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Steve GomezSteve Gomez
Steve GomezSteve Gomez
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How To Keep Your Retail Profit!

How To Keep Your Retail Profit!

February 2, 2019

Do you take your retail sales earned and put it in your account and pay bills with it? While most salons and spas would answer “yes” to this question, this is not a wise financial strategy in the long term. Think of your retail business separately from your service income and your gift card income. In fact each of them should be tracked separately and have their own budgets. For now, let’s set our sights on retail.

For every dollar you bring in with retail sales you can count on roughly 34% (.34 cents) profit after inventory is purchased, commissions are paid and you cover any sales tax, credit card processing, discounts and/or shrinkage. If this amount is left in your bank accounts and used to pay monthly bills then the salon is taking away pure profit and, with it, a chance to make that money work more efficiently. Let’s look at an example of what we mean and then introduce a plan to get that money back into savings.

Let’s say you sell $1,000 a month in retail sales. Based on the averages this would mean a profit of $340 dollars. (Keep in mind this may vary based upon inventory over purchasing or if the retail commission is high, low or not offered.) If this $340 dollars is left in the account to pay monthly bills then it is being lost. Over a 12 month period this adds up to $4,080! Think about what this amount of money can be used for. A salon or spa owner could use this money to chunk down credit card debts, make a double loan payment, invest in education or marketing and, of course, building a nest egg by saving for future retirement. Any of this would be smart business, not to mention the boost of confidence and empowerment in seeing true financial progress being made.

Seeing this is powerful, making the change is important but takes some patient steps to make happen. Up to now, the business has been used to having the $340 to pay bills each month, to just take it away with no plan to replace it wouldn’t work. To get this money back the salon or spa would have to grow its average services sales each month to cover it. However, it would have to grow by more than just $340 a month because any service sold includes expenses to perform the service.

If your goal is $340 for the month you have to add on payroll, payroll tax, cost of back bar, and credit card processing. These are your basic hard costs to perform the service. This is where keeping an up-to-date P&L (profit & loss statement) becomes vital. Look to the P&L to see what your average percentages are for the above costs. (A good idea is to get at least a 3 month up to a 6 month average) For example, let’s say your service payroll percentage is 45%, your payroll tax percentage on the services is 12%, your cost of back bar is 7% and your credit card processing percentage is 2%. Here’s how you would do the math so you know exactly what your service sales increase goal would have to be to get your $340 retail profit back in your hands:

Service Payroll (45%) $340 × 45% $153
Payroll Tax (12%) $153 × 12% $18.36
Cost of Back Bar (7%) $340 × 7% $23.80
Credit Card Processing (2%) $340 × 2% $6.80
Additional Expense → $201.96
Monthly Service Sales Increase $340 + $201.96 $541.96

This would be your new goal. You can make plans to increase your service sales by an additional $541.96 each month, above and beyond your current goals. Each month, when you achieve this, you can then move $340 back over to your savings account and see your retail profit back in the right place!

A few final reminders:

Tracking is crucial. Be sure your P&L is current and that you know what your percentages are. If you don’t know them, I have created a Breakeven Analysis Spreadsheet. It’s part of my Financial Fitness book! When you plug in your numbers from your P&L it will show you exactly what your percentage is versus what it should be. This will help you have your current percentages in place so you can do the above equation and set an accurate goal!

Lastly, do not look at an additional $541.96 as being a big number to hit, because it’s not. Let’s say you have 5 service providers. By breaking the goal up between them, each person would have to grow their monthly services sales by $108.39 a month. Take that a few steps further: Break it up weekly to $27.09 a week and if they work 5 days a week with clients it’s $5.42 a day! Not hard at all!

Take this information and the equations, get your numbers in front of you and do the math. Set your goals and take the first steps to get that retail profit back where it belongs and working for you. Your business will run more efficiently and you’ll have less worries and more money for all of your hard work!

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Steve Gomez Business Coach

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You never get a second chance to make a great firs You never get a second chance to make a great first impression! 

Be sure you implement steps and guidelines that support the front desk to make specific recommendations that support cash flow growth for the business, empower them to feel a bigger part of the team and hit a home run throughout the clients whole experience with you!
A great way to elevate customer service is how you A great way to elevate customer service is how you dress and present yourself. 

Always be sharp, well-groomed and present a professional image before walking through the door. 

These little things make a BIG impression.
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A Great Way to Exceed Your Financial Goals A grea A Great Way to Exceed Your Financial Goals

A great way to exceed your financial goals is to play the Booking Game! 

Begin each day by looking at who is on your books, analyze their last 3 visits to see purchasing patterns, what they are coming in for and what you could recommend to them that can help them and help you. 

Add up what is on the day and what is possible, and you will that you can exceed expectations for them and for you!
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Improving Retail Results by Tracking Sales You ca Improving Retail Results by Tracking Sales

You can improve your retail results by tracking what you sell and what you don't. 

Notice which products you sell based on client needs, your preference and your salon's goals. 

What should you be recommending more based on the services you provide? 

When you take the time to research this you will improve your customer service and your results.

Factors to Consider in Tracking Retail Sales
- Sales volume by product
- Sales volume by service
- Product preferences by client
- Sales goals and targets
Do you have a budget? One of the most important Do you have a budget? 

