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

When Working Solo Isn’t Enough

February 4, 2022 | By Neil Ducoff | No Comments

The enticement of working solo in a salon/spa booth or suite certainly has its appeal.

For many long-time owners, working solo can be a refuge from the stress of managing employees and finances, to just focus on their clients and do the work they love.

Busy service providers see working solo as a means to control their schedule, work when they want, charge what they want, and hopefully make more money.

The flexibility of working solo has its limitations. That’s why, for a growing number of solo service providers, working solo isn’t enough.

FACT 1: A service provider’s two hands can only generate so much revenue.

FACT 2: Revenue stops when those two hands stop working.

At Strategies, we’ve been receiving a steadily increasing flow of inquiries from solo workers asking for training and coaching on growing a company and a team.

Here’s what they’re telling us: “I’ve been working by myself. I’m ready to hire a team and grow my own company. But I want to do it right.”... Read More

Why You Must be Impatient for Profit and Patient for Growth

December 5, 2021 | By Neil Ducoff | No Comments

FACT: The relentless pursuit of business growth can kill your salon/spa.

There are countless examples of salons/spas that found themselves in dire straits — or have completely imploded — because they were hell-bent on driving revenues and expansion at the expense of profit.

Too often, the measure of a successful leader is based on the leader’s ability to grow his or her company. But compromising profit at the expense of growth is, and always will be, inherently dangerous.

As I detailed in my book No-Compromise Leadership, a leader’s ultimate responsibility is to maintain balance across The Four Business Outcomes:

  1. Productivity
  2. Profitability
  3. Staff Retention
  4. Customer Loyalty

Compromise one or more of the outcomes and the others pay the price.

Profit is proof that your business model works. Profit built on integrity, purpose, and high values is proof that you are worthy of being a no-compromise leader.... 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

Why Salon/Spa Retailing Must Be a Team Sport

August 9, 2021 | By Neil Ducoff | 2 Comments

The following was a question posted in our Strategies Salon Spa Business Idea Exchange Facebook group.

RETAIL COMMISSION? We are having some retail commission issues. Who should get retail commission on walk-in sales? Should the person who had to step away from their guest to ring up the sale get it or does it go to “the house”? Now, if a stylist must educate the client on what to buy, then he/she gets the commission. But what about the walk-ins that know what they want and only need the sale rung up? Thanks in advance.

Here are some of the responses …

  • Hire a receptionist and pay zero commission.
  • If you must step away from a guest, you should definitely get commission.
  • Commission on “in chair” sales only. Walk-ins are coming into the salon to purchase so it’s every employee’s job to recommend and ring out sales.
  • If you give retail commission on walk-ins, some stylists will rush to help a client before others. That makes it difficult to measure a stylist’s retail performance at the chair.
  • The first retail sale goes to prescribing stylist.
  • Walk-in purchases go to the house.
  • If the prescriber stylist has repeat clients, he/she gets the commission.
  • Walk-ins go to whoever rings them up … unless the customer patronized a specific stylist.
  • If they’re actually selling a product explaining and earning the sale, I pay a 20% commission.
  • As the owner, I suggest you handle the walk-ins. That way you’re in control.
  • I have always paid retail commission to the person who made the sale regardless of if the customer was a walk-in or a client.

As you can see, the answers are all over the place. ... Read More

How to Implement a Major Salon/Spa Price Increase

July 18, 2021 | By Neil Ducoff | 1 Comment

In last week’s blog post on Why Salons/Spas Should Raise Prices Now, I delivered this reality check on the need to increase service prices:

“The combination of limited service hours available for sale, high customer demand, high productivity rates, and a tight labor market, means it’s time to raise prices. The industry is experiencing a “perfect storm” period for price increases.”

THE CHALLENGE: The industry suffers from price increase phobia out of fear of losing clients. In the process, too many salons/spas struggle with cash flow and creating profit.

Here is our hit-list of strategies to successfully implement a major price increase:

  • The proverbial “What’s the best way to raise prices?”: The answers are all over the place from put up signs, send email notices, tell clients the price is going to increase on their next visit, to front desk telling them at check out. The most logical solution is to inform clients when booking appointments and have service providers inform clients of the price increase at the beginning of the service.
  • The Fix: When it’s time to raise prices … set the date, raise prices, and get it over with. Dragging out the “let’s try to inform everyone so no one complains” is pointless. Guess what? Some clients are going to complain — the majority will not. You need gas and the price at the pump went up overnight … you still buy the gas. You’re a business owner that needs to make business decisions regarding price. Clients know this. If they appreciate the consistent quality you deliver, they’ll pay the new price. If not, it is the client’s choice to accept the increase or go elsewhere. There is no need for price increase phobia.
  • Will all clients who are not paying the current price please stand up? Maybe one reason you need to raise prices is that there are existing clients that still haven’t been charged the last price increase … or two. That’s right, and you know it. There are probably clients with appointments and/or receiving services at your salon/spa that are still paying old prices. This is pure insanity and a 100% compromise of your business. If you and your employees are true professionals, respect the value of your skills, experience, and quality of work, and charge the appropriate prices.

