Know Your Numbers: How Much Are You Really Growing?
In her first five years of owning Trixies Salon in Des Moines, Iowa, owner Tricia Rivas counted herself lucky when the salon was in the black and she could pay her bills, staff and a few credit cards.
But she forgot to pay one person—herself.
“I was so worried about the business that I just didn’t pay myself,” she says. “But then I got frustrated, worried, anxious, depressed—I was working my ass off and not bringing anything home because I was putting it all back into the business.”
So, she started to educate herself. She began working with a personal financial advisor, hired World Class Financial Services to do her monthly salon financials and read Profit First, which changed the way she thought about her business.
“It taught me to pay myself just one percent and put it into an account that isn’t easily accessible,” she says. “So now I have this money that’s there for emergencies, vacations—whatever I need it for.”
On the surface, everything looked good for Rivas. She now had three locations, payroll and rent were getting paid, she was paying off credit card debt and giving herself one percent.
But in April, when she attended The Salon People’s Business Academy, she realized her plan for profitability had one major flaw—it was not a plan for growth.
Planning for Growth
“I was making money in my business, but I didn’t have a plan for retirement or to send my kids to college,” Rivas says. “It’s my skin in the game, so I had to look at my personal plans in order to develop a growth plan for my business.”
While Rivas had worked with financial coaches before, she had never worked with a coach or program designed specifically for Aveda benchmarks and Aveda salons.
“The Salon People Business Academy has a lot of procedures that make sense to stylists and owners.
Being in a room with other Aveda owners going through the same struggle left me reenergized. Through the group’s honesty and transparency, I realized I’m not alone.”
Rivas elected to hire one of the Business Academy’s coaches , Virginia Meyer, to help guide her once she got back to the salon.
“I’m looking at my financial reports in a totally different way now,” she says. “I break down my P&L and benchmarks to the tiniest details to find where we are losing money or can grow.”
In examining her numbers, Rivas found she was struggling with her backbar and her color usage—two areas she could easily improve upon with small tweaks.
“We have to keep asking questions and diving in,” she says.
“Even if a benchmark is just one percent off, I want to know. That could mean $10k for my business.”
With a clear picture and understanding of how to break numbers down and make adjustments to her business, Rivas has seen growth.
Last year (to date), her revenues were $586k. This year, she’s already at $640k.
In addition to a desire for growth, Rivas also wants what everyone wants—a vacation, to be able to retire comfortably, to sell her business at a profit.
“But the only way to get there is to be knowledgeable about numbers and use the tools I got at the Academy,” she says. “I needed to decide what my growth was going to look like first.”
Rivas determined she will close her third location (a salon that she took over) and reopen it in a new, boutique space to match the size and culture of her other locations.
Having all three of her salons on the same path is important to her growth plan, and she’ll continue to work with Meyer to stay on track.
“Talking to Virginia every month keeps me motivated,” she says. “It’s embarrassing to report you haven’t done well!”
Every night, Rivas posts her team’s individual numbers and the salons’ numbers.
“All three salons are competitive with each other as are individual stylists,” she says. “Sharing the numbers fuels healthy competition.”
Rivas has found her openness with the salons’ P&L, which her accountant shares with the staff twice per year, and daily numbers has created a team mentality that results in growth.
“They see that when the salon is doing well, we’re able to reward them,” she says. “For example, we now offer six weeks’ maternity leave. We couldn’t do that when we weren’t hitting benchmarks.”
Recently, when another owner reached out to Rivas to find out how she pays up to four weeks’ vacation and offers maternity leave, in addition to other perks, Rivas told her it was all in the numbers.
“Everyone knows their daily, weekly, monthly and yearly goal. When goals are met, we can provide so much more,” she says.
“It starts with open communication and not being afraid of not being the smartest person in the room—surround yourself with those that can mentor you to be an amazing leader.”
When the salon is doing well, the stylists are doing well, and vice versa.
Embrace Those Numbers
Rivas encourages other owners not just to understand and analyze their numbers, but also to share them.
“You can’t just tell your staff you don’t have the money to give them certain perks,” she says. “People think you’re rich if you own a business. You have to show them how much you pay in taxes every month, how much in rent, etc.”
Rivas offers an in-salon business class for her team, all the while letting them know it takes time and effort to fully understand financials.
“Before I opened, I took tax classes, leadership classes and small business classes all through the Small Business Association in Des Moines,” she says. “I was prepared, but I didn’t even skim the surface of what I needed to know. I figured if we were all getting paid, we were good.”
Getting your financials in a benchmarked format is a daily ritual that should become like brushing your teeth. Without a financial partner to help, and clean, well-organized books, you’re flying blind.
“We hired Virginia because we wanted to break down the numbers and learn how to fix them and grow,” Rivas says. “We’ve surrounded ourselves with smart people and we’re not afraid to ask questions.”
Exclusively for Aveda Salons, The Aveda Business Academy is provided as part of the investment Aveda makes in its salons to help them grow. To learn more about the curriculum, upcoming dates and tuition, visit https://www.thesalonpeople.com/classes.