Something’s brewing. You can feel the moist heaviness in the air, the slight electrical charge, the storms clouds gathering. You just don’t know if, when and how hard it will hit. As a salon or spa owner your horizon is sure to include some hiccups, some trials, perhaps even a devastating loss. Have you prepared: Or are you just planning to cross your fingers and hops for the best?
If you think your salon is impervious, think again. Last fall an earthquake devastated a spa in Paso Robles, California, forcing the staff to leave everything, including their purses, behind. The September 11 attacks destroyed at least one New York salon and put dozens of others in an oppressive economic squeeze. And this winter’s blizzards resulted in days of power outages and lost profits for many salons throughout the northern United States.
Having a written emergency action plan and training your staff in emergency procedures directly impacts the outcome of unexpected events. Well-prepared owners incur less structural damage and fewer injuries, experience shorter downtimes, and increase their likelihood of regaining their businesses. In addition, did you know if you have 10 or more employees, the Occupational Safety and Health Administration require a written emergency plan?
Three salon and spa owners, three trying tales, there survivor case studies. Witness how their quick, decisive actions not only saved their businesses, but transformed difficult situations into opportunities to restructure for future success. Along the way, experts offer advice on property insurance, fire prevention, strategies for rebuilding sales, and steps for drafting your own emergency action plan.
When her phone rang at 4 a.m., Inez Gray ignored it, thinking it was her sister who called at all hours. But when she checked her answering machine two hours later, a friend’s voice informed her of the four-alarm fire at her Habitude Old Town salon.
Gray knew fire was the biggest nemesis for businesses located in Seattle’s historic district. The buildings were more than a century old, few had sprinkler systems and many of the electrical systems were compromised. A few years before, she’d had a taste of the trials of fire when a blaze at a hotel down the street resulted in six inches of water in the salon and forced her to close for a month.
When Gray arrived at the scene of the salon fire, she found most of her staff crying out front. “I don’t know why, but I actually was quite calm,” she says.
“I’ve found it’s important to maintain the Buddha-as-owner, positive demeanor, because your staff replicates whatever you are doing. Hysterics are bad for morale and bad for business.”
Fire inspectors later determined the fire was caused by towels left in the dryer; they believed the hot towels spontaneously combusted due to residue in them from the essential oils used with spa services. “We had just renovated the location, expanding upstairs where we created a new laundry room and corporate offices,” says Gray “The venting was brand new, and we know the dryers were off.” Gray’s landlords determined it would take up to a year to rebuild the portion of the building that had burned, and they decided they no longer would allow the salon to have a dryer on the premises.
The morning after the fire, Gray immediately set up a few key staff members to explain the situation to the clients who were arriving for their appointments. Then she took her management team to her house to develop a quick action plan. They compiled a list of all of the location’s staff members and identified the 20 least productive, who they determined would need to be laid off. The rest of the staff was divided and rotated into what was then Habitude’s two other locations, Habitude Uptown and Habitude Fremont.
Says Gray, “We added a few more chairs where we could and created split-shift schedules, accommodating as much of the staff and the clients as possible.”
She then called together a meeting of her remaining staff at a restaurant. “While the meeting could have gone the route of tears, it was very positive,” says Gray.
“I dressed upbeat and started with a motivational poem someone from The Salon Association had sent me. We had a guest speaker lead us through relaxation exercises and we served good food. And, I stressed to my staff that I was determined the salon would move forward, and I urged them to pull together to continue caring for our clients.”
The day after the fire, Gray was storing some salvageable items in her storage unit and noticed a For Lease sign on a building with big windows and ‘60s flair. She called the number from her cell phone, and the realtor rushed to meet her. Covered in soot, Gray toured what eventually would become the salon’s new home.
Gray held a second surprise staff meeting a week later when she was close to signing the contract on the new location. She gave her staff directions leading them to the new building, which she had filled with candles. Gray announced this would be Habitude’s new home and gave her staff a tour.
PREPARING FOR BATTLE
Gray’s new landlord, a venture capitalist, was excited to have the well-known salon as a tenant. He helped her find a contractor who had the building ready in four short months, and he put Gray in touch with two people who would become her fiercest allies, a high-powered attorney specializing in insurance claims and a forensic accountant.
“These two went to bat for me against my insurance company, and when they walked in the door during that first meeting you could see the insurance people begin to back down,” says Gray.
An inventory specialist combed through the remains of the fire with Gray, itemizing and determining a value on every lost item. The forensic accountant helped Gray calculate her lost income, and the attorney fought to get compensation for the lost income after the insurance company tried to claim that commissioned employees were not true employees. When the insurance company dropped Habitude because of the fire and previous flood claim, the attorney and accountant helped her secure new insurance. And, when Gray learned that the $60,000 worth of smoke-damaged, but still viable product would be carted off by a few men who would likely divert it, her attorney proved she was under contractual agreement not to divert and won her the right to keep the product.