  • The Fix: I’m just going to say it, “Get a new backbone if the one you have is a rubber band.” Clients are NOT your friends. They buy your time to receive services. When the value of your time and cost of business increases, you raise prices, and they pay the increase that all other clients are required to pay. If a client doesn’t want to pay your rate — he or she is not a good client. I bet you’ll see better cash flow just by enforcing your existing pricing structure.
  • Pricing based on assumptions: You know how much to mark up a retail bottle of shampoo based on its cost. How do you know how much to mark up a service if you don’t know what an hour of service costs? The answer is you don’t know … so you guess. It’s downright scary how many salons/spas set service pricing based on WAGS (wild-ass guesses) — or what the competition is charging, that’s also based on a WAGS. Maybe your pricing is based on some level system you installed that has set price ranges for each level, but are those prices based on your company‘s cost per hour or someone else’s?
  • Discounting away profits: Are you driving gift card sales by offering big attractive discounts? It’s great to see all that gift card cash add up, but you may be setting your company up for a cash crisis at redemption time when the cost of fulfilling those pre-paid services is going to exceed their purchase price. The cash crisis is going to be even more painful if the gift card cash was spent and not held in reserve. You’ll not only be busy fulfilling gift card services at a loss due to excessive discounting … you won’t have the cash to cover the fulfillment costs. Discounting dependency kills cash flow and destroys profit. Groupons, and the like, are about the worst discounting practices any salon/spa can engage in.
  • The Fix: There’s nothing wrong with occasional and selective discounting promotions. When discounting becomes a crutch to drive sales, your service business is in trouble. Stop the discounts and focus on quality, delivering extraordinary experiences, giving value, pre-booking, and client retention. As for discounted gift cards, stop the practice. It will come back to haunt you at redemption.
  • Going for the tip vs. charging the right price: This is extremely common and probably alive and well in your salon/spa. It’s when service providers intentionally give away or don’t charge correctly for services, to receive a bigger tip. It’s also when service providers fail to charge clients a price increase because they think they’ll lose clients and miss out on tip income.
  • The Fix: You must have a system in place that monitors the price that clients are being charged for services. Some software systems can alert you whenever a price is adjusted. In a service business, educating your team on proper pricing and pricing policies is non-negotiable. Inspect, verify, and correct. Otherwise, the leaks in your pricing system will eventually sink your company.

Here’s my challenge to you: Prices on damn near everything have increased since the pandemic. It’s time to raise yours.... 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

How to Fall Back in Love With Your Salon/Spa Business

April 25, 2021 | By Neil Ducoff | No Comments

The day you became a salon/spa owner, it was like a dream come true. But like any relationship, it can, and will, hit some rough spots.

Too often, those rough spots turn ownership into a true love/hate relationship. That’s especially so if the rough spots linger too long, or, devolve into what we not-so-fondly refer to as, the fiery pit of hell.

On the “love” side: Your salon/spa business is running like a finely tuned machine. You feel a sense of personal pride and accomplishment. Your team culture is dialed in, there’s money in the bank, your critical numbers are impressive — so much so, you love being an owner.

On the “hate” side: Employees drive you crazy, your culture needs fixing, cash flow sucks, debt load is scary, and you’re always stressed. You’re not sure how much more of this you can take. If there was a viable way to get out without losing everything — you’d take it in a heartbeat.... Read More

Imagine Your Salon/Spa Running at Full Potential

April 18, 2021 | By Neil Ducoff | No Comments

To have your salon/spa running at full potential is every owner’s dream.

Running at full potential means:

  • Your company-wide productivity rate averages 85%.
  • High first-time and existing client retention rates.
  • Everyone working within time standards.
  • Systems make your business consistent and predictable.
  • Every client receives a personalized retail recommendation.
  • Hitting service and retail goals damn near every month.
  • Your culture is dialed in and all staff are on the same page.
  • Cash flow is excellent with three-plus months of cash reserve.
  • No, or very little, debt.
  • Monthly net profit makes you proud of what you built.
  • Your company is meeting or exceeding growth goals.
  • You sleep good at night.

You get the picture. Running at full potential is a wonderful and enviable place to be.

As an entrepreneur, you also know that no matter how dialed in your business is, you see where it misses the mark. Where performance, behaviors, and execution could be better.... Read More

Dare to Dream — And Dream BIG

April 4, 2021 | By Neil Ducoff | 4 Comments

Without question, leading your salon/spa through the pandemic tested your tenacity and leadership skills.

We all had to overcome one obstacle after another until some semblance of normalcy and stability was achieved.

In tough times, your focus and energy are on making it through today, tomorrow, and next week. Future dreams and aspirations have to wait. It’s called “survival mode” for a reason.

FACT: Survival mode can be a trap. If you stay in it too long you can get stuck in survival mode.

The pandemic turned “business as usual” upside down. Many salons and spas closed their doors. But the majority survived.

From the beginning of the pandemic, my message to owners was simple.

  • Salons and spas that entered the pandemic with tight systems,
    disciplined cultures, and cash reserves, will make it through relatively unscathed.
  • Salons and spas that were struggling culturally and financially before the pandemic, may not survive.

Today, there are signs the worst of the pandemic is behind us. So much so, that it’s time to start dreaming again — and dream BIG.... Read More

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