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Profit and Loss Management
By: Anthony Silvestri
Posted: March 28, 2011, from the April 2011 issue of Skin Inc. magazine.
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It is a good rule of thumb to carry approximately four weeks of service inventory and two to three weeks of retail inventory. A good ordering and replenishment policy features minimum/maximum guidelines. Set the maximum number of pieces that you would like to keep in stock based on your sales trends and set a point for reorder. The reorder point is usually when a one-week supply is left. For example, if you have retail product X of which you sell approximately 10 pieces a month, your maximum will be 10 pieces and your minimum would be 2.5, which you would round up to 3 pieces for a reorder point. Once you drop below your minimum, you will order up to your max. By implementing the minimum/maximum system, you should start to see your business sustain a positive and balanced cash flow.
Spa management software is a crucial business tool, and most new applications are built to be a software-as-a-service platform, which are Internet based and involve a monthly fee.
Analyzing your business puts it in a better position to optimize day-to-day operations and will provide a much more efficient and profitable end result.
Anthony Silvestri worked for Mario Tricoci for several years in various positions—most recently as operations coordinator. Before this position, he was a general manager and the management training coordinator for the company. One of Silvestri’s specialties is how to control operating income and controllable profit lines on profit and loss statements. He is currently the COO for Sella All Natural Skincare.