Beginning next year, the cost of owning your own business will escalate: rising taxes, fees and energy (coupled with what many predict will be a slow economy) will cause profits to be lower or nonexistent.
Despite all of these challenges, well-managed salons will be in great demand, provided you plan ahead.
The easiest way to improve profits is to cut overhead expenses. The following tips will provide you with a plan of action that will help you keep rising business costs in check.
1. Create a profit and loss statement.
Are you really making a profit? Are your overhead expenses too high? Numbers don’t lie. Examine all your expenses, then add all your sales, subtract and you will see your net revenue. Review with your accountant. Are your overhead costs out of control? Do you have an inventory control system in place.
2. Cut your expenses.
Examine all of your expenditures, and then find ways to lower them. Too much inventory and product waste is a good place to start.
3. Think about taxes.
Make sure you take advantage of all your legal deductions. Making sure you itemize and keep good records before tax season all year round.
4. Watch client retention.
Losing just one customer and their family over the course of the year can be costly in terms of income and negative word of mouth publicity. You must monitor your customer return rate and referrals carefully.
5. Analyze your advertising.
The cost of advertising continues to rise, and far too many salon owners are spending money on advertising that isn’t getting them the best results. Ask yourself, “Is it working?” You must monitor your advertising results the same way you measure your customer return rate.
6. Control labour costs.
Many owners are paying too high on commission. Many hairdressers think they make more money by having a higher commission. Earning 100% of 0 is still $0. I would rather make 40-45% commission and be booked solid and raise prices rather than just sit around waiting for customers.
7. Watch out for unproductive staff.
Make sure you monitor your staff’s performance, customer return rate and referrals. Either turn them around or let them go.
Published with permission from Jon Gonzales. Gonzales is a business consultant, trainer & speaker to salon owners and hairdressers. Visit his blog for more free business tips: https://hcds4you.com