Intro: Do you feel like you were meant to have a kick-ass career as a hair stylist? Like you got into this industry to make big things happen?
Maybe you’re struggling to build a solid base and want some stability. Maybe you know social media is important, but it feels like a waste of time because you aren’t seeing any results. Maybe you’ve already had some amazing success but are craving more. Maybe you’re ready to truly enjoy the freedom and flexibility this industry has to offer.
Cutting and coloring skills will only get you so far, but to build a lifelong career as a wealthy stylist, it takes business skills and a serious marketing strategy. When you’re ready to quit just working in your business and start working on it, join us here where we share real success stories from real stylists.
I’m Britt Seva, social media and marketing strategist just for hair stylists, and this is the Thriving Stylist Podcast.
Britt Seva: What is up and welcome back to the Thriving Stylist Podcast. I’m your host, Britt Seva, and today, we’re going to get a little geeky with it and we’re going to talk about the only KPIs and numbers that matter for your business.
Now, full disclosure, if you saw this week’s episode was about numbers and you were excited, amazing, so proud to have you here. If you saw the topic and you were like, “Oh no, I might skip this one, this is my nightmare,” you are my people.
I am not somebody who naturally likes the numbers. I am the person who dropped math senior year ’cause she just couldn’t pull it together. Math and numbers and spreadsheets are not my jam. It’s not how my brain works. I’m very visionary, probably much more like you. I see the world in pictures and colors and I love creative writing. That’s my bag. That’s where I feel like I’m the strongest. Math and numbers are hard.
So if math and numbers are hard for you, I see you and I understand. However, we have to have a little bit of real talk.
I started this business the way that it looks right now in 2015. I started it initially in 2012. I am 12 years into running my own small business and I knew from the start if I was going to run a business, I needed to understand money, finance, numbers, and metrics. I knew that from the jump. I knew that from the jump because—a couple things.
One, I’ve known way too many people who’ve been taken financially advantage of because they didn’t know the numbers. And two, from the moment I started coaching salon owners, I realized how little they knew about managing the money. The irony in that is we got into this industry to make money. If you didn’t get into this industry to make money, I’m confused why you’re here. We all chose this as our career and our livelihood. It is such a blessing that we get to be creative and make people feel good and make people feel confident, like we are the luckiest people on the planet that that is our job.
But let’s not be confused. That is our job. This is how we put food on the table. This is how we put a roof over our head. God willing, this is how we’re able to take dream vacations, right? We have to look at this as our career and our profession and we have to take it seriously. We want the world around us to take it seriously. We have to take it seriously.
Here’s examples of not taking it seriously: If you’re a booth renter or a studio suite owner, and you don’t have separate bank accounts for your business expenses and your business checking and all of your income and then a totally separate personal checking account, you’re not quite taking it seriously yet.
If you work independently as a salon owner or a stylist or a studio suite owner, and you’re not giving yourself some kind of paycheck once a week or every other week, you’re not taking it seriously yet.
And even if you’re not an employee of your own business—we could do a whole podcast on that, like the benefits of filing as an S Corp and being an employee of your own business. We could geek out over that another time. But even if you’re not set up that way, you should not just be interchangeably using the money that you use to pay for salon stuff, income that comes in from your clients, and then paying your bills at the end of the day. That’s not taking your business seriously.
There should be an allocation, an owner’s draw, a stipend that you get based on your goals for the year. Until we know the KPIs, we know the numbers, we can’t run our business super professionally.
Knowing these geeky metrics and numbers matter because these metrics and numbers I’m going to give to you affect your paycheck, they affect how fast you’re going to grow. They affect how much you’re going to have to pay in taxes, like they affect so much.
So as somebody who also hates the numbers, I want you to learn to get down with it.
Here’s a reason why: this year—I’m recording this podcast episode January of 2024 and my CFO… I have three financial people in my company. I have a fractional CFO who’s a CFO for me and a couple of other businesses. I have a bookkeeper and a CPA. All of those three people do completely different things for me.
