Most of us started our salon for different reasons and personal life experiences. That’s what’s unique about entrepreneurship; there’s no technical playbook or pre-built path. We are equally responsible for the success and failure we experience. The canvas starts blank, and the rest is left to our imagination and design. However, one commonality that we all share is to create a good living for ourselves and our families. We are taking a considerable risk, and if we do things properly, we want to be rewarded.
Did you know that about half of all small businesses in the USA fail within their first five years? That means between you and the next person who reads this, one of you is statistically set to close down. Why does this happen? For most businesses, it comes down to cash flow issues. Eventually, their expenses outweigh their revenue, and they don’t have the cash to support their business. Is the answer getting funding? Credit? Outside investors? It’s none of that. The answer is profit.
Healthy and consistent profit is more than just the lifeblood of your business. It allows you to invest in better marketing guest experience and ultimately expand. There’s also going to be challenges that cut into your bottom line. It’s not a topic we enjoy, but remember Covid-19? Unfortunate things happen, and the way to “weather the storm” is by having extra cash on hand… which results from profit. Aside from the business you also need a profit for YOU; otherwise, how will you be able to pay yourself? Profit grows the business, it protects the business and it pays you.
In today’s article, we will reveal what will create healthy and consistent profit for your salon.
The 5 Critical Elements of Salons That Have Healthy Profits
1. A System To Fill Your Books With New Appointments Day After Day
There’s a reason this is listed in the #1 spot out of these five elements. If you don’t have a way to attract new clients consistently, the rest of your business will be an uphill battle. We firmly believe that the best way to do this is by building an in-house marketing system for your business. Meaning, that you own it and control it, and can increase new appointments whenever you need to. This is what we specifically help our salon partners build at FillYourBooks.com
2. A Predictable Process For Hiring and Onboarding New Team Members
One day salon owners woke up to a bucket of water thrown into their faces as the independent and booth rental industry emerged. Now let’s be clear, this is an excellent thing for the industry. It has pushed commission salon owners to either become great leaders and business owners, remain average, and eventually fall off. Regardless of that, the reality is that you will need to hire and/or replace many times during the lifespan of your business. The issue is, that every day you have open spaces on your team, your business is losing money. Most business owners are trying to solve this issue reactively instead of proactively. When someone leaves the team, they are scrambling to replace them. When they want to grow, they are scrambling to expand the team. Imagine this: what if you had a waiting list of people who wanted to be on your team? Would the idea of replacing or expanding stress you out anymore? Absolutely not. This is what we refer to as proactively building your team.
3. A Strategy That Accelerates Retention, Referrals, Reviews & Retail Sales
Without element #1, you don’t have a business; without element #3, you won’t be able to keep your business. There are only three ways your business can make money: Getting customers and increasing the amount customers spend on average. Increasing the amount of times a customer comes back. Referrals and reviews are powerful organic marketing strategies that will get you new customers without spending $1 on advertising. Retention will increase the average value of a client, along with the number of times they come back to your business. Retail sales will add extra cash flow without needing additional labor or acquisition costs… the only cost is the product.
4. Basic Accounting and Cash Management Skills
Boring. Really? Yes, while you don’t need advanced accounting skills or wall-street level financial experience, you do need the basics mastered. Of course, you should have a licensed CPA and advisor to help with accounting and taxes. However, too many business owners just blindly hand this information off and minimally oversee it themselves. It’s simple, you need to know where your money is coming from, and where it’s being spent. Then, you must decide how much additional cash you need in the bank to protect the business. You can’t grow your money if you can’t manage it.
5. A Logic-Based Decision Framework and Leadership Approach
Business is tough. It digs into your emotions and consistently challenges your weak spots. The problem is that the market doesn’t care, and no one else does. The way you act, and react, is going to shape the existence of your business. If you are constantly making decisions from an emotional place, it’s going to rattle the business too much. Eventually, the business won’t be able to take it (your team, customers, etc.) and will start to break down. On the other hand, if you can make decisions and pursue leadership from a logic-based perspective, you’ll be in good shape. The easiest way to do this is to slow down your thinking, which will slow down your reaction. Then, look at each situation as if it was NOT your business. We follow this phrase to help make it easier: “What is real versus what do I feel?”. Act on what is real.
Here’s what we will say to close.
It’s straightforward to read and hopefully agree with these five elements. The challenge is in the implementation. Most business owners are overwhelmed and feel they don’t have the time or energy to install these pieces successfully. That’s where FillYourBooks.com comes in. We provide a partner opportunity for our clients to take the weight off their shoulders in these areas if you’d like to learn more about that, head over to our website.
