sweeten the deal. Eg Sale Price – $100K WIWO.
4. Net Profit – once you have paid all your bills then you’re left with a net profit. This is the most important figure when buying or selling a salon. Often the net profit may be small at around $15-$20K however the owner lives an extravagant lifestyle … trips to Paris each year, leases a Porsche etc. This is done to lower the net profit and avoid paying too much tax. When selling a salon, many of these expenses can be ‘added back’ into the net profit as the new owner may be a bit more restrained. Always remember the bigger the net profit the higher the sale price will be on a salon.
5. Earnings Before Income Tax (EBIT) – this very important term relates to net profit and how it is displayed. An EBIT net profit means that the owner has taken a wage and there is still profit at the end of the day. This is often referenced to managed salons where the owner does not work in them. An EBIT profit is one the best profit figures you can get and this type of profit commands the best sales price of a salon.
6. Proprietors Earnings Before Income Tax (PEBIT) – this type of profit has the owners wage added back into the net profit which means it is not as appealing as an EBIT profit. You don’t need to get too hooked up on this concept, just understand that there are different ways of representing net profit.
7. Addbacks – when calculating the real net profit of a business it is a common practice to add back into the net profit certain expenses to give a true indication of the actual money you will earn out of the business. Justifiable addbacks are depreciation, one off expenses like getting sued, interest on a loan, often business coaches, leasing of motor vehicles, overseas trips, excess wages or superannuation. All of these expenses can be stopped when you buy the business.
8. Return on Investment (ROI) – this figure is very important as it lets you know how quickly you will get your money back on your investment. For example if a salon had an EBIT net profit of $100K and you purchased the salon for $200K then your ROI would be 50% which means you would make you money back in 2 years. To work out ROI all you need to do is take the net profit and divide it by the sale price of the business then multiply by 100. EG $100K ÷ $200K x 100 = 50%.

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

Benchmark Salon Sales – Selling salons Australia Wide

The way you conduct client consultations can make or break their experience in the salon.  It can effect whether or not you give your clients the style or colour they want, whether they purchase product and whether or not they rebook.

 

Believe it or not a great hair or beauty consultation starts before your client arrives in the salon, at what we call the daily service opportunity session.  This session is designed to help you pinpoint areas where you can enhance your clients’ salon experience.  Come to these sessions with the Client Profile Card for each person you’ll be seeing that day.

 

Preparing your CPCs is easy; just remember the five R’s:

 

• Refreshment
• Recommendations
• Retail
• Rapport
• Rebooking

Use the session to look over each client’s history, note missing information, future service recommendations, rebooking frequency and future retail requirements.  Make your notes on each Client Profile Card, including details of service opportunities that the client may need compared to previous purchasing habits, e.g. Client purchased shampoo and conditioner eight weeks ago – note down to ask if they have run out and need to purchase more.

Note down under the rebooking area on the CPC the frequency of the client’s visits to the salon. This information can be used in the consultation so that you can tell the client that they usually come in on a 6 week frequency and that we should put them in the appointment book next time for 5 weeks as their hair gets a little out of shape on their current six week cycle.

Also note down a retail product and service that the client has not purchased which you think will benefit the service they are having that day. If you don’t know the client you should still note down two services and products to recommend to them.

Remember to only recommend the right services and products for the right people.  These could include a treatment or facial waxing as well as shampoo and conditioner and a styling product.  Don’t ever try to hard sell something for the sake of a sale.  Clients hate that and most stylists hate having to do it.

Customize the client’s service by noting down suggestions on styles which you think would enhance the client’s image and experience. Wherever possible, use salon books or magazines to confirm with the client what you’re envisioning for them.  Check the client’s CPC for comments on what you talked about last time so that you can build rapport quickly.

Make a note of the refreshment the client usually has so you can offer them their regular drink in the consultation or on their arrival. This is often the receptionist’s or the Salon Coordinator’s job. Say, “Britney, can I get you your regular skinny flat white with one sugar?” She will be immediately amazed that you have remembered how she has her coffee (when she can’t even remember to wear her undies!)

Finally make a note of special occasions coming up such as Valentine’s Day, Easter, Mother’s Day, Father’s Day, the client’s birthday Christmas etc, where you could recommend a gift pack, special service or gift certificate. After the SOS it is time to open the salon and start looking after clients by using the fully prepared Client Profile Cards.

