– Episode 270Antony Whitaker

Episode 270: Transcript

[00:00:00] Antony Whitaker: Hello and welcome to today’s episode of the Grow My Salon Business podcast. I’m your host, Antony Whitaker, and as always, it’s great to have you here with us today. This is the weekly podcast for the ambitious stylist and salon owner. Every week, I either bring a guest on the show or I’ll dive into a new idea or revisit the foundations of what it takes to succeed in the salon industry.

[00:00:29] Antony Whitaker: We’ll also feature new startups as well as new ideas and initiatives from established people and brands. Some of them might at first sound a little bit too niche, but we’ll explore why they’re worth keeping an eye on, how they reshape client expectations, and how they’ll be central to the future of the salon industry and perhaps even become the new normal.

[00:00:50] Antony Whitaker: One final introductory note, I will strive to have a relentlessly positive outlook. Now, I know that’s harder than ever in today’s world of fake news and half-truths, but as there are more than enough challenges to deal with in daily life in business, I will unashamedly be celebrating the ideas and people making the industry better, greener, safer, fairer, and more professional.

[00:01:14] Antony Whitaker: So with that said, on with today’s episode, I get asked a lot of questions and one that keeps coming up is, should I share the salon financials with the team? So as with most things, there are always pros and against or for and against no matter what the question is.

[00:01:32] Antony Whitaker: And it certainly is in this case. So I’m going to talk you through my thoughts on both, but spoiler alert, I’m in favour of sharing some, if not most of the salon financials with your team. So let’s start with my five reasons why I believe that you should share your financials and then five reasons why perhaps you shouldn’t. Or at very least, reasons why maybe you would think twice about what you share and who you share it with.

[00:02:01] Antony Whitaker: So, first of all, reasons to share or show them the financials.

[00:02:07] Antony Whitaker: So number one, it increases the transparency. So, what do I mean by that? Well, I was once talking to a young stylist and we were talking about employed versus self-employed and the advantages and disadvantages of both. And his response to me was, I don’t see why I should give him or her 50 percent of everything I do.

[00:02:31] Antony Whitaker: Why should they make all the profit? And I just shook my head because there is so much naivety Or misunderstanding about where the money goes. So for me, educating and sharing costs increases transparency, and that helps build trust between you, the business owner and the team. And it helps create a more open and accountable work environment.

[00:02:56] Antony Whitaker: And by sharing, it shows that there’s nothing to hide and it improves communication around the business in general. So that brings me to the second reason why you should or perhaps could share some financial information with your team and that is that it motivates performance.

[00:03:15] Antony Whitaker: Now I’ve written some notes in front of me, and next to motivates performance I’ve put in brackets, sometimes. Because when staff understand the financial impact of their efforts, they are often more motivated to contribute to the salon’s growth. As I said, sometimes. Because hopefully, they understand why they should.

[00:03:38] Antony Whitaker: So, for example, if we talk about retail and reasons why you should, as a hairdresser, talk about retail options to the client in your chair. Now, for me, it really boils down to three very simple things.

[00:03:52] Antony Whitaker: Number one, it’s quite simply, it’s your job to do that. At number two, it is a profit center for the business. Unashamedly, it’s a business and a business has to make money. And when we sell retail, it is profitable for the business and potentially for the employee as well if they are on some sort of commission.

[00:04:11] Antony Whitaker: And some people are and some people aren’t. But either way, the third reason why you should talk about home hair care and, what the retail options are that the salon offers, is that if you don’t do it, Then who is going to do it? In other words, is it really the person’s job in the supermarket? Or is it really the person’s job in the local pharmacy to start educating the clients about what they should use on their hair?

[00:04:40] Antony Whitaker: of course it’s not. Of course, it’s our job as hairdressers because, well, if you don’t do it, then who’s going to do it? So my point here is that when people, understand more when they’re educated more as in this case retail, then hopefully they’re more motivated to contribute to the salon’s growth because they understand that retail is an important part of a potentially their own income.

[00:05:05] Antony Whitaker: If they get a commission B, it’s a profit center for the salon and. The last point C or number three was that if you don’t do it, then who is going to do it? So sharing financials should act as a motivator of performance is getting your team to understand that productivity matters and that this is a business and that the results have an impact on the success of the business.