My CFO sent me the overview of 2023 from my bookkeeper. My CPA hasn’t even looked at it yet from my bookkeeper. I sat down yesterday and spent two hours probably auditing those books and found 17 errors. This is a bookkeeper that I trust deeply. However, when I look at what the bookkeeper’s doing and look at what the CFO’s doing, they’re looking at the numbers strictly from a data standpoint. They’re not in the business day-to-day. Really knowing and understanding your numbers, getting down with the money, getting down with the metrics and knowing these things to deep detail is going to protect your money. It’s going to protect your future and it’s going to help you to grow as quickly as possible.
When we talk about KPIs and metrics and numbers, essentially we’re talking about the health of your business as a stylist or a salon owner.
I’m going to give you my opinion and let me tell you where I’ve come up with my opinion.
I coached my very first salon—I coached my salon team starting in 2009. 2012 was the first time I coached a salon. That was not one that I was working in every single day. It’s the first time I looked at a salon and their business from a bird’s eye view. Over the past 12 years, I have been able to deeply feel confident in the numbers and metrics that will actually determine the success of a business. There’s probably 250 to 300 numbers that we could look at for your business. Ratios, comparison, rates. We could look at percentages. There’s a million things that we could do. There is a very small handful that actually matter.
I don’t want you to get in the weeds with numbers. One of the things I’ve noticed for myself is the more numbers I have to track, the less interested I am in doing it. I just want to know the small handful of numbers that will determine if my year is going to go well or poorly. I want you to have the same. Let’s have this be easy, let’s have this be painless.
That’s the point of view that I’m coming from. These numbers are the ones that from experience, I’m able to predict if a business is going to be successful or not, and I just want you to have the same gift.
Let’s start by talking about numbers tracking. First, there’s three options. The easiest is a booking system like your online booking system. It’s also my least favorite. What? I know, I’m a huge proponent of online booking systems. A huge proponent of digital business management systems. I don’t think you can fully rely on them for these metrics and numbers. Let me tell you why.
As the person who’s had the privilege of reviewing hundreds of online reports from a variety of salons across the country, independent stylists, all the things, I can count on, maybe even no hands, the times that the reporting is actually accurate.
Here’s why: If I were to say, “Tell me what your retention is,” and you were to run a report from your booking system and it’s going to say you’re retaining at 71%, I would say, “Great. What are the data points that percentage is being based on?”
“Well, the retention—” No, no, no, no. But I mean seriously, what is the timeframe it’s looking at? What are the indicators that it’s looking at to ensure that somebody has been considered retained? What are all the factors that’s taking into place?
Most of you have no idea. You just click retention report and you trust whatever data the computer gives you when you don’t even know what that data’s based on, right? The same thing goes from volume of new guests you’ve seen. What is it basing new guests on? Is it the first time somebody’s coming to see you just for a consultation? Did they have to have paid? There’s all these things that a computer is just not thinking through for you.
When you run a computerized booking system report, it’s good. It’s not great. I just shared with you that example that when my CFO gave my end-of-year books, I said “Thank you. I need a week with this so I can go through the whole thing manually.” I’m the only one who’s able to do it. I’m the only one who’s in the business day-to-day to know when something isn’t right.
It’s the same thing with you. If you’re to audit the reports that your online booking system gives you, you’re likely to find errors.
Second way that you can track these numbers is through an organized physical system. This is my favorite and this is what I do. This is how I’m able to catch errors in my bookkeeper and in my CFO and all the things. I keep physical track of everything that happens in our business every single month.
I suggest using a system like our Wealthiest Year Yet planner.
You may or may not know this, but here at the Thriving Stylist, we have a physical planner. It comes out every single year. It’s sold out every single year since 2019. I’m recording this at the start of 2024. We are sold out for the year. However, more planners will come in stock at the end of this year and you can get your planner to kick off 2025 if you’d like to.
The planner has six different sections: North Star, Reflect, Dream, Strategize, Execute, and Social Content Strategy. The way our planner works, it allows you to make big plans for the year, break those plans down into projects, break those projects down into action steps, plot them out every single month and then every single month, we’re also tracking the metrics that matter so that it’s never overwhelming. You always have a pulse on your business, you’re never left in the dark. You’re only tracking what counts.
