Category: Hairdressers Journal Page 2 of 3

Price it right

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On November 13, 2015

In Articles, Business, Hair Salon, Hairdressers Journal

Chris Parker – SAHJ

A Hair Journal reader recently wrote into the magazine about salons in his area and the extremely low prices they are offering and how is this sustainable to a salon and where are corners being cut? He also mentioned he knows of a few salons who’ve recently closed their doors.

It’s a very good question, if the salon down the road or in the same shopping centre charges more or less than you do for the same product or service what should you do? How can you compete?

When asked to write on this topic I thought at first that it was going to be a very difficult and time consuming task get to the bottom of it because of the need to examine salons in detail on an individual basis. However, when looking at some of the theory behind a pricing strategy we can actually get some good guidance on how to go about deciding on pricing structures for your salon.

Why do you care?

Let’s start with the question of why we even care about this topic? The reader who wrote in to raise the topic in the first place hit the nail on the head when asking the question: “How is this sustainable to a salon” (ie cheap pricing).

I think that perhaps he had begun to answer his own question without realising it, ie by the fact that he noticed some salons had closed their doors leading to a possible conclusion that if you charge prices that so low that they are not sustainable then you will eventually have to close your doors.

The point is that pricing can make or break you, if you charge too much then clients may not come. If you charge too little then you may not be able to make enough money to cover your costs.

But how do you know?

So, how do you go about pricing? Is this something you know inherently? Is it something you learn over time with experience or do you get out the magic 8 ball and ask it? Well, I went to ask8ball.net to ask the question “should I raise my prices?’ The answer I got was “Most likely”

Ok, so there must be more to it than this – but how do you know what to charge?

It turns out deciding on your prices is not a just a matter of gut feel but rather the process can actually be quite scientific. Scientific is good as this implies a formula, something precise and measurable. So what’s the formula so you can all use it and move on ..? Well, maybe it’s not quite as simple a formula and we might need to decode a few terms like Cost Plus Pricing, Competitor Based Pricing, Price Elasticity, Sticky Prices, Supply and Demand and so on to get closer to deciding on how to set your pricing.

What’s the objective?

Before we decide on pricing we need to start with our overall objective. If we take our readers perspective then the objective of right pricing is to sustain, ie to remain in business. This seems like a very negative or limited way to look at things because we generally think about our businesses in terms of achieving growth and making heaps of money while hardly doing any work at all. However, when examined further sustaining your business actually implies that you are being successful because in order to sustain you need to keep clients coming back, pay (and grow) salaries, pay overheads, pay suppliers, compete with other salons and after all of this make enough profit to recoup your investment or the investment of other shareholders in your business. So, sustainability seems imply growth as well.

Services vs Product Pricing

A point worth mentioning at this point is that salons sell both services and retail products. When considering the pricing of these we need to realise the implications. Hairdressing is very interesting in this regard. We have things like Junior Stylist, Senior Stylist and then some guy called John (often the owner) in the price list. So you could come in for a service and pay one price for a Junior, another price for a Senior and then another for a stylist called John.

When it comes to this there is a perception (and hopefully some reality to match) that the gents cut from John for R285 is actually worth it when compared to a regular stylist charging R165, for example. Here you have an example of internal pricing strategies where the same service is being charged at different rates and you have the same challenges about getting pricing right so that clients will be happy to pay and keep coming back.

When comparing with competitor salons then you may be comparing senior stylist to senior stylist, but maybe the other salon doesn’t differentiate in the same way, they only have one price …

Retail on the other hand has less wiggle room. For example, if you sell the same product as a competitor for a higher price then how will you explain that? I can more easily understand if two different brands have different pricing or two different items for the same brand have different pricing but not the same item.

It kind of reminds me of petrol companies that advertise on TV that their product is superior. I’m told that they all generally get it at the same source but then add some of their own special ingredients to make theirs superior. When last did you make a decision to fill up at one station over another because of what they advertised on TV about what was actually in their petrol? You are much more likely to make your decision based on convenience, or service quality or cash back rewards.

Conclusion

So, this is the first article and hopefully we will go further into this topic in order to actually get something usable, but for now if there is one thing that we can take away it’s this quote from Warren Buffet “Price is what you pay. Value is what you get.”

Whatever the prices you set your clients need to believe that the price they are paying matches the value they are getting and so not a matter of the cheapest price but rather the right price.

Ye of little faith

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On November 10, 2015

In Articles, Business, Hair Salon, Hairdressers Journal

I have a three boys now. Our four year old is in the stage of learning to tie his shoes. Imagine if my attitude towards him was “oh, my son is just never going to be capable of doing this”. Or when it comes to dinner time I simply let my two year old continue to mash his food into his face rather than teach him to use a spoon or a fork or if I decided that its just too hard to potty train him and I leave him in nappies forever.

Not only would this perpetuate the problem of having children that are not capable of doing things that they really ought to be able to do themselves but it would also send a message to them  (and others around them) that they are somehow inferior to other children and not capable of being taught or held accountable. What a sad scenario this would be.

Then why do owners, managers and administrators continue to treat salon staff in this way?

Are salon employees lesser human beings than all other industry employees on earth? When integrity, basic common sense, basic literacy and basic numerical skills were apportioned were they absent on that day? Does it somehow happen that as soon as you accept a job in a salon that you are somehow downgraded to the maturity and competency level of a child?

The answer must be a very definitive “NO”!

Attitude reflects leadership

The question then, is who is really to blame for the inadequate levels of internal salon management that seems to be prevalent amongst so many salons around the country?

I believe that ownership and management perpetuate the notion that internal salon administration staff are simply not capable of all doing anything that may be expected of them if they were to work in another industry.

The reason I say this is because this said on many occassion. So, if the person who hired you does not believe you have the same basic capabilities as your peers in other industries and they don’t expect it of you then why would you ever believe you are capable of or expected to perform at a similar level.

Case in point

I recently wrote an article about the importance and benefits of simply providing salon clients with a printed receipt. As a result of this one action there would be a number of other benefits that occurred as well. I also used supermarkets as an example and the fact that you would NEVER walk out of one of our big supermarkets without being given a receipt for your purchase.

