Featuring, Jane Salsbery Gibson *Podcast available below* Rapid growth sounds like one of those so-called “problems” that we would all like to be cursed with! Yet, ironically, many salons actually lose money during periods of rapid growth. Salon owners see rapid growth as an event, and it does happen. All too often, these owners become over-reactive without measuring the facts. With a little extra care, salon owners can anticipate rapid growth, manage the side-effects, and avoid the pitfalls that could cause long-term damage. HOW DOES RAPID GROWTH HAPPEN? Different factors may conspire to cause a spike in a salon’s income. Some of these include: * New hires. Just two or three new service providers from another salon can initiate a rise in cash * New location. A move to a new area can bring a surge of new guests * Remodel or expansion. A freshly updated space tends to increase traffic flow * Staff growth. When the current staff grows its new clients, the guest count expands * Seasonal changes. Some areas experience increased crowds at certain times of the year or for specific events COMMON PITFALLS OF RAPID GROWTH There are many hidden “danger zones” when a salon enters a period of rapid growth. Some of these hot spots are: * Overspending. More money in the checkbook inspires overconfidence, and as a result, emotional spending and needless purchases run rampant * Impulsive decision-making. Suddenly, all new candles or totally revamped equipment seem like a good idea when in fact they are not needed * False sense of security. Salon owners feel invincible, and often buy things that they would not under normal circumstances * Grandiose plans. When business is booming, it is tempting to remodel, expand the space, or move to a new location * Attention Deficit Disorder. Salon owners are so giddy with cash that they forget to pay attention to the daily business tasks * Reckless hiring. The salon certainly feels busy! Panicked owners feel that they need more help, and often hire too many people, and at too-high a salary * Sloppy inventory control. The sense of urgency leads many owners to overcompensate in inventory. Demand feels greater, so they order more * Overcomplicating the picture. As salon owners feel more and more overwhelmed, they invent job titles as “Lead Stylist,” “Floor Manager,” or “PR Director” which they think will help them gain control of the business. These positions are often overpaid and completely unnecessary The giddiness of an influx of cash is hard to resist for most business owners, and when the checkbook looks flush, it’s easy to get stupid and overspend. In order to fight this momentary madness, a business owner must truly understand the meaning of PROFIT, and remember that PROFIT is always the goal. 10 TIPS TO SURVIVE RAPID GROWTH Rapid Growth does not have to be a drain on your salon. With a little bit of education, attention, and preparation, you can avoid the common pitfalls and turn the growth to your long-term advantage. Here are some key strategies: * SLOW DOWN! Give yourself time and space to catch your breath and think calmly. * GET your hands on your money. * Understand exactly where the influx of cash is coming from * Evaluate. Review your current expenses – commissions, salaries, etc. – before you consider adding more * Measure your debt. Don’t forget what you owe! Refinance or pay off old debts before incurring new ones. Pay off the 2nd mortgage on your house before committing to a brand-new salon * Budget. Incorporate a financial plan with where you are at now, and control what you spend * COUNT. Go through your inventory, count your backbar and retail, and keep an eye on the numbers. Re-count bi-monthly to ascertain what you are using and what is sitting on...