It’s 2:30 am and your phone rings. You pick it up and the caller tells you your teenager has been in an accident and is in the hospital’s emergency room.

Without thinking, you throw on some clothes, go to the garage and jump into your car. Although you’re in a twilight zone, you instinctively glance down at the instrument panel. The gauge indicates that there is more than enough gas to get you to the hospital. Just as a car has a dash board panel with various key indicators, (fuel, oil, brakes), that tells you if everything is running properly, so does your salon/spa. What are key indicators? Key indicators are measurements (quantifications) of various aspects of your salon/spa; they tell you about the health of your business and it’s various parts. Generally key indicators are broken down into three major categories: strategic indicators, business indicators (financial and operational) and systems indicators. Let’s first take a look at the key strategic indicators. They are measurements showing you the progress your salon/spa is making towards its vision. For example, if you want your business to grow into a $2,000,000 salon/spa group with 2 locations and a 15% profit margin, then sales, profits, and number of locations are key indicators. Next are your key business indicators. The are the various measurements that tell the integrated story of your salon/spa (a point that too many salon, spa owners, and managers loose sight of). Your salon/spa’s operational indicators give you an objective view of what is happening in your business and how well or poorly it is being done. They include indicators of activity, productivity, efficiency, quality, and even subjective evaluations of intangible elements of your business. The top six salon/spa operational indicators are as follows: 1. Average Ticket The amount of

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money a client spends on average during every visit. 2. New Clients per Month The number of new clients on average that come to your business every month. 3. Average Visits per Year The number of times on average that your customers visit your business each year. 4. New Client Retention The percentage of customers who return after their first visit. 5. Base Client Retention The ability to keep customers returning to your business from their second visit onward. 6. Gross Margin The amount of every sales dollar that is left over after direct expenses. The financial indicators tell you about the financial condition of the salon/spa. They are taken from your financial statements (your income statement [or p&l], your balance sheet, and your cash flow statement.) Finally,

your system indicators are measurements showing you the details of what is right and wrong with every system. So get into the habit of quantifying every aspect of your business and using the indicators to run your business. Why? Because the next time your banker calls, she will be telling you all about your business loan, the one that’s been approved.