So your beauty business has had a good year; you’ve increased sales and profits, have a dedicated staff, and happy clients. Where do you go from here?
It’s easy to think that successfully growing your salon or spa just means more of the same: more clients and more revenue. But as you probably already know, increased sales don’t necessarily lead to increased profits. And while sales and profits are extremely important indicators of business success, they’re not the only measurements. You’ve probably seen examples of businesses that were popular and busy (restaurants, spas, retail stores), and then one day the door is suddenly locked (i.e. Borders).
How does this happen? When you consider the ingredients needed to build a successful business foundation, one that will support future growth, it involves a lot more than just increasing sales. It requires systems.
When you patronize a business that is “successful,” there are some key components that bring you back. You’re probably greeted by and interact with smiling, friendly, well-trained employees. The products and/or services offered are ones you want and are available to you at convenient times and at a price you’re willing to pay. Most importantly, your experience is consistent from visit to visit. Those seemingly effortless features are in fact the result of a lot of hard work and preparation that happens in the background, beyond the view of the customer. It’s this behind-the-curtain work that allows some businesses to scale and others to fail.
If your spa business had a good year and you’re thinking of expanding it, or possibly opening a second unit, the first thing to ask yourself is: Are we executing well on the basics? Do we have systems in place that are delivering the results we want, with every client, every day?
The beauty business, much more than with restaurants or retail, is built on relationships. Clients will be unable to develop lasting relationships with your staff members, and therefore your business, if you have a revolving door in that regard. Happy staff members are the result of highly-evolved human resource processes, including clearly written job descriptions, recruiting procedures, a multi-step interview and audition protocol, employee handbooks, orientation and training programs, and compensation plans that drive the right behaviors, as well as ongoing coaching and mentorship from management. Selecting the right staff members and then investing in their training and keeping their passion level high will help ensure that you become an employer of choice.
Your service menu must also be built to scale. Excellent brand management requires strategically chosen resource partners and creative service menus that both drive sales and keep your staff engaged, as well as an investment in regular training throughout the year. Detailed service protocols, department and operations manuals, and a quality management system ensure that services are delivered the same way, day in and day out.
Did you know that Starbucks spends more on training than on advertising? The results speak for themselves: A consistent cappuccino at every location, all the time, means that clients will spread excellent word-of-mouth marketing about the brand. Starbucks knows that their clients will do their marketing for them. Each barista is trained a minimum of 40 hours to make a cup of coffee! Are you technicians trained for 40 hours before you put them out on the floor?
Salon and spa profits can be pretty slim, and a lot of money is lost industry-wide on mismanagement of products. Instituting an inventory management program, with guidelines and budgets for the ordering, receiving and deployment of both professional and retail products, can boost your profit margin by as much as 50%. Products are a commodity in the beauty industry, and they tend to be overlooked when it comes to instituting management controls. But if you have a 3% profit margin, and creating some inventory guidelines could boost that margin to 4.5%, that’s money that goes directly into your pocket. It also creates a replicable system that will work no matter the size of the business or number of locations.
These are examples of infrastructure components that need to be created to support the healthy growth of your business. Expanding your salon or spa takes an enormous amount of time, energy, and capital, and you want to be confident that, as your attention is diverted from daily operations, things will continue to run as well as ever, and the infrastructure you’ve created will be able to support an even bigger operation.
I would be remiss if I didn’t mention that if you have one successful salon or spa, expanding to two units does not equal twice the revenue or profit. In fact, many companies will see their profits take a hit for 2 or 3 years upon opening a second location. Two locations are not necessarily enough to support the management infrastructure required to operate your business; the sweet spot is usually 3 to 4 locations for maximum efficiency and return on investment.
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