[00:05:30] Antony Whitaker: And here’s the important thing and everyone who works in it. And that then brings me to the third reason why you should share some financial information with your team. And that is that it encourages an ownership mindset. Now, I understand that they don’t own the business. You do. But what I’m suggesting is that Viewing and understanding the financials can make team members feel more invested in the salon’s success and behave more like a business owner because you as the owner do all sorts of things that you just do because you have that owner’s mindset.

[00:06:04] Antony Whitaker: In other words, you keep the place clean, you don’t waste product, you don’t steal stuff, you don’t, undercharge for things because you are the owner. So you understand that that’s important. So what I’m suggesting here is that by sharing some financial information, it. It helps encourage that ownership mindset within the team.

[00:06:24] Antony Whitaker: So whether that’s about reducing wastage or recognizing that you’re all one team and helping each other or not taking days off to an imaginary illness when there’s probably nothing wrong with you. So the owner’s mindset is simply understanding more about the cause and effect of their actions and being more responsible for what they do.

[00:06:48] Antony Whitaker: So the result is that when, as a team, we managed to make savings in this area of the business, it allows us to then spend more in another area of the business, whether that’s training or support staff that you don’t currently have, or a day out with your team as a team building activity, whatever it is, the more the team have a mindset of ownership and the responsibilities that go with it, and that we’re all in this together.

[00:07:13] Antony Whitaker: Yeah. The better for the business and the better that it is for everyone in it. Next is the fourth reason why you should share some financial information with your team. And that is that it educates them on cost management. And hopefully by being better informed and educated about how much things such as gloves and laundry and client refreshments cost.

[00:07:35] Antony Whitaker: They might become more mindful of spending unnecessarily or wasting unnecessarily because they have an understanding of the costs associated with running a salon. I think it’s important that you treat your team like the adults that they are, and that you’re educating them. You see, they probably have no idea about things like credit card fees and how much you pay for them, or postage, or bank fees, or insurance, or client amenities, or bookkeeping, or the accountant’s fees, or what you spend on marketing, etc, etc, etc.

[00:08:09] Antony Whitaker: So, once again, by educating them, hopefully it reduces wastage and encourages them to be resourceful and more efficient with what they have. Often when I see people go self-employed, the way they start to scrimp and save when it’s their money is absolutely amazing. And so the fifth and final point on my list of why you should share some financial information is that it supports team goals.

[00:08:39] Antony Whitaker: You see, when everyone sees how the salon is performing, it’s easier to align on shared goals from sales targets to reducing expenses. So that things like attending education events or entering awards or a salon refit can happen. Hopefully they recognize that their contribution is important. That everyone’s contribution all day, every day, all adds up and makes a significant difference.

[00:09:09] Antony Whitaker: It’s important that there is that unity and that they recognize that they are part of something bigger than just themselves. So that’s my five reasons why you should share business financials with your team. However, what’s really important, more important I think, than any of those reasons, is the attitude with which you share information.

[00:09:32] Antony Whitaker: In other words, don’t do it from a place of trying to guilt trip the people on your team or come from a place of anger or come from a place of poor me. You know, I’ve got no money, woe is me. Either you do it from a place of educating and empowering other people by treating them like adults, or don’t do it at all.

[00:09:54] Antony Whitaker: So now for the five reasons why, perhaps, you shouldn’t show financials. At number one, I’ve put down that there is a risk of misinterpretation. So what I mean by that is that without some financial education or a broader understanding of business, your team may misunderstand the meaning or implication of the numbers that you’re sharing with them.

[00:10:18] Antony Whitaker: And that can lead to unnecessary worry or a degree of resentment. So, for example, if you were to tell them how much debt the business is in or how much you might be losing some weeks, they might misinterpret that as the business is going under and therefore, they might want to leave. On the other hand, if you tell them that the business generated two million dollars in revenue last year, they might think that that means that they’re being exploited because they have no idea about what it actually costs to run the business.

[00:10:49] Antony Whitaker: Or if you tell them that the business made 100, 000 net profit, they might think that that all goes in your pocket and then therefore they’re going to begrudge you. The second reason why you might not share financial information is because. Over confidentiality concerns. Well, that’s important to acknowledge that that’s important because, you know, your business’s finances are private information.

[00:11:15] Antony Whitaker: So taking the step to share sensitive or private financial data with your team can increase the risk of information being disclosed to other people outside of the salon. Now, obviously, that’s a big concern and a genuine reason why you might not want to divulge financial information. So obviously you should be very selective about what and who you share financial information with because some people have neither the emotional maturity or recognize the trust that has been shown to them by letting them know sensitive and private information.

