Imagine saving thousands of dollars by mastering inventory management. In this episode, we share personal stories about costly mistakes like overordering on Shades EQ gloss treatments, demonstrating how a strategic inventory budget can rescue your bottom line. You'll learn about tools like SalonScale and Vish that can separate parts and labor costs, giving you greater control and minimizing waste. We also introduce a complimentary tool designed to streamline your order management so you can avoid major financial pitfalls.
Ever wondered how to keep your team motivated and loyal? We break down the importance of a well-defined career map within your salon, outlining the growth and financial opportunities for your team members that lead to increased retention and satisfaction. By implementing fair commissions and balanced compensation structures, you can create a clear path for growth that will keep your staff engaged and committed. We'll also touch on innovative advertising and marketing strategies crucial for thriving in today’s economic climate, all while emphasizing the vital role business leaders play in facilitating these opportunities.
Concerned about your salon’s profitability? Discover how proper pricing and time management can transform your business. Through real-life examples, we highlight the financial repercussions of incomplete consultations and undercharging clients. Offering practical advice on efficient time management, we show how to maximize earnings per minute and simplify pricing structures. We also address the detrimental impact of toxic employees on profitability, providing actionable insights to help you create a thriving, financially healthy salon business. Tune in and start implementing these strategies today for a more profitable tomorrow!
Do you have a question for Blondes in Business: Luxury Beauty Business Podcast? Send a text or leave a voicemail at 855.650.3445 or send us an email to hello@thephdprogram.com. We would love to hear from you. Start growing in business and leadership with powerful tools, advice and resources in your inbox every week: Learn more about The PHD Program Events:
Imagine saving thousands of dollars by mastering inventory management. In this episode, we share personal stories about costly mistakes like overordering on Shades EQ gloss treatments, demonstrating how a strategic inventory budget can rescue your bottom line. You'll learn about tools like SalonScale and Vish that can separate parts and labor costs, giving you greater control and minimizing waste. We also introduce a complimentary tool designed to streamline your order management so you can avoid major financial pitfalls.
Ever wondered how to keep your team motivated and loyal? We break down the importance of a well-defined career map within your salon, outlining the growth and financial opportunities for your team members that lead to increased retention and satisfaction. By implementing fair commissions and balanced compensation structures, you can create a clear path for growth that will keep your staff engaged and committed. We'll also touch on innovative advertising and marketing strategies crucial for thriving in today’s economic climate, all while emphasizing the vital role business leaders play in facilitating these opportunities.
Concerned about your salon’s profitability? Discover how proper pricing and time management can transform your business. Through real-life examples, we highlight the financial repercussions of incomplete consultations and undercharging clients. Offering practical advice on efficient time management, we show how to maximize earnings per minute and simplify pricing structures. We also address the detrimental impact of toxic employees on profitability, providing actionable insights to help you create a thriving, financially healthy salon business. Tune in and start implementing these strategies today for a more profitable tomorrow!
Do you have a question for Blondes in Business: Luxury Beauty Business Podcast? Send a text or leave a voicemail at 855.650.3445 or send us an email to hello@thephdprogram.com. We would love to hear from you. Start growing in business and leadership with powerful tools, advice and resources in your inbox every week: Learn more about The PHD Program Events:
on today's episode, today's podcast, we are going to be diving into the top five things that are losing you money in the salon and you're going to want to stick around because a few of these are really going to surprise you and you might not even be thinking that this is something that you need to be looking out for, but we've got your back.
Speaker 2:
Awesome, and so you know I think about myself, of Shades EQ. If you ever do Shades EQ in your business, this is definitely was a huge opportunity for me. I think we gave the whole town that we live in pre Shades EQs. If Shades EQ glosses if that's ever been you, you know what I'm talking about. Is you know? Just a funny story of like, hey, here's some things you could be losing money on. Shades EQ comes to mind for me right away.
