Are You Paying Too Much For Staff You Don’t Need?

by Pam Stellema

in Business Development, Staff Management

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The beauty industry is a tough one.  No one with any industry experience will argue with that statement.

As soon as the economy takes a downturn clients begin looking for ways to economise, and unfortunately that often means trips to the spa or salon are dramatically reduced.

The fact of the matter is that if you have exhausted all the other ways to reduce expenses and increase turnover, it might be time to look at ways to tighten up your staff roster.

No-one likes the idea of putting off loyal team members, but the reality is that when they’re spending more time drinking coffee and checking their phones than looking after clients, it’s time to take action.

Staff wages can be a killer.

One of the biggest expenses in any service based business is in its wages, so this is one area that needs to be monitored very closely to ensure that your wage to turnover ratio has not gone through the roof during these difficult times.

For instance, if your wages to turnover (excl GST) used to be around 35% and has now crept up to over 40%, you need to take action to get this back under control.

Reducing rostered hours may be the only way to do this if you cannot increase your income.

The biggest mistake made by many salon owners is not keeping on top of this important issue.  Every dollar in excess wages that you pay is coming directly out of your profit (and this often translates into the wages you take for yourself).  Waiting too long to act can cause major problems for many business owners as cash flow simply dries up.

Right now is a good time to evaluate your roster to ensure you are not paying staff to simply stand around.  Staff should be made to understand that they have a commitment to your business to keep their wages to revenue % as low as possible.  It’s a figure that should be monitored regularly and acted upon quickly.

What can you do right now?

  1. First, tighten up your appointment taking, and get rid of those expensive gaps that have crept in between each service.
  2. Don’t allow staff to book clients at both ends of the day leaving big wasteful gaps in the middle.  Instruct them on how to book the clients so time waste is minimised.
  3. Train staff on ways to upsell additional services as well as retail to clients.
  4. Review your figures and calculate the wages to revenue figure for each staff member.  This will highlight the employees who are worthwhile to your business, and those who are wasting your time and money.
  5. Re-write your roster so that you are using your employees time more effectively for your business.
  6. Run a team meeting to let your team know that this new process is here to stay and that failure to meet the required sales will reduce in fewer hours of work offered.

If you need help to get your expenses or roster under control for the new year, give me a call and let me help you improve this area of your business.

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Pam Stellema

Pam is an industry experienced coach, salon owner, speaker, author and copywriter.She works beside salon and spa owners to show them how to effectively grow their profits and remain in business for the long-term.
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