If you own a beauty business, your bottom line could be affected by the current recession. But do you know how to measure the potential damage?
If not, no worries. If you haven’t already read our eBook on Recession: A Survival Guide For Beauty Entrepreneurs
, it’s all good. We will break out some of the tips included to measure how the recession is affecting your business and provide strategies to gauge its effects and how to respond.
Before You Do Anything…Look At The Data
Before you make any business decisions, you should examine your data to see how and where the recession may be affecting your bottom line. You can work with your accountant or bookkeeper to prepare key performance indicators (KPIs), which you should get into the habit of reviewing monthly if you aren’t already doing so. This will empower you with hard numbers for your revenue, costs, and profits, which you can then compare to the same time last year. This is especially important if your business has seasonal ebbs and flows. What you need to look for are trends in the data to see if your revenue is declining.
KPIs are considered “lagging indicators” since they tell you what is going on with your business after the fact. One thing to consider is to design “leading indicators” that can give you some heads up about trends in your business’s revenue—this way you can be more proactive rather than responsive. To do this, you could create a customer survey or track how many people are coming through your doors daily.
Once you know what is going on with your business, you can take the appropriate action steps to mitigate the potential damage that a recession may cause.
Strategies For Negatively Impacted Beauty Businesses
Below are some strategies that can help you keep a level head so that you can determine what kind of impact the recession may be having on your business and make the necessary changes so that it thrives.
Ask Yourself If The Recession Is An Excuse To Not Perform?
If your business is suffering financially, it can be tempting to blame outside factors like more challenging economic times. But have you looked at your financial data to confirm this is reality or is it a convenient excuse? We don’t want to sound harsh, but successful entrepreneurs look in the proverbial mirror and ask what they are bringing to the table that may not be working. Instead, you should ask yourself what you can be doing better so that your business prospers. Do a careful review of your staff, engage with your customers both verbally as well as with periodic surveys asking them how you can improve their experience and what other services they would like to have offered. Devise a list of things you can improve on and focus on the top ones that will make a difference in the short term.
If You Have Unnecessary Expenses—This Is The Time To Cut Them
When a business is profitable and the economic times are less challenging, it is easy to overlook unnecessary costs. But these line items detract from the bottom line. So, this is the ideal time to do an audit and cut costs wherever it makes sense for your business, including your staff.
Look For New Revenue Streams
You can’t increase your bottom line simply by cutting costs—you need to have a strategy in place to find new ways to increase your revenue too. Determine which products and services are selling the most and consider offering a special offer or package deal to retain existing clients and attract new ones. You could also partner with existing businesses to either do joint promotions or to discuss referring clients to one another. No matter what you decide, you should play to your business’s strengths.
The first thing to determine is whether the current recession is affecting your business, which can be done by carefully reviewing your financial records. Once you figure out how it is affecting you, you can then come up with a strategy to mitigate the situation. Just make sure that in your decision process that you take account for your own actions and leave your emotions at the door.