My Answers to your Business Questions
Sometimes owning a salon is a lonely gig. You have questions with no-one there to help you answer them.
To help you, here are some answers to commonly asked questions in business.
If you have a business question that would benefit all salon owners, click the link below to submit your question.
Productivity Questions
I’m going to answer this question from a logical, realistic and fair way. What you do is entirely up to you of course but please read on for the reasons I suggest what I suggest.
To calculate a therapist’s productivity, the formula is simple. Take her total revenue in a week and divide it by her total hours. For example, if she produced $5,058 and she worked a 38 hour week, then it’s $5,058/38 = $133/hour productivity.
Whether you exclude hours for various reasons should depend on the answer to the following question.
Did I lose business (revenue) BECAUSE of the time taken off? If the answer is ‘yes’, include the hours.
SCENARIO 1 – PERSONAL LEAVE
What if a therapist produced $3,996 because she took one day (8 hours) as Personal Leave? Do you exclude the 8 hours from the calculation?
Ask yourself… Did you lose business because of the time taken off? Well yes. The therapist may have had a column full of clients who had to be cancelled due to her absence. Leave the hours in. So it’s $3,996/38 = $105/hour. Now if you follow my incentive programme, this therapist would NOT have received productivity incentives in this case.
If you had exluded the 8 hours personal leave, then you’re looking at $133/hour in which case she WOULD qualify for incentives.
Can you see how my suggestion is logical, realistic and fair? If you did it the other way, you would have lost a column’s worth of revenue AND you would have paid incentives BECAUSE OF IT. Not logical, realistic or fair.
If a therapist then argues that she can’t help being sick. You would agree and even say that it’s unfortunate but when you explain the reason why you did include it, a reasonable person would understand and even agree.
SCENARIO 2 – ANNUAL LEAVE
A therapist works 3 days in a week producing $3,100 and takes 2 days annual leave. In this case, I suggest you exclude the 16 hours taken off for annual leave because if you run your business well, then you would have a policy that insists your therapists provide ample notice to have their annual leave approved. With the notice, you can avoid losing business over this time taken off by replacing her hours with another person (eg. a casual) or booking her clients with other therapists in her absence. So her productivity for this week would be $3,100/22 = $140/hour which would qualify her for incentives.
SCENARIO 3 – RECEPTION
Well there are two answers to this.
(1) If a therapist is rostered off in advance to cover reception, then you’re taking away opportunity for her to produce so in this case, YES, exclude reception hours
(2) If on the other hand, you come to work and you can see that a therapist has no booking in the mornings and you ask her to cover reception then NO. You’re not taking opportunity away from her but rather making the best use of her time.
SCENARIO 4 – TRAINING
DEFINITELY DO NOT EXCLUDE. This requires even further logical, realistic and fair thinking. When you send a therapist to training, you are giving her the opportunity to further increase her knowledge and skill in the future which will enable her to produce even more in the future which will enable her to earn even more incentives.
When she’s at training, you are losing business and even though it’s for your long-term benefit, it’s also for her long term benefit.
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