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Financial Skills for the Entire Team
By: Greg Hagin
Posted: June 17, 2008, from the July 2006 issue of Skin Inc. magazine.
Many spa owners would like for their team to take more “ownership” of the business and have a greater awareness of the financial implications of their daily work. But how forthcoming should you be about your operation? Although many spa employees do not think of themselves as having strong financial skills, it doesn’t necessarily mean that they should lack responsibility for the business’ financial well-being. In most cases, a worthwhile goal is to have the majority of your team know enough about finance to be able to think like an owner.
A common belief assumes that the owner and manager make considerably more money than they actually do. Because of this perception, the team also may presume that the spa’s financial position is stable. By not regularly observing where the money goes, team members might even think that anything remaining from a treatment price after they get paid goes directly to the spa.
Perspective, not perfection
Most team members would appreciate the opportunity to become more familiar with financial matters, as long as they do not have to concern themselves with number crunching and spreadsheets. They want the perspective without having to strive for perfection. With this in mind, use terms that are easy to relate to, avoiding technical phrases such as “revenue per occupied room” and “room utilization.” Educate on one or two concepts at a time, beginning with the basics, and remember to remain patient. If your team can increase their awareness of what things cost, they naturally will make an effort to save you money.
What does it cost?
Begin by outlining the cost structure of your spa. For example, a good way to start might be to ask, “What does it cost to turn the lights on every day?” The answer would be to factor in rent, utilities, property taxes, licensing fees and general insurance, as well as anything else needed to open the facility. Call it “utility costs,” if you will. You may even want to express it in terms of a certain number of treatments, rather than dollars. In other words, if the answer is $4,000, the first 50 treatments performed each month go toward the utility expenses. Continue by outlining what it costs for the spa to do the following.
Look professional, or appearance costs. Uniforms, flowers, decorations, maintenance and cleaning.