BUSINESS HEALTH

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If you are going to all the effort of investing in your workforce, you need to maximise your returns and check the health of your actual business performance and models too.

We’ve all heard Einstein’s famous quote “The definition of insanity is doing the same thing over and over again and expecting different results.”

So if you are NOT seeing a healthy growth in your business, take stock this week and see what you can do differently.

We challenge you to start by carrying out a simple SWOT analysis on your business: What are your strengths (Internal) and Weaknesses (Internal)?

When you look externally at the business where are your Opportunities? What are your Threats?

Consider your Weaknesses first – what can be done to change these? Is it your cost of goods? Is it your payroll?

Look at your threats? Is it down to Competitive Advantage? What are your Competitors doing that you could do differently or better?

Then to take this challenge further – Use the three work-books below (these are generic business tools) – select one, and work through it this week.

PDF engage

pdf define

PDF vision

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Adam Chatterly

Lopo Champalimaud
Founder and CEO of Treatwell

Website: https://www.treatwell.co.uk

Lopo is the Founder and CEO of Treatwell, the largest hair and beauty booking service in the world. The company, which is headquartered in London, has over 10 million appointments made through its online bookings platform annually, employs 500+ people and has over 25,000 spas and salons using its service, with 1,500 new ones joining each month.

After a mercifully brief career in banking and private equity with Pictet and Wand Partners, Lopo moved into technology, and was the founder of two successful data and CRM start-ups in New York.  He moved to the UK in 2001 and became the MD of Lifestyle at Lastminute.com.

While working at lastminute.com, Lopo realised the potential for disruption within the €100bn health, wellness and beauty industry, which to that point had largely failed to join the internet revolution. He believed that by providing a world-class cloud-based management software for spas and salons and connecting it to a convenient consumer marketplace, he could help businesses grow while also making it easier for customers to find and book their beauty appointments. In 2008 he founded the company, then called Wahanda, to do just that.

Lopo steered the company through a major European expansion campaign that included five acquisitions, resulting in a company rebrand to Treatwell. Treatwell now operates in 11 countries and in 2015, Japan’s Recruit Holdings invested over €292 million, taking a majority stake in the company in order to fund the ongoing expansion of the business into a global brand.

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STATISTICS: DID YOU KNOW THAT?

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Statistic One

Spa management is a very challenging career that requires a broad mix of ‘hard’ and ‘soft’ skills, combined with a deep passion for people”, (GWS, 2014) Often in our industry people are unable to gain the direction of how to look after the business in real time.

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Statistic Two

Growing at 9.9% annually, the spa industry needs to be ensuring individual businesses are looking after themselves: Vision check, People engagement and reality versus vision .

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Statistic Three

80% of businesses that take concrete action based on business health checks saw an improvement

(Mckinsey, 2019)

HOW DO I HELP AS A MANAGER?

by Young Up Starts.co

Financial Review.

The financial health of your business is imperative to its success, there are a number of aspects of the finances that you need to monitor closely.

1.  Cashflow Projections.

The completion of a monthly cashflow projection enables you to monitor the money that is coming into and going out of your business.  If the income is more than the outgoings then your business is in a “positive cashflow” situation, if the opposite occurs , your business is in a “negative cashflow” situation and action needs to be taken.

2.  Debtor and Creditor Analysis.

A monthly analysis of your creditors ensures that:

You are paying your suppliers on time according to the terms of payment agreed with them thus maintaining your reputation and your credit line.

A monthly analysis of your debtors ensures that:

You know how much money is owed to your business and by whom.  You will know if any particular debtors are falling behind and need to be contacted.  You will also see patterns emerging, e.g if one particular supplier is regularly behind in their payments, you may need to adjust the terms of your agreement with them.

3.  Monthly Sales Figures.

Monthly monitoring of your sales figures ensures that you will quickly know if sales are decreasing or increasing. This information will enable you to take appropriate action to try and resolve problems or to capitalise on successes.