Now you’re fully prepared for the face to face part of the consultation.  You only get one chance to make a great first impression so get it right the first time, and every time after that!  When a client walks through the door, whoever is not attending to a client, or alternatively the receptionist or closest team member, should acknowledge, approach, and greet them promptly.

If they are a new client, find out their name immediately and use it often to establish rapport.  There’s nothing sweeter to a customer’s ear than the sound of their own name.  If it’s a regular client, greet them by name right from the start.  If they will be waiting for their service, inform them of the length of the wait and offer them their regular beverage and some hair magazines (not gossip mags).  This is a great time to recommend the client make note of any colours or styles they like in the magazines.

 

When the team member is ready to start the consultation on the client they should promptly and confidently greet the client by saying, “Hi Britney, welcome to Nsync Salon, I’m Justin and I’m going to be looking after you today.”  Sit at eye level with the customer, and prepare to really listen.  This point is where a lot of stylists and colourists fall down.  If you do not listen with two open ears and one open mind, you won’t give the client exactly what they want.

 

In order to be great at conducting consultations, you need to understand the top twenty reasons why people have their hair done in a salon in the first place (instead of having an ‘at home’ cut with a bowl and some blunt scissors, just like mum used to do)…

 

• To attract praise
• To increase enjoyment
• To avoid criticism
• To keep up with the Joneses
• To feel opulent
• To look younger
• To avoid effort
• To express love for the self
• To emulate others
• To protect their reputation
• To be in style
• To socialize
• To be trendy
• To satisfy curiosity
• To feel good
• To combat boredom
• To feel pretty
• To save time doing hair each day
• To increase comfort
• To be excited

 

Once you understand the clients’ reasons for visiting a salon, you are one step closer to giving them their perfect salon experience.  After all, a client who wants to save time doing their hair every morning isn’t necessarily going to be keen on a ‘high maintenance’ style coveted by a client who wants to be trendy.

 

You can find out why your client is visiting the salon by asking questions like:

 

• What do you like about your hair at the moment?
• What do you dislike about your hair at the moment?
• How much time do you like to spend on your hair each morning?
• Who are your style icons?
• Can you show me any magazine images which reflect the type of style or colour you would like?

 

The main complaint clients have is that their hairdressers don’t really listen to what they want.  It’s impossible to give someone what they want if you’re not intent on making sure you fully comprehend what the client wants.  Worse still, many stylists don’t even ask any leading questions like the ones above.  The client ends up feeling ignored, and resents winding up with a style or service which is close to but not exactly what they wanted.

 

Once you’ve listened to and comprehended all of the client’s needs, say the following, “Britney are you after something similar to what you have now or are you open to a few of my suggestions?”  Most clients will see you as an expert and would love to know what will make them look and feel better.  Most clients also dread the typical question, “So what are we doing with your hair today?”  YOU are the expert, so you should have a professional opinion on what to do with the hair, based on the client’s needs and wants.

 

Once you have listened to their reply, recap what you just heard.  If you are not sure, ask questions and confirm with magazine images so you are both on the same wave length.  Then it’s your turn as an expert in your field to let them know what you recommend, before asking for their permission to proceed with the service.  If the service price is going to be much higher than what they had originally asked for, make sure you quote on the new service before beginning.

 

Watch the client’s body language and listen to their tone of voice for signs of happiness (or unhappiness) throughout the entire procedure.  While you’re styling their hair, it’s a great opportunity to present an idea for a long term plan for their hair.  You might say something like, “Britney, you mentioned you’d like to grow your hair now that your baby is a little older, that’s why I’m cutting a few layers in so the style will grow out nicely and look fashionable as it grows.  It also means we can keep a lot of the length while making the style less bulky and heavy”.

 

Establishing a long term plan for your client conveys to them that you care about their image, and that you’re approach to their hair is not for the short term gain of your salon.  A client is more likely to trust your motives and rebook if they feel you really are committed to making them look and feel the best they possibly could.

 

Finally, be excited to do their hair and never let a client leave looking anything but amazing.  Think of each client as a superstar or a model you’re preparing for the catwalk.  After all, giving a client their dream hair is the best way to ensure increased retention and positive word of mouth.

