My 5% Colour Stock Bill
In the past 2 years I have set about the goal of reducing our professional stock usage across my salons from 12% to a super low 5.3% at our last review. Our ultimate goal was to set up a more profitable ratio between service turn over and professional colour spend. This critical balance gets very out of hand in many salons. Not only is it out of hand it is not even recognized how many thousands or dollars we throw out the window each month!
I really wanted to share this with you all as we have had massive financial gain form focussing on professional colour usage.
In no way was quality or stylist creativity effected negatively in the salons and in fact the savings we have made in this area resulted in a more lucrative commission structure we were able to offer and some exciting photo shoots!
Below I have listed my top tips on reducing your colour stock bills:
Negotiate the best possible buy price.
This is always an emotionally charged thing to try to do for some reason. But there is no harm asking for a better tube price. It’s a huge competitive market out there with massive price variations between product companies. So make sure you balance your head with your heart and get your bye price’s down, down, down.
Beware multiple stocking colour lines
It can be very expensive stocking multiple brands of colour. Line A has three lines and Line B has four lines. Do you need seven choices in your colour department? If you do wouldn’t you wonder why neither line is complete enough to satisfy your needs.
Auto Ordering
Read the fine print, some companies set you on an auto ordering system, meaning they bring out a promotion and you are sent the new product and billed automatically. This is a great deal for the product company as they will immediately sell in any new product – great for them!
Unfortunately this is almost always bad for you.This will mess with your budgets, stock levels and often if you are not careful you’ve just got a bunch of new colors you don’t really use or need. Not to mention ‘auto-training’ is not included so who knows how to use the stock.Calculate a plan for charging for what you use
Do you know what it costs to do a full head of foils or a re-touch? Set up a price list that is reflective for what you actually use in product. Then add the staff cost and all other sots related to delivering the service. Work this out and then add your profit plus tax. That’s the price you need to charge to stay in business.
For example on our price list a full medium colour mix and charge out is 50gm of colour, a long colour is 60gm, we have an extra product mix price per 10gm. All stylists are trained on this usage system to ensure correct charging versus usage. Without this we’d loss money and ultimately our business.
Theft
This is something we all think will never happen to us…….but it does and it has. Staff can take a tube home here and tube of bleach there, doing my mum’s hair tonight etc. We have all had stock taken from time to time. It adds up and its theft. Implement a policy on stock theft and make all staff aware of the consequences. Some salons I know set up a camera in the stock area, removing temptations and education are key. Setting up tight systems of stock in and out systems can give you up to the minute levels of missing and unaccounted for stock.
Return over ordered stock
Large lumps of over ordered stock lying around is dead money. For example having 8 tubes of a high-lift 1203 stuffed in your cupboard is dead money. Gather up all your over ordered stock, call your rep and send it back for a credit note. Yes you can do this do it frequently. I have also found the more stock you see the more you use.
The more you see the more you mix
Have a bulk storage of your excess colour stock in a separate area to your working mix up area. Only have 1 tube open at once and keep it in its box. At the end of every day replenish whats ended up in the Pro Stock bin. This is feast or famine mentality, if you see an abundance you will use an abundance.
Educate your staff on usage, measurement and waist reduction and Reinforce!
In the colour mix up area we have well signed mixing recommendations and ratios for all salon services. Including the charge rates for each service. Upon induction we educate all new recruits on the mix ratios and the charging system, something quite new to most.
Ordering System
Most salon software systems have great stock ordering systems. Set weekly levels, scan stock in on arrival and scan stock out with the tube in box (important). We use a pro stock bin to check all empty used stock out, this keeps our levels accurate.
Don’t order blindly through opening the stock cupboard and doing a visual verbal order in between clients. And don’t get first year apprentice to order. Even worse do not let your rep order for you, they get paid more if you order more.
You can train a stock controller to do the stock handling, but first you must master it yourself!
Stocktake
It is very important to keep track of all your stock. We do a full stock take every 2 weeks. Where we compare what the computer is telling us we have in the stock cupboard is correct.
The biggest crucial tip when stocktaking is that 1 tube open equals 1 tube no matter how much is in the tube.
Set budgets and forward forecasting
Set up spending budgets and goals. We take out previous weeks service total apply a 5% calculation or what ever your goal % is. And that is what you have to spend on colour! This simple equation is the key to success and by implementing all the above you will watch your bank balance rise and achieve a happier healthy business
Happy Stock Savings!
Belinda Keeley
Chumba Concept Salon
You need to do a workshop on this, so many s business owners need this type of help.
Thank you x
Sure we can! Who would be in for that, hands up? A webinar or live workshop?
Actually running a 5% professional ordering system will not work for the majority of salons in the market. The percentage target has to be part of the price of the services. Higher priced services, the lower the target percentage. The average target percentage for most salons, with high client numbers is around 8%, lower client numbers is around 10%.
Salons do need help in this area, but everything has to be tailored. As there a quite a few things in this article which maybe appropriate to your salon, but as a Business Development workshop will not work for the majority of salons.
Hi Dwayne,
Your points are valid and well put.
Clearly Belinda’s referring to her personal experience and performance in this article.
We should point out that we run two salons with differing price points. The higher charging salon has a less than 4.5% pro stock spend. The other has less of a price advantage and runs at 6.1%. Hence the average of 5.3%. Every % point saved adds to the bottom line of course.
The point here is to know your business model, numbers and to run budgets relating to your Profit &Loss.
Most importantly it’s to encourage salon owners to take control of their business.
Each salon will of course have different metrics but what ever they are ‘you’ the salon owner must have the information, systems and controls in place in order to be successful.
Most salon owners have never learnt any of this as we all learnt to be great hairdressers first and foremost.
I’m sure most salon owners would view these skills are important to share in order to help them build a strong business and therefore a strong industry for us all.
Anyhow great to have intelligent salon professionals adding to this – shared thoughts can only strength all of our knowledge pools.
Carl Keeley
Chumba Concept Salon
Great article. I find myself struggling, and always have with stock control when it comes to colour. It doesn’t seem software companies make an easy way to control ordering of stock like they do retail lines.