However, in salons it is all too common that sales are not even entered as they occur. On far too many occasions the salon staff would manually calculate the sale (on a calculator), take the money, give the change and say goodbye. Then later in the day they may (or may not) enter the sale into their system.

Are the staff hired as cashiers at our supermarket chains mentally or physically superior to their salon counterparts? What then is the difference? I suspect it may be linked to the expectations / requirements / demands of management and ownership. They simply would not tolerate a staff member who does not comply with their point of sale procedural requirements. Salon owners and administrators not only tolerate it but they perpetuate it by taking the stance that salon staff are just not capable of anything better.

The salon environment in perspective

In my opinion the operational environment lies somewhere in between a private doctors office and a supermarket. In a doctor’s office the environment will be very calm and quiet. Patients will be required to first make an appointment, then on arrival fill in detailed personal information sheets relating to their medical and insurance details. Without this information you are unlikely to be able to engage in a consultation with the doctor – it’s not negotiable and administration staff will be the gatekeepers that ensure proper procedure is followed. After seeing the doctor you would be presented with a bill, either in person or via the post.

In a supermarket the environment will be far livelier (almost like organized chaos). Unlike the doctor’s office you will not have to fill in any personal information, but you will have to go through one of their check out points. Have you ever tried to get out of a supermarket without buying anything? You feel like a caged criminal trying to escape. It’s almost like the only way to get out is to buy something first.

Now, in a salon environment you have a bit of both. Have a lively environment with more people coming and going than a doctor’s office but not as many as you would have queueing in a supermarket. You have clients providing you with some information like name and number when they make a booking and perhaps a little more information when you do an in salon consultation. Then when they leave they pay for whatever service or product they purchased.

So if a salon is positioned somewhere in between then surely the protocols should be somewhere in-between as well? If you think about it salon staff are required to operate at a level that requires both the ability to work under pressure and also to be able to handle a greater variety of operating procedures as far as transactions go. So the assumption would be that of the three the salon staff member would be the most highly skilled, trained and accountable. Or not?

The root of the problem

The problem is not that salon staff are incapable, the problem is more than salon management and ownership do not believe in their staff or do not know how to develop their staff or do not care to develop their staff. This is very sad when you consider the effect it must have on a staff members motivation levels.

In our company, whenever something has gone wrong, whether it is a process that has failed or something else that resulted in a complaint from a client we as management always have to acknowledge first and foremost that it is a management failure that has resulted in the occurrence. The only exception might be if a staff member is deliberately refusing to comply with what is required of them, but then again see point number one as it is management that hired the wrong person in the first place.

Therefore, whenever you hear yourself saying “my staff will never be able to do that” or “my staff just make so many mistakes” then remember the fact that ultimately you are responsible for everything that takes place in your salon. Your current structure is perfectly designed for the results that you are currently getting. If you want different results then the change has to come from you first and a good starting point is to put a little faith in the human beings you have working for you. Without this any positive results that occur will simply be incidental. If you are humble enough to realise that you may be the root cause of the problem and are trying to get it right but finding it difficult to get the results then perhaps you are the one that needs to get help in order to achieve this.

However, its no good for you to simply try and hire someone to make all the problems go away for you. This is another very common problem seen in the hair industry, ie the flamboyant artist refuses to take responsibility for their business and hires an outside business person to run everything for them. I have seen this fail more times that I have seen it succeed. You have to get involved yourself. You cant flip between hiring someone or doing it yourself. It requires both, hiring the right people and being involved in the process to develop your team and get the results that you expect, require and ultimately demand.

Are you engaged?

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On November 10, 2015

In Articles, Business, Hair Salon, Hairdressers Journal, Wellness

In this month’s article I would like to ask the question “Are you engaged with your clients?” I think that many salon owners will feel a lot of pressure to be sending out regular emails to clients telling them of news, specials and other information that they hope will lead the clients to return and spend more money with them.

On one hand you will have salons that spend a lot of money paying designers to build beautifully professional emails and on the other hand you may find the salon owner, manager or receptionist creating a rather less appealing newsletter using word, power-point and clipart as their canvass and design tools. And then you will have those that just don’t do anything at all, they rely on face to face interaction when the clients are in the salon and use personality as their engagement mechanism.

Now, I do feel that a monthly or quarterly newsletter via email is very useful as it lets your clients know that your business is still in operation and you are ready for their business … even if they don’t open the email, just the fact that you sent it means that you are operational and are organised enough to be able to send them an email. I also believe in the positive engagement that takes place once the client is in the salon.

However, I believe that there are many other opportunities to engage with your clients in smaller and more frequent communications. I also feel that if they are done right they will be far more effective than an impersonal monthly newsletter or sales special.

SMS Booking Confirmations

Booking confirmations are more powerful than you might think. The most commonly used reason for sending booking confirmations is that they will prevent no-shows and thus save you money. This is true, and important. However, there is something else it does, which I believe has a deeper impact and therefore a longer lasting value. I believe that the client has a feeling of gratitude when they receive the sms reminder. On one hand it reminds them to not miss their appointment and the other hand it gives them enough opportunity to cancel and avoid the embarrassment of not showing up. It makes a small positive impression in their mind about your business and its these positive impressions that you want to create as often as possible and build upon. Talk to your software provider about automating this function so that it takes place at the same time each day and becomes part of your standard operating procedures.

SMS Birthday Wishes

Everybody loves to feel special on their birthdays and sending someone a birthday sms does just that, even if deep down inside they know it was a machine that sent it to them. These days it’s actually common for people to complain if they did not get their automated birthday sms.

However, what people love even more than a birthday wish is a birthday gift and if you are able to offer them something special on their birthday then the chances of them walking into your salon to spend some money with you are even better. How you capitalise on the situation thereafter is up to you. Again, talk to your software provider about automating this process to take place at the same time each day.

Loyalty Reward SMS Notification

If you are running a loyalty scheme in which you offer rewards then whenever a client is rewarded with something ensure that they immediately receive an SMS to notify them about it. Its no use having a loyalty scheme and hoping that clients never use their loyalty rewards. If it has been well thought out then it is better for them to redeem their rewards as the long term benefits are greater. Speak to your software provider about automating this notification so that staff members do not have to manage this process manually.

