Braving the Financial Jungle SpaFinder Experiential  Learning Event 2008 By Lisa M. Starr Wynne Business
Effective Financial Management   <ul><li>Performance Benchmarking & Profit Formulas </li></ul><ul><li>Financial Strategies...
What is Success? <ul><li>You are getting paid for your contribution to your business, whether as manager or tech. </li></u...
Income Statement Layout <ul><li>Service Sales $ </li></ul><ul><li>Retail Sales $ </li></ul><ul><li>Total Sales $ </li></ul...
Tracking Revenue <ul><li>Service Revenue – by Department </li></ul><ul><li>Retail Revenue – by Department </li></ul><ul><l...
Chart of Accounts detail <ul><li>Service Sales  </li></ul><ul><ul><li>and </li></ul></ul><ul><li>Retail Sales  </li></ul><...
 
Tracking Revenue <ul><li>Hair Products </li></ul><ul><ul><ul><li>10-15% </li></ul></ul></ul><ul><li>Skincare Products </li...
Tracking Revenue   -  Typical Metrics <ul><li>Average ticket for spa or salon </li></ul><ul><ul><li>Service $ + Retail $ /...
Tracking Revenue  -  cont’d <ul><li>$ sales per square foot </li></ul><ul><ul><li>Annual Retail $ + Svc $ / total square f...
Tracking Expenses   <ul><li>Labor – Your Largest Expense </li></ul><ul><ul><li>Technical Staff  (35%) </li></ul></ul><ul><...
Labor & inventory chart of accounts <ul><li>Labor Expense  </li></ul><ul><li>Inventory Expense </li></ul><ul><ul><li>Retai...
 
Departmental Analysis
Tracking Expenses –  cont’d   <ul><li>Professional inventory costs, by department </li></ul><ul><ul><ul><li>Skincare 5-8% ...
Other Expenses   <ul><li>Rent, Utilities & Debt Service </li></ul><ul><li>Advertising & Marketing </li></ul><ul><li>Cleani...
Financial Performance Strategies   <ul><li>Does your compensation plan drive the right behaviors? </li></ul><ul><li>Are yo...
Performance Strategies –  cont’d   <ul><li>Is each workstation staffed for maximum productivity? </li></ul><ul><li>Do oper...
Action planning <ul><li>Identify under-performing areas </li></ul><ul><li>Develop an action plan </li></ul><ul><li>Pick a ...
Action Planning  -  cont’d <ul><li>Are you good at the basics? </li></ul><ul><li>Do you have the right people on your team...
Braving the Financial Jungle THANK YOU FOR YOUR ATTENTION!  A copy of this presentation will be posted on  www.wynnebusine...
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Braving The Financial Jungle

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Understanding financial ratios in your spa or salon and setting up your income statement

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Braving The Financial Jungle

