Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

GOtalk Webinar Series: New Year's Resolution - Setting Financial Targets

691 views

Published on

Lisa Starr discusses how to use metrics from your operating software and financial statements in order to improve financial performance for your business in 2012. She creates a plan for you to focus on four areas of your salon, spa or fitness business.

Published in: Business, Lifestyle
  • Be the first to comment

GOtalk Webinar Series: New Year's Resolution - Setting Financial Targets

  1. 1. New Year’s Resolutions:Setting Financial Targets By Lisa Starr
  2. 2. Your PresenterWynne Business provides consulting and education, includinglive seminars and on-site team trainings, for the spa and salonindustry• Lisa M. Starr – 20+ years experience in salon & spa industry – Senior Consultant, Wynne Business – Community Ambassador, Gramercy One – Consultant, educator, writer, presenter
  3. 3. Targetsand Goals
  4. 4. "If you dont know where you are going, you will probably end up somewhere else. “ Lawrence J. Peter
  5. 5. Goals must be . . .
  6. 6. SMART Examples• Instead of this: – “I need you to do better.” – “We need to sell more.”• Do this: – “I need you to increase your average ticket from $35.80 to $39.50 by the end of next month.” – “We need every technician to meet minimum departmental guidelines for retailing in the next quarter.”
  7. 7. Guidelines for goal setting• There must be a starting benchmark• There must be consensus on the target• Danny Meyer: “constant, gentle pressure.”• Link achievement of goals with company performance
  8. 8. 4 Areas of Focus• Revenue Side – Average Ticket – % Retail to Sales• Expense Side – % Payroll to Revenue – Treatment Supply Costs
  9. 9. Income Statement ModelRevenue Service Sales 450,000 75% Retail Sales 150,000 25% Total Sales 600,000 100%COGS Service Labor Costs 150,000 Back Bar Supplies 26,500 Products for Resale 68,000 Retail Commissions 22,250 Total Cost of Goods 266,750 44%Gross Profit 333,250 56%Expenses Rent & Utilities 36,000 Marketing 18,000 Support Labor 72,000 Owner Salary 40,000 Employee Benefits 14,212 Payroll Taxes 25,582 Insurance 6,000 Debt Service 1,100 Total Expenses 212,894Net Profit 120,356 20%
  10. 10. Revenue-side Targets
  11. 11. Average Ticket• Service Sales + Retail Sales/ #of clients – $85 + 85 + 85 + 85 + 30 = $370/5 = $75• A simple but powerful way to measure your performance• The quickest approach to growing sales• Average ticket can be measured by facility and by operator
  12. 12. 4 Methods toGrow Average Ticket• Strategic Service Menu design• Each department has micro tx available for small fee – NO additional time• Add-ons• Retailing
  13. 13. The Power of Average Ticket• Feb 1; LMT has 5 clients (4 massages, 1 body tx)$85 + 85 + 85 + 85 + 68 = $408Average ticket = $81.60 or $408/5• Feb 15; LMT has 5 clients (4 massages, 1 body tx, sells 1 retail product)$85 + 85 + 85 + 85 + 68 + 18 = $426Average ticket = $85.20 or $426/5Increase of 4% with the sale of one item!
  14. 14. Service Menu Supports Avg TktFacial Treatments Price Facial Treatments PriceAnti-Aging Facial $95 Anti-Aging Facial $102Clear Skin Facial 85 Firming Facial 98Spa Facial 85 Organic Facial 95Gentlemens Facial 85 Clear Skin Facial 92Teen Facial 45 Spa Facial 85 Teen Facial 48 Hydrating Hands 13 Accupressure Scalp 13 RevitalEYES Tx 11 Smooth Lips Tx 8