I always say Wealthiest Year Yet is meant to save you time, not add to your plate.
Now, am I the only business coach with a physical planner to track and pace your numbers? No, there’s lots. There’s probably a dozen or so out there. For me, I’ve looked at a lot of those. Mine’s the one that tracked the numbers that indicate the health of your business to the most finite degree. You could track as many numbers as you want to. I like just tracking the numbers that count.
You can get a physical planning system designed for the industry that tracks the metrics for you. That’s option number two.
Option number three, least organized, least techie, quickest to get off the ground is going to be a spreadsheet. What you can do is create a Google sheet or an Excel spreadsheet based on what I’m going to tell you today and start tracking there.
The key is to start. I gave you three different tools you can use. The best thing you can do is start today. You can always upgrade your system. But get started with the tracking. Education is power.
One of the things I’ve found through coaching stylists and salon owners is often I’m the bearer of bad news. Somebody thinks something is going super well. I run the numbers and metrics and say, “Listen, we got a problem here.” Sometimes I call it a bleed out, sometimes I call it a blind spot, but I say, “We’ve got an issue,” and the stylist or salon owner’s like, “I’m feeling super defeated. I didn’t even know that was a problem and now I’m feeling crummy about it.”
I always say, “Don’t feel crummy, feel empowered. You brought me on as your coach ’cause you knew something wasn’t right. I’ve just found something that’s not right. Let’s just fix it.” But you won’t be able to fix things like that in your own business unless you hire somebody like me to find these things or just start tracking them yourself.
I want to give you the tools to track them yourself, so start today.
Let’s start by getting into the seven metrics I want all of you to track every single month, and then I also have additional metrics if your goal is growth, if your goal is consistency, or if your goal is impact. We’ll get into those as well.
Let’s talk about the seven that I want all of you to track.
The first is going to be total number of guests you see each month. I like tracking that by guest visits. I think it’s the most accurate because it really gets a pulse on volume. But you could do physical bodies too.
Let’s say Meredith comes in to see you every single week. If Meredith is coming in to see you weekly, I would count that as four visits. You could also say one client ’cause it’s just Meredith coming four times, but I like doing guest visits every single month. I think that’s a really good metric to track. Total guest visits you see every single month.
Number two, new guest requests total. I would love for you to do this split. New guest request total is metric number two.
New guest requests seen is total number three. New guest request total means how many people made a request to come in and see you in your business this month whether you were able to fit them in or not. That’s an indicator of demand.
Metric number three, which is new guests seen total is a metric based on capacity.
Here’s an example: if six new guests requested to come in to see you and you served all six of them, it means you have a good demand, but your capacity is actually a little bit more open than we’d like it to be. Let’s say you had six new guest requests and you only had the capacity to fit four. That’s a sexy problem to have because it’s like so many people want to come in to see me, but I’m already pretty booked and so I’m turning 30% of those guests away.
Now we don’t want to be turning more than 40% away. That’s way too many. We want to be able to see as many guests as we possibly can. But if you’re like, “Oh, I’m able to see as many people as want to come in to see me,” it’s a huge indicator that you have a capacity issue. It generally relates to retention, which we’ll get into in a moment, but we like to look at the relationship between demand and capacity.
Metric number two is new guest request total and metric number three is new guests seen total.
Metric number four is going to be referrals. This is an indicator of loyalty. If you’ve ever taken any of my master classes on the marketing funnel or the retention funnel, I talk about loyalty. If you’re not seeing three to four to five referrals from your existing clients every single month, it’s a huge indicator that your loyalty is simply low. Clients might be consistently coming to you, they may be stuck in the nurture level of your retention funnel, but even longtime clients can be disloyal if they’re not helping to build your business.
Here’s an example: Are you somebody who your clients have said, “Oh, I don’t want to send you any referrals. I don’t want you getting more expensive than you are,” or, “I don’t want to send you any more referrals. You’re already hard enough to get into as it is”? Huge indicators that you’re lacking in loyalty.
I know that it messes with our mindset, but when clients say things like that, huge indicators that there’s a structural issue in your business, and that’s why we’re tracking things like referrals. Because it goes to show how healthy is my business actually? Am I only getting new clients when I’m marketing my own booty cheeks off or are people sending me new guests?
