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:
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.