Raising the Bar on Salon and Spa Business

AS THE OWNER of a thriving business, the leader of your team, and a player in a vibrant industry, you need to shake things up from time to time. It re-energizes your business, draws attention from your community and keeps your staff on their toes. At SALON TODAY, we found that after 15 years of honoring salon and spa growth and best business practices, our SALON TODAY 200 competition needed a little creative shake-up, too.

AFTER MANY YEARS of debating over whether we’d be successful in getting salon and spa owners to share information about the pinnacle of business success—pro­fitability— we decided it was time to dare to make this a competition category. So, we took our most popular ST200 competition category—Marketing—and created a brand new competition around it. As a result, STAMP (SALON TODAY’s Annual Marketing Program), debuted in September 2012. Then we replaced this ST200 best practice category with Planned Pro­fitability, a challenging category that not only required owners to prove to us they were pro­ table, but made them show us they had forecasted for profitability and managed an annual budget to reach their pro­ t goals.

We also determined it was time to make some creative changes to the ST200 application itself. In order to offer readers even more benchmarks to measure themselves against, we added a host of new data questions. And, we developed a fresh, creative format for the best practice essays (see page 35) to give us all a better behind-the-scenes view into the successful programs, procedures, and systems that keep these ST200 salons humming.

The Competition At Large

ST200 Criteria

To be eligible for consideration in the ST200 for 2013, salons had to meet the following criteria:

ESTABLISHMENT: The salon or spa opened on or before January 1, 2010. VOLUME: The salon/spa generated annual service and product sales revenues of at least $250,000 per year since 2010.

WILLINGNESS TO SHARE: The owner completed the applicant information portion of the form, providing statistical information about the business, and completed at least one of the Best Practice sections, including essays.

VERIFICATION: If the applicant competed in the Growth category, the owner submitted tax documentation to verify financials for 2010 and 2011. If the applicant competed in the Planned Profitability section, the owner submitted signed verification from a third-party professional (business coach or accountant) that they projected a certain profit percentage and what they reached.

Applications were up once again this year, with a resurgence of new businesses entering who’d never entered before. Overall salons grew at an average 17% growth rate, which measured the difference of reported gross sales between the calendar years of 2010 and 2011. This growth continued the slow and steady rebound from 2008 to 2009, when at 10%, ST200 salons posted the lowest growth in the competition’s history.

As in previous years, the South and Midwest regions of the United States accounted for the highest percentage of applications, while applications in the West grew to 23% from 19% last year. This year the states with the most applicants are Florida (8%), California (7%), Texas (6%), Ohio (6%) and Colorado (5%). And, Canadian applicants put in a good show with 2%, so it may be time to brush up on your provinces.

The Picture in Focus

The best way to understand what a SALON TODAY 200 operation would look like is for us to build you a composite picture by showcasing the averages of the entire group of honorees. By doing this, here’s a look at what the average ST200 salon would look like:

• It opened its doors in 2002, has only one location, and leases its real estate.

• At 4,700 square feet, it’s impressive in size, and it considers itself to be a salon and spa.

• It holds a membership to one or more professional associations.

• It rung up $1,862,587 in gross revenues in 2011.

• It enjoyed 17% growth in gross revenues between 2010 and 2011. A majority of these gross revenues came from hair cutting and coloring services, with each representing about a third of the overall business.

• It charges an average of $48 for a shampoo, cut and style.

• When it calls roll at staff meetings, 39 employees are on staff.

• And, it spent almost half its operating budget (47%) on labor costs.

Aside from this composite picture, this year’s detailed application allowed us to gather quite a bit of new and revealing data. Read on, and consider how your business compares to our honorees…

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The Categories:

Advanced Education

Compensation & Benefits

Customer Service

Environmental Sustainability

Philanthropy

Planned Profitablity

Recruitment & Training

Retail & Merchandising

Retention & Referral Programs

Technology

Growth