  15. 15. Growing Average Ticket• Feb 15; LMT has 5 clients (4 massages, 1 body tx, sells 1 retail product)$85 + 85 + 85 + 85 + 68 + 18 = $426Average ticket = $85.20 or $426 / 5• April 1; LMT has 5 clients (4 massages, 1 body tx, 3 purchase retail)$85 + 92 + 95 + 98 + 72 + 12 + 15 + 15 = $484Average ticket = $96.80 or $484/5• Another increase of 13%! (18% from 2/1)
  16. 16. More Methods toGrow Avg Tkt• Add-ons that do take more time – Additional 15 minutes of service – Add massage to body tx – Add body tx to massage• Retailing – Estys, makeup high performers – MT’s • Music, books, candles, gels
  17. 17. Average TicketBenchmarks• Should be part of advancement criteria• Higher expectations for longer term of service• Slow, steady, upward movement• Assists with increasing retail ratios• Be aware when service menu pulls it down (waxing)
  18. 18. Retail to Sales Ratios• Retail to Service Sales• Retail to Total SalesWhich is right?$100 Svc Sale + $25 Retail Sale25% Retail to Svc Sales Ratio20% Retail to Total Sales Ratio
  19. 19. Methods toIncrease Retail• Home Care Recommendation Sheet for all clients• Build into service price – New client facial $98 includes take-home kit• Vendor evaluation• Retailing Basics – Price tickets, visual merchandising, lighting
  20. 20. Recommended Retail to Total Sales Ratios Day Spa Resort Spa• Hair - 10-15% • Hair - 5-10%• Skincare - 35-50 % • Skincare - 15-30%• Massage/Body 1-5% • Massage/Bdy - 0-5%• Nails - 5-15% • Nails - 0-10%• Cosmetics - 40-100% • Cosmetics - 25-50%• Gift - 10-40% • Gift - 5-15%
  21. 21. Retail RatioConsiderations• The more modalities you offer, the lower the ratio will be• Etsy & Cosmetics drive retail• Massage & Waxing do not
  22. 22. Expense-sideTargets
  23. 23. Payroll Breakdowns• Labor – Your Largest Expense –Technical Staff –Hourly Staff –Management/Salaried Staff –Taxes & Benefits –Owner
  24. 24. Income Statement ModelRevenue Service Sales 450,000 75% Retail Sales 150,000 25% Total Sales 600,000 100%COGS Service Labor Costs 150,000 Back Bar Supplies 26,500 Products for Resale 68,000 Retail Commissions 22,250 Total Cost of Goods 266,750 44%Gross Profit 333,250 56%Expenses Rent & Utilities 36,000 Marketing 18,000 Support Labor 72,000 Owner Salary 40,000 Employee Benefits 14,212 Payroll Taxes 25,582 Insurance 6,000 Debt Service 1,100 Total Expenses 212,894Net Profit 120,356 20%
  25. 25. Payroll Worksheet• Total Sales _______$• Total Payroll ________ • Service Labor ________ • Retail Commis ________ • Admin/Support ________ • Owner ________ • Benefits ________ • Taxes ________• Total Payroll/Sales ________%
  26. 26. Payroll Worksheet• Total Sales _$600,000_• Total Payroll _$324,044_ – Service Labor _$150,000 – Retail Commis _$22,250 – Admin/Support _$72,000_ – Owner _$40,000_ – Benefits _$14,212_ – Taxes $25,582_• Total Payroll/Sales ___54__%
  27. 27. Ideal Payroll SetupService & Retail Revenue 100%- Management/Support 10-12%- Technicians Svc 33%- Technicians Retail 1.5%* *10% of 15% - Taxes +/- 4% - Benefits +/- 4%Total Payroll 54.5%
  28. 28. Payroll Benchmarks• Average day spa overhead 40% of revenue• So, payroll MUST be below 60% to see any profit• % is focus for you, $ earnings should be focus for your staff