Speaker 1:
Yes, I think we were in that same boat with you, jen, of giving the whole town a complimentary Shades EQ gloss treatment at some point in time, not even realizing the cost, and all of that good stuff. So you know, that really leads us into the first area that you could be losing money inside of the salon, and that is on inventory management. And so really, you know this is a big area inside of the salon because this encompasses our retail, our back bar, you know. So there's a lot of opportunities. You know that could potentially lead to significant loss, you know. And so when we, when we think about inventory mismanagement or even inventory management, you know really thinking about all of the areas that it includes and really looking in to see like, hey, what is it that we're doing great here and what is it that we really need to take a deeper dive into right away?
Speaker 2:
Yeah, and when you think about inventory mismanagement, you know, like Lindsay was saying is I know we've all come from the world of maybe overordering Like you're like here, sell, sell, let's all take it in and so when you think about overordering at the end of the day, like that can really impact your bottom line. So really making sure that you have a strategic inventory budget that you that you use will really help you keep track of that. And here in the PhD program we have a really cool one. Actually we're feeling really gifty today, so if you'd love access to it, just drop us an email at hello at the phdprogramcom and we'll send it over as a complimentary gift, just so that you can really understand your ordering, what you need to order, how you need to order and when you need to order.
Speaker 1:
Yes, what a great gift, you know, because really, the when you over order like that not only throws you out of budget right away but it also can cost you money at the end of the year If you are keeping that on hand with your inventory. But just even knowing, hey, what is the percentages that mean that I need to keep this at, because you know that's something with our clients inside of the PhD program, that we dive in deep to their profit and loss statement to look for areas you know that could be an opportunity for them and that's an area that we definitely monitor because that should potentially, you know, be around 52% is the highest. We would love to see that reorder at budget when we're looking at our inventory. And so if you're utilizing salon scale, you know, if you, if you're a salon that works with us, we know you're utilizing salon scale. If you're not, that's a that's a great opportunity to look into.
Speaker 1:
Also, vish so SalonScale or Vish are both great companies to be able to pass those costs along to the consumers who are the ones using the products. So separating your parts and labor. But if you're somebody who is doing that, then your reorder budget is really simple and it should be an easy target to hit. And so if we're not hitting that, there's some, some golden opportunities, golden nuggets to look at right there to be able to say like, hey, this is some sort of a red flag, what do we got going on here?
Speaker 2:
I love that Cause you're saying that. Back in the day I remember we used to look at the shops. I'm like, oh, that looks a little dusty. I think there must've been something there. Maybe we should order that back 20 years ago. And so, like I love that.
Speaker 2:
You said that, lindsay, it's just having that customized system to really be in control, because if you're not in control of your inventory it can control you in a huge way. So you know, really understanding, like Lindsay was giving you that reordering budget, understanding having that system in place really, at the end of the day, will really, you know, we say that profit is oxygen for your business and you've got to have oxygen to survive. And so we see this as one of the biggest things that people lose money on. They were losing about $6,900 a month just by not having the right inventory on hand, or overordering or just realizing where their color was going, and so that's like, if you add that up over a year's time span, that's like $82,000. So imagine what would you do an additional $82,000 to your bottom line. And so that's the importance of inventory and why, if it is mismanaged, it can really create, it can really steal the oxygen from your business.
Speaker 1:
Absolutely, man. That's like a shocking number to hear so, but that's, you know. That's also the power of having a coach that can have the outside lens instead of your business to see what is exactly going on, because there are so many moving parts instead of a salon company, you know. And so we're here to set a beautiful stage for creative artists to come in and do amazing things, and so, having a well-oiled machine of a business, we know that that inventory management is going to be one of the key tools to success. So, even knowing how many you have on hand, I love that story that you told Jen, because back in the day when I first bought the salon that I currently have, you know, funny thing is is that was about 15 years ago to the day that I took over, and I remember the first time we went to reorder color, it was literally the only system we had was well, we're just going to have four of everything on the shelf because that's what they did before us, so it must work, you know.
