More and more estheticians are opening a solo business and don’t necessarily want to grow a team. Because you’re doing it all – you want to maximize your time to generate as much income as you can.
Being a solo practitioner gives you more flexibility. You don’t have to be on anyone’s schedule and you have greater control over how you deliver your services. Not to mention, you get to keep all the profits.
Speaking of profits – before you can keep them, you have to generate them!
It’s often more challenging to increase profits as a solo esthetician since there are only so many hours in a day. Thankfully, the equation to calculate profits is quite simple:
Revenue – Profit = Expenses
I used to believe in the old formula which was Sales-Expenses = Profit. In order to generate more profits, you need to increase revenue and/or reduce expenses. I have an updated blog that follows the Profit First Formula. Putting yourself first will change your mindset and allow you to actually earn more money!
To strategize how you can become more profitable, you need to first examine your numbers to see how your money is coming in and where it’s going out.
Cut Down On Your Expenses
Getting familiar with your numbers is essential to running a profitable business. Don’t allow a spreadsheet to intimidate you. List your expenses to see where you can cut unnecessary spending.
Obviously your goal is to make sure that you’re earning more than you spend. Here are the two main areas in which solo estheticians’ expenses lie:
Rent is a constant overhead whether you’re having a good month or a bad month so I always suggest choosing a conservative location if you are just starting out. You can always grow into your dream location.
Without getting too deep into formulas, I generally don’t like to see rent expense to be above 10% of your monthly gross revenues. Of course, this does depend on your other expenses as well.
We all want to be in that “A” location so be sure you’re generating enough income and the rental location fits in your budget. Be realistic when projecting and look closely at all your costs before picking a location for your business.
It’s easy to overspend when it comes to product ordering. Maybe you can relate because I know I certainly did until I implemented an ordering system.
How much do you spend on back bar supplies and retail items each month? Is there a lot of money tied up on your retail shelves?
If you don’t know the answer to these questions, it’s time to run a full report to get the details:
- What’s the cost-per-application when you perform a facial treatment? Are you overusing in the treatment room?
- What are your clients buying when they come in for appointments?
- What are your top 5 bestsellers? Does this change with the seasons? (Tip: run quarterly reports to get accurate insights.)
Determine how much back bar products you use each month with the help of your cost-per-application guide. Most manufacturers will provide this for you if you don’t have one.
Adhere to strict back bar ordering and get only what you need. Be mindful of waste. Measure out your products so that you don’t overuse them.
Too many retail products on your shelves can be a liability, but too little can be detrimental to your business. You don’t want to lose a sale because you “ran out” of something.
Run a report to determine your top 5 best-selling retail items. Don’t do what I call “eyeball ordering” where you eyeball your shelves and order a little of this and that without a system.
Once you have figured out your top 5 bestsellers, keep approximately a 2-month supply on hand to make sure you don’t miss a sale without holding up your cash flow.
Increase Your Revenue
Since you only have so many hours in a day, you need to find ways to generate more revenue without working extra hours.
Offer High-End Treatments
Increasing the perceived value of your offerings is the best way to generate more income per hour and earn more revenue per guest. With the right positioning and pricing strategy, you can greatly increase the profit margin of your services.
For example, I’m a big fan of microcurrent since almost every client wants to lift, tighten, and tone their skin. Once your device is paid off, the return on investment is incredible. You can check out the technology here.
Increase Retail Sales
Selling retail to your clients is a great way to leverage your time and efforts while delivering more income. Not only can you offer retail to clients during their visits but you can also generate more revenue by having products available on your e-commerce website.
Here’s how you can increase retail sales:
- Keep your bestsellers in stock.
- Deliver a curated shopping experience.
- Blog about your favorite products and share them on your newsletter.
- Provide personalized recommendations.
- Educate your clients about the products.
Stay ethical when making product recommendations and only suggest items that will benefit your clients most. But the good news is that more often than not, higher-priced serums tend to deliver the best results!
Sell Underutilized Equipment
We tend to purchase more equipment than we actually need and they may not even be helping you deliver services that your clients want!
Take a look at your current equipment inventory: do you have machines collecting dust in a corner? Why not sell those machines and put that money back into your business towards a service that your clients would happily pay for?
Get clear on the results your ideal clients want to achieve, then audit your equipment to see what you need to deliver those results. Take a look at what you can sell to generate revenue.
As a solo esthetician, you do it all. Optimize your time, become more efficient, and balance your expenses. Let’s get you generating more revenue so you increase your profits.
Join the LIVE masterclass with Mike Michalowicz on March 8 to learn how to apply the “Profit First” framework to your beauty business.