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Can Your Salon/Spa Pass this Business Acid Test?

June 6, 2021 | By Neil Ducoff | No Comments

Back in 2017, we shared our Salon/Spa Business Acid Test in this blog for the first time.

So much has changed over the last 18 months. We all experienced some of the darkest and most disruptive days in our lifetime.

Now that most states have lifted COVID-19 restrictions, people are
traveling again, eating out, going to ball games, and a sense of “normalcy” is returning.

But let’s not forget the financial and leadership lessons that this pandemic taught us. What may feel like “normal” today is not the same normal prior to the pandemic.

So, with 2020 being the most disruptive and stressful year ever for salon/spa owners, it just makes sense for all owners to assess the current state of their business and what needs to change.

The Salon/Spa Acid Test

The acid test looks at five critical areas of your business to assess what’s working and what needs attention.

KEY: A salon/spa business can “appear” successful … but one look behind the curtain can reveal toxic conditions that cannot be hidden indefinitely.

  • Your business can be disciplined and in amazing shape. It can be lethargic, disorganized, and in terrible shape.
  • A salon/spa business can be financially healthy. It can also be cash-starved or burdened with debt, making it just plain sick.
  • A business can outlive its owners … and a business can die.

Here’s our Salon/Spa Business Acid Test:

Instructions: Be brutally honest with your responses. After each
statement, and based on your company’s current reality, enter one of the following scores:

  5 = No Compromise
  4 = Consistent
  2 = Inconsistent
  1 = Needs immediate fixing

About the scoring: Because there is no #3, you’re forced to score each statement above or below average. Anything below average is a red flag that requires attention.

Download: Click here to follow along with the printable version.

Part One: Leadership and Culture

___ Your company’s culture is rock solid.

___ Employees protect your company’s culture.

___ You address the wrong behavior and/or performance quickly.

___ All employees know the company’s monthly/weekly/daily goals.

___ All employees are held to the same standards.

___ Your salon/spa embraces change.

Part Two: Productivity Business Outcome

___ Your salon/spa’s Productivity Rate rarely falls below 75%

___ All service providers work within service time standards.

___ All employees are responsible for every hour the salon/spa has available for sale.

___ All service providers give every client a verbal and written prebook recommendation.

___ All service providers give every client a verbal and written retail recommendation.

___ All employees participate in daily huddles.

___ Your salon/spa’s Prebook Rate is 70% or higher.

Part Three: Profitability Business Outcome

___ Your salon/spa has a current 12-month Cash-Flow Plan.

___ Your Cash-Flow Plan is your “Boss.”

___ You understand and review your monthly Balance Sheet and Profit & Loss Statement.

___ You have a cash reserve equal to at least three months of operating expenses.

___ Service payroll costs average 30% to 35% of total revenue (Service + Retail = Total Revenue).

___ Net Profit is 10% or higher.

___ Your salon/spa is current on all expenses, taxes, and debt payments.

Part Four: Staff Retention Business Outcome

___ One-on-one performance reviews are done at least quarterly.

___ Pay is based on “overall performance” … not just individual sales.

___ Education and training are provided and paid for by the salon/spa.

___ Teamwork is a core value.

___ Employees would agree that the salon/spa is committed to helping them achieve their full potential.

___ Employees work in a positive and inclusive culture.

Part Five: Client Retention Business Outcome

___ Your salon/spa’s First-Time Client Retention Rate is 50% or higher.

___ Existing Client Retention Rate is 80% or higher.

___ All clients know that the skills of all service providers are available to them.

___ Clients are more loyal to your “Brand” than a particular service
provider.

___ Clients willingly go to other service providers when their “favorite” is unavailable.

___ First-Time and Existing Client Retention Rates are key factors in pay advancement.

How did you score?

If you scored 150 to 160 … Congratulations! You have an amazing company.

If you scored 128 to 149 … Your salon/spa is above average. However, the closer your score is to 128, the more elements of your company require attention and fine-tuning.

If you scored 64 to 127 … Your salon/spa is below average. The closer your score is to 64 … the more dysfunction there is in your culture, the more missed opportunities … and the more leaks you need to plug to prevent your salon/spa from sinking.

If you scored 32 to 64 … Your salon/spa is on life support. Your investment of time, money, blood, and sweat is at risk of loss.

Here’s my challenge to you: Our Salon/Spa Business Acid Test is designed to either give you a good night’s sleep, or wake you up by scaring the crap out of you.

Own your score by accepting that it reflects your leadership.

Kudos if you scored 150+. If you scored 64 or less, don’t blame your employees, the economy, or the business gods. It happened on your watch and under your leadership.

The question you must answer is what are you going to do to either protect your high scoreor fix what is not right in your company.

🗓 Schedule a free 60-minute strategy session to start building your Team-Based salon, spa, or medspa … CLICK HERE

Categories: Leadership , Test

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