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If We Don’t Know What is Going to Happen, How Can We Manage Our Business?

These are strange times, aren’t they? What can we do as we approach the end of what has been the most bizarre year we have ever operated a business? We have been a business yo-yo; closing, and opening, and closing again. Are we going to open again soon? Profit, what is that? It really seems like some alien concept. Coast to coast, one thing is certain. It is uncertainty.

The spa experience we were providing for our guests prior to COVID was completely different than it is today. As sad as this is, we most change the way we operate today. To some extent, changing with the times means we must operate in a survival mode. I am asking my clients to conserve as much cash as possible. Hold on to it and spend it as sparingly as you possibly can.

  1. Sales & Revenue. Do not try to discount your way back to growth. Carefully review the job cost of providing your most popular services. Be cautious about getting involved with pricing wars with your competitors.

  2. Professional and Backbar Supplies. Buy only what you need and is necessary to perform next-months’ services.

  3. Retail Product. Only buy retail product that you expect to sell in the upcoming 30-45 days. We do not need the level of back stock that we had in our storage rooms pre-COVID. Discount and blast out non-moving inventory for short-term cash flow.

  4. Ignore the year-end specials that vendors are offering at steep discounts if you buy in large volume today. These salespeople are professionals who are good at what they do. Be aware that vendors increase incentives for their salespeople at this time of year. They are trying increase their own year-end revenues by inducing you to buy more product than you need. They can be extremely persuasive. Just say “no”!

  5. Employees. You can be a compassionate employer and a management bad ass at the same time. Be realistic and conservative about scheduling staff. Be very critical of how much staff you need and how you schedule them. In this economy especially, you cannot afford to have people on the schedule who have non-productive time.

  6. Overhead Expenses (Marketing & Promotion, Admin Labor, Insurance, Office Supplies, Professional Fees, Rent, Repairs & Maintenance, Telephone, Travel Meals & Entertainment, Utilities, etc.). Look at your pre-closure P&L and define what each of these were as a percentage of income. As uncomfortable as it may be, try to negotiate your overhead expenses to the same percentage of sales that they were pre-closure.

  7. Equipment Purchases. With your drastic change in profitability in fiscal year 2020, it is unlikely that the escalated depreciation provided via Section 179 when you purchase new equipment is going to benefit you. As attractive as the prices for new equipment and devices may look, now is not the time to purchase new equipment.

  8. Debt Service. Negotiate loans, leases, credit card payments, mortgages, and contracts to the same percentage of revenue that they were pre-COVID.

These actions should net some level of profitability. More than likely, Net Income will be 5-10 points less than it was prior. To grow back to where you once were, your profitability must be managed voraciously. Although some of these may seem drastic, we are not in an economy where we can ignore profitability. We must plan month-to-month. As we begin to stabilize, we can increase this to quarter-to-quarter. Some of this may, in time, become the way that your business is managed. Successful businesses are managed the same during good times and bad.

That’s my story, and I’m sticking to it. I’d love to have this conversation about your business with you. Call me and let’s talk. Hang in there! We will get through this. As always, we’re here to help.


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