Although Gray estimates she paid the attorney and accountant more than $30,000, she says it was money well spent. “These two helped me make the quick decisions necessary in a crisis,” she says. “For example, I wanted to send a mailer to all my clientele following the fire, but I wasn’t sure I could afford it. I called the attorney’, and she said she could justify that as part of the claim.”
Ironically’, Habitude’s previous flood turned out to be a blessing, because Gray discovered during that claim that she was underinsured. “My previous agent had known me since I was young and had the perception I had a cute little business,” says Gray. “But that cute business quadrupled its sales in the first four years, approaching a million dollars. That first claim taught me to take responsibility for the insurance, read the documents and update my agent with every change I make, even if it’s just adding a new technician.”
FROM THE ASHES
Before the fire, Habitude’s identity was tied to the historic-building. Much of the furnishings and cabinetry was hand-built by Gray’s husband, who exposed the building’s handcrafted beams. A gallery art walk created a trendy Soho feel.
But the fire taught Gray and her staff that Habitude was not about the place, but rather the people. “Too many owners do million-dollar build-outs that don’t build relationships, they just scream ego,” says Gray. “While at first glance clients may be impressed, by the second visit they don’t care about the monuments you build to yourself and your company.”
The new Habitude at the Locks may be trimmed in pine instead of mahogany, but it has a warm and inviting ambiance. “It’s clean, it’s crisp and it’s filled with people who love what they do, and we’ve learned we can take that anywhere,” say’s Gray.
The location’s larger space in a higher-income area is fueling Habitude’s new growth, allowing them to accommodate 150-200 clients a day.
The experience of the fire also taught Gray and her staff how to deal with crisis. “It used to be an emergency situation when we ran out of hydrating masque,” laughs Gray “We’ve mellowed through this process. When a vandal recently threw a rock through the window at the salon, my manager quietly and quickly dealt with the situation, and didn’t even call me at home.”
Steve Izzo was living a dream. After years of work, Portfolio Salon and Renewal Spa was one of the most prestigious and successful in Amherst, New Hampshire. He had a staff of seasoned professionals who were booked weeks in advance, he’d built a gorgeous, busy spa, and he’d grown his sales from $90,000 in its first year to $ 1.5 million earning him a spot on the SALON TODAY 200 five years in a row.
Izzo’s staff was reaping the rewards as well. They received attractive benefits, including medical, dental and retirement plans, as well as national and international educational opportunities.
“We were looking to continue the rocket ride with huge increases in dollar volume each year. With success systems in place, what could possibly deter us?” asks Izzo. “One word—walkout.”
When one of Portfolio’s top stylists announced her intention to open her own business, Izzo encouraged her. In fact, he toured her future space and offered advice. What shocked Izzo is when she left in 2002, she took two-thirds of his styling staff and a few of his top spa producers with her. The loss reduced his incoming sales by about $10,000 a week, roughly a third of total sales.
“Did I see it coming? Did I have a system in place to protect me?” remembers Izzo. “No, I didn’t. But quick strategy sessions and the aid of some key people helped me save my business.”
BAILING OUT THE SHIP
When the walkout occurred, Izzo already had begun a working relationship with Phil Fennell, consultant and owner of Programs in Salon Excellence. Since Fennell had been analyzing and reviewing Portfolio’s books every three months, he had an intimate working knowledge of the salon’s business. He immediately acted to help Izzo get his cash flow under control and reduce some of his overhead.
“One of the first things I do in a walkout situation is calculate the true financial implication of the loss,” says Fennell. “Often it’s not as bad as an owner thinks. This not only helps the owner understand what he’s really lost, but it usually has a calming effect.”
Fennell explains that many salons pay on a sliding scale, with the biggest producers earning the largest commissions. While they bring in a larger share of the sales, they also take a larger share of the pie. When star players leave during a walkout, often the remaining stylists can quickly pick up the slack by increasing their production efficiency rates by even a few percentage points. (See “Every Bit Counts” on page 52.)
Izzo and Fennell then went about stabilizing the client base. They began with an aggressive marketing program, offering complimentary gift certificates to rebuild client rosters. His first target was not the clients of the vacating stylists, but rather the clients the salon had lost in the previous 90 days.
“Steve had an awesome environment. If a client followed one of the vacating stylists to a new salon, it was pretty unlikely she’d come back, at least initially,” says Fennell. “But clients who left the salon before the walkout, left for other reasons. And some leave because switching salons is more comfortable than switching stylists in the same location. The gift certificate made it comfortable for them to schedule an appointment with a new stylist.”