Unused Rewards SMS

Following on from the loyalty reward notification, you may wish to notify people that have rewards available but have not been back to the salon for a long time. On one hand it is common courtesy for you to let them know that they have unclaimed rewards and so the impression should be a positive one, as long as the reward value is worthwhile. Maybe only send a notification to clients who have rewards over a certain value so that they don’t roll their eyes when you send them an sms, which costs more to send than the rewards they have available.

Follow up (feedback) messages

One great way to engage your clients is to send them a follow up email or sms the day after they have been to your salon. The message should thank them for their visit so that they feel valued by you and that they get a sense that you want them to come back again.

Furthermore the message should welcome their feedback so that you can improve your service to them and give them the opportunity to complain if they need to complain. Its better for them to complain to you the day after their visit than to complain to their friends and families (or an online complaints forum) and never return to your salon.

Do I need to say it … talk to your software provider about automating this process so that it is something that always happens at your salon.

Clients that have not visited

All salons will have clients on their database that have not visited for a long time. An opportunity exists to send an email to these clients with the goal of either de-activating them from your database or getting them back in to the salon. I would do an exercise whereby you send them some sort of worthwhile offer in order to test whether they would consider coming back or not. If they respond positively it means that you have won back a client. If they respond by asking to be taken off the mailing list then at least you know your database is that much more accurate.

Talk to your software provider about conducting this exercise so that you ensure you send the message to the correct clients.

Conclusion

There are many ways apart from newsletters and specials to engage with your clients in order to continually shape a positive perception of your business. As you consider each of the above remember that once you start you must not stop. It must be something that is continued in your business for the long run. Also, start with one thing at time and ensure you get it up and running properly else you may bite off more than you can chew. Work with your software provider to automate as much as possible as this has the best chances of ensuring it is continued for the long run.

Tag ’em and bag ’em

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On November 6, 2015

In Articles, Hairdressers Journal

Imagine you are a marine biologist and you specialize in studying the behavior of great white sharks so that you can learn about them and ensure they are protected from extinction.

One part of your job might include tagging great whites so that you could monitor their movement patterns. Imagine going out on a boat one day to do some tagging. Think about how much work and cost would have already gone into getting ready for the task of actually doing the tagging. Apart from the cost of your education, the cost of the boat, the cost of the other members of your team, the cost the tagging equipment, the cost of the monitoring equipment and so on. Now, imagine you’re get out into the sea, you’ve locate one or more great whites, all the work has been done and at the last minute the person who is meant to place the tag on the shark simply chooses not to do it … and everyone packs up and goes home and hopes that somehow information about the sharks will magically become available. An absolutely ridiculous notion right? That would be absurd! All that money and effort only to walk away with nothing?

Some perspective
Okay, let’s put it another way. Imagine you are a hair salon owner. You’ve always dreamed of having your own salon and making it a success. You have invested energy finding the perfect location, you have invested hundreds of thousands of Rands into shop fitting and making your salon look as amazing as possible. You have gone through the tedious processes of hiring staff, setting up a price lists, purchasing computer equipment and software, stocking your shelves, advertising in magazines, local radio stations, even television, you have done everything you possibly can in order to get people through the door. Then, when they arrive you treat them as if you actually don’t care they exist. An absolutely ridiculous notion right? That would be absurd. All that money and effort only to walk away with nothing?

Well, if after all the effort of getting a new client to walk through the door and your staff do not capture their details onto your system it is as if they do not exist to your salon. Think I am being a little too dramatic? Put yourself in the shoes of your client. Visit a salon and then never go back. I would put money on it that 9 out of 10 salons will not care, well to be more accurate they will not ever know and hence it’s is just as bad as if they did not care and you would never hear from them again.

The message you are sending your clients
What is the message you are giving your clients when you do not capture their details on your system. The message is that “we do not really need you, you are not very important to us, we don’t really have anything worthwhile to offer you, we don’t want you to return, we have all the clients we need already and money is not important to us, we care more about counting our stock than we care about knowing our clients” and so on.

The funny thing is that salon staff are afraid of offending clients by asking them for their details, but in my opinion, it’s more offensive to clients to perpetually treat them like strangers. Do you not think that you can give a better client service if you actually keep record of what you say and do for your clients?

The critical touch point
The problem is quite easily solved, when a client calls in to make a booking simply ensure that your staff request and capture the clients name, surname and cell phone number. That’s NAME and SURNAME and CELL NUMBER. Having 120 John’s with no Surname on your database is not that helpful either, believe it or not.

However, if you do successfully capture these three every elusive bits of top secret information, then hey presto, you’ve tagged the shark. You can now track their behavior forevermore. Can I end my article at this point and getting back to my coffee? There’s not much more to it than this step. Any other information you get over and above the name, surname and cell phone is beneficial but in order for the very basic tracking of your clients and the ability to communicate with them you only need this.

What’s the point really?
I had a quick look at the client spend per visit of about 15 salons and for these 15 it is roughly R450 per visit (with a range of about R275-R650). Let’s say for arguments sake that each person visits a salon every 3 months, then over 1 year that is R1800 per person. Over 10 years that is R18000 per person. Imagine that husbands, wives, children or friends end up visiting the salon because of association to the original person then you could multiply that figure by 2, 3, 4 or more. This is a very rough illustration but gets the point across about the potential value of every client that visits your salon when you see them with a long term perspective.

Conclusion
Imagine Bruce Fordyce running the Comrades, arriving at the finish line ahead of the rest of the pack only to stop just before the line, turn around and walk off without crossing the line. Again, this would be ridiculous right?

Well, so it is with your your clients if you don’t capture their details. Every effort that is made in your business is with the express purpose of getting people through your door and keeping them coming back. Surely something as simple as adding their contact details to your system is not too difficult a task, considering all the other challenges you have faced to get where you are today.

