Salon Today - November 2008 - (Page 28)

PINCH PR F money in the bank. “In developing a long-term contingency plan for the worse-case scenario, we became really aggressive about putting money aside each month,” says Chreky. Kopsa advises all his clients to establish two- to three-months worth of cash reserves in the bank just in case. “Whether you are facing a recession or strong competition moves in across the street, it’s always wise to establish cash reserves. If you put aside every year and end up never needing it, then you have funds for future projects like expansions and remodeling. What you don’t want is a situation where you’re going down the tubes, putting $100,000 on credit cards trying to save your business.” One word of caution—with the holiday season ahead, don’t be tempted to use your gift certiﬁcate receipts as cash reserves. “It’s hard not to view that money as operating capital,” says Kopsa. “Owners tend to spend it, but then you’re just postponing your problem. As those certiﬁcates are redeemed, you’ll be stuck dealing with paying for the labor and products associated with those sales.” we’re looking at cost of paper goods and printing and looking for competitive pricing on gift cards and boxes. And, we’re studying how many guest service staff members and appointment booking agents we really need during times of low volume,” he says. The corporation is shifting its call center to a virtual call center, where agents who meet specific requirements can work from their homes. Agents also split shifts, overlapping their schedules during peak call times. “Bottom line, we’re running more efﬁciently, but in ways that are not cutting quality for our guests,” says Silvestri. In an effort to tighten spending, Ogle took a hard look at his banking relationship this year and switched lenders. “We also constantly evaluate credit card processing fees and electrical usage, which are both big expenses for us. Combined with the new bank, we’ve saved tens of thousands of dollars.” Look at every cost associated with your business, says Chreky. “It can be as simple as converting your year-end holiday bash into a pot-luck dinner.” When studying your costs, look at the terms of the relationships with your vendors. Chreky looked at extending the time that bills are due with vendors from a 30-day period to 45-, 60-, even 90-days. “Again, we continue to submit payments at 30 days, but we’ve established a cushion should we need it in the future.” Credit Crunch With the collapse of many ﬁnancial institutions, it promises to be much harder to obtain credit in the near future. Keep that in mind as it relates to projects and equipment purchases you have planned for the year ahead. “I recently read that Merrill Lynch will no longer back any new McDonald’s franchises,” says Logan. “If McDonald’s is having a hard time getting credit for expansions, then there’s no question that credit will get tougher for the rest of us. Banks will be looking much harder at your business plans and customer relationships. If you are facing a challenge now, the best thing you can do is keep your banker informed. Be upfront with information, and share your growth plan for how you are going to compensate for shortages now.” Although she has no intention of using it, Chreky recently expanded her current line of credit over the past year. “We knew it may be tougher to get in the future, and we wanted to have it available in case of emergency.” On Your Mind The financial landscape changes daily, and this month’s presidential election promises to have its own impact. Since the editorial team at SALON TODAY ﬁrmly stands behind its mission to help salon owners achieve their best business success in any environment, we invite you to share your top concerns about operating in this new economy. For example, are you… • Worried about obtaining ﬁnancing for additional locations, expansions, renovations and equipment purchases? • Concerned about how the stock crisis impacts your ability to retire on time? • Facing the possibility of having to layoff some staff? • Anxious that this year’s holiday sales will plummet, seriously impacting 2008 growth and proﬁtability? • Looking for creative ways to further trim your budget and boost sales? • Searching for an exit strategy? Please share your concerns, questions, and, as always, your great ideas, by logging onto www.salontoday.com or e-mailing Associate Editor Alison Shipley at ashipley@ vancepublishing.com. Your responses will shape the editorial in the pages of the magazine and on our website well into the New Year. Dollars on the Shelf A common problem for many salons is tying up too much money in the inventory sitting in their stockroom. By taking a more streamlined approach to ordering, you can still keep shelves stocked while freeing up additional funds for the business. As part of Chreky’s recession plan, she evaluated her inventory procedures. “We took a strong stance to not order any more product Cost Controls In addition to setting aside proﬁts to build your cash reserves, you can and should take a hard look at all your ﬁxed and variable costs. Silvestri says Mario Tricoci Corporation is starting that process by focusing on costs that are invisible to the consumer. “For example, >> “Clients are greeted by ﬁrst name and all staff members, even the busiest, offer something for them to drink, to go out to feed a meter, or pick up lunch.” —Maritza Brint, Salon39, Doylestown, Pennsylvania 28 | November 2008 www.salontoday.com http://www.salontoday.com http://www.salontoday.com

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Salon Today - November 2008 Contents Editor's Note Reception Fashion Sense Marketing Roundtable Decor Spa Menu Dream Team Pinch Proof Growing Pains Products Owner to Owner

Salon Today - November 2008

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