Return on investment – how is it growing?
Do you know what revenue, profit, and margin mean? If you own a salon, you should. The hair salon sector in general is growing very well year after year; in Brazil, this field generated about R$ 50.8 billion in 2018. But what about you? Do you know your revenue and profit? Take two minutes now to learn how to calculate your return on investment and how to improve your return and, consequently, the profit margin of your beauty salon.
What is ROI (return on investment)?
Return on investment (ROI) is a performance measure used to evaluate the efficiency and financial return of an investment. In addition, ROI measures the amount of return on any investment, relative to its total cost. To calculate ROI, the return on an investment is divided by the cost of the investment.
What to measure when calculating return on investment?
Every salon owner dedicates a lot of time, money, love, and effort to their business. Have you ever heard the saying “you can't manage what you can't measure”? Well, then let's measure!
The most common way to calculate your ROI is to divide the net profit by the total investment. For example, if your net profit is R$ 50,000 and your total investment is R$ 200,000, your ROI will be 25%.
R$50,000 ÷ R$200,000 = 2.5 or 25%
Knowing your ROI is very important as it helps determine where you are winning (or losing!) And this simple calculation should guide all your spending decisions.
Here are some common situations that are perfect for ROI calculations:
Hiring new employees: tracking the ROI of individual employees is the best way to evaluate their hiring. After all, estimating the impact of someone new depends on knowing how many clients they can reasonably handle and how this might affect profit.
Buying new tools: Adding new equipment (and/or products) can be a great idea, but is it worth the investment? Calculating the ROI of each purchase will help you decide what to buy in the future, based on what you earn.
Sales strategies / promotions: some types of marketing miss the mark, while others are overwhelming! Did your latest promotion attract new (profitable) customers or just discount your services? Analyzing what drives results will help you stay in business and do more of what actually works.
Investing in business software: modern business software is sold as a subscription. This is a cost that needs to show a real return, or it is just increasing your costs! Would your salon software demonstrate time savings, business efficiency, and marketing improvements for your operation?
Invest in software to generate a return on investment
Every investment must be carefully considered by the business owner. That is why it is important to ask yourself: will this improve the way the business runs? Will you save time, make more money, and simplify administration? In the long run, will it return more to you than it costs?
Belasis offers Return on Investment and profit margin for your beauty salon in several ways.
How does Belasis improve operations?
Save time on scheduling and administrative tasks
How many hours a week do you (or your receptionist) spend on administrative tasks, such as scheduling client appointments and finding scheduled appointments? In addition to calling each client to remind them of appointments?
Belasis offers online scheduling, which allows clients to book their appointments through the salon's website, Facebook, or Instagram page. In other words, this simplifies booking support and significantly increases the number of appointments. Automatic reminders via SMS or WhatsApp are another great time saver.
Reduce time spent on bookkeeping and commission splitting
Processing financial and commission-splitting data can take up a large part of your week when your systems are not integrated. Belasis has a system that splits commissions automatically according to the services performed, in addition to personalized reports to ensure that all your data is in one place, in a single system.
How does Belasis drive growth and increase your beauty salon's profit margin?
No more forgetfulness!
Belasis provides automatic appointment reminders via SMS or WhatsApp messages. All features are customizable, including the message or platform, as well as the timing and frequency of reminder messages. In addition, messages can be for follow-ups, birthdays, or bulk campaigns to promote a sale, for example.
Attract new clients
Online scheduling, marketing automation, and add-ons help attract new clients to your salon. Belasis offers booking options through social networks like Facebook and Instagram, as well as on your website (or use the free salon website that comes with Belasis) to ensure you are always open for new business, 24/7/365.
Return on investment: what are you waiting for?!?
Now you understand what ROI means, how it can help you increase your beauty salon's profit margin, and why it is so important. In fact, you know how to calculate it and, hopefully, you will use it to weigh any purchasing decision. Start making critical business decisions based on real results.
You can try the Belasis system for free for seven days and prove everything we talked about in this article. Just click here.
In fact, we have set aside some useful links to help with the administration of your beauty salon
Visit our Free Materials page by clicking here
Free spreadsheet for break-even point calculation
Spreadsheet for control and cash flow management in the beauty salon
Want to understand more about the Salon and Partner Professional Legislation? We have prepared an e-Book
Learn more about Beauty salon apps
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