[00:11:55] Antony Whitaker: So that then takes us to the third reason why you might not want to share financial information, and that is the potential for comparison. For example, staff might begin comparing their pay to the salons profits, which could lead to feelings of unfairness or a demand for a pay rise.

[00:12:14] Antony Whitaker: Obviously, the reality is that all businesses have to make a profit or they simply don’t survive, and then, well, everybody loses out. And the other point there is that whatever their pay is, and whatever your potential profit or losses are, shouldn’t determine what the people on your team are paid.

[00:12:32] Antony Whitaker: So I think that Especially when it comes to profit, if someone doesn’t have a broader understanding of what and where the profit goes and the tax implications, etc. It’s easy for people to feel that they should be paid more. So I would be very careful about what you share when it comes to talking about the net profit figure and who you share it with.

[00:12:58] Antony Whitaker: The fourth reason why you might not want to share financial information is that it might distract people from their core duties. So, for example, instead of focusing on client service and looking after their clients, some team members might then start to fixate on the financials. Detracting from their main responsibilities, which are looking after the clients, doing hair and giving people great service.

[00:13:22] Antony Whitaker: It’s not their job to be focused on the financials of the business. It is their job to be focused on their own personal productivity within the business. So, by sharing more of the business’s financials, it might distract them from what they should be focusing on.

[00:13:39] Antony Whitaker: So that leads me to number five, the last of my reasons why you should be careful about sharing business financial information with the team. And that is the increased pressure, or I should say the potential for increased pressure.

[00:13:55] Antony Whitaker: So, for example, if the financial situation of the business isn’t good, then sharing that information might cause stress and potentially start to harm the team morale. So, as I said earlier, sharing the salon’s financials has to come from a place of wanting to educate, not pressure them or scare them or guilt trip them or make them worry about their jobs or the business.

[00:14:21] Antony Whitaker: So while I said at the outset that I’m in favor of sharing, I think that it’s really important that you take a balanced approach and you weigh the decision based on the salon’s culture, the team dynamics, and the level of maturity on your team. There are some numbers that should be just for you as the salon owner.

[00:14:42] Antony Whitaker: And they are no one else’s business. Whether that’s about what your salary is, or what the net profit of the business is, or what your personal debt levels are for the business. Then there are some numbers that are for perhaps just the management and maybe senior staff that have the maturity and understanding of what those numbers mean.

[00:15:01] Antony Whitaker: And then there are some numbers that are potentially for everyone on the team.

[00:15:06] Antony Whitaker: When I had my salons, I used to do a breakdown for the team annually of the profit and loss. And I’d explain what money came into the business and what services and retail it came from and where there was potential to improve. And I’d also explain the breakdown of where that money then went.

[00:15:24] Antony Whitaker: So that line by line, they could see what went to bank fees and credit card fees and cleaning and insurance and product costs, et cetera, et cetera. Right. I would explain that the net profit, whatever that figure was, didn’t mean that it necessarily all goes into my pocket, but that profit is used for reinvesting back into the business for growth or potential refurbishment.

[00:15:48] Antony Whitaker: It’s used for building a financial buffer in the event that, for whatever the reason, that the business can’t operate or can’t operate to capacity for, at least three months so that you have a financial buffer to fall back on. Or that profit is sometimes used to pay down any loans. And that finally, that there was an owner’s dividend within that profit, which is a reward for the risk of the initial investment that goes into opening the business.

[00:16:17] Antony Whitaker: Now, I wouldn’t break down those profit percentage numbers for my team because it’s just none of their business. Whether I took home all of the net profit after I’d paid tax, or whether I’d left it all in the business or paid down loans, etc. Because well, that’s my personal financial information.

[00:16:34] Antony Whitaker: Okay, so with all that said we’ve now got five reasons Why you could or should start sharing some financial information with your team and five reasons equally Why maybe you shouldn’t or at least need to be very careful about doing it. So with that said, we need to start winding this week’s episode up.

[00:16:51] Antony Whitaker: But before we do, we have multiple resources on our website from our weekly podcast to the two-minute salon manager videos, as well as our paid for resources, whether it’s our books, our one-to-one coaching or our online courses. So until next week, keep safe and that’s goodbye from me.