Finances

Paying Groomers – What is Fair?

November 16th, 2017 by Kara Adams

How and what professional groomers get paid is always a hot topic. There are so many variables:

  • Hourly?
  • Commission?
  • Pay rates?

MoneyOver the years I’ve tested just about every possible combination of scenarios to try to determine what was fair, what worked, and what didn’t.

When I started my first business, I groomed in the vans right beside my mobile groomers. My team earned 50% commission of the grooming charges. We also had an extra “house call charge” for the front door service per stop (not per dog).

My mobile fleet grew from one van to six in about five years. Plus, I added a grooming salon to the mix. We were busy all the time. However, every once in a while, cash got tight.

Have you ever been there?

As we grew, the cash flow would have high and low swings. When the swing went up, it was fun, and I could reinvest in the company. I would buy another van and pay for continuing education for both myself and my team. We celebrated when we met sales quotas.

Occasionally, I would struggle to make a payment. If catching up got too deep and available cash got tight, I would grab a credit card. In those moments, I needed to keep the vans on the road and take care of expenses no matter how high the interest rates.

The busier we got, the less I paid attention to the finances. After all, we were all working and bringing in money. It was inconceivable to think we wouldn’t have enough money to pay the bills or commission.

Quote In A CircleBut then it happened.

A payroll check bounced. The lights got turned off. The phone service got shut off.

Each of these stressful, embarrassing, and terrifying moments are the hard lessons many business owners face.

Early in my career, I didn’t pay attention to the financial health of my business. It was a painful lesson I needed to learn the hard way. I was losing sleep over it and after more than one negative incident, I vowed never to let it happen again.

Detailed bookkeeping wasn’t my forte – I would rather have been grooming. However, I bit the bullet and invested in a bookkeeper. She was much wiser than I when it came to money matters. She made sense of the income and the expenses and I started paying attention to my cash flow.

We worked closely together and each month she would create a profit and loss statement for me. It would contain all the standard categories along with monthly and year-to-date figures. Plus, she added a column that tracked the percentage of expenses to sales.

The percentages were critical. No matter how rapidly we grew, I started to see trends in the percentages. It allowed me to easily track the fiscal health of my companies at a glance.

Early in my first mobile business, the only thing really saving the company was the house call charge on top of the grooming fee. Little did I realize how detrimental a 50% commission rate was to the health of a business. It’s very hard to run a profitable company when you pay out almost half of your grooming revenue.

It’s even more challenging if you had W-2 employees vs. independent contractors (but that’s a whole ‘nother blog!). In the state of Michigan, an estimated 13% was paid in payroll tax obligations for my staff based on their wages.

Look at the chart below. If you are a commissioned groomer/stylist, find your rate. Next, find your average price per dog. For example, if you earn a 50% commission rate and the average ticket price of the dog is $50, you would be earning $25 per dog.

CHART_1

Did you find your place on the chart?

Notice what happens to the earning potential when pets are priced higher, yet the commission rate is lower?

Where would you rather work – at a salon with lower-priced dogs but at the 50% rate or at a higher priced salon with a lower commission?

The commission rate isn’t the true barometer of your earning potential. The price per dog combined with the commission rate is what you need to look at. Even if a commission rate is 38% but the average ticket price is $70, you would be earning $1.60 MORE than the 50% commission rate at $50 average grooming price.

Don’t get hung up on the commission rate. Pay attention to the average price per pet COMBINED with a commission rate. Then, do the math. It might surprise you!

In the next set of charts, I want to demonstrate what happens to a business paying out a 50% commission rate to employees. In these examples, I have simplified salon expenses. Most salons will have a longer list of expenses. The examples show how the numbers would play out over the course of a year. As you look through the amounts, notice what happens.

A

I have used a 50% commission rate for salon generating $150,000 per year.

 

B

The salon is generating $210,000 annually while paying out a commission of 50% to the groomers.

 

C

The salon is still generating $150,000 per year but now the commission rate has fallen to 44%.

 

D

The grooming commission rate is 44% but the average ticket price increased per dog, earning the salon $210,000 annually.

 

In example A, the salon is clearing $5,910 for the entire year or less than $500 each month.

