Tackling Profitability. While examining growth and best business practices are ways to view business success, the gold standard always is profitability. And for more than a decade, we've considered looking at it with the ST200. But, comparing and evaluating a salon's profitability is tough. And, convincing owners to share that information is even tougher. But after forging a partnership with Scott Missad and Frank Gambuzza of Strictly Business over the last year in a series known as The Profitability Project, we thought it was time to take on the challenge.
After careful consideration, we decided that who we really want to honor are those owners who forecast, budget and plan profitability into their businesses so they can develop a more sustainable salon (and a more rewarding personal life) over time. For that reason, and also because we didn't want to ask them to publicly reveal the dollar amont of profit they take home each year, we decided to ask owners who are entering this category to show us the percentage of overall revenues that they forecast for profit (or planned) for 2011 compared with what they actually produced. And to prove it, we're asking them to produce a signed waiver from a financial planner, accountant or salon coach attesting that those percentages indeed were planned and produced.
(Note: It's important to note that there are 11 different competition categories within the SALON TODAY 200 and to be eligible, a salon only has to enter one category. Planned Profitability may not be the category for you this year, and that's perfectly alright—you have plenty of other options.)
Borrowing from the 2 to 10. One of the most important aspects of the SALON TODAY 200 is that the research questions we ask all applicants and the resulting data we publish in each ST200 issue helps establish important business benchmarks that all salons owners can use to measure their own businesses against. Another of SALON TODAY's strategic partnerships has been with Tom Kuhn's Qnity and ISBN in the 2 to 10 Project, a research project that studies the best practices of small-chain salons with between two and 10 locations. While most of the results of the study are only available to the salons that participate in the study, as a sponsor, we were privvy to the study, and I quickly noted that Tom designed some pretty sophisticated and savvy questions. Since he had asked to borrow some of the ST200 questions when designing his study, I didn't hesitate to ask if we add some of his illuminating questions to the ST200. So if you've entered the SALON TODAY 200 before, you may notice a number of new questions in the general section. For example, we ask "What keeps you up at night?" and "What single revenue-related key performance indicator do you review most frequently to assess the health of your business?" And before you start to sweat those responses, these questions are multiple choice— you simply chose the answer that sings to you.