Productivity as Form of Measurement in Salon Business
One of the most important pieces of data that we can utilize in developing goals for our salons and spas is in the measurement of productivity. However, when I discuss this with salon owners they are often in the dark on how to measure it and why they would want to.
How to Measure Productivity
A productivity measurement is the ratio between the hours a business is open for operation and the actual hours that the business is utilized. For example, let’s discuss Seriously Great Hair Salon. SGH’s is open 6 days a week, with differing hours depending on the day:
- Monday: 10:00 AM – 6:00 PM
- Tuesday: 10:00 AM – 6:00 PM
- Wednesday: 10:00 AM – 8:00 PM
- Thursday: 10:00 AM – 8:00 PM
- Friday: 10:00 AM – 9:00 PM
- Saturday: 9:00 AM – 4:00 PM
- Closed on Sunday
SGH’s is open for a total of 54 hours per week. There are six stations in SGH’s salon. That means that SGH has 324 available hours to book clients (54 hours x 6 stations). Now we need to take a look at the actual bookings for each of the stations:
- Station 1 – actual hours booked = 35
- Station 2 – actual hours booked = 20
- Station 3 – actual hours booked = 40
- Station 4 – actual hours booked = 36
- Station 5 – actual hours booked = 15
- Station 6 – actual hours booked = 20
The total actual hours booked for the entire salon is 166 hours. The ratio is 324:166 or 51%. This means that SGH is operating at 51% of capacity. They have the ability to almost double their revenues. If this salon is generating $25,000 per month in revenues, their potential growth would be closer to $49,000.
Decisions to Make From This Information
- Close the salon on Mondays. Re-vamp the service providers schedule to make better use of the open hours. You no longer have to pay to have the salon open on that extra day and your productivity ratio changes to 270:158 or 59%. Your revenues remain the same but your cost of operating is reduced by 16%.
- Double shift your stations. Each station is available for 54 hours per week. The most that a station is booked currently is number 3 at 40 hours per week. The stations that only have 15 or 20 hours of use attached to them have room for other service providers to be brought into the salon. If you have 6 stations booked for 40 hours per week that would increase your productivity to 324:240 or 74%, almost a 25% increase in usage. If revenues were constant that means you would increase your revenues by $6,250 to $31,520!
- You can determine if you are pricing your services correctly by using this information. Add up all your costs to run your business. Divide that amount by the number of hours you are open. At SGH the operating costs are $22,500 each month. We need to bring in $104.16 every hour that we are open to meet our expenses. Divide that hourly amount by the number of stations (6) and you will know that each station needs to produce $17.36 every hour.
- By using the information from number 3 above you will be able to tell if each and every service provider is generating enough income to meet the salon/spa needs. For example, if Station 6 charges $35 for a woman’s haircut but takes an hour and a half to complete the service you know you have a problem!
Collecting data is an incredibly important aspect of our business that many of us neglect. Or we have systems that collect the data but aren’t really sure how to use the information to our advantage. Check out your Vagaro system to find your numbers; they’re just waiting for you to utilize them!
The Core 4 Legal Essentials Every Studio Owner Must Know
3 Strategies to Maintain Customer Retention in the New Year
Vagaro is a cloud-based scheduling software commonly used by beauty, fitness, and wellness businesses to manage booking, credit card payments and processing, marketing, payroll, inventory management, reporting, and much more.