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling Salons Australia wide

Almost every salon owner I speak with says they want to attract more new clients through the door.  I bet many of you are nodding your beautifully styled heads and thinking, “yep, me too”.  New clients through the door are like some kind of Holy Grail.  My question is, “Why?”

 

Did you know on average it costs 25% more of your advertising dollar to get new clients and keep getting them than it does to take care of the clients you have?  Unless you’re retaining existing clients, you might as well have a revolving door on your salon and money to burn.

 

My next question is this, “Why should a new client come to you if you can’t even keep the ones you already have?”

 

I have some tips for you shy artistic types out there on pain free rebooking procedures that will help keep your clients coming back.

 

Have a positive attitude and a bright cheery demeanor.  Nothing turns off a potential client like a snobby, stuck up, cranky stylist/therapist.  Leave your problems and bad moods at the salon door.  When someone is in the salon chair it’s never about you, it’s all about them.

Treat everyone as a VIP.  Imagine how you would treat Madonna or Hugh Jackman or some other high profile hottie if they were in your salon.  I’d bet my life if you treated everyone the same way they’d be fervently rebooking every time.

Never rush a service.  No one likes to feel like they’re an inconvenience or in the way.  If you’ve been put through the motions as quickly as possible by a robotic stylist set on auto pilot, you’re unlikely to re-book.  If a 1 hour service only goes for 45 minutes, your client will notice and will feel ripped off.

Analyse, identify, express, listen and repair.  You are the expert.  Analyse the hair or skin of the client.  Identify their needs and express your opinions on how you can meet those needs without being pushy or mean.  Listen to the client’s response and their analysis of their needs and make sure you meet them while you repair the damage.  Make sure the client looks as fabulous as they possibly could look when they walk out that salon door.

 

Plant the Seed

So you should have your client all blissed out from the amazing customer service you’re giving them.  Now they’re lulled into an almost hypnotic trance of ecstasy it’s time to plant the rebooking seed.

 

Say something like ““Madonna, to maintain the style that I’m creating for you today, I’m going to need to see you again in 5 to 6 weeks to keep it looking great” and leave it at that.  Give the client time to absorb the concept of regular upkeep being a good thing.

 

Reaffirm
You can reaffirm without being pushy by having a clear plan for the future of your client’s style.  Saying something like “Your brows are looking great right now, and the fringe I’m giving you will draw a lot more attention to your gorgeous brows and eyes.  By the next time we see you they will probably need some tidying up so if you want us to take care of it for you, make sure you tell reception when re-booking.  The salon books out quickly so you’re better off organising it with us in advance so you don’t miss out”

Now you’ve established two things in the client’s mind.  One is that you actually care about the overall look and style of the client, now and in the future.  The other is that your salon is popular and it’s best to rebook to guarantee they don’t miss out.

 

Use your Client Profile Card

Hopefully you’re using a client card during the service to note what services you’re performing for the client, which ones you’ve recommended they rebook for, what refreshment the client ordered, and any retail you’ve recommended.

 

This card will serve you on two levels.  One is for your own future reference when a client returns to the salon.  Imagine their delight when you ‘remember’ their dog’s name, the way they take their coffee, and the details of their last visit.

 

The other way a Client Card will serve you is to make the point of sale process run smoothly.  Hand the card to reception at the end of the service so they may accurately tot up the client’s services.  Have your receptionist trained in the final process of rebooking: closing the deal.

 

Reception & Choices

S/he should say something like, “Madonna, as Mandy suggested before, to keep your hair looking and feeling great you’ll need to come back and see us in the next five to six weeks. We get really busy, so can I put you in the appointment book for five or six weeks’ time?”

 

Some clients may say they are unsure if they’ll be available or if they will remember an appointment booked in advance.  Your receptionist can offer to SMS a reminder or write the appointment on a card.  Never get pushy, impatient or frustrated with the client.  If the client is still unsure, leave it at that.

 

Follow Up

If a client does not rebook then and there, don’t look at them as a lost cause.  Send a new client welcome letter to them within 2 weeks of their visit.  If you still have no response from the client within 6 weeks, send a non-returning client letter to them offering them an incentive to return to the salon.  You’ll be surprised how effectively this cheap marketing tool can boost your client retention.

