Planning for Spa & Salon Success in 2012

No doubt you’re reading numerous wrap-ups of 2011 along with trends, forecasts, and predictions for 2012. Will business be up, or will it stay flat?  Will there be another economic dip? Beyond reading the prophecies of the experts, what are you doing to ensure the growth of your salon or spa business in this year? Creation of budgets for 2012 started last September in large companies, but in our industry we are often not as well-prepared. We hope business will improve, but we don’t often take concrete steps to make sure that it does, or have plans in place to reduce expenses in case it doesn’t. Here are a few prioritized and simplified steps to follow in order to develop a plan that helps you raise both sales and profits in 2012.

1. Careful review of 2011 Income Statement

Your final statement for the past year is a vital tool in planning the next year. You want to compare your performance to the prior year, and then understand how your performance compares to industry standards. All of the entries are important, but the most pivotal line items to examine are the following:
 

• % Gross Profit Margin & Cost of Goods
• % Payroll to Revenue
• % Retail to Total Sales
• % Overhead Expenses to Revenue

2. Strategic analysis of treatment and retail sales reports from 2011

Make sure you know what services and products are your top sellers, and which are the slowest movers. If you remove the lowest-performing 20% of the list, you can invest the money you were spending in stocking of products and training on protocols into the top 20% where it can produce greater returns. A simpler treatment menu is less expensive to offer and market and can also be easier for clients to understand. The sales reports will also tell you what your average ticket is for services, retail, and the combination.

3. Realistic goal setting for 2012

Now take what you have learned from this review and set some solid goals for performance in 2012. The important thing to remember in goal-setting is that goals should be SMART: Specific, Measurable, Attainable, Realistic, and Timebound. Taking your % of retail to total sales from 13% to 28%, for instance, is something you would need to accomplish in stages; perhaps 13% to 17% in the first quarter, 20% in the second, 23% in the third and attaining your goal of 28% for the fourth quarter only. Goals set both for the business and for each service provider that fit in with the SMART acronym and much more likely to be met.

For further guidance on this concept, join us on January 18 at 1pm EST for our monthly free webinar, which will help you to analyze your past performance and set a few simple but specific goals for the coming year.  A small bit of strategic planning goes a long way towards creating positive results.