You can not manage something you can not measure!
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
