Bondgirl

GOODGUY thanks for bringing up this great question

LOBO77 - I agree with many of your assessment. I think a lot of the breakdown in good salon versus average salon is in equipment as well. Without HP (an other high end models) a small salon's chances of hitting high averages of $25,000 per tanning bed per year are impossible. I also think that at a time when we are waiting on your 3 steps to occur (don't hold your breath) it is difficult to invest in expanding any small business but ride out the storm as best you can.

Underhill is correct in that we need to market with the times, however each area of the country is unique in it's own ways and that takes precedence over blanket standard marketing plans.

My salon is in a growing area of a town, however the town is fairly stagnant as far as growth in new employment opportunities and WOW does the job market stink. I cannot give information for a good market study on the numbers prior to 2007, however i can tell you that growth has stopped this year and i see weather as the main culprit currently. We saw 8.5% growth in 2010 and 17% in 2011 (horrible winter, hotter than average summer, excellent marketing); this year i am battling to break even so far with last year and praying for an extremely hot summer so that tanners in my area will be forced inside to tan.

Steve Underhill

Tanners and tanning habits are changing. The salon owners task is to effectively reach tanners reminding them you are there and that they enjoy tanning. In most cases tanners do not all of a sudden no longer enjoy tanning, they simply get out of the tanning routine due to personal routine changes.

As a salon owner we must keep them in routine and encourage tanning as a part of routine.

With this in mind your salon must keep up with change, eye appeal, pricing, employee training and overall structure. You must establish what is not working even though it may have worked in the past, or in some cases you may have never been properly structured.

My point is that there are a great many salons that are increasing sales and growing. To blame business declines on negative publicity, economy, weather and so on is a mistake. These are reasons to adjust your efforts not reasons your salon is suffering. How things directly impact your business is in relationship to your ability to change.

There have always been peaks and valleys and weather, economy and negative publicity. You must keep pace with a changing industry and customer. There has been more change required in the past five years than ever before.

Another peak season is winding down and you must ask yourself again. Did you identify required changes and make them or did you just stay the same and continue to decline in business and simply blame everything except yourself.

Take control of your own destiny or become a casualty of your complicity.

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Stephen Underhill
Consultant
steve@smuconsulting.com

Steve Underhill

There will never be a united tanning industry because each salon owner must participate in order to become united. Instead most salon owners think that some misterious power should be responsible for protecting them even though they are not going to get involved.

As a result there will always be regulations and undefinded negative publicity. Because of this it is important for the successful salon owner to take control of what you do as a salon and how your tanners are treated and communicated with.

If you are not going to be a part of the big picture you must at least control your tanners and control how your clients look at you.

Every market is different and how much business should be expected is based on structure and demographics, not only how many tanning systems you have.

If your salon is properly structured and you are doing everything you should be doing you will maximize your income potential based on your market.

Everything you do wrong or do not do that you should do will cost you business. If your business model is complete and you are consistently executing, now you can identify things out of your control that must be addressed.

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Stephen Underhill
Consultant
steve@smuconsulting.com

Bondgirl

Is it not also a mistake to be blind to these factors, to not reach out to those in the industry with similar experiences to find a pattern? This is vital to asses your business as well and see if you are keeping with the industry or being left behind. Where are the salons that are growing? What do they attribute significant growth to? What trends are changing in the industry that some salons will close if they don't keep up with?

Steve Underhill

Economy, weather and negative publicity are not things that you or anyone in any industry can do anything about. These things come with owning any kind of business.
Advertising message and method of advertising has changed drastically in the past 5 years. Equipment mix requirements has changed. Price structure will make or break you. Employee training that also includes the training of salon owners is important.

Every decision you make will have a positive or negative effect on business. No decision will have a neutral effect. If there is something that you should be doing that you are not doing will have a negative effect on business 100% of the time.

Spending time worrying about things that can't be changed is bad business. Adjusting business practices to keep up with industry trends is something you can and should do.

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Stephen Underhill
Consultant
steve@smuconsulting.com

Good_Guy

I fell behind on this thread...

Steve,

I think this is wise advice in many ways but it may be too narrow in scope. Focusing on what one can control within ones business is important but equally as important is being aware of ones environment. It is important to set benchmarks, know where you stand relative to the industry, be aware of marcro forces, be aware of those attacking your industry and business and how to deal with it etc. Questions such as the ones raised in this thread can help answer questions like:
- How does our business stand relative to the industry?
- Is there something we are missing or is everyone in a smilar boat to us?
- How is the industry doing? Is this industry growing or shrinking?
- Should I invest more capital into this business or should I hold back for now, or should I sell?
- Where else could I put capital to get a better return on investment?