The reason you do stock control is primarily so that you can manage and sell stock to your clients and keep them coming back. The reason you pay salaries is so that you can keep staff motivated to keep providing top service to your clients and keep clients spending money with you. The reason you write down appointments is so that staff don’t arrive at your salon on the day only to be turned away because they don’t have an appointment. The reason you send sms and email messages is so that you can communicate a message with your clients that gets them to come back. The reason that you introduce loyalty schemes is so that clients will keep coming back to you.

However, when you fail to even know their name you work against yourself and every other effort you have made in your business to be successful. You send a message that you really do not care and could not be bothered whether they come or go. Companies can spend millions trying to get their hands on client databases, whereas salons simply throw this valuable information into the garbage.

Get them to say Wow!

By

On April 28, 2015

In Articles, General News, Hairdressers Journal

Does it matter how great you say your salon is? Or does it matter more how great your clients say it is? It’s a little nauseating to others when we tend to blow our own horns.

CS Lewis, author of The Chronicles of Narnia and many other well know books gives writing advice to a young American fan named Joan Lancaster in June of 1956.

“In writing. Don’t use adjectives which merely tell us how you want us to feel about the thing you are describing. I mean, instead of telling us a thing was “terrible,” describe it so that we’ll be terrified. Don’t say it was “delightful”; make us say “delightful” when we’ve read the description. You see, all those words (horrifying, wonderful, hideous, exquisite) are only like saying to your readers, “Please will you do my job for me.””

The point is that you should not have to tell people how great you are, they should be telling you how great you are because of the great things that you do. The question therefore is how do you get your clients to say great things about your business?

Exceed customer expectations

In my opinion this is not very hard in the hair industry (with exceptions of course). Again, maybe its because I’m a man and men generally are quite easy to please and therefore salon staff don’t feel the need to work very hard to please male clients, who knows?

As a result my expectation is that if I enquire about a booking and there are none available on the day I desire I will not get offered alternatives. If I do get a booking the staff will generally not know much about me even though I may have visited the salon on more than one previous occasion. While I’m at the salon I may or may not get offered some coffee or other type of refreshment, which seems quite standard. I may or not get my head massaged at the basin and if I do it may or may not be a great experience. I will most likely not get much of a consultation apart from the usual “What are we doing today?” Once my cut is finished and the stylist has flashed the mirror behind my head while I nod or grunt approval its then time to pay. The discussion of products for my hair will most likely not come up and if it does it will be something to the effect of would like to try this product or not? Once I’ve paid that will be the end of it and the sense I will leave with is that they couldn’t really be bothered if I return.

So the question is, if that has been my experience of so many salons over the years what will it take to exceed my expectations? I don’t think it will take very much indeed.

Little things on the side

One way to start is to do something small on the side. For example, what do you get when you buy a coffee at Vida? That’s right, a dark chocolate. Now, any coffee shop I visit after having experienced Vida that does not provide me with either a chocolate or a something similar will be less of an experience than Vida (Note that Im not commenting on the quality of the coffee itself – this is a matter of its own).

Another example is Pearl Valley golf course near Franschoek in the Western Cape, which is a wonderful experience. However, one of the best parts of the experience is something that is quite achievable by other golf courses who don’t enjoy such high pedigree. They have cool wet towels at the half way house. On a hot day there is hardly any better experience than walking into the clubhouse and wiping your face with a cooled towel. Also, on the first tee box I was given a chilled apple before starting the round. These are things that other courses could also offer that if they did people would talk about them.

The idea would be then for your clients to say something along the lines of “My salon is so amazing, whenever I go there they give me _____________ “(fill in the blank). Or, “…whenever I go there, they do ____________________ for me” (again fill in the blank).

Be careful though, once you start adding something to the mix (like you do above) then if you ever stop doing it in future your clients will not feel that you are simply offering the same as everyone else again, but rather they will feel like you have taken something away from them that they have grown to expect.

Validating parking

Our offices in Cape Town are near the Cape Quarter and inside there is a car wash. One of the things that the car wash does, apart from wash my car, is validate my parking for three hours. They most likely build it into the price of the car wash, however, it still comes to mind whenever I need to get my car washed. If you are able to build it into your costs, or able to work something out with centre management then covering some or all of a client’s parking would go a long way to building wow factor.

SMS Appointment Reminders

Sending your clients an sms appointment reminder goes a long way to improving their perception of your salon. On one hand it is practical and on the other hand it lets them know that you actually care for them to return, so much so that you are willing to send them a reminder.

Discount less preferred booking dates

This may be a bold one, but if a client wants an appointment today and you cant fit them in why not offer them a discount for a slot that you do have free. This may be the difference between them returning to your salon or not. I would be blown away if a receptionist said to me “we are fully booked today, but we have a slot tomorrow and we will give you a 10% discount if you take it”. It would be worth talking about.

10% off for a repeat booking

What about saying to a client as they finish paying “if you book your next appointment now you will be entitled to a 10% discount”? If that were me I would be much more inclined to make the booking and it would be something worth talking about to others.

Surprise them with your knowledge of them

If I sat down at the chair and the stylist recalled details of my previous visits it would surprise me. These details could be of a personal nature or related to products and services. If this was the standard I could expect from a salon it would definitely be worth talking about. But, Im talking about doing this for everyone, even the person who was last there more than 6 months ago and not just doing it for the clients you see week in and week out.

Conclusion

Its hard to give someone credit when they are giving themselves credit all the time. Rather, do things for others that result in them responding positively to you. Doing things like in the examples above gives the client an overall feeling that you want them to come back again. We want you to come back so we will pay for your parking, we want you to come back so we will send you a thank you SMS. We want you to come back so we will give you 10% off if you book your next appointment now.

When people sense that you value their business then they will talk about whatever factors contributed to that.

A stitch in time …

By

On April 18, 2015

In Articles, General News, Hairdressers Journal

Have you ever had to do anything over again because you didn’t do it properly in the first place? Have you ever had to spend a lot of time cleaning up a mess that could have been avoided if you had just planned better?

Would you consider yourself a good manager? They say that the first function in management is planning. Planning is something I actually find very difficult – I don’t know what this says for my management skills …

Part of the reason I find it difficult is I always feel so busy with all the pressures of work that seem to almost be working against me to prevent me from planning (notice how I’m trying to make excuses). But I think there is some truth in this, life continually throws enough things our way to keep us busy for a number of lifetimes, we therefore have to be very deliberate about planning else it will never happen.

