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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.
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Each job in a spa has a direct influence on the financial performance of certain revenue and expense categories. Keeping it real entails maintaining a connection between the financial information and a specific job. Just as you teach your team what the duties are for each position, also explain how each contributes to a revenue stream or an expense category. For example, team members contributing to the services revenue might include receptionists, spa desk coordinators, group salespeople, service providers and managers. These employees would benefit from learning the financial dynamics of services revenue.
A short list of financial ratios for the spa services revenue might include basics, such as total spa revenue, services revenue and net operating profit, as well as specifics, such as departmental labor costs, product costs, average revenue per day/week, average number of services per client and administrative costs. Learning to interpret a simple management report, such as the services sales analysis, also would be beneficial. Introduce these concepts slowly—preferably during a one-on-one meeting. This way, team members can ask questions and learn at their own speed.
Educating the team
When explaining ratios, make sure you first clarify why you are tracking something and what information it provides to the spa management team. For example, discuss the service sales analysis report with the spa receptionist. This report indicates how many of each service were sold during a specific time period. Explain that this report determines how well menu items are selling and how successful specific sales efforts are in producing results. Discuss how this report is referenced when deciding which treatments to keep on the menu and which to eliminate.
Make sure to review each team member’s impact on a report by pointing out specifics influenced by their performance: “Remember the big group you booked last Thursday? They all had facials, which is one reason why we sold so many this month and our retail sales were higher.” As they learn, ask them for ideas on how to improve the spa’s financial performance. This acknowledges the team’s role in the management process, which is to help generate ideas and help with implementation. It also gives them a degree of ownership in their respective areas and a sense of responsibility for improvement.
Massage therapists can benefit from understanding the service sales analysis report, as well. They should be aware of what the spa’s marketing expenses, laundry costs, utilities costs, product cost percentages and client satisfaction surveys signify. Estheticians should be knowledgeable about retail sales, provider sales reports and product cost percentages. For each job in the spa, there should be a corresponding report.