Your comments sound more like the perspective of a manager as they have a specific task to fill and they have no other job than to consider what the business itself is doing as it is open at that moment. The owner needs to consider if they should fight to keep their business alive, cut their losses, invest more, hunker down, sell etc. Personally I think these questions are exceptionally important and the comments are very helpful.

Steve Underhill

If you are already invested in this industry, I think the first question should be, Am I doing everything I should be doing to maximize my income potential. I think you must be absolutely sure you are getting 100% of the potential out of your business before you start comparing yourself to other salons or where you stand within the industry.

It has been my experience when evaluating a salon in most cases there is so much room for improvement and increased sales with the proper changes that it makes no sense to base your success on the health of the industry as a whole.

If you are a salon that has a great business model that is being executed perfectly, you are now in a position to look at outside factors other than your own performance.

Of coarse we must be aware of the economy, regulations, negative publicity just as all industries are.

Should we invest in the success of our businesses? Always, however sometimes the investment is simply being willing to change. If you have already made the initial investment in your business, you owe it to yourself to be as successful as possible.

Salon owners that blame the economy, the tan tax, the weather, negative publicity for declining sales are looking for something to blame for their inability to be successful.

I go into salons every day that shock me that they have any tanners at all. Being successful takes knowledge and consistent execution of a great plan. Most operators have fixable problems in their salons. You must look for and be willing to make changes.

Even some of the largest chains in the country must stay on point each and every day or it will slip away. If owning a successful business was easy, everyone would own a business. Renting a space and buying a bunch of used equipment and opening a business without a plan is not a formula for success.

Another peak season is winding down and with out making the necessary changes instead of hoping this season will be different has just brought many salon owners closer to closing. This does not have to be the case unless you wait until it is too late.

I am sorry for my directness, but I hate to see what is happing to our industry as a whole, mostly because operators are not willing to make the effort. And yet it is being blamed on factors that are not responsible for our decline.

Example: a news story that shows salon employees giving bad information to tanners. We are mad at the media for the negative publicity and yet they simply showed how salon employees conduct business. You tell me where the blame lies?

__________________
Stephen Underhill
Consultant
steve@smuconsulting.com

House of Tan

Steve, come on now; you know that an important benchmark to keep tabs on in any industry is how you are doing in comparison to the average in your industry. I track this stuff all the time for hair stylists.

For example to be in the top 1% of the hair industry as a stylist you must: Pre-book @ 90% or higher, and have a retail to service ratio of 35% or greater. These are just 2 great numbers to benchmark against and know. I personally benchmark 6 separate metrics with my clients.

The metrics have nothing to do with “totals” rather they deal with percentages. When comparing salons you could never just compare sales totals and such. You would compare ratios, averages, and percentages. To discount this is a mistake IMO.

Now I would agree that benchmarking your own numbers against previous numbers is more important.

The blame lays with the individual salon and in some rare cases a rouge employee, not the industry itself. Any professional salon owner has a right to be upset when a new story (that selectively used) footage and interviews to paint the industry as a whole in a negative light airs.

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Startbucks

Good_Guy

Hi Steve,

You make some great points that are very valid and we are not that far off in terms of our arguments. I agree with your statement except I still feel it is a little narrow in perspective. I agree that the first step is to do everything possible to run the salon to its fullest potential. But being the "owner" and not just the "manager" does require the individual to consider how much capital to invest, hold back etc. As a business man the investment isn't simply the startup costs. Deciding when to add a new bed, upgrade equipment, paint, fix the floors, add a new stereo system are all investment decisions. A simplistic view of these decisions would be to charge ahead insisting that it all gets done, immediately, and only the most expensive, best quality is purchased. In the real world we need to prioritize, invest in the most important things first, budget, predict cash flow, understand our market etc. Understanding where your salon stands in the big picture can help predict cash flow, budgeting, capital investments and making it through tough times.

If the entire salon industry is down and very slow it may make sense to hunker down and hang on for another busy season when some relief comes.

If the entire salon industry is booming along but your salon is slow then you may want to either get out of the industry because your not good at it or make some major changes such as investing more capital to resolve your businesses issues.

If the entire salon industry is down and noticeably slower for a prolonged period, if the customer base seems to be shrinking over time and if public perception about tanning is shifting in a major way, it may make sense to invest capital where it is treated better. In many ways tanning is being grouped with Smoking which is a NOT a good indication of public perception. Feedback on this kind of thing is exceptionally helpful from an "Owners" perspective.

Because we don't live in a vacuum and tanning is not the only business where we can invest our capital, knowing what is happening in the industry is essential to long term success.

On that note I should mention that a salon in our area just closed a few weeks ago. It had been open for over 10 years.

Bondgirl

Good Guy - DITTO

What other industries are you looking at investing in?