The flip side of why I find planning difficult is because if I do actually make any plans then I have to stick to them, which leads into the second, third and fourth functions of management namely activating your plan, coordinating your plan and finally maintaining your plan. If I don’t plan then I don’t have to do any of these other things and its more difficult to hold me accountable.

Im starting to wonder if this article is for your benefit or mine ..?

Types of planning

As I consider the different types of planning that you can do I realize I may be off the hook in some ways because I realize that for some types of things I do plan and for other types I don’t.

For example, I don’t plan my social life very well (probably why I don’t have much of a social life to speak of). I don’t plan holidays well either. However, when it comes to other things like certain projects at work where I have experienced what can go wrong when there isn’t a good plan in place I have been much better at planning.

How is it with you? Are you a planner by nature or do you only plan well for certain things or do you just live by the seat of your pants and rely on good instincts in the moment?

That little piece of paper

Believe it or not, this article is not an article on planning. Well, not in the general sense as I’ve alluded to above. Rather, as the title suggests, its more about being deliberate about certain small things that if done will save you time and hassle in the future. I guess this is a form of planning but its almost situational planning, ie to save you time and avoid mishaps in very specific areas.

My suggestions are not going to be anything mind-blowing but rather just some practical wisdom based on what I’ve observed over the years and how to avoid a lot of pain in certain of your business processes.

For this article I want to focus on just one thing, printing client receipts.

Print your receipts

Whenever you go to a reputable retail outlet you will notice that you always get issued a receipt once you have paid. This does not happen only when you request it, it happens automatically every time you make a purchase. When last did you have to request a receipt from the cashier at Woolworths or Pick n Pay? You’re more likely to try and refuse the receipt because its probably going to find its way into the nearest dustbin but you’ll never have to ask for one.

So, how does printing a receipt save you time and avoid pain? Well the first assumption is that you have some sort of computerized invoicing system and if you do then it means that you have a powerful tool at your disposal that should be enhancing your business processing capabilities in more ways than one. So, in order to print a receipt you need a computerized system (and by implication will get all the benefits that come with it).

However, just because you have a computerized system does not mean that you will print a receipt so go back to rule number one and ensure that you print a receipt. Lets look at the other benefits of doing this.

For owners

By printing a receipt it means that your reception staff have actually entered the sale onto the system. If they didn’t enter the sale onto the system then a number of things may go wrong, ie they may pocket the cash. If there is no record of a sales transaction then there may not be any record of cash being received. This will lead to pain in your cash flow!

For clients

Another outcome will be that the client themselves have proof that the transaction took place. The benefits to the client would be that they will be able to produce proof of purchase if they have to return a product at a later stage. This also keeps you in line with the Consumer Protection Act. Another benefit for clients will be if you have a client loyalty scheme, then the client will know that their purchase will contribute towards their loyalty balance.

For staff members

Because the sales have been entered onto the system and entered correctly then there is a higher chance that staff members will get their correct commission when salaries are paid.

Also, printing a receipt (AND GIVING IT TO THE CLIENT) means that the sale was entered into the system at the time it actually took place rather than at the end of the day after you have closed. It is disturbingly common for salons to not enter sales into their computerized systems as they happen but rather enter them all together at the end of the day. Doing it this way leaves much room for errors and manipulation. At the end of the day staff are eager to get finished and get home and having to work through cash up errors and deal with transactions that happened up to 8 hours prior can cause a lot of frustration and errors.

For accountants

I don’t know if you’ve noticed this yet but accountants are quite particular. They get their knickers in a knot if things don’t all balance or money cannot be accounted for. There’s quite a good reason for this, and this is because they know what kinds of questions will have to be answered if the “Eye of Sauron” (SARS) turns its focus onto your business. Believe it or not SARS does not like it when money can’t be accounted for and so if printing receipts for every client is a way that guarantees that every sales transaction is entered into your system and matches the money that you have in your safe or your bank then your accountant tends to be a little less condescending about how you run your business and the general state of your affairs.

Conclusion

There are many more benefits not mentioned above that are the result of simply printing a receipt like accurate reporting and analytics, targeted marketing campaigns and stock control to mention a few. Who would have thought that the little piece of paper that so often goes straight into the bin could have such a profound influence over the successful management of your salon?

If you are not currently doing this start today, ensure that every client who visits your salon walks out with a printed receipt for their purchase. Ensure all your correct details are on the receipt. Ensure that your software autoprints a receipt and also a second copy that you can keep in the salon for your own records.

It may seem like more work to have to enter the sale into your system as it happens but as the saying goes a stitch in time … well you know the rest.

What’s so gross about profit?

By

On January 8, 2015

In Articles, General News, Hairdressers Journal

Last year I did a couple of articles on Cost of Sales. The series was a little dry and theoretical and I wanted to follow it up with some practical points about how to monitor and manage your cost of sales so that you achieve as much gross profit as possible and this is something that all of us are interested in. Im not sure why its called Gross Profit, in my mind profit is awesome, not gross?

Before We Start

Cost of sales is made up of any variable costs that are directly related to sales volumes, ie if sales go up then these costs go up. For example, the total cost price of the retail items that you sell.

On the other hand fixed costs remain the same regardless of whether your sales volumes go up or down, for example, rent. Fixed costs are not included in cost of sales.

Some costs have variable and fixed components, for example, a basic salary that is constant plus commission, which is dependent on your sales volumes. The commission portion may be included in the cost of sales calculation whereas the basic salary would not.

Gross Profit, therefore, is the difference between your Sales Revenue and your Cost of Sales (or your variable costs).

Once you have determined your Gross Profit you then deduct all your other operating expenses like rent, telephone, insurance, advertising, ESP I.T costs etc and this will leave you with your Net Profit. And its your Net Profit that SARS is particularly interested in.

The Laws of Balance

When thinking about how I could spice up this topic in order to make it more inspiring and less like a sedative I concluded that people like articles and talks where there is a call to action and a set number of steps. For example, 3 keys to being a good boss, 5 traits of a bad employee, 7 ways to retain your clients etc.

