What Does Profitability Mean?

If you’re a business owner like me, you know that one of our many responsibilities is to make sure our business is profitable. However, there is a lot more to profitability than having a solid budget in place, operating in the black, and reading your P&L. Operating a profitable business means providing your team—and yourself—with opportunities for freedom, security, benefits, growth, and much more! Like most aspects of running a business, it’s not an easy task, but profitability is achievable with some simple guidance and my four proven tips!

Profitability Myth Busting

Before we can talk about ways to increase your profits, we need to have a shared definition of what profitability is and what it isn’t. Let’s start with an easy question: are you looking at your profit and loss (P&L) report on a monthly basis? If you aren’t looking at your P&L monthly, you absolutely need to! As the saying goes: “what you don’t manage will manage you.” It’s incredibly important to see the summary of your financial input and output. But, please don’t get confused. Your P&L is not king—cash is.

That’s right, what is happening in your bank account is where the truth lies. Profitable business owners understand that one of their major roles in running their business is knowing the numbers. Your profit is what you have left over after all your expenses are paid, all your specific savings are accounted for, and after you’ve paid yourself. Many business owners pull their income from profits – this is a costly mistake. You must include your salary in the monthly numbers. One way of knowing if your business is truly profitable is if an outside buyer could purchase the business, take over, and earn a great income.

Profits are important because we need to operate a high functioning business without worrying if we can make equipment upgrades, invest in our staff through professional development, and any number of other investments. It’s also important because we all have dreams of our own that would not be possible without profits. Examples would be if you wanted to sell your business, so that you can retire comfortably. Or, maybe you want to draw from profits annually to donate to your passion projects. It could be that you want to remodel your store, add a second location, or even buy the building you’re in.  

At the end of the day, none of this is possible without profits. What do the next two to five years look like for you? What long-term goals do you have with financials specifically tied to them? If your business isn’t profitable, you’ll be without the flexibility to focus on bigger dreams.

What if your business wasn’t your only mission, but rather a vehicle that drives a larger vision. I recently had the opportunity to interview Winn Claybaugh, a renowned motivational speaker and business expert, and he shared the three basic human needs we all have. We want to feel safe/secure, feel like we belong, and have purpose in life. If money is keeping you up at night and you’re lacking in any or all of these human needs, now is the time to focus on what you can do to grow your business’ profits!

Now that you have a clear understanding of profits and why they are essential for a successful business, stay tuned for my next post when I’ll share my four tips to increase your profits! In the meantime, connect with me on social media or send me your thoughts!
 

Maximizing Customer Relationships Part 3: Take Lessons From Others

Welcome back to Part 3 of my series on Maximizing Customer Relationships! I hope that you have spent some time reviewing your business’ practices with a focus on standing out from the crowd and WOWing your customer before they even purchase from you! Now, we are ready to dive into Secrets #4 and #5.

Secret #4: During the Visit

This is the easiest—and most fun—secret that I have to share: take lessons from other industries. The best way to do this is booking an expensive, 5 star experience for yourself! If you’re in the salon industry like me, this means heading to a big city and booking a service at a top-rated, high-end salon. (Now you know why this is the best secret!) While you’re there, take tons of notes: what are they wearing, how do they greet you, what did you LOVE, etc. If you’re in the hotel industry, visit another hotel; if you’re a fitness club, visit another fitness club—you get the point.  

The best part about borrowing from other industries is that you don’t have to reinvent the wheel! Success leaves clues, so all you need to do is be the detective. For instance, the best restaurant servers don’t ask if you want a refill, they just bring it to you. I noticed this and implemented it at my own salon. When a guest is running low on a beverage, we simply bring another one.

Remember, the goal of this series is to maximize customer relationships, and there are countless ways that you can do this when you have guests in your business. Another way that we WOW our guests at Be Inspired Salon is by offering to clean our guests’ rings when they are being shampooed. By partnering with The Diamond Center, this added amenity costs us nothing, but is a great added value for our clients! In Part 2, I told you that the little things mean everything and this is especially true when you have a guest in your business, so don’t be afraid to go the extra mile! If you want to maximize relationships, you have to be willing to do what others aren’t.

