3 Epic Business Fails.

by Marion G Shaw on March 27, 2016

woman with problemThe statistics in our business are dismal.  80% of new salons go out of business within the first 2 years of operation.  Not because they do not have great technical skills or look after their clients.  But because they do not know, nor do they take the time to learn, the business side of the salon.

The average earnings of stylists in our industry in North America is between $13.20 and $13.40 per hour.  Now that’s really depressing.  Your stylists  have probably spent thousands of dollars on learning their skills, not to mention the fact that they may have a huge student loan to pay off.

So what is the answer?

There are 3 reasons why many salons fail and here they are:-

  1. Systems!!!  A system is a successful, repeatable method of doing something.  In the salon that would be how to do just about everything, but particularly for the service providers, the big 4 are:-  Retention  –  Rebooking  –  Referrals  –  Retail.  As a salon owner it is your responsibility to develop easy ways of getting your team to do all of the above in a way that is not pushy or uncomfortable.  Be prepared to mentor your new stylists on these systems so that they can get the results that are necessary for the success of your business.
  2. Pricing!!!  There are so many salons who do not know how to do this correctly.  You need to make a profit on every service you offer and the only way to do this is to know how much that service is costing you.  You have only 1 thing to sell – TIME – and knowing how much that time is costing you is the most important factor in pricing correctly.  You need to know your productivity.  How many hours per day are you selling?  Don’t count the hours that your team are actually in the salon – you need the hours that they are actually working with a client.  You must also assign a certain amount of time to each of your services and your team must know that they must do the service within that time frame.  Once you know how much that time is costing you, you can then decide on the amount of profit you need and price accordingly.
  3. Your Team!!!  Failure to be a leader instead of a manager is common in our industry.  Your stylists need to be productive, happy, know your salon goals and know that their career goals are important and also being met.  Share your numbers with your team,  celebrate victories, mentor and encourage and make sure that your team know they are part of the salon’s success.  If you do this well, you will have a team of very high earning producers, who are happy and enthusiastic and proud of their achievements.  Your stylists are your most important assets, so look after them well.

Does this sound daunting to you?

Doing all of the above can be a challenge, however, they are absolutely essential to the success of your business.

If you could have an easy way to put this together  would you be interested?  I think so! 

I have one for you.  (Or rather 2)  The #3 is addressed in some earlier blogs on finding the right people for the job.

The more difficult ones can be found right here  Take a look around the site and see the excerpts from the book which will give you systems for success on all of the above and also a great offer of the complete pricing system, (you will need MS office excel for this – don’t worry, there is a tutorial if you are not familiar with Excel,)  for only $40 with the added bonus of the book for only $5.

Give yourself an inexpensive Easter present and take yourself out of the scary statistics zone.


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Selling Your Salon? What’s Your Plan?

by Marion G Shaw on March 22, 2016

For Sale SignMost people, when they open their salon, think of it as a life time business.

However, at some point you will want to move on and sell the salon that you have invested thousands of dollars, not to mention years of your life into building, nurturing and growing that business.

Few salon owners have an exit plan when they start their business, however you need to think about it at some point and here are some things to consider.

