ERC May Not Be All Free Money

April 18, 2022 | By Neil Ducoff | 4 Comments

What is ERC?

The federal government established the Employee Retention Credit (ERC) to provide a refundable employment tax credit to help businesses with the cost of keeping staff employed.

Eligible businesses that experienced a decline in gross receipts or were closed due to government orders and didn’t claim the credit when they filed their original return, can take advantage by filing adjusted employment tax returns.

  • For example, businesses that file quarterly employment tax returns can file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return to claim the credit for prior 2020 and 2021 quarters.

So, what’s the ERC catch?

First: ERC is not at all like PPP which was super easy to apply for and get 100% forgiveness.

Second: Figuring out ERC is complicated and requires an accountant to determine the correct payroll credit amount and to complete the Form 941-X Adjusted Employer’s Quarterly Federal Tax Return.... Read More

Ten Characteristics of a Successful Salon/Spa Business

April 9, 2022 | By Neil Ducoff | No Comments

For salon/spa owners, the past two years sure feel like everything to run a successful business has changed.

What hasn’t changed are the characteristics of a successful salon/spa.</strong> In fact, they just became more non-negotiable.

Using a simple grading system of 1 to 10 (10 being truly outstanding), each characteristic listed below establishes a benchmark that you can use to quickly assess the viability of any business … including yours. Using this approach, a score of 10 for each characteristic will yield a perfect score of 100.

Characteristic Number 1 – Leadership: First and foremost, the owner of a successful business functions as a businessperson. This means that the owner is engaged, accountable and drives performance by paying attention to the business. That being said, it’s easy to identify owners that are so engrossed in their non-leadership work that the business is essentially free-floating without direction, structure or systems. This is the equivalent of trying to run a business by remote control. It just doesn’t work.... Read More

Why Salon/Spa Profit Matters

February 27, 2022 | By Neil Ducoff | No Comments

Profit is a strange little beast.

Salon/spa owners fight for it — even obsess over it. And if you’re not fighting to create profit, you absolutely should be.

FACT: Profit doesn’t mean cash in the bank.

It’s like profit is some sort of sick mind game where you can be profitable and broke at the same time.

Even crazier — profit can be negative for extended periods and you’re still in business.

And the ultimate body blow is when you have to pay taxes on profit even though there’s little or no cash.

Clearly, it’s better to show a profit than a loss, but wouldn’t it be nice if you could get some control over that little beast?

The good news is, you can control profit if you follow these six lessons:

LESSON ONE: Profit is a measurement

Leaders monitor and drive productivity rates, client retention rates, gross profit margins, payroll costs, product, and raw material costs, purchase frequency, return on investment (ROI), and other key benchmarks and financial ratios.... Read More

It’s The Most Awesome Salon/Spa Financial Report Ever

February 20, 2022 | By Neil Ducoff | No Comments

OMG! Could there really be one absolutely awesome financial report? And if it does exist, what amazing things could that one report tell you about your salon/spa business?

For starters, it would tell you just how financially healthy your business really is. It would tell you if your business was getting healthier, if its financial health is declining, or if it requires life support.

It would tell you how much total cash you have to operate on and how much cash reserve you have. Simply put, it will tell you if you can sleep well at night.

It would tell you how much you have in assets.

It will tell you what you owe in credit card debt and loans.

Most important of all, this awesome report will tell you how much your business has accumulated in Equity. Just as the equity in your home increases as you pay down your mortgage, the equity in your business increases as you drive up revenue, manage cash, and reduce debt.... Read More

Six Must-Do’s to Make Money in a Salon/Spa

January 14, 2022 | By Neil Ducoff | 1 Comment

Salons and spas are historically notorious for operating at low single-digit profits or losing money … and are plagued by staff walkouts.

Worse yet, many salon/spa owners readily admit that they wouldn’t be able to take a paycheck if they weren’t working behind the chair or in the treatment room.

So the question begs to be asked: Why would anyone open a salon/spa if it can’t make money?

The fact is when any business struggles to pay bills and create profit … it’s because the owner designed and runs it that way.

The top five culprits are:

  • Compensation systems that are financially unsustainable
  • Undisciplined spending behaviors
  • Excessive borrowing and credit card debt
  • Excessive employee turnover
  • Service pricing is too low

IMPORTANT: Throwing in the towel to go booth rental or suite is a knee-jerk reaction to a bad situation.... Read More

Do You Know Your Salon/Spa’s Current Net Profit? If Not — Why Not?

