The importance of annual performance reviews at your salon

The importance of annual performance reviews at your salon

The term “annual performance review” does not sound too appealing, especially for salon owners and staff in the hair and spa industry. Every year, you bring out your massive book, digital spreadsheet or your Booksy statistics, filled with monthly reports on cash outflows and inflows, as well as receipts and information on staff work-times. In fact, this data contains everything you need to know about your salon.  These numbers show how your business is doing financially, as well as your staff work output and also treatment and product sales. When going over your annual performance reports, you should also compare them to those of previous years and note any significant changes. You should have one goal in mind - using this data, see which parts of your business could use some improvement. Here are the two most important pieces of data you should be focusing on! 

A better understanding of cash inflows and outflows

When looking at your salon’s numbers, make sure you are following cash inflows and outflows - these are made up of earnings and expenses in your business. Using these numbers, calculate which treatments and products bring in the most cash inflow, and which do not. For such treatments and products, you may want to consider removing them off of your salon’s menu, but first, compare the current year’s data to previous years' statistics. Mark any significant spikes or drops you notice - if a service you considered removing turns out to have brought more cash inflow this year than last, you may want to promote it more in marketing campaigns in the upcoming year and track whether or not sales have increased even more. 

Since your business has two main sources of cash inflow (treatments and retail), you need to look closely at every item on your menu. With Booksy, your current salon statistics, as well as those from previous years, are generated with the click of a button. Quickly look into each treatment and product sales history and monitor their growth or loss throughout the year. Cash outflows, on the other hand, are by far the most painful for salon owners to track, as they are made up of the business’s expenses. Everything from utility bills, supplies, equipment and staff salaries all need to be paid for. When following these numbers, look at the highest cash outflow sources. If they are from water or electricity bills, consider investing in more energy or water efficient solutions. After doing so, compare your results with those from a previous year, and track your savings. 

Staff progress

When it comes to annual performance reviews, this is usually the part that salon employees dislike the most. When looking over staff progress throughout the year, salon owners have a lot to go over. Everything from the number of appointments, retail and gift cards sold, to referred clients and hours worked is taken into account and each staff member should be looked at individually. Pay special attention to employees who are lagging behind in the number of clients serviced or treatments offered, as they may require additional training. It is also recommended to look over the annual work time reports and the number of treatments offered in unison - if an employee has a significant number of working hours, but hardly any services performed, then they may be dragging your business down.

Tip: Looking at your staff progress does not have to be such a downer! Motivate your team by introducing an employee of the month contest! Give those who have improved the most over the year a chance to shine - click here and read how to introduce an employee of the month contest.

What should you do if your salon is under-performing?

Avoid panicking! If your business is not performing as well as you had hoped, maintain composure and carefully look over your data to see where you could improve. If you were expecting to see an increase in new clients or sales, implement promotions such as flash sales and happy hours or start selling service packages or memberships, which will bring you both! What if staff are under-performing? You pay for their salaries, but by implementing commissions, they not only have to work harder but also have the opportunity to earn more - which is advantageous for both them and your business! 

And if your salon is over-performing?

Of course for salon owners, this is the best news all year - however, avoid letting it get to your head! Such great news can lead to regrettable decisions, such as mass discounting and expenditures. Instead, look over the current year’s data and compare it to the previous year. Mark any significant changes and any activities you have done which might have promoted this growth. If you have introduced Facebook or Instagram ads during the time of your salon’s increase, you should definitely implement this marketing strategy in the upcoming year!

No matter if your salon and staff numbers are higher or lower than your expectations - you should carefully look over your data and plan out your next actions to help your salon grow even more! And thanks to the innovative solutions like Booksy, beauty business software, collecting reports is done quick and easy - no massive book or messy notes! See for yourself how an easy to use salon system can help you keep track of everything - start your free trial now!