Speaker 1:
And a couple of those like six ends or those ones that are like a main character in a lot of people's color, we would order a couple more, you know. So you know, I know, jen, you offered out those free tools, so part of it was that formulation, but part of it is getting that. How much do you need on the shelf? You know, so that we would love to give you that, that free tool, so that you aren't just taking that swag at things to see. You know what is the specific wild ass guess Pardon my language that I need to take at this reordering. And you know, like Jen said, you really have a system to that. So that's proven. It works, that you can stand on and move forward inside of your business right away.
Speaker 2:
Yeah, all right. So let's think of what is another top of mind opportunity where you could really be losing some money on, and that's really, you know, lack of a career map, or a career map that is not setting you up for success. So you're maybe asking, well, what the heck is a career map, jen? And so a career map is going to be a journey that your team can go on to know exactly where the growth opportunities are, what their financial opportunities are, so they really truly understand, at the end of the day, what's possible for them. And so think about it like if you were working in a job that you know if you're a cashier at McDonald's, nothing wrong with that but like it's hard to know exactly what what an advancement will look like.
Speaker 1:
And so in the salon space, like without that career map, you know, people get stuck and a lot of times people leave because they don't see those growth opportunities so right there, that can make yes, and that's so powerful that you said that, because people do want to know how to get to that next place, and I think one of the most valuable things that we give as leaders inside of our companies is being able to paint a brighter future for people possible because they haven't achieved it yet, you know.
Speaker 1:
So when you look back on your life, it's easy to say like, wow, I didn't think that it would be possible to get where I am today, but as the visionary leader of the company, being able to paint that bigger picture and then having that career path path that is just black and white, it's just numbers, you know, and for us inside of the PhD program, we just believe that numbers tell a story, you know, and so it doesn't mean that we're a good or a bad person. Um, it just might mean like, hey, you know, if your retail is really low, your conversations when it comes to retail, um, probably are more about like the latest episode of the bachelor versus somebody's hair wants or desires or problems or pain points, you know, and so so helping, you know, paint kind of that picture for people. You know, that's kind of the key to that career map so that they can keep working through those systems and, like you said, jen, then it has to be supported by the math that makes sense inside of your business.
Speaker 2:
Specifically, and I think another aspect of that career map too is making sure that you're paying someone the right commission or the right hourly hourly rate.
Speaker 2:
You know, back in the day I was taught like you just scored out like 55% commission for everyone and so like, if you think about that, it doesn't actually work because most of our overhead comes from, you know, from payroll, and so you're not able to provide any extra opportunities when you pay such a high commission rate.
Speaker 2:
And so to really look at that and design your career map based upon the profitability you want, to take home, how your team can win, and you know really what's going to set you up for success, that you can offer those extra benefits for employees. So like, even if you start out at, let's say, level one on your career map, which would be a new level service provider, maybe you're paying them 38%, but if you paint the big picture for them all the extra benefits that they're getting, it's really like 42 or 43%, and so I think it's all in the presentation and the way you deliver it. And so I really feel like you've got to understand, and I find it hard we run lot numbers all day long to pay someone over 50% commission in a commission space and still be a profitable salon at the end of the day.
Speaker 1:
Yeah, it's really just not possible in today's economic climate. And so, knowing this, like, hey, you're playing the infinite game as the salon owner, and part of playing that infinite game is is creating infinite possibilities for people on your team. And you know one of those ways is by paying in a healthy and a healthy pay range. That makes sense because you know there's gone are the days of not doing any sort of like advertising in our business and only relying on social media or only relying. You know there's gone are the days of not doing any sort of like advertising in our business and only relying on social media or only relying, you know, on word of mouth. Like, we've got to get creative, to stand out, to really showcase our stuff, and we have to have, you know, the money available to make that possible. And so you, as the leader of your ship your ship, you know need to really think big picture. And, of course, you want to pay as much as possible because you love the people that you work with.