Specific sales figures for each product will help you to see from month to month which products are selling well and which are not moving, allowing the necessary adjustments to be made.

4.  Profit Margin.

Monthly calculation of profit margins is important, because if your profit margins are decreasing, then there is a problem somewhere, e.g. costs may have increased. Some questions to ask here are;

Are you suppliers charging you more or could you get better value elsewhere?

Have your utility bills increased, if so why? Have costs gone up or has usage increased?

Are you charging enough for you product, look at what your competitors are charging.

Whatever, the issue turns out to be, if you check your profit margins monthly then you will be able to address problems in time.

5.  Tax Returns VAT and PayRoll

These are all necessary and legal expenses of your business and it is advisable to check each month that all is in order.

Comparison with Previous Years

It is important to be able to check each month exactly how the business is doing in comparison to the same time last year.  All businesses experience fluctuations in the level of business, there are busy times and quiet times and some businesses are more seasonal than others.

However, if your comparative figures show that your sales for a particular month have decreased significantly from the same month last year, there may be a problem. If you make a regular habit of doing a healthcheck on your business, you will see these patterns as they emerge and take the necessary steps to fix them.

Stock Inventory Check.

A monthly review of your stock inventory will help to keep your business in a healthy position.

Many businesses use what is known as the Just In Time (JIT) Inventory management system.  The fundamental basis of this is that the business carries enough stock so that they will not run out. But not so much, that necessary cash is tied up in stock that is being kept in storage.

Doing a stock inventory check each month enables the business owner to align stock requirements with business projections, e.g. if demand for a particular product is increasing month on month, then more of this stock will need to be ordered.

Similarly, if it becomes apparent that there is too much stock of a particular product, it may be necessary to do a special offer to shift this stock as well as ordering less of it in the future.

Stock inventory management is particulary important if you sell perishable items, you will need to know exactly how much you are selling as unsold stock will definitely go to waste.

Human Resources

Your staff are a very important part of your business, so carry out checks each month to ensure all is in order.

Take note of absenteeism and sick leave so that you will quickly be able to see if there are any patterns emerging and you can deal with problems early on.

Maintain an awareness of Annual Leave entitlements, ensure that staff are taking their leave throughout the year so that it is not accumulating, and check that Annual Leave is being staggered properly so that a number of staff will not be taking leave at the same time.

Take time during your monthly review to plan ahead for fluctuations in staff requirements, such as recruiting extra staff for busy times.

Market Engagement

Keep your customers up to date with what is happening in your business by using online tools such as CRM (Customer Relations Management) or MAS (Marketing Automation Systems).  You can also send monthly newsletters, or personal emails.   Use whatever means is most appropriate for your business and number of customers but it is important to maintain regular contact.

Use the Google Analytics Tool, to assess each month the level of engagement with your company’s website.  Check how often your website is being viewed, where the traffic is coming from and whether views are converting into actual sales.

This information is very valuable as it will show you if you need to make changes to improve your online presence, you may need the assistance of a web developer in this.

Use social media to promote your business, social media channels require regular updates to keep customers engaged.  Review your social media strategy to ensure it is working for you and that people are following your posts. If this is not the case, you will need to revise your strategy.

Set time aside each month to review any business leads you may have received ensure that you have followed them all up as much as possible, if there are any you neglected to follow up, do so now.

Data Protection

Do regular reviews of data protection in your business to ensure it meets the highest possible standards, always be on the lookout for security problems or breaches and address these immediately.

Developments in your Industry

Keep yourself informed and updated about any new developments in your industry.  Subscribe to newsletters (UKSA Spa Voice!!) trade publications, etc that are respected.  Set aside some time each month to read these and take notes on the ideas or developments that are useful for you.

Business Plan – Milestones and Targets

Each month, refer back to your business plan to check whether you are meeting the targets you have set and if your business is where you want it to be. If it is not in the position you planned, you may need to make adjustments.

