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Profit and Loss Management

Anthony Silvestri

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In the spa industry, it is essential to know your current cash position in order to be better prepared for the uncertain future. Ask yourself: What is my spa’s current cash position? Where is my cash tied up? How can I increase my cash position?

These questions can be answered by first creating a profit/loss statement. Be sure to include all revenues and expenditures in order to have the best perspective and overview of where your company currently stands. Start with your major expenses; the largest of which will probably be labor, with the industry average of approximately 47% of total sales. Then, create subcategories for your expenses. For instance, administrative fees, spa professional service compensation and retail commission would all be subcategories of labor expense.

Next, peruse your service menu and assign costs and supplies that are associated with each service. All supplies should be applied to the department or service in which they are used. This step should include everything from the products used during a treatment to the spa professional’s compensation for performing the service.

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