 

A Final Word

David Bowie once said something to the effect of this, “If you treat the normal person as if they are famous and famous people as if they are just like everyone else, you’ll go a long way”.  I’m paraphrasing Bowie to get to this point:  For some of your clients, their visit to the salon is the only time they get to feel pampered, special and beautiful; just like a VIP.  Give people what they want every time, a beautiful special pampering, and then watch that client retention rate improve.

 

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling Salons Australia wide

The sale value of a salon is the most asked question I get as I travel around the country to various businesses … So let’s look at what makes up the value of a salon and how to establish a realistic price for your business.

 

In my experience 90% of all salon owners think that their business is worth more than what it really is and the reason is that most salon owners have put in blood, sweat and tears to get their business to a point where they think it will sell at the price they want.

 

The reality is a little different. As a salon owner about to sell you are totally focused on how much you want for your hard work; of course why wouldn’t you be, your aim is to get the best price for your salon.

However owners are often blinded by the fact that their business is viewed by a potential buyer as a risk and the irony is that while you are focused on the highest price they are focused on getting the cheapest price they possibly can.

So let’s talk about how we make this transaction work so that all parties are happy with the result.

The first thing we need to look at is value…

 

1. The value of your salon directly relates to your financial figures. In the industry a good rule of thumb for the value of your salon can be derived by multiplying your Net Profit inc owners wage by 1 or 2 depending on weather it is an owner operator or fully managed.

 

 

Example 1 – owner operator salon with a net profit of $50,000 per year x multiple of 1

= $50,000 + STOCK

 

Sale listing price would be around = $65,000 + STOCK

 

 

Example 2 – fully managed salon with a net profit of $50,000 per year x multiple of 2

= $100,000 + STOCK

 

Sale listing price would be around = $115,000 + STOCK

 

 

 

How to increase the value of your business…

 

• A salon that has a good turnover e.g. $15,000 to $20,000 per week is often worth more as this provides a guaranteed cash flow with a large stable team.

 

• A totally managed salon (owner does nothing on a day to day basis) is worth much more and these salons are often highly sort after.

 

• An outstanding long lease, low rent for the position or high traffic flow is also a premium.

 

• Detailed Policy & Procedures with regards to every aspect of the business, implemented on a daily basis and user friendly also add value.

 

If you combine some of these factors above you may be able to achieve a net profit multiple of 2.5. We have seen many salons sell for these figures because they are such a good investment for a buyer.

 

Steps you can take to increase the value of your salon …

 

• First and foremost you must increase your net profit. Net profit is the money that is left after all operational expenses e.g. – product purchases, rent, wages including yours if you work in the business, marketing etc. You can often leave out things like Depreciation, Personal Expenses and odd purchases. This figure is called the EBITDA. (Earnings Before Income Tax Depreciation Amortization) The way you increase your net profit is to control the expenses above. Keep on a few casual staff that you can send home if work is not busy, don’t order too much stock and control wastage. These are the best places to start.

 

• The other thing you can do to increase your net profit is to increase revenue .i.e. money coming into the salon. Have training with staff, get a business coach (this can be added back into your net profit) or invest in results driven marketing.

 

• The final thing we recommend to do is get yourself out of the business over the next few months without affecting your net profit. We are inundated with enquiries from people who what to buy a managed profitable salon. The best way to get you out of the business is to develop good policy and procedures and hire a quality manager.

 

Now that your business is highly valued, it is time to sell… We always have the motto of “When things are going well that’s the time to sell!”

 

• The first thing you need to do is make sure your financials look good, go and see your accountant.
• Read your lease again and make sure there are not going to be any hiccups with the transfer.
• Decide on what sale price you want to put on the salon. Be realistic and leave room for negotiation.
• Take a few pictures while the salon is busy and also when it is closed so this can be used in an information pack for the potential buyer.
• Contact a salon specialist broker and introduce them to your business, ask for an appraisal.
• Let the broker advertise the business and negotiate the deal for you as this is more likely to get the desired result. Leave your emotions out it!
• Most importantly keep the whole thing confidential (including your clients and team) until the deal is done and unconditional – meaning the money is in the bank!

 

For more information on appraisals and finding the right salon. Contact a salon specialist broker today on 1300 366 521.

 

Benchmark Salon Sales – Selling Salons Australia wide