Metric number five, total revenue received. That can be retail revenue, service revenue—I’ll get into segmenting revenue later, but I just want to know total revenue received, total money coming into the business every single month.
Metric number six is going to be total expenses. Then metric number seven is total profit.
Now, in theory, revenue minus expenses equals profit, but some of you haven’t been doing good bookkeeping and you’ll find that there’s a discrepancy there. When there is, it gives you pause and it makes you go in and dig a little deeper.
For every single one of you, those are the seven metrics I want you tracking every single month.
Now, what about those of you who want to grow? If you are focused on growth, the three most important metrics for you are new guest requests, total revenue, and total profit. That is my main and primary concern for you.
For those of you focused on growth where you’re like, “I’m getting a ton of new guest requests, but my revenue is not increasing,” huge red flag. “I’m getting a ton of new guest requests, my revenue is increasing, but my profit is not,” huge red flag. Those three metrics and the way they relate to each other, most important for you who are concerned with growth.
Now what about those of you who are concerned with consistency? Consistency would be like, “My business is good. I’m actually focused on scaling my schedule back and sustaining my income.” Okay, cool. For you, we’re going to look at total guests you see each month, new guests seen, total capacity because if your goal is to scale, we’re not necessarily looking to grow, we’re looking to gain time back. I’m more concerned with capacity versus demand. Then total revenue received total expenses and total profit. We want to make sure those things in the way they relate to each other, stay healthy, stay consistent. We don’t want to see a dip there.
Those of you where your focus for the year is impact. We start to look at different things, income by source, interest level growth, and interest level engagement.
There’s a lot of schools of thought where it’s like I understand that we want to grow your clientele, but I need to know how many guests you’ve pre-booked. What is your retail-to-service percentage? I get it, I totally understand. I’ve worked in salons where those metrics are tracked for me. I have coached a lot of stylists with incredibly shitty retail to service percentages who make a killing in service dollars. So why do I care that that ratio is low? I don’t.
I know so many stylists where their pre-booking percentage is garbage and they are growing ridiculously fast. That’s why a lot of these very typical traditional metrics I throw in the trash can because if there’s no direct correlation with those things, to me it’s old school and it doesn’t matter any longer.
I’m a huge fan of retail sales. I think they count, but do I have countless examples of stylists who have grown really well without selling retail? Yeah, of course and so I don’t put a ton of weight into that.
That being said, if impact is important to you because you want to impact your community, you are launching a new specialty, you’re growing as an educator, income by source counts twice. You need to know what is giving the most impact, what is bringing in the most money, and what is resonating the deepest.
Then Interest level growth and Interest level engagement. Interest level for me is social media. If you look up, if you do a Google search of Thriving Stylist Podcast interest, I have a whole podcast on what lives on the Interest level, so you can look that up for sure. But when people say, “How important is social media growth?”, for me, the metric that matters most is booties in the chair. I don’t care where those booties come from. If it’s verbal referrals, if it’s Google business, if it’s Instagram, all good. We need to start segmenting the Interest level growth when our goal is impact.
For some of you, impact is important to you for some of it. Some of you, not so much.
Again, going back to tracking what actually matters, I hope this gives some clarity. This is a shorty, but a goodie. I want you as your next-step homework to figure out how you’re going to be tracking these things, the seven critical metrics I listed off for you and the ones that matter the most, and I want you to start now.
If you’re like, “Britt, I don’t know how to track new guests seen total,” figure it out. If you’re like, “I’m not sure how to track total revenue received because my bookkeeping’s a nightmare,” this is your call to figure it out.
You will find red flags as you start tracking these things. This is the point.
The other thing I want you to do is not let the numbers get you down. I see numbers every single year I’m not a fan of and it gives me and my team opportunity to pause and say, “What can we do to make this metric go up?” It’s very challenging to build and grow a business when you don’t know where the pain points are. This is your chance to figure them out.
Thanks for geeking out with me this week. Next week, we’re going to talk about business growth. I know you’re going to absolutely love it. So much love, happy business building, and I’ll see you on the next one.