  29. 29. Treatment Supply Costs• Treatment supplies are often seen as a commodity item by staff• They are one of the few areas that can be positively impacted by careful management• The answer: Systems & Processes
  30. 30. Treatment Supplies• What is a treatment supply? – Cremes, gels, lotions, branded products – Gloves, Q-Tips, comestibles – Gallons of distilled water and massage oil – Anything you purchase to provide a treatment
  31. 31. Treatment SupplyChart of Accents• Each department that you break out for service . . .• You also break out for supplies – Massage Service – Massage Tx Supplies – Nail Services – Nail Tx Supplies
  32. 32. Controlling COGS for back bar Simple DetailedRevenue Service Sales 450,000 75% Revenue Massage Svc Sales 195,000 32.5% Retail Sales 150,000 25% Esthetic Svc Sales 255,000 42.5% Total Sales 600,000 100% Massage Ret Sales 5,000 0.8% Esthetic Ret Sales 145,000 24.2% Service Labor Total Sales 600,000COGS Costs 150,000 % of Back Bar Supplies 26,500 COGS Products for Resale 68,000 COGS Massage Svc Labor 78,000 29.2% Retail Commissions 22,250 Esthetic Svc Labor 72,000 27.0% Total Cost of Goods 266,750 44% Massage Backbar 3550 1.3% Esthetic Backbar 22,950 8.6%Gross Profit 333,250 56% Massage Ret Prod 3,000 1.1% Esthetic Ret Prod 65,000 24.4% Massage Ret Comm 500 0.2% Esthetic Ret Comm 21,750 8.2% Total Cost of Goods 266,750 Gross Profit 333,250
  33. 33. Power of Treatment Supply Before AfterRevenue Massage Svc Sales 195,000 32.5% Revenue Massage Svc Sales 195,000 32.5% Esthetic Svc Sales 255,000 42.5% Esthetic Svc Sales 255,000 42.5% Massage Ret Sales 5,000 0.8% Massage Ret Sales 5,000 0.8% Esthetic Ret Sales 145,000 24.2% Esthetic Ret Sales 145,000 24.2% Total Sales 600,000 Total Sales 600,000 % of % of Svc % of % of Svc COGS Sales COGS SalesCOGS Massage Svc Labor 73,245 27.4% COGS Massage Svc Labor 73,245 27.4% Esthetic Svc Labor 76,755 28.8% Esthetic Svc Labor 76,755 28.8% Massage Backbar 3,550 1.3% 1.8% Massage Backbar 2,535 1.3% 1.3% Esthetic Backbar 22,950 8.6% 9.0% Esthetic Backbar 18,360 8.6% 7.2% Massage Ret Prod 3,000 1.1% Massage Ret Prod 3,000 1.1% Esthetic Ret Prod 65,000 24.4% Esthetic Ret Prod 65,000 24.4% Massage Ret Comm 500 0.2% Massage Ret Comm 500 0.2% Esthetic Ret Comm 21,750 8.2% Esthetic Ret Comm 21,750 8.2% Total COGS 266,750 Total COGS 261,145 Gross Profit 333,250 55.5% Gross Profit 338,855 56.5% Total Expenses 210,532 35.1% Total Expenses 210,532 35.1% Net Profit 122,718 20.5% Net Profit 128,323 21.4% Net cash increase of 4.5%
  34. 34. Treatment Supply Processes• Coordinate orders among departments• Time orders for beneficial arrival• Assigned & locked storage by department• Replenishment methods
  35. 35. Recommended TxSupply Costs• Massage 1%• Body Tx 2%• Esthetics 7-8%• Nails 4-5%• Hair 7-10%• Injectables 10-40%• Cosmetics ˅1%• Waxing ˅1%
  36. 36. Where to Start?• Does your business model support growth in average ticket?• Do you have the right vendors and system to support retail initiatives?• Does your compensation plan need to be overhauled?• Do you have systems in place to receive/track/replenish tx supplies?
  37. 37. Wise Words"If you aim atnothing, youllhit it every time. “Unknown "A goal is a dream with a deadline." Napoleon Hill
  38. 38. Setting FinancialTargetsThanks for your attention!Questions? Lisa Starr atgotalkone@gmail.comGramercyone.com/blogFacebook.com/GramercyOneTwitter - @gotalknow

×