So I was looking for a container or a way to package this topic so that it would be easy to absorb with clear calls to action.

I recalled a series of talks on personal finance by Andy Stanley (www.northpoint.org/balanced) where he compares being financially balanced to the laws of physical balance.

In this series Andy talks about the requirements to balance a pole in the open palm of your hand. First you need an objective, in this case the objective is to keep the pole upright. Without this objective the pole would fall.

Secondly, you need a focus point. In this case the focus point is the top of the pole. If you take your focus off the top of the pole it will fall down. Try this for yourself, take a broom and try and balance it upside down on your hand and take your focus away from the top and notice what happens.

Thirdly, you need to be making constant corrections. If you try this balancing act you will notice that you have to keep moving your hand in order to keep the pole upright. These movements are the constant corrections.

Andy then goes on to explain how this all applies to personal finance and if you get the chance I highly recommend that you check out this online series.

I will now use this comparison between physical balance and managing your cost of sales and gross profit.

Objective

First of all we need to define our objective. In this case the objective is quite simple, make as much gross profit as possible (in Rand value).

The goal of any business is to make a net profit, but this is simply impossible if you don’t first make a gross profit.

There’s not really much more to say about this.

Focus Point

In the balancing act, the focus point is the top of the pole. Remember that if you take your eye of the top of the pole it will fall. The focus point therefore is the monthly Gross Profit Margin, both as a percentage and as a Rand value.

One might argue at this point that Gross Profit is directly related to whatever your mark up is on your different supplier brands and so it will be pretty constant. In an ideal world this would be the case but in the real world you will see that it is not.

The outcome that we wish to achieve is that the Gross Profit margin is in fact consistent and if anything getting bigger (ie more profit) as time goes on.

Whenever there are variances that eat into the profit margin then action needs to be taken in order to firstly understand what has caused the variance and secondly to correct it (constant corrections).

Generally you can work on a Gross Profit margin of between 35% and 45% before commission. If you are going to include commission then take off another 10% from the margin. This will depend on the brands that you stock, the price you pay for your stock and the price you sell it for.

Arrange your data into monthly management accounts so that you can get a monthly Gross Profit percentage. Doing it monthly will alert you more quickly to any problems and put you in a better position to take action.

Here is a very simple example of what this might look like:

gp

In this example you can see a Gross Profit Margin that is close to 40% but in one month (May) dropped to 34%. By keeping this as our focus point we can immediately be made aware when we need to make a correction. (note that I have not distinguished between Retail and Service revenue or Cost of Sales at this point, Im really just focusing on Retail).

Ask your accountant to help you in setting up this structure. Explain to them what you are trying to achieve. This will be right up their ally so they should be in full support of the process.

Once you have set this structure up you need to start looking at the constant corrections that you may need to start making in order to keep your gross profit margins at the level you require.

Constant Corrections

There are a number of things that affect your gross profit margin and would need constant correcting:

Commission paid to staff

In most cases this is fairly straight forward but if you have sliding scales in place then the more that staff sell the higher their rate of commission will become and the less your gross profit margin will become. Sometimes staff members get rewarded not on their retail sales alone but on the ratio between Service and Retail sales. This gets a little more complicated so you might need to run a few scenarios to see the effect it has on commissions and therefore gross profit margins.

Shrinkage

If stock is being stolen then this will be eating into your gross profit margins. Because cost of sales is generally calculated as Opening Stock, Plus Purchases, Less Closing Stock it means that all stock that has gone out of the business (whether sold or stolen) is being calculated in the cost and therefore eats into the margin. Therefore you need to be constantly correcting the issue of shrinkage in your business.

Discounting

If you are discounting then it means that you are selling at a lower value but you are still selling at the same value. Therefore you need to be careful of falling into the trap of over discounting. It is difficult as clients become more price sensitive and the effect of companies like Groupon have had. If you are going to rely heavily on discounting then you are going to need to increase your volumes in order to get the same Rand value in the bank with lower margins.

Choosing your brands

Often times people will change brands because they are not happy with the deal or the discounts they are getting from their supplier. While this makes sense at one level you must consider which brands sell the best because you may recover your lost margins purely by sales volumes. Therefore you need to get the balance right between margin and sales volumes when choosing a brand. Also you need to consider what else your supplier is doing for you in adding value to the brands they supply. This added value may need to be looked at as a savings in marketing costs rather than a savings in cost of sales.

Supplier price increases

If suppliers increase their prices this will eat into your gross profit margins immediately. There are one of two ways to deal with this, increase your own prices but this could scare clients and drive sales down. Or you could leave prices as they are and increase volumes based on a better price.

Stock Valuations

Because you are buying stock at different times and selling stock at different times the chances are that you will have items on your shelf that you have purchased at different prices. Therefore if you bought one item at R100 and another at R110 you will need to discuss with your accountant what method they are valuing your stock at so that it most accurately reflects your actual stock value because this value is used in determining your opening and closing stock values, which in turn are used to determine your cost of sales.

Conclusion

Do you know what your current Gross Profit Margin is? Do you know what it should be? Are you watching it carefully every month? Do you know what is affecting your margins and are you constantly making corrections in order to improve it?

Use this example of balance by remembering your objective, having a clear focus point and getting to work to make the corrections required.

To app or not to app?

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On January 8, 2015

In Articles, General News, Hairdressers Journal

I recently counted over 130 apps installed on my iPhone. 130 different programs that I have installed in the past year, since I last upgraded my contract.

I have them grouped according to what they do, for example, there is a folder for apps that relate to reading like Kindle, and other apps for magazines or bibles. I have social apps like Facebook and Twitter in a folder. I have news apps like News 24, BBC, CNN, Aljazeera and EWN grouped together. Now, I’m not sharing this with you to indicate how anal I am about apps, Im sharing it with you to indicate that I have over 130 apps that actually serve a purpose installed on my phone and I tend to get rid of apps that I havent in a while.

