Ten Characteristics of a Successful Salon/Spa Business
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.
Characteristic Number 2 - Business Culture: The culture of a business represents the collective behavior of its leaders and employees. Businesses that possess well-defined cultures stand out from the crowd because they’re a joy to interact with. Customer points of contact at the front desk, retail areas, and service departments – everything throughout the business feels natural yet orchestrated. What you don’t see are employees that are indifferent and disengaged. Great business cultures require leadership, systems, training, coaching, accountability and commitment.
Characteristic Number 3 - Financial Literacy: Financial literacy is a non-negotiable skill in business. This doesn’t mean that the owner needs to be an accountant or have the skills of a bookkeeper, but it does mean that the owner knows how to read and understand financial reports and use them to make the best possible business decisions. More importantly, the owner is capable of building a cash-flow plan to project service and retail sales goals complete with a budget to manage expenses. The result is a business that is fiscally solid and has the cash and resources to fund growth. What you don’t see are owners in a perpetual state of financial stress with difficulty paying bills and retail shelves that have more room for dust than they do products to sell. Cash is the fuel of business. Successful businesses learn and master the skills to be financially responsible in order to ensure that they will have enough fuel to achieve their goals.
Characteristic Number 4 - Structure and Systems: If your intent is to grow a dynamic, efficient, quality-driven business, structure is non-negotiable. Structure ensures efficiency, productivity, consistency and predictability. Systems produce predictable results. Lack of structure and the absence of systems all but ensure inconsistency in how work is done, conflicting agendas, dissension, stagnancy and, worst of all, uncertainty. Call it leadership, accountability, systems, standards of performance, or policies and procedures; it all refers to the structure that supports success. Anything less than a deliberate and structured approach to business infuses mediocrity into all activities. Mediocrity never wins in business.
Characteristic Number 5 - Skill development: Success is the result of acquiring knowledge and mastering the skills to use that knowledge to the best of your ability. A commitment to training and education is non-negotiable for both technical and non-technical skill development. And the ultimate measurement of a company's commitment to training and education is found in its first-time client retention rate (the percentage of first-time clients that return for a second visit within approximately 90 days). Skill development is an investment in your brand and quality assurance. “Getting better” is a company value. Got it?
Characteristic Number 6 - Everyone sells: When it comes to the topic of "selling," there is always a “love/hate” relationship. The “love” part is that selling is what every business is all about. Everyone recognizes this. The “hate” part is best summed up by the fact that not all people are comfortable with the concept of "selling." Some people are natural at it while others feel their gut twisting when in close proximity to a sales situation. The process of selling is just like producing a hit Broadway show. There are writers, choreographers, set designers, lighting and sound technicians, an orchestra … and the actors. The applause and success is earned by the collective efforts of all. It doesn't matter what an individual's role is in a company … his or her paycheck depends on the company's collective ability to sell.
Characteristic Number 7 - Work environment: Success has a “look.” It’s common for owners to ask me, “What’s the first and most important thing I can do to turn my business around?” More often than not, my response is, “Clean it, paint it and refurbish it.” Front door to back door, everything about the facility should communicate and support its brand identity. Every piece of equipment should work. Lighting fixtures should be functioning. Walls, décor, posters, pictures, bathrooms and dressing rooms should be spotless. Reception areas should look organized and professional. Dress for success applies to work environments too.
Characteristic Number 8 - Compensation: Compensation is perhaps one of the most hotly debated topics for owners and leaders. Commission, Team-Based Pay, fixed rate, sliding scales, product/service charges, or independent contractor - there is no one right way that will serve the needs of all. But when all the debating is done, a compensation program must achieve three goals:
1. Inspire and reward the right performance and behaviors: If you keep rewarding performance and behavior you don't like … you continue to enable that behavior. Commission-based pay is notorious for rewarding individual sales while paying for performance and behaviors you don't want.
2. Fit the financial reality of the business: There are only 100 pennies in a dollar. Whenever payroll exceeds a company's financial reality, it instantly initiates a cash crisis that, if left unchecked, can be destructive and even kill the company.
3. Provide income growth for employees: The best companies provide employees with growth paths for income and achieving their full potential. It is up to both parties to make it work.
Characteristic Number 9 - Brand Identity: When it comes to brand identity, businesses fall into one of three categories: nondescript, blends in, or stands out from the competition. Nondescript businesses are just bland places. There’s nothing about the facility, signage, logo, print materials, service or personality that makes the “wow” meter show signs of movement. There’s nothing overly special. Businesses with strong brand identities send the “wow” meter flying into the success zone. It’s a complete package, from web site, print materials and phone experiences to its facility, décor, team personality, execution of work and all those special touches that radiate success. Each and every one of the previous eight success characteristics must rate high in order for a strong brand identity to emerge and endure.
Characteristic Number 10 - Community Service: The true character of a successful company is defined by how it gives back to the community. Community service comes in many forms, from fundraising to employees donating personal time to a worthy cause. Business success simply does not appear complete if it’s all about making money and generating profit. A business, no matter how profitable or magnificent, is never truly successful without a warm heart and sincere compassion for the well-being of others.
Here's my challenge to you: Rate your salon/spa business against the ten characteristics of a successful business. The more brutally honest you are … the more you see what needs improvement.
Collectively, the ten characteristics establish a world-class standard that forward-thinking and business-minded salon/spa owners can strive for. How did your business score?