Feeling better or just getting used to it? Time to draw a picture. The picture is entitled “What My Business Will Look Like One Year from Today”.
In this picture I want you to describe your guest. Who are they? How often do they come into your business? How old are they? Where do they live? Are you seeing them more, less or the same as last year? Why?
In this picture, I want you to indentify your competition. Who are they? Why are you comparable or competitive with them? What makes your business special, unique or different compared to them? How are they doing financially this year compared to last year? Why?
Now, look at your business. How many guests are your seeing each and every week? What services are they coming in for? Are you seeing the same guests your saw last year or are they different? Do they bring or recommend their friends? What about your pricing – higher or lower than last year?
Look at your direct costs. Labor specifically. What is it as a percentage of service and product sales? Including payroll taxes, is it less than 42%? What about product costs? Are professional product costs in line, or is your staff using what they think they need rather that what you have taught them to use? Is retail product cost marked up correctly and is it controlled or walking out the door?
Overhead has to be paid every month. Has rent been re-negotiated? What about your advertising and promotions plan? Hopefully it is appropriate for the scale of your business and effective. Don’t get me started on advertising.
So, this picture is now taking shape. You know your guest, your sales, your costs and profitability. We now have a road map, a vision and targets. I call this picture a budget.
Monte Zwang
Wellness Capital Management, Inc.
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