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Why Salon/Spa Owners Wait Too Long to Take Action

Why Salon/Spa Owners Wait Too Long to Take Action

I was recently honored to be the opening keynote speaker at the two-day Art of Business seminar in Philadelphia.

One of the benefits of being the opening speaker is that attendees get to hear my content and have the rest of the event to discuss their challenges with me. My keynote was on "Creating Profit."

Rather than putting 450 people to sleep with the mechanics of financial statements, I focused on the thinking, behavior and decision-making that create profit.

  • I addressed the belief that getting busier and driving top-line revenue is no guarantee that profit will occur.

  • I addressed how to accurately forecast monthly revenue and expense budgets.

  • I addressed the monumental task of controlling payroll costs.

  • I drove home how sloppy spending decisions chew away at profit ... and add debt.

  • I emphasized the need for building cash reserves.


After my keynote, I spent the remainder of the seminar at a table talking to owners and answering questions. Keynotes are fun, but one-on-one conversations bring out the real issues.

Below is a snapshot of my conversations with owners. I’m sharing these insights because one or more of them may reflect you and what’s happening in your business. The intent is to get you to take action. Here goes:

  • Living on the edge: Too many owners are checking their bank balances to see how much cash they have in order to pay expenses and payroll. This indicates that the owner isn’t tuned in to what their Balance Sheet and Profit & Loss Statement is telling them about their financial reality. It also indicates that the business is operating on the financial edge of a cash crisis.

  • And the number is ___?: I use simple questions to quickly determine the level of financial awareness of an owner. One question is, “What did your business do in total revenue last year?” I talked to no less than a dozen owners that couldn’t tell me with accuracy what their business did in total revenue last year. Yes, there are many owners that know their numbers in extreme detail. However, there are too many that don’t know - and that’s a financial accident waiting to happen. Why work so hard playing the business game to generate revenue and not know the final score?

  • Payroll, payroll, payroll: In my keynote, I discussed what I call “The Three Headed Monster.” The biggest and meanest of the three is service payroll. When service payroll (hands that do the work) exceeds 35 percent of Total Revenue (service + retail) on your Profit and Loss Statement, this head of the monster begins sucking the financial life out of the business. When service payroll creeps over 45 percent, it is officially killing the business. I talked to a number of stylist owners that were generating a good chunk of their salon’s revenues and taking very little personal income. Translation: They’re working seriously hard to offset the high commission rates they can’t afford to pay. What’s worse is that these owners are afraid stylists will quit if they make any change to fix their payroll issue. Strategies has been doing Team-Based Pay conversions for over 22 years ... what owners fear rarely happens. Yes, a stylist may leave. Guess what? There were going to leave anyway.

  • Just stuck: I talked to some owners that have independent contractors in their business and are frustrated that they can’t create the culture and teamwork they want. They’re afraid to convert the renters to employee status because they believe they can’t afford to lose the rent money. Guess what? A couple of stylists working at a 60 percent productivity rate can generate more revenue for the business than the rent paid by independent contractors. There’s no reason to be stuck.


The point of this Monday Morning Wake-Up is that too many salon/spa owners simply wait too long to make the necessary changes their businesses are begging them to make. All of the issues listed above are common small business challenges, and solutions exist for each and every one of them.

The question is ... when will the owner have the courage to take that first step down a new path that leads to the business, team culture and financial success they’ve been hoping and dreaming for?

Here’s my challenge for all owners that see themselves in this MMWU: The only reason to beat yourself up is if you acknowledge that problems exist in your business and do nothing. That’s compromise. The first step is to understand that you did the best with the business tools you had to work with. The next step is to replace your old business tools with new tools that can fix your business, grow it and create profit. Step three is to embrace change and commit to seeing the changes through. There will be some bumps in the road and a detour or two, but you will reach your destination. Take action now. Every day you remain stuck is another day heading in the wrong direction. No Compromise.

2016 Team-Based Pay Conference

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