October 11, 2021 | By Neil Ducoff | 2 Comments

In business, you play to win. But winning has nothing to do with how busy your salon/spa is. Winning in business is about creating Net Profit — what’s left after all expenses are paid.

To know if you’re winning, you must keep score. That means reading and understanding your Profit & Loss Statement — and doing it no less than every month.

So … if your Profit & Loss Statement can tell you if you’re winning or losing the business game … why is it that so many salon/spa owners ignore or avoid this massively critical financial report?

Some owners think it’s complicated and the numbers don’t make sense.

Well, there’s nothing complicated about a Profit & Loss Statement. Even in its most basic format, it lists dollars in, dollars out, and dollars left for a specific period of time (a month, quarter, or year).

Here’s the simple math: If your salon/spa generated $1 million in service and retail sales for one year, and had $900,000 in total expenses, you earned a $100,000, or 10%, Net Profit.... Read More

Stop Over-Complicating Credit Card Fees in Your Salon/Spa

August 30, 2021 | By Neil Ducoff | 2 Comments

Yes, credit card processing fees suck.

So do utility bills, rent, insurance, and all the other expense line items on your Profit & Loss Statement. Credit card processing fees are one of those line items.

FACT 1: Credit card processing fees are a cost of doing business.

FACT 2: The global economy has been moving to cashless at a rapid pace.   Cashless is a reality — not a trend.

According to Forbes magazine, “Cashless is to the 2020s what the motorcar was to the 1920s — you don’t want to get stuck with just a faster horse.”

The seemingly endless salon/spa debate on credit card fees misses the mark with these approaches:

  • Don’t accept credit cards.
  • Offer discounts for cash payments.
  • Add a surcharge on payments made by credit cards. (Some states have strict policies on surcharges and consumer awareness.)
  • Don’t allow tips on credit cards.
  • Put in an ATM.

In response to restrictions on credit card usage, many owners say, “Our clients are fine with it.” Well, clients really don’t have a choice if they want services done.... Read More

Why Salons/Spas Should Raise Prices Now

July 12, 2021 | By Neil Ducoff | 4 Comments

After the COVID-19 shutdown, salons and spas reopened to a new economic reality.

The increased costs of PPE, plus the reduced capacity restrictions, meant expense budgets had to be rethought.

Complicating matters even further were employees that chose to remain on unemployment for a while — or not to return at all.

As salons and spas were reopening, Strategies was encouraging owners to raise prices to cover increased costs and capacity restrictions. Some did minor increases while others added a surcharge for PPE.

But there were many owners and independents, with the best compassionate intentions, who chose not to raise prices.

With pent-up demand for services, salons/spas reopened with high productivity rates. Everyone was excited being crazy busy.

As the reopening surge settled in, a new economic and financial reality began to settle in.... Read More

One Salon Owner’s Journey from the Fiery Pit of Hell to Giving Back to Those Less Fortunate

January 11, 2021 | By Neil Ducoff | No Comments

Every business goes through good times and bad. Sometimes, the bad times get so excruciatingly painful, the sleepless nights, and feelings of hopelessness so debilitating that some owners lose all hope.

No one opens a salon/spa expecting his or her business to fall into the fiery pit of hell. Yet, many owners find themselves there. The fiery pit of hell is real, it’s ugly, and emotionally demoralizing. So much so, many businesses never emerge from it.

In this post, we put the spotlight on one owner that found herself in the most unimaginable situation a business could be in.

This owner’s name is Lisa Cochran, owner of The Studio in Hattiesburg, MS, and R3 in Laurel, MS.

Lisa is the winner of the 2020 Team-Based Pay Coach’s Choice Award.

We first met Lisa in 2006 at her first Incubator seminar. Her business was in the deepest point of the fiery pit of hell. She was over $700,000 in debt, most of which was back taxes to IRS.... Read More

Pricing Salon/Spa Services by the Hour — Not Price

October 19, 2020 | By Neil Ducoff | 4 Comments

Imagine looking at your appointment book and knowing exactly how much profit every booked hour was going to generate.

Imagine every member of your team being well-versed in explaining the pricing for every service you offer.

Imagine getting rid of those complicated and seemingly endless price lists.

Now, imagine reinforcing your brand by using a pricing structure that charges for time, skills and expertise rather than the “name” of specific services.

AND … You should already be doing the following three things:

  1. You should be pricing your services based on “Cost per Hour + Profit Margin.”
  2. You should have established time standards for every service.
  3. You should be monitoring productivity rate to track “hours sold vs. hours available for sale.”

If you’re doing the above, you’re so close to switching from giving clients a $$ price for a service to saying, “We charge by how long your service(s) will take.” ... Read More

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