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Don’t open your salon without a plan!

Spa Business Plan
Profit and Loss Analysis

Salon and Spa Business Plan

Do not sign a lease or incorporate a business with a partner before you’ve taken care of the most critical aspect of starting a new business; writing a business plan. Compiling a business plan is a daunting, soul searching exercise that requires structure, foresight and a great deal of stamina. Without one, it is like writing a final exam without ever having done your homework; only with far greater consequences. Below are just a few of the components you will need to address in a well laid out business plan.

Your Unique Selling Position
Address how your goods and/or services will appeal to customers. How will your salon/spa products and services make a difference in the lives of your customers? How will you be remembered? What does your business stand for; its mission and values? If your business is not unique enough to stand out from the fray, your chances of success are greatly diminished.

Market Analysis
Basically, your market research helps you understand your customer’s needs so that you can offer a product or service that precisely meets those needs. You’ll need to provide information such as your target market, customer demographics, competitive environment and market condition.

Key Competitive Information

Business Concept Development

Business Plan Idea Generation

Assess the top 10 competitors in your business area and provide detailed information on their strengths and weaknesses. Then explain how you intend to improve on what they’re doing. Be honest; they can’t all be treating their customers badly or providing lacklustre service. Anyone that has been in business for more than two years is doing something right.

Partnership and Legal Structure
You will need to find a good and unique business name (one that is available as a domain name as well), file for your GST and employer numbers, and ensure that you compile all the permits and certifications you will need from all levels of government to legally run your business. If you are forming a partnership, it is of the utmost importance that you set up a partnership agreement that details the tasks, duties, and responsibilities of each partner, outlines the shareholding status of each, lays out how the company valuation will be established, sets the rules and conditions for the sale of shares, and describes the course of action for those situations where you
can’t agree. Once everything is compiled, ensure all legal documents are vetted by a lawyer or notary.

Human Resources
Your business plan should include a section that outlines how you plan to recruit and maintain your employees, what your pay structure will be, the kinds of incentives, social benefits, insurance, pension plan, discounts, and the education and motivational programs that you will offer to maintain and grow your staff.

Location, Location, Location
The physical location of your business should be based on extensive research, your budget and your business model. Your business plan should lay out why being located on a specific street or in a specific neighbourhood is so important to the success of your venture. Can your new business survive on the second floor or just around the block for half the rent, less walk-in traffic and less visibility?

Key Financial Data
In this section, you will need to create several tables, the first one outlining your start-up costs, including: rent deposit, renovation costs, location improvements, décor, furniture, furnishings, technology, equipment, signage, inventory, marketing, cash reserves, etc. The second table will be your Start-up P&L and operational budget for at least the first 3 to 5 years. You may want to also include a month by month revenue and expense projection table. The ultimate goal is to determine the exact amount of money you need to finance your project and where these funds will be coming from.

Writing a business plan is a daunting task that is better not done alone. At Solnyx Consultants we have helped numerous salon and spa owners build their business plans; maybe we can help you too.

These formulas are mine (or are they?)

ImageIn the beauty industry the question of who “owns” the client (their file and business) frequently arises. At the heart of this battle are the fabled formula cards that, for the vast majority of businesses, are located on file cards in the colourist’s possession (helping to uphold the belief that the formulas are the colourist’s property). To further muddy the waters of this debate there are many different ways in which to employ salon/spa personnel including independent status, commissions and bonus structure, team based pay, booth and chair rental, contract workers, regular employees and freelance artists.

So who does the client belong to? No matter where you operate your business in Canada, the labour laws are pretty specific about one thing; the subordination link. In order to distinguish between an independent worker and an employee a labour dispute court would first want to determine what kind of subordination the worker is submitted to.

Simply put, who has the decision making power on working hours, products, prices, pay, education, quality and other aspects of running the business. In reality there is no independent status in the salon industry unless you are a booth/chair rental. All other forms of  employment are variations of the standard employer/employee relationship with all the legal, financial and fiscal ramifications that go with it.