There are over 1 million apps on the iStore and many more for Android and Windows Phone. That’s a lot of apps! There are apps for just about every idea you can think of; a werewolf locator app that helps you locate Werewolves around the world, an app that tells you what nearby ghosts are thinking and even an app that claims it can detect a watermelons ripeness using the phones microphone. Really useful apps, I know …

But are all apps simply gimmicks that don’t add any real value to our daily lives? Well at this stage in the mobile revolution we can confidently say that apps are more than just gimmicks and have rooted themselves in our daily routines in good ways and bad.

Communication has been revolutionized with apps like Whatsapp, which allows you to not only send messages to individuals but also to set up groups for work, family, clubs or any other reason. News is now instant through social media like Twitter and news apps. Banking can now happen in your car (while you are stopped at a red light of course). Navigation no longer requires a map book or even a dedicated GPS. Reading no longer requires books and you can purchase just about any book and have it on your phone within a few minutes.

Apps for the salon owners

So, with this wave of mobile applications having taken the world by storm what does it mean for the salon owner. Should you be using apps? Should you have your own app?

In looking at the first question “Should you be using apps?”

Utility apps

I think the answer is a definite yes. However, my answer relates initially to the generic use of apps, ie utility apps that may solve a certain problem for you that is not necessarily directly related to managing your core business functions.

Whether it’s a notepad app for writing down ideas or meeting notes with staff or using Whatsapp for group communication within your business there are many small utility apps that you will find useful.

Third party apps

Then there are apps that third party companies develop with a specific problem they are solving or unique service that they are offering and provide you with an opportunity to take part in. For example, GoBeauty that enables you to upload last minute bookings at a special price. Then any member of the public that has downloaded the app will see your appointment become available and can book the service through the app. This solves the problem of any open slots at the salon that you cannot fill and also reaches an audience that may never had visited your salon before thus sending new business your way.

Core business related apps

Then there are apps specifically for your own salon. These apps can be anything from glorified web sites to interactive purchasing and booking engines.

They will be apps that have your own branding and do not list any other salons that may compete with you.

There are a number of ways to get your own app including having one custom built from scratch according to your own requirements. Alternatively you could take what is known as a white label app and have it branded according to your own brand needs. There are certain sites that let you actually build your own app using wizard driven tools on their web sites.

The choice you make in how to get your own app will depend largely on what you wish to achieve through the app. If you have very specific and unique requirements then you may need to go the route of a custom built app.

Custom built apps

The upside of a custom built app is that you won’t have hundreds of other competitors that have apps doing exactly what yours does but just branded differently. However, on the down side a custom built app can be very expensive. Remember that you have to have your app built for the different mobile platforms (ie for Iphone, Android, Windows Phone etc) and you can end up spending over R100k on each of these platforms if you have it developed locally. For most salons this prohibitive cost makes a custom built app a non-starter.

White label apps

A white label app may be the next best thing in that you will have an app that is most likely custom built for the salon industry requirements, has a company behind it that is maintaining it and does not have large upfront costs like a custom app. The pricing model will most likely be a few hundred Rand a month and you will be able to include your salon details, price lists, specials and news and bookings requests (amongst other things). On the down side any other competitor can make use of the same app and therefore offer the same to their clients.

D.I.Y apps

D.I.Y apps are similar to white label apps in that you are using the same engine as anyone else who builds their apps on the same site as you, except that you are putting it together yourself using the options provided to you. The app is published in the app stores by the company whose site you build it on and they charge you a monthly service for providing all these facilities.

Answer this question first

The big question is “What do you wish to achieve through an app?” If, for example, you wish to allow your clients to log in to your app and view their live loyalty points balance or buy a gift vocher in their app then a custom built app will most likely be the requirement as the app will need to communicate with your loyalty scheme and gift voucher server.

If you wish to advertise your salon and allow clients to request bookings then a white label app would most likely suffice. However, you may wish to first ensure that your web site is mobile friendly as this may cover much of this for you already. A mobile friendly web site also deals with the problem of the different mobile operating systems as it will work across platforms.

Apps can be used as a talking point as they have the initial hype factor but in order for them to be more than just a gimmick they should be offering your clients some real value else the clients will not open them and eventually delete them. Therefore, if you are going to go the app route think about it very carefully and come up with a very good reason for your clients to open the app.

When the lights go out …

By

On January 8, 2015

In Articles, General News, Hairdressers Journal

What do you do when you have a power failure in the salon? The answer is simple really … follow all the steps in your policy and procedure manual on what to do in case of a power failure. Oh, you don’t have any procedures for a power failure? Well, in that case consider a few of the following points when putting together a power failure procedure.

Your computer system, which contains all your critical data (like bookings, client details and the ability to process sales records) will be shut off immediately in a power failure unless you are either working on a laptop or you have an uninterrupted power supply (UPS) installed. The danger of it shutting off immediately (apart from the fact that you cant access data) is that your data may get corrupted. So, it is very important that you do have a UPS if not working on a laptop.

In the case of a UPS you have up to about 15 minutes before it will run out of power. As a daily preventative measure you should have already printed out the days appointments (including contact details of clients). If this is not your practice then you should immediately do so before the computer shuts down.

A laptop will give up to about 2 hours before its own battery runs out so you should be able to achieve more.

The first thing you should do is communicate with your clients, ie all clients that are scheduled to come in for appointments that day should be notified to advise them of the power failure potentially reschedule. Remember, in order to reschedule you will need your computer else you may create a double booking so if you are working without a computer you will have to arrange to call the client back when the power is back on to re-schedule.

If you are on a laptop and still able to connect to the internet (ie 3G usb Modem) then you may want to SMS all clients with bookings today, or even your entire database to advise them of the power failure. This may even provide a marketing opportunity to communicate with your clients.

If you use a fancy PBX phone system that requires power then you may need to plug in an old school regular Telkom telephone that does not need power to work. This will enable you to call clients as well as receive calls from clients during the power failure.

For the clients that are still in store and any the come in that you are still able to accommodate (ie Retail sales etc) you will need some way of recording the details of the transaction so have some sort of manual docket/invoice book available. Remember that your credit card machine may not be working so you will most likely only be able to take cash.