  • Your business must be a viable investment if you are going to get any return on your money.  You must be profitable, you must show sustainability and you must have a great business model with systems for success.  Who will give you their life savings and more if your business is not a success story.
  • You must keep good business records, have all of your financial information ready and easy to understand for any new owner.
  • Your Balance Sheet and Profit & Loss Statement tell the story of your leadership thinking and behavior. They tell if you’re paying attention to your company’s financial reality or putting your faith in the universe to keep your company financially viable If you don’t know what every line item means on your Balance Sheet and Profit & Loss Statement, make it your business to learn so you can show it to a potential buyer without fear.  (This great paragraph comes from Neil Ducoff one of the foremost leaders in our industry on salon financial health.)
  • Price your salon correctly.  How do you so this?  Firstly, understand what your potential buyer is paying for.  Your inventory, your fixtures and fittings and the goodwill of your business.  Fixtures, fittings and inventory will be on your balance sheet, however, you will need to do a complete physical inventory count on the day of completion.  The most difficult thing to calculate is the goodwill.  That is the expectation of future business for the new owner, the client records, the staff and the systems for success.  There is an accountant’s calculation for this.  Take the profit from your last annual profit and loss statement, add this to the amount you, as the owner, took out of the business as financial compensation, then multiply by 2 and that is the accountant’s method of calculating it.  However, be prepared to negotiate on this one.  Will the business continue to operate successfully under a new owner?  Will the staff stay? will the clients stay?
  • Be prepared to sigh a “Non Compete” agreement.  This will state that you may not work in, or be involved in, a business similar to that which you have just sold, within a specific area for a specific number of years.
  • Know how many gift certificates are outstanding and your redemption rate.  For example, if there are $5,000 worth of unredeemed ones, then that must come off the price.  However, it the redemption rate is 75%, then that figure is negotiable.  Be open and upfront about promotions outstanding and if there are any Groupon campaigns ongoing and how many are sold.
  • Several salon owners recognize potential staff members who may want to buy the business when the time comes.  They groom these people on ownership and prepare them for it.  They also make it easy by offering payment options.  Think about this one – it can work well and save you a lot of time and expense when you want to step back.  In this case, you may act as a mentor to the new owner to ensure that you get paid out for your investment.  Some will charge for this, some not.

So the bottom line is – prepare well.  Almost any salon is for sale at the right price and in the right circumstances.  What is your absolute bottom line if you have to sell quickly?  Having a plan in place will help you to make a return on your investment instead of taking a bath and walking away with very little.


Guidelines for your Performance Reviews by Neil Ducoff

by Marion G Shaw on February 27, 2016

Want to take the pain out of evaluations?
Owners try their best to escape them…
But in the end, performance evaluations are an essential task for every salon/spa leader.
So why are evaluations such a pain point for so many owners? Often times, it simply comes down to two common mistakes:
1. No structured plan for the meetings
2. Not knowing what to say or how to say it
The good news is, it doesn’t take much to plan out a killer evaluation.
The most important thing to remember, is that without your feedback, your staff will never know if they are under-performing, over-performing, doing something incorrectly, or are your biggest rock star. It’s the age-old question posed by salon/spa owners…

Why don’t they ever do things like I want them to?

Well, maybe they never realized they were doing them wrong! If that’s the case, there’s no quicker and easier way to get staff back on track than with a performance evaluation.

One of the most effective ways to get the most out of your salon/spa staff is to give them lots of feedback. There’s a saying in Human Resources that nothing said in a performance review should ever be a surprise for an employee. Problems should be dealt with as they arise, and not saved for formal reviews. And be generous with your praise. What gets rewarded, gets repeated!

The first year, an employee should receive reviews at the one-month, three-month, six-month and one-year marks.

Here are 10 key points to remember when doing staff performance reviews:

1. Prepare all staff records and review them well in advance. The worst thing you can do is begin staff evaluations unprepared. Have a written form that addresses each job responsibility, rating each on a scale from 1-5.
2. Give feedback on their contribution to your culture: Rate your employees on teamwork, enthusiasm, communication and other culture-related things.
3. Avoid being confrontational. Evaluations provide a one-on-one forum for you and your employees to discuss ways to improve performance. A performance problem requires a solution — not a battle.
4. Give employees a chance to express their thoughts and feelings — learn to listen. Don’t be one-sided. State your concerns and listen to what the employee has to say.
5. Never discuss money or raises. Performance evaluations must focus solely on addressing and improving performance. Save discussions of money for compensation reviews that should occur regularly — and don’t always result in pay raises.
6. Be specific with both your praise and recommendations for improvement. Never say someone needs to do better without offering tangible ways to do so.
7. Keep tempers under control. Should an evaluation turn into a heated debate, take a 20 minute break to cool off. Resume the meeting and focus on solutions.
8. Re-evaluate sooner for special situations. Sometimes you need to schedule a followup meeting in two or four weeks to review the progress of certain problem employees.
9. Know when to eliminate problem staff. Not everyone is compatible with every salon/spa environment. If an employee can’t eventually get with the program — it’s in the best interest of the company to end the relationship.
10. Always find something to compliment. Look for it; it’s there. Discuss achievements and acknowledgements, such as positive client feedback.
Bonus: Be sensitive: People’s identities are frequently wrapped up in their jobs. Criticism is difficult to hear. Offer a dose of kindness and compassion, but be honest. An employee can’t learn and grow if he or she doesn’t know where the problem is.