If you are a salon owner, I’m guessing you did not get into business to run a nonprofit company. In this scenario, that’s pretty much what’s happening.  Remember, I simplified the outgoing costs of the businesses. Most salons will have more bills to pay than reflected in this example.

If you are an employee working at a salon paying 50%, you feel it every day. The lack of cash flow filters through. Chances are, the salon struggles to make ends meet. It has to cut corners. One financial hiccup can send it into a downward spiral.

The only way a 50% commission-based salon can truly make ends meet is if the salon owner is also one of the groomers. Another option is to have other streams of income other than just grooming.

Raising prices and dropping the commission rates is in the best interest of a business. It creates a cash flow buffer which takes the pressure off everything and everyone. It allows the business to thrive instead of struggle. It allows for higher-quality products, equipment, and education. These items make the workspace more enjoyable while minimizing burnout and maximizing quality.

Most salon owners and their employees are among the most passionate people I know. We’re hard workers and love pets. Owners and staff need to work together as a team. Everyone needs to understand what the numbers look like in order to have an enjoyable work environment.

My professional grooming department at Whiskers Resort & Pet Spa currently runs with a team of seven stylists and three grooming assistants. The team has both full- and part-time employees. The sliding-scale commission rates range from 38% – 44% for full grooms based on client satisfaction, rebooking, and financial quotas. Stylists earn lower commissions on simple bath and brush pets requiring less time. Stylists can bounce up and down the tier system based on the previous quarter’s performance. Grooming assistants are paid hourly based on experience and performance. On average, the grooming department’s commission payroll runs between 36% and 43% of gross sales. With lower commission rates, we can afford to pay the assistants and a portion of the customer service team who books all the grooming appointments.

Even with lower commissions, the average ticket price runs between $65 and $70 per dog. Based on personal motivation and experience, stylists groom an average six to 12 dogs a day. As a bonus, on a typical day, a stylist can also earn anywhere from $30 – $80 in tips on top of their commission rates. This department is flourishing, and the turnover is extremely low.

Salon owners, if you don’t have a firm handle on how the dollars stack up, I encourage you to track them and pay attention. If you don’t want to deal with it yourself (like me!), hire a bookkeeper. Then work closely with them and learn. They love to tinker with numbers the same way we like to tinker with dogs!

I encourage you to compare the charts. Check out the numbers. Think about how you fit within these examples. Then run your OWN numbers and see how you stack up. It does not matter whether you are the salon owner or a commissioned stylist. The numbers don’t lie and are the key to EVERYONE’S financial health and success.

Happy trimming!

Melissa

MVpaw_no_Inner_white

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The Importance of Rebooking Appointments

October 19th, 2017 by Kara Adams

Rebooking clients is one of the easiest ways for groomers and pet stylists to boost their income. Encouraging clients to rebook on the day of their service will help keep a steady stream of pets coming into your salon.

cozy petClients that rebook before they leave return on a much more frequent basis than those who do not. Let’s face it – life gets busy. Personally, if I did not rebook my own hair appointment before I left the beauty salon, I’d be there a lot less frequently than every five or six weeks! Our pet owning clients are no different.

Many groomers don’t encourage their customers to rebook their pet’s next grooming. They think the client will come back when they are ready. While that may be true, it’s more likely the client will not return as often as they should.

As a professional, it is up to us to educate our clients how often they should return based on:

  • hygienic needs of the pet
  • coat condition
  • trim style
  • activity level
  • level of home maintenance between appointments

Most pets that are considered a part of the family require regular grooming. These owners share their lives, their homes, and sometimes even their beds with their four-legged family member. These pets benefit from weekly or bi-weekly bathing. Ideally, pets that require haircuts should be trimmed every 4 to 6 weeks. How often you handle hand stripped pets will vary based on the coat type and the technique used to strip out the dead coat. These dogs will need to be groomed weekly to a couple of times a year.

Pet professionals who understand the impact of rebooking realize that is not just a courtesy, it’s an important business building strategy. Educate your clients about the rebooking process. Encourage them to set aside time to keep their pet’s coat in peak condition.