Review your long-term and short-term goals and the steps you have set out to meet them, to ensure that you are staying on the right track to achieve your business goals.

Meet your Team

Set aside time each month for a staff meeting, to review the past month and agree plans and actions for the coming month. It is also good practice to meet your accountant and other advisers monthly so that everyone has all of the most up to date figures and knowledge in relation to the business.

Set a date for your next monthly review

It is more likely that you will complete the necessary review each month if you plan ahead and schedule a date and time for this.

If you complete all the checks on this list each month, then you will have an in-depth knowledge and awareness of all aspects of your business.  You are much more likely to quickly become aware of potential difficulties in any area. This will put you in a strong position to address these issues in a way that ensures the continued growth and success of your business.

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ON THE SALON FLOOR

by Valerie Delforge

salon floor

Assisting international leaders in the spa & beauty industry create a sustainable & profitable business.

When judging a spa/salon there are the basics factors that I look for: hygiene, cleanliness, friendliness, the treatment itself, but the one that stands out the most is the overall customer journey & experience.

One spa, in particular, got it right, from reception who welcomed me with a big smile to every single team member that I was encountering whilst at the spa smiling and acknowledging me. It felt extremely genuine as if they were happy that I was there: extra points to them!

Another example of the overall customer journey is from reception from how welcoming they are to when you leave, what do they do to give that lasting impression on you. That is always a winner in my eyes. One reception team gave me a welcome pack and automatically rebooked me, I call that the cherry on the top, the silver lining that makes me what to come back.

Of course, being obsessed with retail sales, I love it when I am being sold to. But I only buy if the sale is well made. Sometimes there is a faint attempt at sales and sometimes it’s all perfect. Of course, for that to happen, it is crucial that the consultation is impactful. I have to say it is seldom happening, therefore I am busy with retail training!!

I strongly believe that if you want to drive revenue in your salon, you must focus on all the details that make the customer experience something they will never forget. Ask yourself:

How does the customer feel when entering your Spa/Salon?

What do you have in place to make that experience memorable?

The more details you have on the customer journey, the better it is, as not only will your staff understand your expectations and deliver it but your customer will leave with a memorable experience specific to your business. It’s never about the money, it’s about the concept and experience that you deliver, as a customer will spend the money easily if they feel wonderful.

This will automatically motivate your team as they become more focused on delivering what you want in your business. Often, as a salon owner, we take things for granted and whatever is in our head, is not necessarily communicated properly to our team.

One exercise I do within a team meeting is ask participants to create the customer journey: So one group discuss what happens before the customer comes in the Salon/Spa, how do we attract them to the salon (having done this a number of times with various teams, some people don’t even know that newsletters are being sent to the database for example!) another group writes down what the customer should experience the minute they enter the salon/spa and another group focuses what happens when the customer leaves the salon/spa.

It’s fascinating to see what they believe happens in your business and sometimes through this exercise, the team come up with some really good ideas that you can implement into your business.

Having your team really define the customer journey makes them buy into it and motivates them to create the best that they can deliver.

WHAT IS BENCHMARKING?

Ever wondered how the spa down the road are doing in comparison to your business? Whether they are just as busy, if not busier? How much the average treatment revenue is per hour across the competition? Or simply whether your staff are converting retail revenue?

Currently the UK Spa Association encourages its members, and indeed non- members to really drill down into the basic and fundamental information of your operation. 

It  does not matter  how big or small your operation is – what matters is how by interrogating this information we can help you grow and become even more successful.

We look at four key pieces of information:

- Treatment revenue per hour

- Retail revenue conversion

- Treatment room utilisation

- Therapist utilisation.

Every month you will receive a report with a series of useful insights that let you identify where you sit within your competitive set, and potentially how to drive your business forward.

Every month we will then issue a wider set of insights that represent the wider sector.

It goes without saying - The more people who contribute, the more data there is available to you and more valuable it will be.

For more information, simply contact us