Spa business practice

Inventory Control

• Inventory should ideally be turned over roughly every six weeks.
• Stock management involves balancing having enough product without having excessive amounts, which applies to back bar, retail, and general stock.
• A purchase list, or running purchase order, can help maintain optimal stock levels.
• Ordering patterns should consider seasonal demands and popular services.
• Stock room organization and product placement are crucial.
• Computer software can be used to set minimum stock levels and track inventory.
• A complete inventory should be conducted annually.
• Perishable inventory should be closely monitored for expiry dates to avoid dead stock.
• Strategies to move old stock include discounts like "buy one get one" offers and bargain baskets.
• Consider donating usable but unwanted products to organizations like women’s shelters.
• Unusable or expired products should be properly discarded or written off.

Floor Plan Considerations

• Nail services should be located near the front of the salon.
• Allow approximately 10x10 for esthetics rooms.
• Key floor plan factors:
  • Electrical layout
  • Lighting design
  • Water supply
  • Laundry facilities
  • Washroom placement
  • Dispensary/storage area
  • Retail waiting area
  • Reception space
  • Staff room
• Floor plan directly contributes to the salon's success.
• Traffic flow within the salon should follow a zig-zag pattern, like a department store opposed to a bowling alley.
• For ceilings over 10 feet high it is recommended to paint them the same color as the flooring to draw customers eyes to retail displays.
• Retail space should start within the first 10 feet inside the storefront.
• Cabinet shelving should be no lower than knee height for accessibility.
• New items and testers should be prominently displayed at various stations.
• Products look best when stocked in groupings of three.

Staff & Self-Management

• A job description defines the duties, responsibilities, and other relevant details for a specific job role.
• Responsibility refers to the tasks an employee is obligated to complete.
• Authority is the specific area where an employee can make decisions.
• Accountability refers to the duties upon which an employer evaluates an employee's performance.
• Leadership in management motivates employees to increase productivity.
• Key areas of responsibility include:
  • Room/table setup
  • Order of service and add-on offerings
  • Opening and closing salon procedures
  • Handling customer complaints and returns
  • Appointment booking
  • Inventory management
  • Processing payments
  • Housekeeping duties
  • Telephone and social media management
  • Uniform maintenance
  • Adherence to safety regulations

Personal Finance: Budgeting

• Budgeting should be realistic, thorough, and flexible.
• The core budgeting equation is: income - expenses = your goals.
• Take into account irregular income sources.
• Be aware of the difference between gross pay (total earnings) and net pay (earnings after deductions).
• Tips must be considered as income when budgeting.

Personal Finance: Expenses

• Fixed expenses remain constant (e.g., rent, car payments, cell phone bill).
• Variable expenses fluctuate (e.g., medications, car repair).

Personal Finance: Saving

• Prioritize saving within your budget.
• Savings goals include:
  • Short-term savings for upcoming expenses, vacations, and taxes
  • Long-term savings for emergency funds and job loss coverage
  • Investing for future retirement

Personal Finance: Paying Debt

• To get out of debt it is essential to curb spending and incorporate debt repayment into the budget.

Personal Finance: Financial Plan

• Key steps in a financial plan:
  • Set financial goals
  • Create a budget
  • Make a detailed plan
  • Save consistently
  • Establish emergency funds
  • Be intentional with spending
  • Avoid accumulating debt
  • Protect your credit score

Business Finances: Financial Statements

• Assets are things a business owns that have value.
  • Fixed assets are long-term items like buildings, machinery, and equipment.
  • Current assets include cash, inventory, and prepaid expenses.
• Liabilities are legal debts or money owed by the business.
  • Current liabilities are debts due within one year.
  • Long-term liabilities are debts due in over one year.
• Equity is the owner's stake in the business, calculated as assets minus liabilities (Equity = Assets - Liabilities).
• Break-even Point: The point at which a company's revenue equals its total costs, resulting in neither profit nor loss.
• Fixed Expenses: Business expenses that remain constant.
• Variable Expenses: Business expenses that fluctuate with sales.
• Balance Sheet: A snapshot of a business assets, liabilities, and equity at a specific point in time.
• Income Statement: Summarizes a business revenues, costs, and profit (or loss) over a period of time.
• Cash Flow Statement: Tracks the movement of cash both in and out of a business over a specific period, often broken down monthly.
• Projected Financial Statements: Forecasts of a business future financial performance and position (also called pro forma financial statements).

Business Finances: Projected Cash Flow

• Projected Cash Flow Definition: A forecast of expected cash inflows and outflows for a business over a defined period (also known as a cash budget).

Business Finances: Funding Sources

• Potential funding sources:
  • Personal funds, potentially secured with collateral.
  • "Love money" (funds from friends and family).
  • Government programs and grants.
  • Bank loans.