This means that, with the exception of chair rentals, the salon is obliged to collect all relevant taxes and other deductions from the employee paycheck and must pay the employer portion for all employees. The only exception to this rule is in Québec where the employer is required to take care of unemployment payments for chair rentals as well. Understanding this, it becomes clear who owns the client files; clients belong to the business unless an employee came in with a proprietary client base and uploaded that client list into the salon database. As an employee, any work produced during your employment belongs exclusively to the employer. Employees were paid fair and square to perform their work and consequently all colour formulations are the sole property of the salon. Whatever is produced or documented e.g. formulas, education material, salon policies or any tools or processes created during the employment period belong to the person who paid for it. Copying formulas or client cards is not only a breach of contract but in most cases is illegal.Image

So what happens when an employee decides to work for a competitor across the street, or worse, opens his/her own salon around the corner?  Well, the rule above still applies; the client files belong to the salon unless the staff member was a chair rental independent. This however does not restrict anyone from going after your clientele unless there is an employment contract with a non-compete and a non-solicitation clause that clearly stipulates a reasonable distance and duration of the limitation as well as a reasonable penalty for breach of contract. Understand that you can’t stop someone from working everywhere and that, depending on the population density of your geographical area, the restriction usually ranges from 2 to 5 kms, rarely between 5 and 10 kms, and never beyond 10. It is possible to enforce a non-solicitation clause for both clientele and other employees, but it requires a fair amount of time, money and resolve. If an ex-employee is pilfering staff or clients, immediately send a lawyer’s letter warning the ex-employee to cease their unauthorized practices or face the stipulated penalty.

To avoid disputes of this nature, salon/spa owners should modernize their systems and end the use of formula file cards entirely, entering client formulas directly into their salon software. Not only will this prevent theft but it may also allow you to better manage your colour inventory and ensure proper charges for colour services.

 

This article was first published in the May 2014 edition of Canadian Hairdresser Magazine page 28 and 29

http://viewer.zmags.com/publication/398512e3#/398512e3/28

 

 

 

 

 

 

 

 

 

 

Scripting made easy (For Salon and Spa)

Scripting Made Easy

Have you ever wondered how the servers in upscale restaurants are able to describe a series of special menu items in infinite detail? The executive chef has simply taken the time to write down exactly how he wants each dish to be presented and then made the wait staff commit it to memory. This is a very daunting task for any new server but once they’ve run through it a dozen times, the words get more familiar and their confidence increases. This process is called scripting and it is used in almost all service industries. Starbucks created a whole new coffee language through scripting and staff training. People will now order Grande Lattes even when they go to other coffee chains. Prada has all fashionistas adopting the words Nero and Bianco for black and white. Telemarketers are the kings of scripting and the salon and spa industry has a great deal to learn from their expertise.

Scripts are important because they ensure consistency during appointment scheduling, the reminder call, the pre-service consultation and the post-service pre-booking recommendation. Scripts are also used to maintain service standards during the many service stages including the retail consultation, quality control and follow-up on any new service. They also come in handy anytime you have to call on your actual or potential clients for promotional purposes, referral thank-you calls and client re-activation efforts.

Most employees are not as fluent in purposeful client conversation as they are with small talk. Knowing when to talk about products and when to upsell services is an acquired skill that needs to be practiced religiously. Giving your staff higher service and retail sales targets without giving them the words and means to achieve it is just setting them up for failure. So save yourself the aggravation and decide which part of the client process you want to formalize first and then get writing.

The first step in creating your own scripts is to determine your official tone of voice. Is your place of business considered to be formal, casual or family oriented? This will make a real difference in how you address your clients and the choice of language you will use. Remember that your script needs to differentiate your business from your competition as well as dictate the service level in your trade area.