Circle Steps

Here are 4 Tips to Ensure Your Clients are Rebooking with Every Visit

  1. Stress Maintaining a Schedule – As a professional pet stylist, it’s your job to educate your client. You know what it takes to keep their pet’s coat in peak condition. Find out how the client would ideally like their dog to look and learn their budget. Talk to them about how much at-home care they are willing to do between grooming appointments. Discuss the lifestyle of the pet. Once you know the answers to those questions, you can suggest the ideal number of weeks the pet should go between professional grooming appointments.
  2. Suggest Dates – Don’t just ask the client if they would like to rebook their next appointment. Suggest an ideal appointment date when you should see them again and have your calendar ready to set that appointment. If the client is hesitant, politely informing him that the best spots are already being filled can often help him make the decision to arrange for the appointment before he loses out to someone else.
  3. Offer an Incentive to Rebook – Small incentives can be a great way to keep clients coming back. Offer a small discount if they book their next visit within six weeks or less. Or offer them a free service with their pre-booked appointment. If they rebook weekly, bi-weekly, or every third week – offer them a special discounted rate to maintain the frequency of their visits. Do the math – you’ll probably be shocked at how steeply you can discount a weekly or bi-weekly client on their regular grooming price and still make more money on an annual basis.
  4. Train Your Staff – Rebooking is a courtesy to the client – and a benefit to you. Make sure your entire team understands the importance. The key to success is to ask EVERY client to rebook their next appointment before they leave.

Having an appointment book that is 50% to 70% pre-booked is like money in the bank. It’s a security system that allows you to breathe easily. It ensures you will not lose clients or revenue from light client bookings. It is one of the easiest ways to guarantee your income and keep your pet clients looking and feeling their best.

Happy trimming!

Melissa

MVpaw_no_Inner_whiteDo you agree with this post? How do you encourage your clients to stay on a regular schedule? Jump on the Learn2GroomDogs.com Facebook page and tell us why or why not.

 


Who Should I hire?

June 30th, 2016 by Kara Adams

Recently, I’ve been hearing a lot of questions when it comes to hiring groomers and stylists. Questions like, “How should I grow my business? Which is better – independent contractors or employees?”

Early in my career I faced the same question. I went the same route as many of you. I was phenomenally successful with my first mobile grooming van in the early 80s. I needed to bring someone on to help handle my client load.

1rrAt the time, it was just me. I wore all the hats. My focus was strictly on grooming and growing my business. I didn’t have time to deal with payroll, taxes, and Workman’s Comp. The easiest way for me to handle the situation was to bring on an independent contractor to run a second van. Within a very short time I needed to bring on another van with another independent contractor.

As I was growing the business, my father (who is also a successful businessman) was watching over my shoulder. He heavily questioned my thought process about using independent contractors instead of employees. Just like many of you, I had every excuse in the book as to why independents contractors were better for my business.

  • “I can’t afford employees.”
  • “I don’t have time to figure out all the taxes.”
  • “They supply all their own hand tools.”
  • “They work without supervision in the vans.”
  • “Everybody else pays their groomers as independent contractors.”

I was confident I was doing the right thing.

Was I?

I ran like this for a number of years. My business was growing and so was my team. Then I learned about one of my idols who was a very knowledgeable and talented pet stylist who bought an existing and thriving salon.

The IRS had come in for a standard audit of his business. Guess what? They determined all of his independent contractors were actually employees. They went after him for all of the back taxes for the entire team. Years of back taxes. And to make matters even worse – they went after him for all of the back taxes due from the previous owner, as well.

My idol was destroyed – not just financially.

He lost his business.

He lost his house.

He lost his marriage.

He lost everything. He virtually became homeless.

2rrThe IRS is not somebody you want to mess with. They can destroy you.

Once I learned of this story, I went back and really looked at how I was running my business.

  • The company dispatcher booked our contracted stylist’s appointments.
  • The company dictated what their route needed to be and what time they needed to arrive to the client’s home.
  • The contracted employees were required to create daily written records of the services provided along with the charges with each appointment. With existing clients, stylists were expected to follow the directions in the trim histories, plus they were required to abide by the established pricing structure.
  • Checks were made out to my company.
  • The company set the pricing structure charged for the work done by each stylist.
  • The contracted employees worked full-time for my company.
  • The contracted employees were paid weekly commissions based off of their previous week’s sales.
  • I supplied the van, the tables, dryers, shampoos, vacuums, maintenance on the vans, fuel, and auto insurance on the mobile units.
  • All vans were stored and dispatched out of my property.
  • I had the ability to fire them.