Speaker 1:
But it's just got to make sense, you know, because if the if there's no money there, at the end of the day it doesn't matter, and you know they might be able to go down the street and make a little bit more commission, um, but are they bringing in the guests that you are? Are they providing the education? Do they have the benefits, All of that stuff? And so that's really what sets our salon companies apart that we work with inside of the PhD program is that we're playing the infinite game. We are creating infinite possibilities. We know what we bring to the table. We know that we're creating a beautiful team-based environment to where it's not solely reliant on one person and that's just the game that we're playing. And that's another space where you could be leaving money on the table right now. If you're so fixated on what that commission number is and not fixated on creating that infinite game and playing for those bigger possibilities, that could be a big Achilles heel for you right now in your business.
Speaker 2:
All right.
Speaker 2:
So let's talk about segment three of what are some opportunities that are probably you need to view, that could be costing you money at the end of the day, and this is going to be like a profit and loss audit.
Speaker 2:
And so we like to look at your COGS, which is your cost of goods sold, and so the way we like to teach in the PhD program is that your cost of goods, you want them to be 60% or below of your total sales, and because what we see is every single time that your COGS are 60% or above, like it's really hard to create and maintain that profitability.
Speaker 2:
So, yes, there may be times in your business that your COGS may be a little bit higher than 60%, but, like, if you're really on that data-driven area of really understanding and analyzing your profit and loss, it helps you to be able to make informed decisions about what needs to happen in your company. So maybe you don't order as much the next month or maybe you need to turn down the marketing a little bit or whatever it needs to do. Because, again, like I said earlier, oxygen we profit is oxygen in our business, and so we have to have oxygen to survive, and so it's like. It's like really, you know, putting that puzzle together and really understanding hey, what are the pieces that go together to really make this really work? Hey, what are the?
Speaker 1:
pieces that go together to really make this really work. You might be thinking to yourself what is considered COGS inside of my business and really the cost of goods sold or whatever it takes to produce more sales inside of your business. And so, like, for a retail item, you'd need more retail items to produce more of those sales. But for a service, you would need the service provider, you would need the products that the service provider needs to, you know, to create their beautiful masterpiece Um. And then also, of course, like credit card fees, you would need the owner of the company to be able to make the company run Um.
Speaker 1:
But then what's not considered cogs would be, like you know your front desk, because sure, does it feel like you couldn't survive without a front desk? Yes, like once you, once you hit the space, cause I've worked in both, like I've worked where we didn't have a front desk, cause we were that small in the beginning, to the place where you know now there's multiple people up there and could you function without it? Does it feel like we could today? No, but could we actually? Yes, so that's not considered to be a cost of goods sold, but you know so. So just knowing kind of where you categorize things is super powerful because, like, also, if you're ever thinking about expanding into another location, if your cogs are out of line, you are going to be duplicating chaos. We've seen, you know we've helped salon owners in that position in the past. You know we'd love to really get people in alignment before they start to scale and multiply and duplicate in the future.
Speaker 1:
So if that's one of your goals you know it's it's a good thing to consider. Like, hey, let me look at my cogs, let me get those under control, let me, um, you know, work with people who can help me also achieve that goal as well.
Speaker 2:
I love that, and so another segment of things that could be costing you financial freedom at the end of the day would be your service providers not charging correctly. Actually, this just I have a story to share is we actually had a guest come in and a service service provider so it was a stylist, hairstylist and she said the guest only wanted a root array, so like just a touch up on the hairline. Well, she charged her only that no blow dry, nothing else, and so like for an hour and a half service. I think we ended up doing like a price per minute for her and it was like 40 cents a minute. So really we gave a free gift that day. We were feeling very generous that day, but it was like it was a huge teaching opportunity because she just didn't see. It was a huge teaching opportunity because she just didn't see it. She's like, yeah, I was kind of frustrated that I was only going to be making you know so-and-so dollars and it took that long.