Best Practices for Salon and Spa

Salon and Spa best practices and customer service scripts

Once your scripts are written, they need to come alive. Each service provider or support staff for whom a script is relevant needs to own the script. Depending on your vision, you may allow them to adjust it to their own style and personality so they feel comfortable and at ease with the language. You will also need to ensure that the scripts are tested for their efficacy and relevance by monitoring them closely. Phone scripts can be recorded for review and training purposes by either recording them at the source via your own phone system or by redirecting your calls to a “callrail” or “voicemeup” system. Then, together with your staff member, you can listen to the recording and make any necessary changes. Practise is key here; it will help build staff confidence and consequently improve the overall client experience. You need to be insistent however on script usage and application, making it a non-negotiable part of every client visit.

Whether you are booking an appointment, up-selling a service or recommending a product you will want to write several script options that take into account client objections, concerns and negative responses. Having an appropriate response for all possible scenarios will ensure that your employees are not left floundering and frustrated.

Scripting can be taxing and takes a fair amount of planning, preparation and coaching. If you find the task daunting don’t hesitate to call upon the services of a Salon and Spa consultant such as Solnyx Consultants Inc to help you in the design and implementation process.

E-mail Marketing Rules are Changing!

 

Bill C-28 CRTC

Bill C-28 CRTC

E-mail newsletters and other electronic messaging formats are one of the easiest, cheapest, and most direct ways of staying connected to your clientele. Email marketing allows your business to keep your clients informed of company updates, changes, and promotions. If used correctly, they can be extremely beneficial to your business, but stray too far from the guidelines and you or your company could face heavy penalties.

The new Canadian Anti-Spam Legislation (Bill C-28) is slated to enter into force July 1st 2014. It imposes new obligations and strict regulations on e-mail marketing, e-newsletters, and any other form of “commercial electronic message” (CEM) solicitation. It is still okay to send any email or text that is considered to be a part of conducting regular business and where there is no self-promotion or solicitation involved. This includes appointment reminders,

Post service follow-up instructions or special care information, thank-you messages for client referrals, and special order notifications. Client recuperation emails, newsletters, and all promotional offers are out of bounds and require explicit client consent before sending. Birthday wishes fall into a grey zone, so play it safe and keep it 100% promotion free.

It’s All About Consent

The CRTC prohibits the transmission of unsolicited electronic or email messages i.e. to people or clients that you do not have consent from. The CRTC defines consent as being either express or implied consent. By express consent, they mean the person receiving the commercial electronic message has agreed to receive these messages either vocally or by written consent. Implied consent is consent through the exchange of information that was requested

or is related to an agreed upon transaction between customer and company. Any person receiving unsolicited emails or emails with false or misleading information may take action within 3 years of the occurrence. The fine for such behavior is $200 per violation, up to a maximum of $1 million/day. It is also illegal to represent yourself or your company under false pretense in URLs, subject matter lines and message content. Always identify yourself and provide accurate and credible information in your messages. You are trying to build or maintain a loyal and trusting client-company relationship, so there’s no need to lie about anything or use electronic gimmicks to try and get your clients’ attention. When collecting your clients’ emails, we recommend that you get either written consent (where they select which types of communications they are willing to receive from you) or that you use an on-line double opt-in e-mail system where clients reconfirm their willingness to remain on your email list. You’ll gain more respect from your clients for being honest and your subscriber list will be more accurate, making your email marketing strategies that much more effective. In order to avoid getting slapped with heavy fines or penalties, when sending out any kind of CEM, the CRTC requires you to provide the following mandatory information: • Include your name or the company name to let your email recipients identify you as an accepted sender

  • Provide information that will allow the person receiving the message to contact you, the company, or a third party that is sending the messages
  • Include an unsubscribe mechanism that allows the recipient to remove themselves from your mailing list electronically and at no cost
  • Finally, keep records of your electronic mailing lists, including date and time that consent was given in order to reduce law infringement risks

The game is changing; it is now time to reset your database and rebuild it to meet the new standards and requirements. Start now; when the law comes into effect consumers will be bombarded with requests for their consent which means they will be reluctant to give it out to anyone.  You have until June 31st 2017 to fully comply to this new rule…40 months that will fly by quick if you don’t start right now.