Sure, there are a few gray areas. When I reviewed the list of 20 questions the IRS (see the image below) uses to determine whether a team member should be receiving a 1099 or a W-2, I had that deep gut sense I had been working with misclassified workers. I was terrified.

I flipped my team of independent contractors to employees almost instantly and never looked back. My father was immensely relieved with my change of heart – and rightly so.

3rrYes, having employees was more costly to my business. I made the necessary adjustments. I raised our grooming prices. I hired an office assistant to deal with the weekly payroll. I boosted the level of responsibility of my accountant to deal with taxes on a quarterly basis. We made it work and we continued to thrive.

If you are in the United States, take a look at the questions below. You can click on and print the image to review it more carefully. Answer them honestly. What is your gut telling you?

This is not an area where you can afford to be wrong. Choosing the wrong classification could cost you weeks – if not months – of grief. Maybe you’ll get away with a slap on the wrist. Maybe you’ll have to make up all those back taxes and pay them to the IRS. Or maybe they will come down so strongly you could lose your business. Your home. And even your life as you know it.

Are you willing to take the risk?

Are you in this situation? Jump over to the Learn2GroomDogs Facebook page and tell us about it!

Happy Trimming!

~ Melissa

IRS-20

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What Does Your Future Look Like?

December 3rd, 2015 by Kara Adams

“The success you have tomorrow is predicated on the work you do today.”
~ Darren Hardy

I saw this quote recently and it really got me thinking.

Are you struggling or thriving? Whatever it is, it stems from things you did yesterday. Last week. Last month. Last year.

Everything you do is a set-up for the future. Your health. Your relationships. Your job. Your business. This single thought is essential to everything we do.

Do you:

  • Sit on your duff and eat crappy food? You will suffer physically down the road – maybe not tomorrow but it will catch up to you.
  • Fail to put positive energy into your relationships with people or pets? You’ll end up with uncontrollable children, empty friendships, and untrained pets.
  • Give your job less than 100%? There is a good chance you could be replaced by someone who will make the commitment to putting in the effort.
  • Pay poor attention to satisfying your clients? Clients will not return, and you won’t have a business to support you, your family, or your staff.

What you do today totally impacts your future.

So how does this play out in the grooming world? What can you do today to ensure you will thrive tomorrow?
 
Here are 5 areas that can really influence your overall success.

The Amount of Knowledge You Apply

The more you know about your field, the more confident you will be. That confidence transfers in many ways to grooming table. Plus, it will play through in a positive way to your clients. You will be able to communicate effectively with them. You’ll instantly know how to groom any breed of dog, in any condition, with any temperament. The more knowledge you have, the easier – and more enjoyable – your job will become every day.

What are 3 things you can you do today to help your future?

  • Study official breed standards
  • Watch videos by top pet stylists
  • Read books on canine anatomy and structure

The Quality of Your Work

High-quality work always brings customers back. It creates client loyalty and positive relationships. For most clients, their pets are much like their children. They love them and want to be proud of them. If you want to win the hearts – and the pocketbooks – of your clients, make sure the work at the other end of the leash is top-notch.

What are 3 things you can you do today to help your future?

  • Make sure your dogs are SQUEAKY clean
  • Focus on getting the perfect drying technique mastered for each coat type
  • Go over your work one more time – look for rough or uneven spots

Winning at Customer Service

As a professional pet groomer or stylist, you are a problem solver. Clients bring you their pets with a host of problems. Most are overgrown, dirty, or shedding. You need to uncover what their underlying needs are and present solutions to solve the problem. As you’re solving the issue, do it in a way that creates a memorable experience for the customer. It’s important to do more than just meet their expectations and satisfy their needs. Do it in a way that excites and delights them every step of the way. A smile will go a long way but there is much more to the customer service game. You need to look at every interaction with the client and figure out how to make it extremely positive.

What are just 3 things you can you do today to help your future?

