Management Practices

The Bottom Line: Finding More Profit

Stacey Soble | April 6, 2012 | 1:33 PM

IN THE END, it’s not about how much money you bring in, it’s about how much you take home. Here to talk about profitability is Scott Missad, who, with Frank Gambuzza, is one of the founders of Strictly Business, an intense four-day business course that firmly guides owners to the bottom line and shows them how to build profit.

ST: With the recession and the increased costs of doing business it’s more challenging for owners to forecast their P&Ls, is there a specific set of percentage ratios that salons should now use?

Missad: “There are no magic numbers. It all depends on your organization, what you’re trying to build and where you’re located. We tell people in Strictly Business, ‘You can’t believe the athletes, there is no 110%—when it comes to business there is only 100%.’ If you want to take home 10% profitability at the end of the year, you have to budget it and operate your business at 90%. It’s called forced bottom line accounting. You pull your fixed costs out of the mix and look at your variable costs, and try to keep it all below 90%.

“It will get tougher though—there will be a significant profit pressure on service revenue as the cost of providing service is going to raise at a level faster than salons can increase their prices to the consumers. As energy prices go up, wages go up, prices of professional services like banking fees go up.”

ST: Where are the best profit opportunities for salons?

Missad: “For many owners, they believe the road to pro­tability is to automatically go out and get new clients or add new stylists, but they don’t calculate the costs associated with those activities. Nor do they consider how many of the new clients they’ll actually be able to keep. Are you maximizing the opportunity you have with each client? There’s signi­cant more profi­tability in add-on services and retail than in traditional services, yet owners typically put 99% of their energy into services, then put some retail on the shelf and hold a product knowledge class twice a year. Services are important, don’t get me wrong, but you have to pay equal attention to your retail.

“Of course, there’s more to this than I offer here, if you really want to learn the systems and processes and procedures that’ll drive more profitability, you need to get yourself in a business class. I prefer ours, but get yourself to a business class.”

For more information and a schedule for Strictly Business, the live education seminars by Scott Missad and Frank Gambuzza, contact Julie Oeffling at 800-718-5949. Catch their column, The Profitability Project, in SALON TODAY.

More from Management Practices

Management Practices
Management Practices

Dos and Don’ts When Communicating with Upset Guests

July 31, 2018

They say the key to every great relationship is communication – and handling a guest complaint is no different. It’s not ideal to have to communicate with an upset guest, yet we’ve all been there and it’s likely we’ll be there again someday. Here are the dos and don’ts to keep in mind to help you successfully communicate with upset guests.

Management Practices @vanessapalstylist cutting a precision bob hairstyle. 
Management Practices

SALON TODAY RECOMMENDS: Strategies for In-Salon Education & Minimizing Stylist Turnover

Lauren Salapatek | May 4, 2018

What kind of continuing education do you have at your salon? Are you inspiring your employees to reach their full potential? This month Aveda Means Business covers topics from in-salon education to minimizing stylist turnover. Learn some ways on how to attract stylists who are passionate about the business and who will fit in with your salon’s culture.

Management Practices Sponsored by L'Oréal Professionnel

OWNER TO OWNER: The David Rios Salons’ Secrets to Providing 5-Star European Service for the Country’s Most Demanding Clients

May 2, 2018

Many of the country’s most brilliant, talented and powerful people live and work in the Georgetown neighborhood of Washington, D.C. They’re politicians, diplomats, attorneys. Also professors and students at the nation’s top universities. So, if you’re servicing these people in your salon, you had better be at the very top of your game.

Load More