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Combating Rising Business Costs

annual-report-203760_1280Combating Rising Business Costs
The cost of owning your own business will escalate, rising taxes, increased minimum wage, sick leave mandates the possibility of vacation mandates, fees, energy, and the cost of owning your own business continues to grow. As business costs rise, the margin of profitability for salon owners keeps getting lower.
Other competitive  challenges include 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, turnover, and the list of challenges continue to grow.
A trial and error approach to finding solutions to these challenges are unacceptable.
This coupled with your personal living expenses, costs such as food, gas, etc. really compounds your challenges.
Despite all these challenges, you can turn these challenges into great opportunities for the simple reason most owners will not seek help.  Savvy well managed salons will know how to turn adversity into great opportunities and  be in great demand, provided you plan learn how to develop your business ski
The first step and the easiest way to improve profits are to cut overhead expenses.
The following tips will provide you with a plan of action that will help you keep pace with the high cost of rising business costs, as well as improve profit

Follow these steps:

Profit and Loss Statement — are you really making a profit? Are your overhead expenses to high? Number doesn’t lie. Is your Overhead out of control? Do you have an inventory control program in place? 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. Review with your accountant. Without profits how can you combat rising business costs?
Legal — are you a sole proprietor, subchapter S, an L.L.C? Ask your accountant, what is best for you. There can be advantages to choosing the right legal structure. Review with your accountant.
Cut Your Expenses — examine all your expenditures, and then find ways to lower. Too much product waste and inventory is a good place to start.
Taxes –— make sure you take advantage of all your legal deductions. Making sure you itemize and keep good records.
Seek out help — from people who have been able to find solutions to these challenges.
Client Retention — losing just one customer and their family over the course of the year, can be costly in terms of money and bad word of mouth publicity. You must monitor your customer return rate and referrals. Losing customers will greatly reduce your bottom line.
Advertising — Is it working? The cost of advertising continues to escalate, 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.
Labor Costs — many owners are paying too high on commission. Many hairdressers think they make more money by higher commission. Earning 100% of O is still O.
I would rather make 40 0r 45 % commission and be booked solid and raise prices, rather than just sitting around waiting for customers.
Unproductive Staff — make sure you monitor their performance, customer return rate, and referrals. Either turn them around or let them go.
Develop powerful business management skills — your salon is a business and must be run like a business. Learn to be an entrepreneur who has the skills to grow and build your salon and team.

These are just a few ideas that will help get started towards profitability. For ongoing information, follow me and share with your friends and staff. My upcoming 2 day business seminar for astute salon owners will be held in Las Vegas September 14-15  Click here.

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