After the first year, many companies offer quarterly reviews. While that may seem excessive, developing an evaluation process will help ensure that employees know exactly how they’re doing and can make needed adjustments before too long a period has passed. It give management a structure to objectively judge performance and ensure that behavior is held to a consistent standard. The guide for this is the broadband, which offers clear standards for each step on the salon/spa employee growth path.

Thank you Neil Ducoff for this great article.  For more information go to www.strategies.com


Let’s Have an Oscar Party!

by Marion G Shaw on February 16, 2016

HollywoodEveryone loves to party, and not least of all are hairstylists.
However for us, it’s not just an excuse for a get together, but also an opportunity to learn.
Not only will you be watching the red carpet, but so also will be your clients.
Although many of our product manufacturers feel that they are the trend setters in our industry, we all know that it’s the media – film, TV, and our favourite stars who are the real trendsetters here.
For the next few weeks following the Oscars your clients will be coming in to the salon and wanting that latest greatest look that their favourite stars wore on that special night.
So it’s time to organize your salon party and get your hairstylists and make up artists on board with taking photos and notes as they have fun and watch the awards.
Once you recover from the party, put together a portfolio for the stylists with photos and notes on each great look.
So now you have all of the information – how do you get your clients involved?
Firstly, practice, practice and more practise. On each other, on friends and mannequins. You want to make sure that you have those looks “as seen on TV”.
Prepare some beautiful mannequins, name them after the appropriate stars and display them in your salon.
Do a “Red Carpet” fashion show. Invite your clients and their friends to see your “Oscars” work by holding a fashion show. Make it a charitable event and pick a charity that will appeal to your clients, to the salon and to the community. Find some “Look Alike” models and work your hair and make up magic.
Not only will this be a great promotion for your business, but also you are showing the community that you support and are involved in good work in the community.


Creating the Brand For Your Salon

February 6, 2016

Nowadays, the word “Branding” is thrown around a lot. But do you know what it really means to your business and how do you go about it? Here is a great description by a marketing expert on exactly what it means and how you create that unique image that will say so much about your […]

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Your Target Market and Demographics

January 23, 2016

When I speak with potential salon owners, I ask them who their ideal client is.  Usually the answer is “Everyone”. While we will never turn a client away because she does not fit the profile, no business can be everything to everyone and one of the most important things to do when planning your salon […]

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The Business Plan – Your Financial Picture

January 17, 2016

Now it’s time to get out your calculator and set out your financial picture. As I said in an earlier post, if you intend on opening and running a business you need to keep your financial affairs in good order.  No overdue loans, no maxed out credit cards or other debt that is not handled […]

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How to Give A Great Consultation

January 16, 2016

Want some tips on how to do a great hair consultation by a stylist. Just released is my podcast and interview on this all important part of your client’s visit to you. Please note, this is talking about a first time client consultation in a hair salon. Go here to listen  https://soundcloud.com/greg-robins-1/how-to-give-a-great-new-client-consultation       […]

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Your Business Plan – More Information

January 10, 2016

After the holiday hiatus, let’s continue with writing that business plan. You have created the cover page and the executive summary, now you are ready to go into details of how you intend to organize your business. After your executive summary, you need to supply some legal information.  What legal business model will you choose?  […]

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Valentine’s Day – Gift Certificate Heaven!

January 6, 2016

Here comes Valentine’s day and one of the biggest opportunities for you to market to your male clients and make them aware of the wonderful gifts and services you have for their loved ones. Hopefully you have a separate contact list for the gentlemen in your clients’ lives so with February 14 coming up quickly, […]

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