  1. 1. Braving the Financial Jungle SpaFinder Experiential Learning Event 2008 By Lisa M. Starr Wynne Business
  2. 2. Effective Financial Management <ul><li>Performance Benchmarking & Profit Formulas </li></ul><ul><li>Financial Strategies </li></ul>
  3. 3. What is Success? <ul><li>You are getting paid for your contribution to your business, whether as manager or tech. </li></ul><ul><li>Your business can produce a profit on its sales. </li></ul><ul><li>You are growing your staff and your clients continually. </li></ul>
  4. 4. Income Statement Layout <ul><li>Service Sales $ </li></ul><ul><li>Retail Sales $ </li></ul><ul><li>Total Sales $ </li></ul><ul><li>Cost of Goods Sold $ % </li></ul><ul><li>Gross Profit $ % </li></ul><ul><li>Expenses $ % </li></ul><ul><li>Net Profit $ % </li></ul>
  5. 5. Tracking Revenue <ul><li>Service Revenue – by Department </li></ul><ul><li>Retail Revenue – by Department </li></ul><ul><li>Other Revenue – gift certificate sales, food sales </li></ul>
  6. 6. Chart of Accounts detail <ul><li>Service Sales </li></ul><ul><ul><li>and </li></ul></ul><ul><li>Retail Sales </li></ul><ul><li>Skincare & Waxing </li></ul><ul><li>Massage & Body </li></ul><ul><li>Nails </li></ul><ul><li>Hair </li></ul><ul><li>Makeup </li></ul><ul><li>Medical </li></ul><ul><li>Other </li></ul>
  7. 8. Tracking Revenue <ul><li>Hair Products </li></ul><ul><ul><ul><li>10-15% </li></ul></ul></ul><ul><li>Skincare Products </li></ul><ul><ul><ul><li>35-50 % </li></ul></ul></ul><ul><li>Massage/Body </li></ul><ul><ul><ul><li>1-5% </li></ul></ul></ul><ul><li>Cosmetics </li></ul><ul><ul><ul><li>40-100% </li></ul></ul></ul><ul><li>Nails </li></ul><ul><ul><ul><li>5-20% </li></ul></ul></ul><ul><li>Gift </li></ul><ul><ul><ul><li>2-5% </li></ul></ul></ul>Recommended Retail to Total Sales Ratios in a Day Spa
  8. 9. Tracking Revenue - Typical Metrics <ul><li>Average ticket for spa or salon </li></ul><ul><ul><li>Service $ + Retail $ / number of clients </li></ul></ul><ul><li>Average ticket for operator </li></ul><ul><li>$ per hour per station </li></ul>
  9. 10. Tracking Revenue - cont’d <ul><li>$ sales per square foot </li></ul><ul><ul><li>Annual Retail $ + Svc $ / total square feet </li></ul></ul><ul><li>Utilization/Productivity rate </li></ul><ul><ul><li># of appts avail / # of appts sold </li></ul></ul><ul><li>Retention vs Request rates </li></ul><ul><li>Capture rate </li></ul>
  10. 11. Tracking Expenses <ul><li>Labor – Your Largest Expense </li></ul><ul><ul><li>Technical Staff (35%) </li></ul></ul><ul><ul><li>Hourly Staff ( 8%) </li></ul></ul><ul><ul><li>Management/Salaried Staff ( 4%) </li></ul></ul><ul><ul><li>Taxes & Benefits ( 8%) </li></ul></ul>
  11. 12. Labor & inventory chart of accounts <ul><li>Labor Expense </li></ul><ul><li>Inventory Expense </li></ul><ul><ul><li>Retail </li></ul></ul><ul><ul><li>Back bar </li></ul></ul><ul><li>Skincare & Waxing </li></ul><ul><li>Massage & Body </li></ul><ul><li>Nails </li></ul><ul><li>Hair </li></ul><ul><li>Makeup </li></ul><ul><li>Other </li></ul>
  12. 14. Departmental Analysis
  13. 15. Tracking Expenses – cont’d <ul><li>Professional inventory costs, by department </li></ul><ul><ul><ul><li>Skincare 5-8% </li></ul></ul></ul><ul><ul><ul><li>Nails 4% </li></ul></ul></ul><ul><ul><ul><li>Massage/Body 1 - 2% </li></ul></ul></ul><ul><ul><ul><li>Makeup 1% </li></ul></ul></ul><ul><ul><ul><li>Hair 6-7% </li></ul></ul></ul>
  14. 16. Other Expenses <ul><li>Rent, Utilities & Debt Service </li></ul><ul><li>Advertising & Marketing </li></ul><ul><li>Cleaning, Repairs & Maintenance </li></ul><ul><li>Training & Education </li></ul><ul><li>PROFIT! </li></ul>
  15. 17. Financial Performance Strategies <ul><li>Does your compensation plan drive the right behaviors? </li></ul><ul><li>Are your ratios aligned with benchmarks? </li></ul><ul><li>Does your menu reflect an ability to upsell and increase average tickets? </li></ul><ul><li>Are your performance appraisals tied to financial behaviors? </li></ul>
  16. 18. Performance Strategies – cont’d <ul><li>Is each workstation staffed for maximum productivity? </li></ul><ul><li>Do operating hours reflect demand? </li></ul><ul><li>Is there an inventory management program in place? </li></ul><ul><li>Is there a retail sales program </li></ul><ul><li>in place? </li></ul>
  17. 19. Action planning <ul><li>Identify under-performing areas </li></ul><ul><li>Develop an action plan </li></ul><ul><li>Pick a few key focus points </li></ul><ul><li>Both revenue and expense-side strategies </li></ul><ul><li>Involve the staff </li></ul>
  18. 20. Action Planning - cont’d <ul><li>Are you good at the basics? </li></ul><ul><li>Do you have the right people on your team? </li></ul><ul><li>Prioritizing </li></ul>
  19. 21. Braving the Financial Jungle THANK YOU FOR YOUR ATTENTION! A copy of this presentation will be posted on www.wynnebusiness.com Lisa M. Starr [email_address]
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