Once the power is back on remember to insert all the sales that you entered into the manual docket book. On the dockets you should record the client name and cell number, staff name, items purchased and payment method (most likely cash).

Checklist of items required related to your computer

  • Daily bookings print out
  • Uninterrupted Power Supply
  • 3g USB modem (if you have a laptop)
  • Manual Docket Book
  • Regular land line telephone handset

Wisdom for salon owners

By

On January 8, 2015

In Articles, Hairdressers Journal

January 8, 2015/0 Comments/in Articles, Hairdressers Journal /by chris

As we approach the end of 2014 I thought I would take some time to do some looking back, at the year and at things in general. One thing is very clear, many things have changed and are still changing. And Im only talking about my own lifetime, let alone our entire history. But another thing is also evident and that is that with all our technology there are still many things that have not changed.

King Solomon, known for his great wisdom, wrote these words about 3000 years ago, “What has been will be again, what has been done will be done again; there is nothing new under the sun.”

Can this be true today? Surely that was only applicable because he had not yet experienced all of the modern developments and triumphs we have recorded in history since then? With all our developments in technology and information can it be that we still experience the same things as Solomon did in his day, surely not? We are so clever these days, we have solved so many problems, life is easy – or is it?

Let’s take a look at some old proverbs that can still be applied today.

For by wise guidance you will wage war, and in abundance of counselors there is victory (Old Testament Proverb)

If you are considering starting your own business be careful. Although you are not going to war with competitors in the traditional sense of war, there is a sense in which you will be fighting for a share of the market, and you will fight many battles on many fronts along the way.

This ancient wisdom urges the reader to get wise guidance before going to war, speak to many wise counselors so that you can ensure success. In the same way, before you go into business for yourself talk to people. Talk to the salon owner that you work for, talk to other salon owners, talk to suppliers in the industry, talk to other business owners outside the industry. Find out what has led to successes and what has led to failures.

Failure in business can have severe consequences with much personal devastation and should therefore not be entered into lightly. Being your own boss is not for everyone. This also should influence your attitude to your current boss, if you work for someone else. Show them the respect that they deserve (even if they don’t always deserve it).

The rich rules over the poor and the borrower becomes the lenders slave (Old Testament Proverb)

Be careful how you finance your business! As soon as you take money from someone you are in debt to them, they potentially have a say in how you run your own business and this negates why you may have opened your own business in the first place, ie to be your own boss and do things your way.

Now, you may need to borrow money in order to start your business and there are many success stories that have arisen from borrowing money, but going to bed each night knowing that you have to make Rx.xx amount of money each month just so that you can pay back your loans is not a great feeling. So approach finance very carefully.

Be especially careful of private finance, ie from one of your clients or friends. These kinds of arrangements are often less formal and less thought out than, for example, borrowing money from the bank. The bank will be very clear about the terms of the loan agreement. There will be an interest rate, a repayment term, action for breach of contracts etc.

However, when it comes to someone private this is often not the case and down the line this often leads to trouble. A private financer may have a very different idea of what they are going to get back from the business compared to you. It may be that they want a say in how things should be done, especially if they feel they are in jeopardy of not recovering their money. They may ask you for your financial information each month so that they can ensure that you are not trying to hide money from them, especially if they feel they are entitled to a share in the profits of the business.

In cases where you start out as friends the result can often be a loss of the friendship and this is even worse when it happens to be a family member.

Be as formal as possible, protect yourself and also protect the person who gives you the money. It would not be right for you to enter into an agreement with the hidden agenda of never paying back what you owe and it can get ugly, especially if they have more money and therefore more legal power than you.

When you have money think of the time when you had none (Japanese proverb)

In business there will be profitable times and there will be less profitable times. The danger often comes in the times when you have money. In the times when you do not have money you tend to make very wise choices, like spend wisely, cut costs, pay close attention to your business, motivate staff, ensure that you retain clients, save money for a rainy day and so on.

However, when money is coming in we tend to become reckless. We spend on things we don’t need, we don’t worry if we lose a client, we stop paying attention to the details of our business and we don’t plan for rainy days and we don’t re-invest wisely in our businesses.

Therefore, if you are doing well then remember a time (if it exists) when you may have been struggling. This should sober your approach to what you do with your money. It does not mean that you don’t spend it, but it means that you may need to spend it more wisely.

One of the best places to spend it is in your business. However, the goal of doing this is to ensure that your business keeps making money, even in hard times.

All the usual financial planning rules will apply, have a budget, cut costs, maximize profits, know your breakeven point, store away money to cover your monthly budget for x months. Pay yourself a set salary and then only take a portion of the profits periodically, don’t drain your business of its cash flow. Take care of your staff, but don’t overpay them so they become lazy, or too expensive to retain in hard times.

Do not withhold good from those to whom it is due, when it is in your power to do it. Do not say to your neighbor, “Go and come back, and tomorrow I will give it,” when you have it with you. (Old Testament proverb)

Pay your bills as soon as you can if you have the money. Not only does this keep you out of trouble, ie it keeps the lights on, the shelves stocked and your staff coming back, but it also takes care of the needs of the people that have supplied you.

Pay people what you owe them as soon as you are able, else you will spend the money and run into troubles later. It is very liberating being able to pay people what you owe them.

Now when David reached an old age, he made his son Solomon king over Israel

If you own your business are you teaching it to run without you or does it fall to pieces whenever you are away? Maturing your business to run without you frees you up to rest when you need to but also allows you to grow the value of the business apart from yourself. This is the equivalent of buying a house and adding value to it by adding a bedroom or a some other home improvement. By adding this value to the house you’re likely to get much more than you paid for it when you sell it.

In the same way, by working on your business you stand a better chance of handing it over to a successor like your children or getting a better price for it if you sell and less chance that you will have to continue working there once you have sold.

Conclusion

As you can see, in the profound words of The Pretenders, “some things change, some stay the same”. Our civilization solves some problems and then is faced with new ones. Some problems remain unsolved and seem unlikely to go away and we will need to keep applying ancient and modern wisdom to our lives as technology is just a tool and not a solution. (References: Proverbs for Business, Steve Marr)

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