When it comes to salon finances, most salon owners are in the dark. They seldom know the profit and loss incurred in a month. This makes things worse and affects the salon bottom line altogether.
If you own a salon and really want to watch your numbers grow, it is extremely important to stick to a concrete plan. Understanding the what, why and how of certain crucial numbers can help you make informed business decisions.
When you understand the basic numbers of your business, you can start planning and working towards bigger aspects such as salon facelifts, expansion, retail store, hiring spree and more.
A salon owner has countless tasks to juggle – payroll management, employee scheduling and marketing. With so many things to do, the business aspect just seems dull. Also, salon owners feel that with so many things to do, there is very little time left for strategic growth. Due to this, they tend to operate in the same way for years without realising that some practices followed by them are actually hindering the growth of their business.
If a salon wants to embark on the pathway to success, the first step is to get the right tools. Salon software can help you achieve the results you truly want to see for your business.
MioSalon, salon management software, has a real-time report and analytic feature, which gives business owners insight on how their business is performing. Besides generating detailed reports, it also helps salon owners and their managers to analyse the data correctly and make informed business decisions such as stock ordering, promotions, staffing, expansion, among the other things.
However, having too much data can be overwhelming and lead to business mishaps. Thus, if you are in the salon business, it’s important to run the right reports that will give you up-to-date information on how your business is really doing.
- Client retention report: Clients are the main reason salons are able to survive. Therefore, salon owners must give paramount importance to client retention. Running a client retention report will help you determine which employees are retaining most of the clients and which are struggling. Also, a salon must understand that it is cheaper to retain clients than acquire new ones. The average retention rate for first-time clients is usually 30% while for regular clients, it is 80%. The fastest way a salon can grow is by analysing these retention rates. Client retention reports should be generated every month to check which clients are leaving and which are staying. Salon owners can use this opportunity to reward employees who are able to retain clients too. If you haven’t seen certain clients in a while, send them an email, text message, inviting them back to your salon.
- Inventory status report: Inventory management is an important aspect in any salon. Analysing this report every month will give you a fair idea on your retail and professional inventory. Retail products can add a tremendous amount of revenue to your salon. Generating a product sales report will help you determine which products are bestsellers and which items are just collecting dust on the counter. Once you get this information, you can probably increase the order of the products that sell the most and ask your suppliers for discounts too. The inventory management feature on the beauty salon software will notify managers about product consumption, retail product sale and low stock alert.
- Sales/Business summary report: It comes as no surprise that the business summary report is an important one to look into. Most salon owners analyse this report with their accountant. It gives detailed information on the sales, deposits, gift card sales, redemption, tax collected and other client information. A salon owner must compare the numbers from month to month to identify trends and irregularities. If certain services are not selling out, find out why. While analysing these reports, emphasis should be even given to no shows and cancellations. Use these figures to eliminate no shows by frequently sending clients messages and emails.
- Activity trend report: In addition to monitoring your number of services, you will want to see the amount spent, by each guest, per visit. The more you know about a guest’s needs, the more you will be able to provide solutions. The statistical information generated on the salon management software can be used to analyse client rebooking rates, new client percentage, request rates, retail sales and average ticket. This report should be run every week to help stylists monitor their progress and work towards their goals.
- Employee utilisation: When you run a salon, the primary resource that you are selling is time. In order to increase your bottom line, you would want your employees to be busy all the time. While it’s impossible to expect a 100% utilisation, you must aim towards getting as close as possible to it. The employee report will be able to give you insights on your staff and their schedules. It will tell you which employee is busy most of the times and which one is idle. You can also gain an understanding on when your salon is busy, and when it’s not. To minimize gaps in the appointment book, improve marketing efforts and encourage customers to book appointments during quieter times to keep employees busy throughout the day. If you are nearing 100% utilisation, it’s time to grow your business by probably adding another chair or hiring another stylist.
- Client referral report: The most cost-effective way to get clients in a salon is by way of referrals. If a client refers to their friend to your salon is primarily because they have given you the ‘seal of approval’. They strongly believe in your services and want their friend or family member too also get the same kind of experience. A salon should make it a practice to check which client is referring to their friends the most. At the end of a quarter, they should be rewarded and given special benefits. They are not just your VIP customers but unpaid advocates.
With MioSalon, beauty salon software, a salon can make informed business decisions. From receiving real-time information to making strategic changes, analysing the profitability of services and products, the efficiency of employees, client retention, monitoring effectiveness of marketing campaigns and avoiding errors in business management, a salon and spa can do all this and more with MioSalon. Run them consistently and you will slowly start seeing a change in every area of your business. It’s high time you understand where your business is going. Start your free trial here.