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Running your Salon Business in “Fits and Starts”?

SalonManagementSoftwareOK, so you own a salon business.  And whether your business employs 5 people or employs 55 people its still considered a “small business” in the traditional sense.  But here’s a big question for you to ponder…

Are you really “investing” in your business (today) in order to build it?

In other words, do you spend x amount of dollars every month in order to make your business run better…to maybe attract more clients or to improve your staff skill level, or to maybe improve your customer experience?

Think about it.

Many salons struggle to get beyond a certain sales plateau because the owner stops “investing” in the business.  The lion’s share of the “investing” was done upfront and now the owner want to reap some (or all) of the rewards of their investment.

Believe me, I get it.  I’m a small business too.  And I used to run my business that way.

But, a number of years ago, a very smart business consultant looked at my “books” and said “Steve, you’re just living off the spoils of your past investments and you will never build this business further unless you take at least 3-5% of your sales dollars and re-invest it into your business…every week”.

And that’s exactly what I wasn’t doing.  I would do nothing for 2-3 months and then I would do a marketing campaign or upgrade my website or upgrade our software.  Essentially, investing in the business in “fits and starts”.  No real plan and no consistent marketing effort.

And I know exactly why I was doing it that way.

Because, at the end of the day, I always felt like the money “was coming out of my pocket”.  Does that ring any bells for you?

Heck, when I would have to pony up $2,000 for a marketing campaign it almost felt like someone went into my bank account and drained it by the $2k.

But here’s the thing…

If you keep “thinking” that way…you will always run your business in “fits and starts”.  When you have a couple of good weeks…you will invest some money.  When you have a bad month or two…you will invest nothing.  Which is exactly the wrong way to run your business.

So, here’s what I want you to do…today.

Be honest with yourself.  If you’ve been doing virtually nothing over the last 6-12 months and have been basically using the salon account as your own personal bank account…use 3% as your initial target level.

Whatever your salon does in sales for the week (service and retail combined) take that number and multiply it by the 3%.  Then set that money aside…every week in a separate account.  Yes…physically get a separate account.

Separating out the money from your main salon account is psychologically very important.  If you don’t do that…you will never have the money when you really need it…trust me on this.

That account now represents your “investing” money.

“Investing” money is to be used exclusively to build the business thru marketing, improve staff skill levels thru training or to improve the client’s salon experience.  That’s it.

Everything else including the purchase of retail products or professional products, or fixing something in the salon that’s broke, or buying supplies all gets paid out thru the main salon checking account.

That simple 3% investment in your business will pay huge dividends going forward and separating it out every week (into a separate account) will get you out of the mentality of “this is coming out of my pocket”.

P.S. If you can’t do the 3% right away…start with 1% and work your way up.  The key is developing the weekly habit.  You have to invest something (every week)…otherwise you’re never going to grow your business off that plateau.

As always, aim high…and dream even higher…

Steve Sampson

HairMax Salon Software is a product designed to be the best investment your salon has ever made. It is not only the easiest and most powerful salon software on the market. It is from a company dedicated to becoming the ultimate VALUE source to the industry.

 

Comments

2 Responses to “Running your Salon Business in “Fits and Starts”?”

  1. Gary PUCCIO on August 12th, 2013 11:32 pm

    The 3% is great idea. I have maintained a education budget and that has grown my business. I haven’t been very impressed with various types of advertising, I also give products as a gift for new clients as well as to clients that send me clients. It’s all about investing. I do like the 3%

  2. Bill Leary on August 13th, 2013 8:38 pm

    Steve, great idea. I have been slacking off these past few months and this is the perfect idea to get ME back on track. Thanks

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