IT’S NEVER TOO EARLY TO PLAN AHEAD.
In fact, planning ahead can often help lead to greater success. But don’t just take my word for it. Many of you know Monte Zwang, founder and CEO of Wellness Capital Management. Monte is a standing-room-only speaker on the trade show circuit, and he’s worked with many wellness professionals and businesses throughout North America. Monte and I always have a lot to talk about (grand kids and the fact we both have dogs named Rocky), but when we discuss the wellness industry, key performance indicators (KPIs) are always top of mind.
While numbers certainly aren’t the personality of your business—that’s still your personal interactions with your clients—you do need to know the numbers. Have a plan, flex it, or stick to it, but have a plan. This month, I asked Monte to share his KPIs that will help lead you to success, and here’s what he had to say.
According to Monte,the wellness landscape isn’t the same today as it was pre-pandemic. “The wellness industry has had to alter the way it thinks and offers services,”he says. “Today, it’s more expensive to operate, and if the cost of labor, back bar, retail product, payroll taxes, health insurance, and merchant services hasn’t increased, it will. As such, we need to look for ways to improve our gross margin.”
In addition to the expenses already listed above, wellness businesses are facing increases in rent, marketing, business liability insurance, repairs, and maintenance costs. However, here are some KPIs to help you and your business plan for success. Some of these are actual targets that Monte recommends, others are figures each owner should define.
1. Sales Mix: Retail to Service (15-25%)
2. Direct Labor (38-42%)
3. Professional Supplies (1-10%)
4. Retail Cost (50%)
5. Gross Profit Margin (40-30%)
6. Overhead Expenses (30%)
7. Net Income (5-10%)
8. Debt Service (2.5-10%)
Trends to follow to see how your business is growing and how efficiently you’re operating:
1. Number of Services – Guest Counts
2. Sales per Hour
3. Retail per Guest
4. Average Service Sale
6. Revenue per Guest
7. Revenue per Station
What should every owner and/or operator be doing now to ensure success going forward?
Don’t get involved in pricing and deep-discounting wars with your competitors.
Carefully review and manage the job cost of your most popular services.
Hoard your cash. Spend only what you need to.
If your supply chain is timely,buy only enough back bar and retail product that you expect to use or sell within 30 to 45 days, even if your vendors promise deep discounts.
Be critical of how much staff you need and how you schedule them. Manage your productivity.
Don’t allow non-productive time. You cannot afford it.
Don’t purchase new equipment or devices on impulse.
Evaluate touchless technologies and programs as a way to utilize underused treatment rooms.
Create a month-to-month plan. We are in a sustain-and- build mode.
Manage your profitability voraciously.