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NOW UPDATED FOR 2006!
The most recent benchmarking data for Hairdressers is now available, both in print and in downloadable PDF format, with your purchase of the Hairdressers Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Hairdressers for the financial years up to June 30, 2004. The survey was based on 56 businesses.
The financial success of a hairdressing salon clearly depends on quality and consistency of the service it provides, coupled with good personal relationships. So having those issues under control is imperative. Once they are working well, it's time to concentrate on the financial drivers:
- Higher personnel productivity - a consistent flow of customers through the week, to minimise idle time.
- A mix of personnel is important, so the qualified cutters can concentrate on higher-value work with customers.
- Larger size of business helps to extract cost efficiencies.
- Getting the best return from rent and from each chair can be boosted by trading a few extra hours per week, as long as the time is busy to cover the extra costs.
Survey Results
These are the results of a survey of hairdressers. These results of a survey should not be considered to be representative of all hairdressers in Australia. However, they will allow business owners to identify strengths and weaknesses in the ability of their business to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of business performance and comparing them with benchmark performance levels currently being achieved by the sample of businesses in this survey.
Most of the hairdressers participating in the survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Tasmania or the Northern Territory in our sample.
Businesses from large towns and regional cities with a population of over 20,000 represented around 43% of the entire group with another 33% of businesses located in smaller towns and rural areas (population under 20,000). The remaining were city-based businesses.
More than 90% of participating businesses rented their premises and of these approximately 71% were located in premises with street frontage while another 18% were located in Shopping Centres or Arcades.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 5th highest and 5th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 75% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income | $120,212 | $54,649 | $205,356 | | Gross Profit | 84.13% | 76.74% | 91.68% | | Wages & Salaries (staff only, not
owners) | 26.38% | 0.00% | 43.80% | | Rent of Premises# | 10.53% | 5.08% | 15.97% | | Other Occupancy | 1.89% | 0.45% | 3.90% | | Interest and Bank Charges | 2.46% | 0.44% | 5.08% | | Staff On Costs | 2.48% | 0.34% | 4.15% | | Net Profit (bos*) | 30.47% | 9.99% | 56.84% | | Trading Hours per Week | 46.40 | 40 | 50 |
# calculation based
on just those firms with a rental expense (excludes firms in freehold premises). *(bos) before owners' salaries
and benefits.
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your business falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 2% of total income on average; however some businesses reported some larger results for such items as:
- Advertising, Promotion of up to 4.78%;
- All Insurance of up to 2.89%;
- Repairs, Maintenance and Hire of Plant/Equipment of up to 6.18%;
- Vehicle Operating Costs of up to 7.57%; and
- All Other Expenses of up to 7.27%.
To summarise this, larger businesses had:
- Higher profit per owner
- Higher productivity per person and per chair
- More trading hours per week, on average, but this did not translate into more working hours per owner
- Relatively more staff and about the same number of owners as the smaller firms
- Lower non-salary overheads.
The more profitable businesses:
- Were larger
- Had higher gross and net profit margins
- Had higher personnel productivity and higher productivity per chair
- Had substantially lower non-salary overheads.
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