5 Ways To Financially Prepare For Reopening
Use These Business Strategies For A Stronger Reopen
As salons across the U.S. slowly start to reopen, owners and stylists are trying to get “back to business.” But what is the new normal for salons? What can you do to have a stronger business than before quarantine? We spoke with Stephen Gomez, a business coach for salon and spas to get his five best strategies for reopening your business smarter and more profitable, scroll down for everything we learned.
1. Get Financially Organized
To get started, Stephen suggests taking “financial inventory.” Here’s how: Gather four months of business data (Stephen suggests leaving out abnormal business months like December) and break it down into specific categories:
- Service sales (overall business and for each stylist)
- Retail sales (overall business and for each stylist)
- Client volume (overall business and for each stylist)
- Gift card sales
- Expenses (line by line)
- Service mix (a percentage of each service offered= 45 percent balayage, 55 percent haircuts, etc.)
Then, divide each four-month total by four to get the average of each category.
Why is this important?
Stephen broke it down like this: These averages are a concrete guide to determine where the salon stands financially and how social distancing will affect the salon’s bottom line. Use these numbers to make smart decisions about how the salon will operate moving forward.
2. Understand That Clients Are Also Cash-Strapped
When planning services for reopening, it’s important to remember that clients have been affected by closures, too. Here’s how to keep them in mind when reopening:
- Anticipate more time between appointments for clients who have been financially affected.
- Be prepared for clients to request lower-priced services.
Note: This is where the service mix percentage can be useful. If full highlight services drop 10% after reopening, use the guide to make meaningful recommendations so clients don’t feel pressured to pay for services they can’t afford and the salon doesn’t take a substantial hit.
3. What To Do With Income From Gift Card Sales
First, if the cash from quarantine gift card sales was used on basic needs, that is absolutely fine. If not, Stephen advises conserving GC income to cover operational expenses. To determine how much you’ll need, calculate these category percentages:
- Payroll = Service payroll divided by service sales
- Backbar = Backbar purchase divided into service sales
- Retail = Retail purchases divided into retail sales
- Credit Card Payments = CC processing fee average divided into total sales
4. Manage Inventory
Now that you’ve taken stock of your cash, it’s time to take a deep dive into inventory. To ensure salon inventory is both well managed and profitable, Stephen suggests considering these circumstances before reopening:
- If you offered curbside pickup or bundled together at-home services, perform a thorough inventory check to see what is left.
- Assess the modified salon schedule for specific products stylists will need for in-demand services.
- What products will clients need post-quarantine (permanent color for root touch-ups) vs. what products they will always buy (shampoo & conditioner).
5. Manage Additional Expenses
Have you worked hand sanitizer, gloves and masks into your new budget? Planning for extra expenses can help you prepare financially (and mentally) for any extra costs that could accrue. Stephen suggests considering these additional expenses:
- Health and sanitation expenses
- Service combo packages that could affect revenue (i.e. a a trim/treatment/tone package)
- Costs attributed to operational improvements
Pro Tip: To help cut down on overhead costs, record client traffic after reopening to determine how many stations are needed daily.