  • Take the time to listen to your client and offer viable, attractive solutions to their pet care needs
  • Make it a goal to earn a smile from every client
  • Always be honest and upfront with all clients

Presenting Consistent Marketing

Effective marketing creates a desirable experience that connects with prospective customers and clients. To take it even further, it’s about creating clients who want to share their experience with others. Marketing is more than just your business card or a paid ad. It’s about how your phones are answered. It’s interaction with clients and their pets. It’s the impression you, your staff, and your salon make when your client walks through your door. It’s the images and messages you post on social media. It’s your printed material. Your advertisements. Everything you do to entice pet owners to use your service.

What are just 3 things you can you do today to help your future?

  • Take the time to groom yourself – always present a pulled together, neat, clean, and polished image
  • Smile when you answer the phone – it transmits instantly to the other end of the line
  • Make sure your salon is fresh smelling and appealing

Being Financially Savvy

No one starts a grooming business to give away their services or lose money. That’s not what going into business is all about. Whether you are a solo stylist, an employee, or a business owner, you need to pay attention to your money. Ideally, you need to charge enough for your services so that you can pay yourself a fair wage, pay all of your bills, pay your staff (if you have them), pay your taxes, and still have a little left over for emergencies. If you don’t pay attention to the details of how money flows into your business and how it goes out, you could get into trouble quickly. You have a responsibility to yourself and to your team to be financially knowledgeable.

What are just 3 things you can you do today to help your future?

  • Set a budget for yourself or your salon and then track your progress regularly
  • Create a daily sales goal
  • Keep accurate financial records with the aid of a computer, bookkeeper, or accountant

This is just the tip of the iceberg. There are countless actions you can focus on today to positively impact your future. Hopefully the ideas in these sections will get your juices flowing. There is always SOMETHING you can do today to improve your tomorrow!

Everybody wants to be successful. The bottom line is that success is hard work. You have to put in the effort. You have to put in the time. You have to pay attention to the details. Sure, today might be difficult, but think about the long-term benefits? Will your efforts today help you tomorrow? What about next week? Next month? Or even next year? There are many areas you can focus on to improve tomorrow.

Always remember, to be successful – to thrive – you need to put forth effort today so that your future will be bright.

Happy trimming !

~Melissa


How to Avoid Living Hand-to-Mouth

June 11th, 2015 by Kara Adams

Getting your financial life in order allows you to enjoy today

I still remember this point in my life well. I absolutely loved grooming dogs, but I was barely getting by. I had no savings account. I had only one credit card with a very small limit. I worried every time I wrote a check – would it bounce? I could not afford health insurance. The only vehicle I could afford was my mobile grooming van. I drove it everywhere.

If I had a financial hiccup, anywhere, I was in deep trouble. The thought of a retirement account or an emergency fund never crossed my mind. I learned very early in my career what it was like to have the phone or electricity shut off… the payroll to bounce… or my credit card declined. Yes, I have experienced all of those. I’m not proud of it – but I did learn from it.

Sound familiar? I know many groomers and stylists who struggle with this scenario. I don’t envy you. I’ve been down that path, too. Luckily, those days are long gone for me but the lessons are etched in my soul.

Here’s some things that I did early in my career to beat that problem.

Alignment

The first thing you need to do is take a look at where you are currently sitting, financially. How much money do you bring in your household annually? Are you the sole income earner or do you have a dual income stream? You don’t have to be exact, but get close. If you have multiple income streams, how much do you need to produce to make your household budget work?

Before you start fixing a problem – you need to thoroughly understand what your current situation is. This background work will help you create a plan to get over this hump.

Next, you need to figure out how much money you need to run your life. How much money would it take for you to feel comfortable and not strapped week by week? Obviously, it’s going to be more than you’re making right now – otherwise you wouldn’t feel stressed over money. How big is the gap? Don’t get freaked out. What you’re doing right now is collecting data.

The final step is a reality check. You need to discover the difference between what you currently are making and what you would like to make to be comfortable. It might look something like this:

That’s a real do-able number.

However, if you’re “comfortable income desire” was closer to $70,000, yet you currently only generate $32,000 in revenue, that would be a more challenging nut to crack. Creating an extra $8,000 in extra income a year can be attained on a groomer’s income. Finding $38,000 is a bit more difficult – but it can be done if you are willing to make big changes in your life. (But that’s another blog.)

There are only so many hours in a day. Only so many days in a week. Unless you more than double your current pricing structure or number of dogs you groom, making it happen will be impossible. That’s not to say it can’t be done. It can. However, you will have to make some major changes in how you generate money.

