Does Your Salon Pass this Five-Part Test?

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In so many ways, a business is a living functional being. It has emotions, behaviors and vital signs. Your business can be disciplined and in amazing shape. It can be lethargic, disorganized and in terrible shape. A salon/spa business can be financially healthy, but it can also be cash-starved, burdened with debt making it just plain sick. A business can appear successful... but one look behind the curtain can reveal toxic conditions that cannot be hidden indefinitely.

So how does your salon/spa stack up? I put together a salon/spa business acid test to help you identify what’s working right and what needs attention and fixing.

Instructions: After each statement and based on your company’s current reality, choose one of the following scores:

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5 = No Compromise
4 = Consistent
2 = Inconsistent
1 = Needs immediate fixing

NOTE: Because there is no #3, you’re forced to score each statement above or below average. Anything below average is a red flag that requires attention.

Part 1: Leadership and Culture

___ Your company’s culture is rock solid.

___ Employees protect your company’s culture.

___ You address the wrong behavior and/or performance quickly.

___ All employees know the company’s monthly/weekly/daily goals.

___ All employees are held to the same standards.

___ Your salon/spa embraces change.

Score for Part 1: _____

Part 2: Productivity Business Outcome

___ Your salon/spa’s productivity rate rarely falls below 75%

___ All service providers work within service time standards.

___ All employees are responsible for every hour the salon/spa has available for sale.

___ All service providers give every client a verbal and written prebook recommendation.

___ All service providers give every client a verbal and written retail recommendation.

___ All employees participate in daily huddles.

___ Your salon/spa’s prebook rate is 70% or higher.

Score for Part 2: _____

Part 3: Profitability Business Outcome

___ Your salon/spa has a current 12-month Cash-Flow Plan.

___ Your cash-flow plan is your “boss.”

___ You understand and review your monthly balance sheet and profit & loss statement.

___ You have a cash reserve equal to at least three months of operating expenses.

___ Service payroll costs average 30% to 35% of total revenue (Service + Retail = Total Revenue).

___ Net profit is 10% or higher.

___ Your salon/spa is current on all expenses, taxes and debt payments.

Score for Part 3: _____

Part 4: Staff Retention Business Outcome

___ One-on-one performance reviews are done at least quarterly.

___ Pay is based on “overall performance” … not just individual sales.

___ Education and training is provided and paid for by the salon/spa.

___ Teamwork is a core value.

___ Employees would agree that the salon/spa is committed to helping them achieve their full potential.

___ Employees work in a positive and inclusive culture.

Score for Part 4: _____

Part 5: Client Retention Business Outcome

___ Your salon/spa’s First-Time Client Retention Rate is 50% or higher.

___ Existing Client Retention Rate is 80% or higher.

___ All clients know that the skills of all service providers are available to them.

___ Clients are more loyal to your “Brand” than a particular service provider.

___ Clients willingly go to other service providers when their “favorite” is unavailable.

___ First-Time and Existing Client Retention Rates are key factors in pay advancement.

Score for Part 5: _____

Total score for all parts: _____

How did you score?

  • If you scored 150 to 160: Congratulations! You have an amazing company.
  • If you scored 128 to 149: Your salon/spa is above average. However the closer your score is to 128, the more elements of your company require attention and fine-tuning.
  • If you scored 64 to 127: Your salon/spa is below average. The closer your score is to 64 … the more dysfunction in your culture, the more missed opportunities … and the more leaks you need to plug to prevent your salon/spa from sinking.
  • If you scored 32 to 64: Your salon/spa is on life support. Your investment of time, money, blood and sweat is at risk of loss.

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