Secret #5: The “Checkout”

If you’re running a top-notch business, you should be charging top-notch prices. So, Secret #5 is all about alleviating the “pain” that comes with a pricey purchase. I learned from Steve Jobs that people will remember the last thing that they see, touch, or hear. For most businesses, the last thing that a customer sees or touches is the receipt, and that isn’t always a great memory. I decided to replace that “painful” memory with a positive one. Now, when a guest finishes their checkout process, we hand them an inspirational quote to bring a smile to their face. How simple is that?

Another strategy to make the checkout process more enjoyable is by implementing a VIP Program or “Points Program.” When a customer completes their transaction, your front desk staff can let the customer know how many points they have and how far away they are from their next reward. Additionally, first-time customers receive a Be Inspired Salon tote bag with a product sample, brochure, and business card.

Last, but certainly not least, you can’t forget to say “thank you for your business.” Don’t let your customers forget how appreciative you are! In the beauty industry, there are three reasons that a client will stop doing business with you. #1: they move, #2: they pass away, #3: they think you won’t notice. Take a minute and let that third reason sink in. You will notice when a client doesn’t return, so make sure your client knows that!

Here’s an example of a checkout process that eliminates the “pain” of a client’s purchase: “With today’s services, you have a total of 800 points, and you’re 200 points away from a complimentary product! Here’s an inspirational quote to take home with you. Thank you for your business, Elise. Have a great day!” If this sounds great to you, write it down in your employee handbook and hold everyone accountable!

Are you fired-up about WOWing your customers during their visit and checkout process? Connect with me on social media to share what you’re doing at your business and make sure to check back for Part 4! We all grow when we lift each other!

Say NO to FOMO

What Is FOMO?

Have you heard of FOMO? Recently, I've been seeing this term everywhere! I've heard it in podcasts, on my favorite Instagram accounts, and even in finance articles. So, what the heck is FOMO? 

No, it's not a scary genetic illness. FOMO stands for "Fear of Missing Out." Yep, you know the feeling. Here's a very real example: a group of your friends invites you out on Friday night. Even if you were planning to stay in and watch a webinar, you become so scared that you're going to miss out on a fun night with friends. And, here comes the FOMO. 

You don't want to be the one who misses a hilarious inside joke or is excluded from all the fun Instagram pics. So, you spend hours agonizing on whether or not you should go. This is FOMO, and it can kill your energy and happiness. 

My FOMO Story

I first learned what FOMO means during a sermon about being face-to-face and fully present in the lives of those who we care about. Many people can relate to this feeling of being pulled in so many directions that some of your personal connections suffer. But, my fear of missing out is related to missing business or educational opportunities. Now, you might be thinking: “That doesn’t sound like Kati—she is always on the top of her game, constantly learning, and building her business!” Yes, that is me, but my priorities have recently shifted.

If you follow me on Instagram, you know that my husband and I recently welcomed our first baby boy to the family! Baby Nash has become the sunshine of my life and fills me with joy. But, I've become a victim of FOMO.

I'm constantly worried about education and business opportunities that I might be missing out on while staying at home with my family. With a newborn, I’m limited in the events that I can attend and be present for. I know the working-mamas can back me up on these struggles: Where do I find a decent babysitter? Will I be mom-shamed for attending an out-of-state conference with an 8 week old at home? How could I miss baby’s first smile, laugh, words, and the list goes on!

Say NO to FOMO

Now, it’s not fair for anyone to experience FOMO—especially when you’re a hardworking, thoughtful, and compassionate person. So, how do you combat these feelings and say no to these negative emotions?

• Gratitude  

A great place to start is with gratitude. For me, I think about how thankful I am for a healthy baby boy, a loving husband, and amazing friends and family. When I’m present for Nash’s first words, I will be thankful for that moment.

For you, this practice might look different. If you’re a graduate student and your FOMO is related to going out with friends, take time to write down how thankful you are for having the opportunity to further your studies, attending the university of your dreams, and learning from top minds in your field. Everyone has something to be grateful for.  

• Take Your Time

FOMO will not disappear immediately, but it can get easier with time as you begin to define or realign your priorities. For example, I recently received an invitation to volunteer for an event that I really care about, but the time and location are totally inconvenient for my life. On the first day that I received the email, I had a bad case of FOMO. I kept thinking about the participants who I would let down and how much fun I would have at the event. But, when I came back to the email a day later, I didn’t feel FOMO and politely declined the invitation. Oftentimes, you can come back to an idea or feeling with a fresh mind and a clearer perspective on your priorities. Make a decision and don’t look back.

