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The Circles Way By Sharlene Lee
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FINANCIALS AND KPI’S
Let’s talk about money. I love money. Love it. There is so much shame around money and people who want it and enjoy it are seen as being greedy, but I don’t see it that way at all. Especially for women, we are taught to be quiet about money, to hide what we earn while men are taught the opposite.
There is nothing I love more than seeing female salon owners being loud and proud about it. Other than my family, money is my biggest motivator. The more I make, the more successful my salon is and the more people I can start on their own hair journey, so it’s a win win.
Circles is a highly profitable and sustainable business. The reasons for overall financial success can be tricky to analyse as it comes from so many smaller elements all working together seamlessly, but if we had to break it down to the simplest forms let’s look at the numbers around Total, Retail and Colour Sales, Wages, Rent, Outsourcing and Diversifying. Then let’s dive into KPI’s.
TOTAL SALES
People don’t talk about this much but I’m here to. Over 2020 our Subiaco salon smashed it and increased 34.2% while Fitz came in just under 24.3% increase on the previous year following steady increases YOY. A lot of this can be attributed to a strong foundation from which were able to build on new client acquisition, of which we averaged up to 65-70 new clients per week, and strong client retention. We also have noted the importance of online bookings for securing both new clients as well as retention with a 22% increase. The power of automation and the way this frees you up to work on the other elements of your salon will also help drive the $$$ which I discussed last column and will keep banging on about forever!
COLOUR SALES
Our colour sales had a 15% increase. The single biggest factor which will drive your colour sales is staff experience and education. The more confident your team are with their colour skills, the more colour services you are able to book, and the more consultations will lead to both one off and ongoing colour work. A bad colour experience puts client retention in immediate jeopardy so really there is no room for error here. At Circles we work on colour education both in house and externally and highly recommend the comprehensive options L’Oréal Professionnel provide. salons. The defining factor in your retail sales will always be your staff’s confidence in closing the sale as although we love our products, the actual product isn’t the driving factor, the staff endorsement is. We focus heavily on sales strategy and personal development and I work hard to be the motivator for the girls to smash their own targets to ensure our staff have the guts to up their retail average from 0-1 products to 2+ per sale. We also set monthly challenges to get the team motivated and to create a sense of camaraderie and support rather than just pitting them against one another. We also rely on sales data from each of our business partners to check how we are tracking nationally and to identify areas on which we can improve.
WAGES
At Circles we work with our own model which is well above the standard hourly rate and with weekly reachable commissions. It’s simple- the more money they generate the more money we both get. A lot of salon owners tend to hide what Senior Stylists and Juniors make but I am the opposite. Be open with the team, make sure everyone understands their commissions and if they are achievable, you will get the results. I’m not talking an extra $50 to $100 per pay, I am talking over $1,000. So many salon owners say that “my team isn’t really motivated by $$”- that is complete bullshit and maybe your incentives are too low. Think about it. Am I going to go above and beyond expectations for an extra $50 to 100 per week? Probably NOT.
RENT
One thing that I have done that has had a big impact on my financial success was purchasing the Circles of Subiaco salon. In 2004 my husband and I decided to take a big risk and bought our very first commercial property, an off the plan purchase in a development which took 4 years to build. It was incredibly nervewracking but as luck would have it, it was the start of the mining boom in WA and property prices were going through the roof, so by the time we moved in the value had tripled and this is where Circles of Subiaco is still located. Remember to consider all your options.
OUTSOURCING
I keep my business management team close to ensure we make calculated decisions with regards to growth and expansion, future proofing our brand financially and mediating risk factors. I need to have those people beside me crunching the numbers and managing my ‘dynamic’ personality with a little bit of grounding! You are a hairdresser/creative/ salon owner/business owner/entrepreneur- you don’t have to also be an accountant. Yes, it costs money, but anyone you outsource should be providing ROI to mitigate that outlay. Put them on a trial for a few months and see how it goes.
DIVERSIFYING
It’s 2021 and things will never be the same. Obviously with COVID we have been forced to pivot, but even prior to that things were changing. The move towards freelancing, the power of social media and influencers and the expectation to constantly innovate. We have finally moved firmly into e-commerce with the launch of our online store and we are also looking outside the realms of what a salon is, moving into the lifestyle space by adding a coffee bar to our Fitzgerald salon.
But how do you achieve the above and stay on track? Strong KPI’s- both for your staff but also for the salon. A few tips-
MAKE THEM DETAILED
Saying you want to increase your turnover is not enough, you need a scary number. Put it up on your computer, put it in the break room, show that you are getting closer. We are visual beings, we need to see the goal. If the thought of a yearly projection is too overwhelming, start small. Set your monthly goal, or even a weekly target. Become obsessed with analysing your numbers and if you need help to get your head around it? Get it!! Set real dollar values. Set concrete retail product amounts. A simple ‘increase retail sales’ just isn’t going to cut it.
MAKE THEM ACHIEVABLE
Just because you decide to get serious about your KPI’s, doesn’t mean that miracles are about to happen. Setting unrealistic goals puts way too much pressure on your staff and creates an unpleasant and stressful work environment which will have the opposite effect. One of the things I see people do way too rarely? Ask their staff. Your salon KPI’s shouldn’t be created in a management vacuum and delegated down to staff. They are on the floor, dealing with customers so ask them what they think is achievable. Make them part of the process and then push them a little further, cheer them on and watch them shine.
MAKE THEM RELEVANT
Look at what your salon needs most and work from there, don’t compare yourself to other salons and create a version of their KPIs. Salons may look at our influencer relationships and think that if they had those they would be bringing in more money, when in actual fact they need to focus more on their systems and automation before they are able to deal with more clients. If you are smaller and wanting to increase your financials, look at this time as a way to refine so that you have the capacity to manage growth. Instead of setting a KPI to get a big-name local influencer, focus instead on generating a set number of quality 4.5-5 star reviews for the salon across your social media. The impact of this is going to be much more targeted and will naturally assist with securing local interest and driving new client acquisition whilst getting you to hone in on customer experience.
MAKE THEM FLEXIBLE
Sometimes you won’t reach your KPI’s. It sucks but it is true. Sometimes it will be because of something outside of your control, but often it will be completely within your control and you still don’t push it over the line. Perhaps staff are still a little nervous to translate appointments into retail sales. You got busier than usual and were slack getting back to online enquiries. As a leader you need to be able to pivot and adapt and revisit each KPI and refine that goal again and again until your get the sense of achieving it. Take stock, brainstorm the why’s and then try again.
MAKE THEM FUN
Let’s face it some staff don’t do well if they feel pressured. I like to make sure that our salon KPI’s are very much a team effort and I always incentivise. Remember, ultimately the salon KPI’s and financial success serve YOU. Yes, it means you can pay your staff and give them a nice place to work, but that should be a given. They know that their hard work is contributing to your financial freedom outside the salon and so it is only fair that they see some of that. You can be doing everything ‘right’ but if you have staff who aren’t connecting with clients and an atmosphere that has lost its welcoming feeling, all that back-end work isn’t going to hold up.
