Tuesday, November 24, 2009

Secrets To Becoming A Profitable Salon: Rev Up Your Retail!

One sure way to creating more profit is through retail sales in your salon or spa. This is no secret to anyone on a service level, however, we usually relate to this from the stand point of how can we grow retail sales to become more profitable.

Now this is important and most of the time we focus all of our energies here. This doesn’t necessarily mean more profit, it just means more sales!

The secret is three fold:

Create a retail marketing calendar for a 12 month period. This means you need to spend the time to research and get with your team so all of you come up with a plan over a 1 year period that you know will be sound and can highlight different parts of your retail business, always fluctuating and keeping it fresh. Keep in mind that once you create this plan it doesn’t mean you might not change it along the way and add any new or fresh approaches you may come across, the key point is to have the plan created.

Create a rigorous retail inventory tracking system. As a coach this is where most businesses I coach fail! We sell retail, market it but do not track our effectiveness. You have to be able to stay within a budget but most salons and spas do not. Your budget is 50%, meaning you sell, for example, $1,000 in retail; your budget to restock the shelves is $500. To really get more detail, you need to drive deeper, analyzing each line you carry and looking at each individual item, tracking your wholesale cost per item, your mark up cost and quantity purchased at wholesale versus quantity sold at retail. Go back over the past twelve months and really dig. You will be surprised at how many low performers you have.

Once you indentify this you can research further, looking at why top performers are moving and why slow movers are not and you can then create a plan of attack to do something about it. This can have a tremendous impact on profit!

Manage your retail profit differently. Most salon and spa owners I coach and talk to throw all sales dollars into one account and also use all the monies generated to pay the bills! This takes profit out of your hands! Typically you have 50% of retail sales used to restock the shelves, 10% paid out in commissions and 40% left for profit. This 40% number needs to be tracked separately and a plan created to utilize this dollar amount for other purposes than paying monthly bills. This money, when used effectively can help you pay off debts & loans, do more effective marketing and education, implement 401K plans, etc. Before you implement this last strategy please consult one of our coaches so we can support you to do this the right way.

As you can see there are lots of different ways to make your retail more profitable for you other than just selling more of it! Take that next step and learn more about how to make this work to your advantage!

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