I recommend a head-to-toe review of the salon operation — a salon “physical” to check how everything is working, to take preventive measures, and to get yourself on a financially healthier program.
As a busy as we all are at this time of year, we all are beginning to think ahead about what the new year will bring to our businesses. What can we do better to make our endeavors more profitable and less hectic in the year to come? I recommend a head-to-toe review of the salon operation — a salon “physical” to check how everything is working, to take preventive measures, and to get yourself on a financially healthier program.
You may need a little corrective surgery in some areas, but you should be able to get your salon businesses on a “wellness” program. Let’s diagnose our businesses and see what simple changes or preventive measures we can take to have a healthier 1997.
Budget/P&L: There are certain things, like rent and taxes, that are pretty hard to discount or change, but there are a number of salon expenses that you should be keeping track of so you can control them. Also, it’s in your best financial interest to investigate your options to get better deals. One way of tracking these items is to compile a profit and loss record, and then a budget, to help you to better control your finances.
Whether you use a computer program or a ledger to keep records, you must list monthly expenses (such as rent, utilities, retail products, and table products), as well as revenues (such as service fees and retail profits). The finished result is a profit and loss record and using this record, you can then determine an accurate monthly or yearly budget for your salon.
Other items to track are credit card charges, banking fees, and accounting expenses. While these items may not show up on your paper or computer forms, they are worth renegotiating.
- Credit cards: There are so many credit card programs offered for small businesses. If you have credit cards or plan to get some in the next year, do your homework. The Salon Association has extremely competitive rates; you can reach them at (800) 211-4TSA.
- Banking fees: Take a minute to check your bank statement for any new fees that have been added in the last year; it could be time for a change. Some smaller banks offer better service and lower rates than the big guys. It could mean a difference of several hundred dollars a year.
- Accounting: Most accountants charge by the hour (more than you probably make), so do the easy stuff yourself and save a considerable sum of money. I use a computer accounting program to balance the shop checkbook; it creates great year-end reports for our accountant. I take just a computer disk and bank statements to her at tax time, and it saves us hundreds of extra dollars.
Salon Equipment and Interior: If you’ve ever had two or more major pieces of salon equipment break down in one month’s time, you know how much it can hurt. So take a good look at these things you take for granted every day before they stop working.
- Electrical systems: Have you added energy-consuming equipment? This would include appliances like coffee makers, purified water dispensers that keep water hot or cold, and lights left on at makeup stations. Contact your local electric company for more information on energy-saving tips.
See if you might need to add some extra outlets or fixtures. In my experience, if you have too many power strips laying around your salon, then it is time to add extra outlets and fixtures. Also, keep your eyes open for frayed cords or broken or bent plugs.
- Plumbing: Have your pedicure products clogged up the salon sink? Now is the time for some drain cleaner and a snake down the drains before a backup on your busiest day.
- Computer equipment: A fate worse than death is to come in one morning, turn on the computer only to have the screen go black. If you haven’t invested in a tape backup system, do so now. The cost is $75-$ 100, but it could save you thousands in lost files, especially your client database. Make sure you have enough computer memory to handle next year’s growth. I recommend finding one local computer specialist to handle your computer when you add new software or have problems. Stick with someone you trust.
- Heating and air conditioning: Most standard leases make you responsible for this equipment when you sign the lease. Air conditioning filters need to be changed, and the system needs to be checked to run efficiently. Put your heating and air conditioning systems on timers if possible so that they only come on during business hours and stay at a certain temperature.
- Telephone equipment: Has your business grown enough to add more phone lines? Keeping up with the options offered for phone service could be a time-consuming project in itself, but it could be a worthwhile project if you can find a less expensive system that is more efficient. At Tips, our phone takes a beating on a day-to-day basis (how does acetone get into the buttons, anyhow?). If you use cordless or memory phones, don’t forget to change the batteries.
- Furniture and workstations: Stained Formica, torn upholstery, wobbly chairs — we work with them every day and have gotten used to them. But to a new customer, your salon may look shabby. Take a good look at your existing furnishings. Will they last another year with just a cleaning, or should you budget for a minor or maybe even a major makeover?
- Floor and window coverings: Do your carpets look like they came from Grand Central Station? Again, the question is, will they last another year with cleaning, or is prompt replacement necessary? If new carpet needs to be budgeted for, think about it now and begin to look for sales and close-outs that might save you money. Check high-traffic areas like the service and rest-room areas for loose, stained, or worn floor tiles or coverings before they become a safety hazard.
- Salon signs: When you drive up to your salon tomorrow, look at your exterior signs as if you’ve never seen them. Are they still fresh and inviting? If they are illuminated, are all the letters lighted? Are all the services, even recently added services, reflected in your current signage? If you have neon signs, check the date (which tells you when it was made) on the converter boxes and make sure they are not too hot to the touch. Smoke came out of our converter box one day; good thing it wasn’t in the middle of the night!
- Salon staff and recruitment: Most of us don’t anticipate a major walkout, but it is an all-too-frequent occurrence in this business. Prevent a “catastrophic illness” (affecting your salon, that is) before it happens.
Make it routine to keep some employment ads at the beauty supply stores, distributors, and local shows. Creating an apprenticeship program will also keep new blood coming in. Always keep an ongoing relationship with your local schools as well.
- Products and distributors: When you gather all the receipts from your distributors, you’ll probably be amazed to see what a substantial amount you’ve spent. That makes you an important account for a distributor. I recommend using fewer distributors so you have greater buying power and are a bigger customer with one. There are four factors to look for when choosing a reliable distributor.
- The distributor carries a comprehensive amount of products from various lines.
- It is well-stocked; make sure that products are rarely back-ordered, if at all.
- Orders should arrive in a timely manner, as salons always seem to order just as they are running out of supplies.
- Does the distributor have a good professional rep to handle your account? Make sure there is customized personal service.
Now, make an appointment for a business meeting with your distributor. Ask for an across-the-board, bottom-line discount on your product purchases in exchange for your commitment to purchase exclusively with them.
We always use a credit card that earns airline mileage to charge all product orders. We pay off the balance each month. This way, we rack up travel miles for a free airline ticket (which you’ll deserve as a hardworking salon owner), save about $1,000 per year on COD charges, and eliminate some of the headaches with your bookkeeping because your credit card statements will have all your supply purchases on it.
While some of the items on the checklist aren’t very glamorous and seem to have very little to do with nails, they fall under your realm of responsibility as a salon owner. If the air conditioning, heater, salon sign, or any other appliance breaks down it will be costly to fix and may inconvenience clients. Check with staff and clients to see if any husband, friend, or relative would be willing to barter or discount fees for maintenance services to give you a break on the cost. My husband has saved me tons of money by running extra phone lines and installing electrical outlets. Just taking the time to get the big picture of your overall business, you may protect your bottom line from going into cardiac arrest. When your salon physical is complete, you can start with the quick and easy list and chip away at the costlier, time-consuming areas. Go ahead, tear out the checklist on page 42 and keep from having to call 9-1-1.