Salon 101 – The Importance of Cost Control
Let me tell you! After 10 years of running my salon, I could not pinpoint where cash was going. We would have a huge month and after we paid staff and expenses our money was gone AGAIN. I made it my mission to find out what and where this was.
After months and months of the same routine, I finally found the root of the problem – it was COLOR going out the door or down the drain unpaid for. I started to look at the way I was charging for color. Was the 15% service charge we are allocating the right amount of money to cover color and back bar expenses? SalonScale helped us track per customer how much color was going through our back bar and what the cost per pour was. We used it to find out if we were covering our costs on each guest individually – and guess what?
We learned a valuable lesson on cost control. We completely reformatted how we ran our business from how we charge to what we order. Separating parts from labor allowed us to not only increase our revenue but make a profit every color every time. I hate to be the preacher over and over about this but you guys! This is what is wrong with our charging system. We need to have color as a separate charge on a bill. This makes a sure true profit and you can be sure you are making what you are charging. Not only that it is transparent to everyone from clients to staff no need to hide charges or have service fees.
I now know after 10 years of controlling our expenses that this is the best way to control cash flow in any line of business. A healthy company with a budget will take so much stress away. I cannot express how much my life changed when things were laid out right there in front of me and I could see exactly how profitable we were each month.
Wishing you all more cost control in your salons!