Speaker 2:
I said, yeah, that's why we really got to make sure our consultations are up to par, that we're really educating the guests, and because when we're not charging guests correctly, it does a disservice to them actually and it really hurts the salon company, the service provider and the guest at the end of the day. And so to really make sure that you're over explaining, I feel like you have to over explain pricing sometimes to your team so that they understand the game that you're playing, the why behind what you charge, and just like creating scenarios of like hey, okay, we have this guest, this is what she wants, this is kind of like let's come up with a scenario or you know a, a funnel of like what it would cost her, and so I think that really just helps them to understand, because at the end of the day, we get why we charge what we do, but a lot of times our team doesn't. So helping them, you know, see that opportunity really helps to create financial impact.
Speaker 1:
Yeah, and I love that you talked about that price per minute or the cost per minute, because I think that that's a huge area, that that when you bring awareness to your team on that, it's like light bulbs go off. You know, I feel like that is a place where people can give themselves a huge pay increase and a commissioned environment. You know, we see it all the time on our team when we have a new team member come on. You know, not necessarily by fault of your own, but just you're slow in the beginning sometimes and you know it takes you a little while longer. And so having that be one of your goals right away, because like that's basically like not charging correctly, Like you can't charge somebody because you're new and you're slower, but you can work on getting faster, you know, and getting your times up to what they need to be and showing somebody like hey, if you're taking right now three and a half hours for a balayage and you can get that down to two and a half hours, your cost per minute goes up or your earnings per minute go up significantly and somebody who has the funds to spend on that they don't always have the time to spend with you and so really getting in exchange with people with that they don't always have the time to spend with you, and so really getting in exchange with people with their not only are there financials, you want to stay in exchange with somebody with their time. And so, you know, I think not charging correctly and then also taking so much time in an area is a place where salons are bleeding money. You know, and you see, I feel like there's just like some kind of sexy marketing. You know, on certain areas of social media right now, that's like. You know, take 47 hours for one balayage, charge a million dollars, you'll be a bazillionaire by the end of the week.
Speaker 1:
You know, and okay, maybe, maybe that's happened for one person. I'm not saying it's impossible. I would love to meet you if, if, as you hit us up, but what we see is that most people, you know that's not your reality. Your reality is like when you're working with those high ticket clients. They're easier to work with. They just have less time. You know they're. They don't have as much friction around the value that you're delivering to them If you can get them in and out quickly. We always joke around at our salon like, hey if, cause we don't do nails inside of our company, like if I could drop my hands off to get my nails done and then go pick them up later. That would be amazing, you know, and so that's what our high ticket clients are thinking, you know. So how can you create an experience where not only have you educated the team like Jen just talked about, on why pricing and charging correctly matters, but also like how do we manage that time?
Speaker 2:
Because that's another area that we could be bleeding out to All right, I'm in If I can drop my hands off to get my nails done, sign me up, amen. Another thing, too, I think about too, is sometimes I see pricing structures or the way people are charging to be like overcomplicated and like we're big fans of KISS, like keep it simple, superstar, like you want to be able to present this almost to like a fifth grader and so, like you know, I think it's okay to do packages and things like that, but I think the more simple the simplicity has so much beauty in it is. You know, to make it easy for the guest to understand. I think it makes it easy for your service providers to understand too. So, you know, I think you don't have to overcomplicate things. Just keep it simple and you'll have both parties enrolled in what you're creating.
Speaker 1:
Love it. And number five in the the five, the top five things that could be losing you money inside of your salon today is having a toxic employee. That's right. You know, if you've been in the business for any amount of time, you could have experienced this already. If you haven't yet, we don't wish it upon you, but really this can be a detrimental thing inside of a company.
Speaker 1:
You know, a lot of times we have talked to salon owners or even, you know, been in a position ourselves in the past where we thought, gosh, they're, you know, a high producer and you know they, they produce a lot inside of the salon. But what you don't realize is usually, you know, with our career paths, like it's a level six, seven is no different than a level one. You know, with our career paths, like it's a level six, seven is no different than a level one. You know. And so a lot of times the financial impact isn't actually what you think it is, and so people will think they're keeping someone for a financial impact. But what it does to your staff or for your you know the rest of your team, and for your consumers, your clients, is just like immeasurable.