• Trust

As a follower of Christ, I trust God’s timing and the path for my life. I know that I am exactly where I’m meant to be right now, and I know it’s true for you too! Remember to treat yourself kindly, stop comparing yourself to others, and enjoy exploring the unknown.

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Do you have a FOMO story, or tips to combat these fears? Share below or reach out to me on Instagram! Together we can say NO to FOMO!

What Not To Do As An Entrepreneur | Part 1: HIRING

I am super excited to kick off a three-part series about What Not To Do As An Entrepreneur! First, I promise that this series will not be negative, and you won’t close your computer crying with crushed dreams. But, I do want to get real and share some tips that I wish I was told when I started my entrepreneurial journey.

As entrepreneurs, we are often told what we should do. Go to this event, hire that consultant, start this investment. But, what about the habits, partnerships, and decisions that we should avoid? A great quote to reflect on states: “success is what you don’t do.” Well, what the heck does that mean? Think about a weight loss journey. What you shouldn’t do is go to Happy Hour three nights a week, nor should you eat processed foods. When you stop these negative actions, the positive actions can actually be effective! But without—it’s unlikely you’d achieve your goal. Hence, success is often what you say no to.

As an entrepreneur who manages five brands, I have made my fair share of mistakes (keep reading and you will see what I’m talking about). To be honest, you will still make mistakes after reading this series—every entrepreneur does—but I hope that I will help you avoid the big ones and learn from the little ones.

Do not co-own; there can only be one CEO.

There’s a reason companies have one CEO. Have you ever partnered with someone? How did that go? Typically, partnerships will not work because there is not clarity around their roles. Have you ever taken a DiSC personality assessment? Well, I will share that I’m a D—if you know me, this is no surprise. D’s are dominant, driven, and task-oriented. Primarily, I just want to get it done. For me, another owner will not work, period.  Someone (me!) has to be in charge. I believe that the 80/20 rule applies here: 80% of the time co-owning will not work.  

Do not get desperate and make impulsive decisions.

 I once heard a great quote that states: “If you want a lot, make it easy; if you want the best, make it hard.” I have impulsively hired and really regretted it, so take your time!

Another great piece of advice I was given was, “Be slow to hire and quick to fire.” If someone isn’t getting it done within their current role, you may try to reposition them. If that still doesn’t work, you have to let that person go. Deep down, you will know if that person is not working for your team. Channel your inner Olivia Pope and trust your gut.

Think about these impulsive decisions that you may be guilty of: have you ever joined something that you really can’t afford, then totally regretted it? Maybe you purchased an expensive app that you have only used twice, or bought a business membership that really wasn’t worth it? Now, you are stuck with a service that you can’t afford. You get the point. Do not get desperate. 

Do not hire the cheapest; do not hire based on price period.

This is a really challenging lesson for me and one that is hard to admit. So, I am going to be candid and share a tough experience. When I first hired a software developer for Meet Your Stylist, I thought that he could build the right software for the right price. However, I quickly learned that he didn’t actually like to work. Rant Warning: the project took a year longer than it was supposed to, he was terrible at communicating, he would disappear for days, countless technical glitches…trust me, I could keep going.

At that point, I had one customer and the software was continuously failing. Although my one customer was very gracious and understanding, I was completely embarrassed. I was freaking out and totally scrambling for a solution.

When I consulted with a reputable software company, they explained that the developer’s software was a nightmare—there was code on top of code on top of code. Basically, I would need to start over if I wanted the software to work. That hiring mistake cost me $30,000. I took that mistake up the you-know-what. Long story short, if you think a project will cost you $40,000, budget $80,000—you will either pay in dollars or tears.  

Do not do all the work yourself.  

If you try to do it all, the work will be mediocre. ActionCOACH founder Brad Sugars explained this best when he said: “Saving a wage is costing you a fortune.” Eventually, you need to find strengths in others and build your tribe. As an entrepreneur, what do you do that you aren’t that great at, or drains your energy? Hire those tasks out. Do you struggle with product photography? Hire an intern! Do you hate writing your blog? Hire a blogger! Don’t try to be great at everything. Be great at being an entrepreneur, and fill in the rest by building an awesome tribe!

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Which of these tips comes as a surprise to you? Share your thoughts below! Then, check back for Part 2: Money, Money, Money where I dish on some important financial decisions to avoid!