Your Salon’s Performance Report & KPI’s

Performance Report | a stand-back overview on how your Salon is performing

KPI’s | key performance indicators – measuring the key goals of your Salon

Background

To keep control over your business, you need to know where you want it to go, and then make sure it’s going that way. As the British artist The Streets says:

“If you don’t know where you’re going then any road will take you there.”

Day to day, you’ll be stuck in the detail (often being sucked into your bookings system hour by hour) and it’s hard to take time to step back and see the bigger picture. This is where the Performance Report comes in.

Performance Report

The Performance Report is a monthly overview of what’s happened in the month and where your Salon is headed so far year to date. By using it, you get to see a more holistic view.

It revolves around a summary ‘profit and loss account’ (which shows the amount of income generated and from where this income has come from (e.g. from Clients or from Contractors). It also shows key parts of your balance sheet – such as the amount of cash in the Bank, amounts still owed (for example to HMRC or to your employees if the payment run is yet to happen).

Some Salons will have already put together a Budget for the year and the Performance Report will show the actual results against it.

KPI’s

The Performance Report can also include KPI’s which are used as part of a more sophisticated control mechanism, to ensure your Salon is achieving its goals (or at least heading in the right direction). You don’t need many KPI’s but the ones you do have should highlight the most important (say) 5 areas you want to control.

Some KPI’s you will obtain from your Salon Software directly (e.g. Phorest, VendHQ, SalonIQ, GetTimely etc.) which may include:

• Total salon income (services)
• Total salon income (retail)
• Total individual income (services)
• Total number of Clients
• Average Income per Client
• Percentage of new Clients to Total Clients
• Percentage of returns (Client retention)
  • Per Phorest, a healthy industry standard should be 58% minimum; being 30% for
    new Clients and 68% for existing Clients. We think that if you’re losing 22% of your
    existing Clients, you’d want to try and find out why.

Other KPI’s you can include in your Performance Report:

• Individual employee salary as a percentage of individual total revenue
  • Benchmark figures for a stylist’s individual salary to individual salon revenue should run somewhere between 33% to 35%*
  • Many Salons who run a commission program start it once the employee has reached 3 x salary
• Total employee costs as a percentage of total revenue
  • Total salon wage bill to total salon revenue should be at the 50% mark (including pensions, annual holiday pay, sick pay, etc.)*

*Stats per the NHF (and Salonfrog has seen this sort of range in its own Clients as well.)

Your own KPI’s

You need to consider what’s important to you and your Salon, then decide which KPI’s you want to measure and report.

Motivating Staff

You can use KPI’s to motivate staff and measure their performance. They also come in handy to backup performance ‘issues’ with staff members.

In Summary

Set your goals, put in place a way to report them, then take action if your salon or barbershop is moving away from them.