Speaker 1:
You know and you know I know one salon owner that we work with just lost a few people on her team and was thinking, gosh, you know this.
Speaker 1:
That seems like a lot of money going out the door.
Speaker 1:
But then what she noticed right away was every single service provider increased by at least $1,000 a month like at least $1,000. Some of them were several thousand dollars a month and it was because of the removal of one toxic person in particular. There was a couple that went during that, but the one person in particular made such a big difference on the team that thousands of dollars came back in the door right away. And of course you know we've got some great training inside of our program around, like what do you do when this happens so that you can get back on your feet right away? But at the end of the day, what it came down to was the removal of that person, just the life force, energy that it brought back to the rest of the team. The guests noticed it right away. It's like small little things where you're like, wow, I didn't realize what an impact this had on my company, but when you're able to step back and see it in a new lens, you're like, oh, wow, feels like a breath of fresh air around here.
Speaker 2:
It sure does A breath of fresh air. And I remember talking to that salon owner too, lindsay, and she was saying she's like you, you truly don't realize it, because then you start to get feedback after that person leaves. You get feedback from employees, you get feedback from other guests and it's like you really truly don't understand it, because a lot of times, as servant leaders and thoughtful leaders, like, we're trying so hard to coach someone up that we sometimes don't even see their toxic behavior or their toxic traits and so at the end of the day, just like the example that Lindsay was sharing, is like wow to to lose someone like that is the biggest gift, the biggest gain that you can get in your company.
Speaker 1:
Yes, and so you know that's just a, that's a great thing to just look at, just to see like it just kind of take an audit, like hey, what's going on, and and just be willing to be with it.
Speaker 1:
You know, like I think that's, you know, kind of one of the hardest things, like you mentioned, jen, because we are servant leaders, we love people, we love to see new possibilities for them, to paint that bigger picture, help them continue to grow. But if you start to get to the place where you're like wow, I'm feeling more drained than energized, like that could be a good opportunity to just look and see like, hey, what do we need to do? Because you know, at the end of the day, like you will be giving them a gift too, because if they're miserable and you're miserable, then your guests are miserable, the rest of the team is miserable, and it's just time. Sometimes you know it doesn't make anybody good or bad, it just means toxic, is is draining, and so you got to stop that drain, you got to stop that leak so that your ship can continue on to do incredible things.
Speaker 2:
I love that you said that drained or energized. Imagine using that in a growth session. You know to view it from all perspectives. But being in a growth session with someone and it really helps you to gain some power back to when you're like, okay, I do every like I'm really trying to help this person, but at the end of the day I feel drained. A lot of times it can just tell you a lot about who that person is and to know that, hey, you've got some decisions to make in your company. It doesn't have to be made today, but it does help you to collect that data so that you do have the tools and that decision needs to be made right there in front of your face.
Speaker 1:
Yes, brilliant. Okay, so we just dove into the top five things that are losing you money inside of the salon today. The first one was your inventory management, or mismanagement. The second was a lack of a career map. The third was high cost of goods sold. The fourth was service providers not charging correctly. The fifth was having a toxic employee. And so if you got some amazing things out of today's podcast and you can think of somebody to share this with that is also in your shoes as a commissioned or hourly salon owner, definitely send it over to them. We believe that you get what you give in life, and we know, if you're listening to this, you share that same belief, and we know that you're a giver and givers gain, so you're not given to do it, but you just receive same belief. And we know that you're a giver and givers gain, so you're not given to do it, but you just receive on the other end. So feel free to share this with somebody you know um inside of our industry.
Speaker 2:
Awesome, all right Cheers to cracking down on those money losing factors. Have a beautiful day.
