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Combating Rising Business Costs

Paying our taxes is just around the corner, I feel this is an appropriate time to help you find ways to combat rising business costs.
The costs and challenges of owning your own business continues to escalate; rising taxes, increased minimum wage, sick leave minimum wage, overtime mandates, fees, energy, and more.

As business costs rise, the margin of profitability keeps getting lower. The growing trend towards high and low end franchises, booth rental, franchise suites, price and commission wars, lack of business skills on the part of the owner, are but a few of the challenges salon owners must face when growing their business.

A trial and error approach to finding solutions to these challenges are unacceptable. The ability to  combat rising business costs by being a savvy salon owner will be a critical key to running a successful salon.

The following Steps will help you improve salon profits:
Cut Expenses —do an inventory of all your expense. do you have an inventory system to keep track of all your Supplies? Is there any areas where you may be able to cut back? Do you have an inventory system in place?

Profit and Loss Statement — are you really making a profit? Are your overhead expenses too high? Number don’t lie. Have you spoken with your accountant in finding ways to cut overhead expenses? Examine all your expenses, make sure you add your salary as part of your expenses, then add all your sales; then subtract all your expenses and you will clearly see your net. Without profits, how can you combat rising business costs?

Legal Structure — are you a sole proprietor, sub chapter S, an L.L.C? Ask your accountant what is best for you and do some research on the legal structure of your business. There can be advantages to choosing the right legal structure.

Inventory Control— examine all your expenditures, and then find ways to reduce product waste.

Taxes — make sure you take advantage of all your legal deductions. Making sure you itemize and keep good records. Save your receipts!

Seek Out Help — from people who have been able to find solutions to these challenges. Saving money is one of the topics I’ll be addressing at my Las Vegas 2 Day Seminar.

Client Retention — losing just one customer and their family over the course of the year can be costly in terms of money and negative word of mouth publicity. You must monitor your customer return rate and referrals. Keeping customers and getting a lot of referrals  will greatly grow your bottom line.

Advertising & Marketing — is it working? The cost of advertising continues to escalate and far too many salon owners are wasting money on advertising that is not effective. You have got to monitor your advertising results the same way you measure your customer return rate. Consider the free benefits of marketing through social media — make sure your salon has a Twitter account and a Facebook business fan page. Your you tube channel offers plenty of opportunities.

Labor Costs — many owners are paying too high on commission. Many hairdressers think they make more money by higher commission. Earning 100% of 0 is still 0. I would rather make 40 0r 45 % commission and be booked solid and raise prices, rather than just sitting around waiting for customers. Make sure you review your compensation structure, whether by hourly wage, commission, salary, etc.

Improving Staff Performance — make sure you monitor their performance, customer return rate, and referrals. Either turn them around or let them go. Improving staff performance and productivity should be a high priority.

Develop Powerful Business Management Skills — your salon is a business and must be run like a business. Learn to be an entrepreneur and leader who has the skills to grow and build your salon and team. Don’t miss my upcoming business seminar in las Vegas May 15-16

Raising prices — when is the last time you raised your prices? As costs rise, you must raise prices periodically to keep ahead of costs. But before you raise your prices, ensure your services warrant these price increases. Customers do not mind paying higher fees if you exceed client expectations. Ifyou want to develop a high end business with high end professionals on your team,you must create a demand for your business.
These steps are a great starting point for saving money and turning a profit.

These are just a few ideas that will help you improve salon profits. For ongoing information, follow me here and on Facebook and Twitter, and be sure to share with your friends and staff.

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