For more info on this Bill C-28:

CRTC Bill C-28

New Canadian Anti-Spam Law

http://fightspam.gc.ca/eic/site/030.nsf/eng/h_00050.html

6 Ways To Recruit New Staff

recruitingThere seems to be a shortage of staff in salons these days. In this climate some salons have resorted to “guerilla tactics”, offering signing bonuses for staff to jump ship, high commission rates, payment of salaries under the table, and other incentives and enticements. Poaching staff however can create its own set of problems. With such questionable “loyalty”, the staff you steal will stay with your business only as long as you are meeting their demands or until a better offer comes along.

GETTING THE WORD OUT

As your recruitment program is an ongoing process that requires constant effort, you want to make sure that you are using your time, energy and resources wisely. There are several things you can do to get the word out that you are looking to hire:

1. Interview anyone who comes knocking at your door (unsolicited requests).

2. Networking and staying connected (both within and outside the industry) is by far the best way to discover potential employees.

3. Devote a section of your business website for people to upload their resumes or complete an employment application.

4. Pay a finder’s fee to staff who bring in a new employee (paid only after the first 3 to 6 months of employment, or once the probationary period is over).

5. Use your Facebook fan page to let people know you’re hiring.

6. If your needs are urgent and you are forced to place an ad, KIJIJI and your local newspaper are usually the most effective avenues.

7 Successful Tips for Salon Education

Education is one of the differentiating factors that separates the best from the rest. So set yourself apart, seek out only the best programs and trainers, and be sure to align yourself with vendors who meet your education criteria and have your success in mind. Consider the following tips when contemplating your education strategy:

shutterstock_ssm1. Establish an overall education plan for your salon, a personalized training plan for each employee, and a separate one for yourself (allocating up to one third of the overall salon education budget for yourself).

2. Ensure your entire team attends all relevant in- salon classes, product knowledge sessions, retail programs, local and vendor tradeshows, and any other technical, motivational and/or personal development courses you have scheduled for your salon.

3. Check with your local business development board, as well as your city, regional and provincial governments for business building education, coaching, job security and job creation programs to determine what you may be eligible for. Then take full advantage of all possible loans, subsidies and tax credits.

4. Seek out an independent business coach or a salon/spa consultant to review your business. You will receive an unbiased, non brand-related opinion on how to improve your business and a custom made support program to help achieve your training goals.

5. Join your local chamber of commerce to meet fellow business owners, network and learn about local development programs that your business can benefit from.

6. Include your front desk staff in all business and marketing seminars, retail courses, vendor related programs and in-salon trainings. It is surprising the impact this can have on your business growth as well as your team building efforts.

7. Professional competitions are a great way to motivate your employees to keep their knowledge and skills current.

The Pros & Cons of Private Labels in Salons

goldshampooAlthough private label and salon brands have been around for quite some time, they have been proliferating over the last few years. Small and average salons around the country are embarking on the private label bandwagon with widely mixed results. Here is a breakdown of the pros and cons of selling private labels in salons, if you are considering it:

Pros

1. Grants better margins
2. Promotes your salon every single day of at-home usage
3. Offers flexibility in packaging and labeling
4. Can evolve into a profitable wholesale business
5. Provides the opportunity to select and restrict specific ingredients

Cons
1. Requires a great deal of time and money
2. Involves a chemist, a laboratory, a factory, graphic artists, and testing volunteers
3. Most ‘ready to label’ programs present out-dated technology or me-too products
4. Demands a sizeable inventory to get cost advantage
5. Requires you to invest in promotion, education and sales collateral

In short, only enter the self-formulation private label game if you are at least a 15+ service provider salon, a chain operation or a franchise system. For the independent salon, if you feel compelled to embark on this venture, limit yourself to branding a select few pre-formulated products and keep your exposure low.