If you work with your hands to make a living, you will always be limited in your earning potential. It doesn’t matter if you are a doctor, lawn service, or pet groomer. You will hit an earning cap at some point. What level that is will depend on a number of things; the quality of work being produced, amount of time it takes to complete each groom, the price per pet and the commission level.

Reality check time. If you had grandiose ideas that you could simply groom dogs and earn a six-figure income, that’s not very realistic. Make sure what you want to earn and what you can earn are in alignment.

Set Goals

finger-keyboard.jpg Grab a calculator, a sheet paper, and a pencil. It’s time to set some goals and do some simple math. This is a game I started playing very early in my career to hit my personal goals.

Let’s say you worked 50 weeks a year. (You did take a vacation, right?)

Let’s use that $40,000 figure as your ideal earning potential. You work at 50% commission rate. So, if you want to make $40,000 annually, you need to generate $80,000 in sales. Divide $80,000 by 50. That equals $1600 which is the amount you need to generate each week. Break it down one more step by dividing $1600 by the number of days you work each week. Let’s say that number is five days. Each day you need to generate $320 in sales. If your average price per dog is $45, you need to groom a little over seven dogs a day.

$40,000 x 2 (50%) = $80,000.

$80,000 / 50 (weeks) = $1,600

$1,600 / 5 (days per week) = $320

$320 / $45 (average price per dog) = 7.1

By breaking this down into a daily goal of $320 in sales, you know exactly what you have to do every day to achieve the annual income you desire.

You’ll find yourself adding up your potential sales for the day before you even start. That’s the key to making this work. If you know early in the morning that your schedule is too light, you will look for ways to increase your revenue for that day. You’ll look for added services that you can up charge for or you may even take another appointment. If you had not set that goal as you went into your day, you wouldn’t have a target to shoot for.

Discipline and Focus

Discipline and focus is a two-part equation. The dual areas are monetary inflow and outflow. Raise the amount of money you bring in every week. Minimize what you spend every week. You need to set a budget for yourself and stick to it. Stay within your means. Just because you have a credit card does NOT mean you should use it!

Raising your income level is going to take plenty of discipline and focus. There will be times when it will not be easy. If it was easy, you wouldn’t be struggling.

There are many programs out there that can help you. Dave Ramsey and Suze Orman are two popular financial educators. Try a simple Google search about financial planning. You will find plenty of options. Use them!!

In order to reduce your financial stress, you need to have a financial plan. For most people, the financial crunch didn’t happen overnight. You’re not going to get out of that crunch overnight, either. Be patient with yourself. Be disciplined. Be focused. You can fix this problem.

Visualization

2Want a great aid to help you hit your goal? Create a visual reminder. This is a proven method that works in many scenarios. Top athletes have used this technique for years. High achievers create entire dream boards of their goals. One of my favorite books and films on this topic is called The Secret by Rhonda Byrne.

It’s simple. What you see and think about – you remember. But here’s the deal. You need to see and think about it A LOT. You want to be constantly reminded of your goal.

For a financial goal, I would select something about the size of the business card. You can get as creative as you like. Make up 10 to 20 of them. Once you have a slew of them made, start distributing them where they will be a constant reminder.

  • Post them on the mirror in your bathroom.
  • Tuck them in your wallet with your money.
  • Put them on your bedside stand.
  • Stick one on the refrigerator.
  • Place them at your grooming station.
  • Put them in pockets.
  • Attach them to your appointment book.
  • Tape them to the dash of your car.

Keep them highly visible and in front of you as a constant reminder. It’s amazing how well this works.

Sure, you can get by living hand to mouth, but it’s not fun.

The worry.

The stress.

It’s just not worth it.

Life is so much more enjoyable when you are confident about your financial future – whether it is tomorrow, next week, next month, next year, ten years down the road, or into retirement.

You don’t have to have a six figure income to be happy and secure. However, you do need to live within your means AND have a savings plan in place. Once you get your financial life in order, the more you will enjoy today.

How has living hand to mouth affected your life? Have you taken steps to overcome it? How has your life changed? Jump over to the Learn2GroomDogs Facebook page and tell us about it!

Happy trimming!

~Melissa


 
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