One of the most important steps any technician can take is to put a budget plan in place that helps to manage expenses and create a clear goal for what production goals need to be. 

Be sure you take the time to make this happen and improve your results and your quality of life too!

Tips for Effective Budgeting
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When running a promotion for your customers, decor When running a promotion for your customers, decorate appropriately. Put shelf talkers everywhere a customer may be in your business. Think of fun collateral to accompany the shelf talkers. A little decoration goes a long way to stimulate the senses and add to the promotion.

Benefits of Decorating Appropriately
- Attracts attention and increases visibility
- Stimulates the senses and creates a memorable experience
- Reinforces branding and messaging
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It’s a wrap! Another successful Financial Fitnes It’s a wrap! Another successful Financial Fitness Workshop with @dmkinternational is in the books today here in Dallas! @20beautynancy and I are honored to partner with a great team of people to serve and support these awesome clinics to grow their knowledge and profits! Let’s elevate! #financialfitness #interdependentleadership #dmkinternational #dmk #dmktexas #clinicprofit #clinicfinance #elevate #liftuplife #lovewhatyoudo #speaker #author #catalyst #futurist
Do you have raving fans? Create your own fan pag Do you have raving fans? 

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Even if you work at a salon you can have your own page and further connect to your clients and your community. 

It will help them, your salon and you!
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The greatest use of life is to spend it on somethi The greatest use of life is to spend it on something that outlasts it. - William James

We only have a limited time on this earth, but our impact can be eternal. One of the greatest purposes of life is to dedicate ourselves to something that will outlast us - a cause, a legacy, a contribution to society.

 

 William James reminds us of the importance of using our time wisely and investing it in something that will make a lasting impact. What will you do with your time? How will you leave your mark on the world?

 

 Let's make the most of every moment and strive to create something that will outlast us.
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Are you looking for the right salon, spa or clinic Are you looking for the right salon, spa or clinic to work in?

Start by finding out what their vision for the future is and what they value.

Once you know what they believe in and where they want to go will help you see if you are aligned with them.

How will they train you and market you to support your growth? Is there a pathway to increase your income based on performance? 

What benefits do they offer? 

These questions will help you get the answers you need to make an informed choice that is right for you!
Evaluating the Salon's Vision and Values
 - Compare their vision and values to your own personal and professional goals
 - Consider their approach to employee development and client satisfaction
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Thank you to Allyson and her awesome team at @ally Thank you to Allyson and her awesome team at @allysonbrittany_aesthetics for hosting me today! You are all a great group of people who make a great impact in your community and I’m honored to play a small part in your growth! Thank you @dmk_northeast_tristate for joining us today! Your contributions always make a difference Sybil! Keep elevating! @dmkinternational @phorestsalonsoftware #spabusinesscoach #salonbusinesscoach #spa #clinic #dmk #lovewhatyoudo #teamwork #community #interdependentleadership #financialfitness #liftuplife #phorestsalonsoftware #makeadifference #author #speaker #educator #catalyst #futurist #elevate
Set goals that make you stretch and grow! If it Set goals that make you stretch and grow! 

If it doesn't make you uncomfortable, then then the odds are it won't get you as far as you can. 

A goal without a "By When" date is simply something you hope will happen. 

The moment you add a "By When" date you increase the odds of accomplishing what you say you want.

Tips for Setting a "By When" Date
- Make it specific and realistic
- Break it down into smaller goals and milestones
- Write it down and make it visible
- Share it with someone for accountability
- Celebrate progress and success along the way 
- Does it make you uncomfortable?
-Ask yourself how you will grow by accomplishing it?

#StretchAndGrowGoals #UncomfortableGoals #ByWhenGoals #AccomplishmentGoals #salon #spa #clinic #salonprofit #spaprofit #liftuplife #educator #speaker
Do you have a training plan in place? Be sure you Do you have a training plan in place? Be sure you create a 12 month plan that supports you to develop yourself and your team technically, personally and professionally.

Benefits of Having a Training Plan
 - Improves technical skills and knowledge
 - Enhances professional growth and advancement
 - Boosts confidence and job satisfaction
 - Increases productivity and performance

#trainingplan #SGBC #FinancialFitness #SalonBusinessCoach #SpaBusinessCoach #salon #spa #clinic #salonprofit #spaprofit #liftuplife #educator #speaker #author #catalyst #futurist #beautybusiness #beautybiz
Every meeting you conduct should have guidelines a Every meeting you conduct should have guidelines and a timeline. Take the time to put together your agenda and stick to it. 

Be sure you train your team on what the rules are and hold them to account when needed. 

Get the team involved by assigning homework prior to the meeting to get them more engaged. 

You'll see an increase in productive energy arise from your meetings when you do.

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If you are a single owner/operator... ...you sho If you are a single owner/operator...

...you should add your personal expenses in with your business expenses when you are creating your budget. 

This way you have a sound financial plan that accounts for what you need to produce to prosper.


Benefits of Including Personal Expenses in Your Business Budget
- Provides a more accurate picture of your financial situation
- Helps avoid overspending or underestimating expenses
- Enables you to set realistic goals and targets
- Helps ensure long-term financial stability and success
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