” Cutting Expenses is the easiest way to give yourself a raise.” -Jon Gonzales
Beginning next year, the cost of owning your own business will escalate; rising taxes, fees, energy, and what many see as a slowing economy. As business costs rise, profits will be lower or nonexistent.
This coupled with your personal living expenses, costs such as food, gas, etc.
Despite all these challenges, well managed salons will be in great demand, provided you plan ahead.
The easiest way to improve profits is 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 profits.
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 costs out of control? Do you have an inventory control system in place?
Examine all your expenses, then add all your sales, subtract and you will clearly see your net. Review with your accountant. Without profits how can you combat rising business costs and grow your business.
Legal — are you a sole proprietor, sub chapter S, an L.L.C? Ask your accountant, what is best for you.
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.
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 .
Advertising — Is it working? The cost of advertising continues to escalate, far too many salon owners are wasting money on advertising that is not getting results. You must 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. I will be releasing a blog post soon for hairdressers on this topic soon.
Unproductive Staff — make sure you monitor their performance, customer return rate, and referrals. Either turn them around or let them go.
These are just a few ideas that will help you plan ahead. For ongoing information,follow me and share with your friends and staff. Click here.