How to Build a Profitable Business
There’s a lot more to building a profitable salon than simply having a smart budget in place. As a salon owner, it’s your responsibility to provide your team with opportunities for freedom, security, benefits, growth, and education. Not to mention, the goal is to be able to give yourself these same affordances.
Like most aspects of running a business, profitability doesn’t come easy, but Industry expert Kati Whitledge is here to break it down step-by-step in order to help you support your team. .
In addition to hosting the beloved Beyond The Technique podcast, Kati is the owner of the award-winning Be Inspired Salon located in Madison, Wisconsin, and the creative brain behind Meet Your Stylist, an innovative salon software system that matches potential clients with salon professionals based on services, lifestyle preferences, and personality metrics. Kati is passionate about helping others in the industry develop their own success stories, and wants to share her success with all of you with her four steps to building a profitable salon.
STEP 1: Set a Goal and Track It Daily
First thing’s first, you have to have a goal to work toward. If we don’t have a clear target to hit, how can we expect to grow our profits? At Kati’s salon, Be Inspired Salon, her team has established a monthly revenue goal that is broken down into daily goals. Every day the salon administrative manager sends over the revenue from the day prior, along with the weekly goal they need to achieve in order to maintain their revenue expectations.
Kati’s budget is tied to these numbers and she’s totally transparent about this with her team, so that all of her guest service representatives are that much more motivated to fill the books. Kati says the trick is to keep your eyes on the prize—and get butts in the seats!
Additionally, each of Be Inspired Salon’s guest service representatives has the ability to earn an increase in their pay as they contribute to the sales of the salon. Kati holds her front desk team accountable with performance goals similar to those of her stylists. These goals include things like gift card sales, service add-ons, retail sales, personal referrals, VIP membership sales, and re-booking.
STEP 2: Increase Your Prices
The second step to increasing your profitability is to charge more. Seems simple, right? Then why are we so scared to increase our prices? Kati reminds us that our CPAs, attorneys, product companies and contractors are all very willing to increase their prices on an annual basis. We come to accept that is the price of doing business with the people we trust, so why would we look at ourselves any differently?
The majority of our guests, whom Kati refers to as “A” clients, wouldn’t blink an eye when we do the same. There are so many reasons to increase your prices, perhaps you have just started offering a brand-new shampoo experience, maybe a handful of your stylists have been promoted to higher levels after reaching new benchmark achievements and productivity percentages. No matter how you choose to enhance the client experience, your prices should reflect the changes.
STEP 3: Stop Offering Discounts
The third way to increase your profitability is to stop offering discounts. Have you heard the saying, success is what you say no to?
Kati offers a few examples, if you wanted to be successful in your pursuit of being fit and healthy, you would probably say “no” to fast food. If you wanted to get out of debt, you would probably say “no” to friends when they ask you to join them on weekend getaways—at least until you’re debt-free of course! What it comes down to Is this: with discounts, you’re going to attract fickle guests who won’t stick it out after the deals are over because you’re devaluing your work.
Kati emphasizes, people don’t want to pay less, they want to be given more! There are so many ways to add value to your guest experience without devaluing your services, products, or people.
STEP 4: Think BIG
Finally, the fourth way to increase your profitability is to THINK BIG! When you’re in growth mode, you’re thinking about all of the ways to grow your team, your guest list, your brand, and your long-term potential.
This could mean you’re looking for a new, bigger and better space. Perhaps you even buy the building, in which case your salon would be renting from you—neat right? Depending on the space you might even be leasing out additional spaces to other businesses, essentially getting into commercial real estate. This could be great for your profitability!
You could also divide and conquer. Meaning you multiply and open your second, third, and fourth locations. Kati assures that if your systems, processes, culture, and training procedures are in place, this can be easier than you may think. There are so many ways you can grow profitability if you’re willing to think beyond what’s currently tangible—exciting, isn’t it?
To listen to the podcast that inspired this blog, check out episode 164, and if you’d like to learn a little bit more about our host, Kati, check out her website and don’t forget to subscribe to the Beyond The Technique podcast for more incredible industry insight.