It wasn’t until three months after the walkout that Portfolio attempted to reclaim the lost walkout clients. “They had to have time to experience the difference, to see if the grass really was greener,” says Fennell.
Reclamation programs combined with strong referral programs successfully stabilized the client base. “For example, we did a gift certificate reward program based on frequent flyer programs,” says Fennell. “On December 20, we mailed out thank-you cards to Portfolio’s top clients offering $35 gift certificates they could re-gift to a first-time visitor. In a six-week period we earned just under 400 new clients.”
Following the stabilization phase, Izzo strengthened his salon to help deter future walkouts. Instead of hiring experienced stylists “with bad habits from diverse cultures,” he restructured his training program, hiring new stylists fresh out of school.
“We set a new vision of a salon culture that perpetuated high quality work, ownership of talent, and consummate class,” says Izzo “This was a clean slate, and we took an oath to no longer compromise our values to fill positions.”
A new three-step interviewing process requires candidates to first meet with Izzo, then meet with two managers, then spend a half-day on the floor with the staff. Izzo considers the staff’s impressions before hiring. And he requires all new hires to sign a non-compete/agreement.
“We outlined a new training program in a booklet, with evaluation forms, a graduation exam and a photo shoot required for passing the program,” states Izzo.
Izzo and his managers also decided to add a few retail lines to spark a new energy among staff and excitement among clients. The salon eventually became a test salon for the new line Profound, with the outcome of immediately increased retail sales.
“Within a few months, we really started seeing the results of all our hard work,” says Izzo. “At any point during the day I could look around the salon and see incredible work. The energy was contagious and it inspired us all. Mutual admiration made us expand our creativity, a new culture was in place, and the clients were thoroughly enjoying the change.”
While a temporary electrical blackout may seem more an annoyance than an emergency situation, Patricia Owen, owner of Faces Day Spa, determined the frequent blackouts her salon suffers was costing her up to $20,000 each year. Located on Hilton Head, a barrier island off the coast of South Carolina, Faces Day Spa experiences several tropical storms a year that cut power from a few hours to a few days.
“While the spa’s never freed an actual hurricane, we do have mandatory evacuations every few years, and of course, we’d never stay open during an evacuation period. But we do know it s the businesses that are back up and running the fastest that will survive,” says Owen “Developing our own emergency action plan not only helped prepare us for a potential hurricane, it helped us recover the income we were losing during frequent blackouts.”
In the past, Owen’s course of action was to send her staff home and close the salon. But she noticed that despite the power outage, most of her clients continued to show up for their appointments. And, despite her staff’s initial delight at having an unexpected day off, they too were noting the loss of income each event incurred.
“We started, very simply, by purchasing battery-powered lanterns for each of the treatment rooms as well as the office,” says Owen, who quickly learned about creating an auxiliary power source from her husband, an electrical engineer.
Today, Owen’s emergency stash includes battery-powered CD players for each of the rooms, headlamp headbands for each of the estheticians to aid in facials and precision waxing services, crockpots to help keep the spa towels warm, battery-operated fans, and an uninterruptable power supply that keeps phones operating for up to eight hours and the computer running for 30 minutes. With judicious use, the spa’s larger capacity hot water heater typically ensures hot water throughout the duration of the outage.
Now, when the power goes out, Owen’s staff goes into action. The front desk staff immediately takes advantage of the half-hour of computer time by printing out all the itineraries of services for each client, in order of check-in time. Then they light candles, turn on lanterns and set up portable tape players.
The spa staff is charged with plugging the wax pot, the crockpot and the stone heater into the charger outlet. They set up treatment rooms with lanterns and tape players, open window shades and stock rooms. Battery-operated fans help circulate air when the rooms get stuffy. Service providers also explain to each of the clients about how the service will be different because of the outage.
The office staff rushes to print out the day’s appointment confirmation list and back up the computer to disk before losing auxiliary power.
“These mini-emergencies are a great opportunity to learn about your staff,” notes Owen. “Some naturally emerge as leaders, and others become whiners. Those observations go into their performance reviews.”
When Owen first instituted her plan, she knew it wasn’t enough to write it in the manual and ask each employee to read it. She posted a step-by-step version of the plan on the staff bulletin board and before each storm season asks department leaders to review the steps through role-playing exercises.
“I estimate we’ve spent less than a few hundred dollars to accumulate everything needed for the action plan, but it has earned us much, much more,” says Owen. “It’s worked great during the past few outages, and I’m happy to report that although we did have a few clients not show up, we didn’t lose one client through the process. We were able to adapt all of the services and even create a few exciting ones, such as a pedicure performed in candlelight.”