4 Tips from a Top Waxing Franchisee on How to Grow Your Business
Updated: Apr 22, 2020
Multi-unit waxing center franchisee Jens Kottke stays on top of his financials and key performance indicators, actively seeking to make his businesses more efficient, profitable, and growth-focused.
Jens, having a decade and a half of professional financial experience, has valuable and expert advice for other entrepreneurs on how they can leverage financial insights to run better businesses.
Here are just a few of his tips.
Tip #1: Dig Deeper. High Net Income Isn’t Always A Good Thing
Is higher net income than your franchise peers always a good thing?
It could mean that you are sacrificing building long term value for quick profits.
This past month, Jens logged onto his Edge dashboard to review his monthly financials and see how his businesses did in their key performance indicators. One store in particular caught his attention. This store had a much higher net income than his other stores. Most owners would stop there and be happy, but Jens wanted to know why.
Jens went to the benchmark detail page in his Ceterus Edge Entrepreneur account and found that his payroll costs for this store were significantly lower than other stores of the same age. Digging deeper, he went to his store metrics page in Edge and saw that his repeat guests and new guests were lower than the previous year and lower than stores of the same age.
Within 5 minutes of digging, he had a key insight: net income was high because payroll costs were low, meaning the wax studio had been turning customers away due to limited staff to service them. The studio was profitable -- but it wasn’t growing.
Jens used this insight to take immediate action. Calling up his manager, he discussed how they could increase staffing and capacity so he could continue growing the location - his primary entrepreneurial goal.
Tip #2: Don’t Let Wax Payments Take You By Surprise
Many entrepreneurs who own waxing businesses know that, behind payroll costs, the wax itself can be the second largest expense for the business.
For Jens’ businesses, this is certainly the case, and he can’t pay for his wax using a credit card - he must pay using his operating account 7 days after the wax is received.
To plan ahead for the wax payments and make sure his finances are always where he’d like them to be for the wax payment and following the wax payment, he has his managers notify Ceterus when they purchase the wax. This allows the Ceterus accountants to input the payment ahead of time, making Jens’ Cash Forecasting report reflect how much money will be in his account in seven days when the wax payment goes through. That way, he can plan accordingly.
The best practice in this case is to require your managers to communicate upcoming wax purchases to your Ceterus representative to ensure that your Cash Forecasting will reflect that.
Tip #3: Stay On Top Of Cash Deposits
Keeping track of cash sales and cash deposits is key in a business where money is changing hands frequently and managers have autonomy. While some business owners only require cash deposits every couple of weeks, having managers deposit money more frequently allows you and your accountant to keep track of cash more easily, and serves as a deterrent to employees who might be tempted to pocket some of the money.
To create a work environment without temptation, have managers deposit cash frequently.
Tip #4: Use Key Performance Indicators To Measure Managers’ Results
Key Performance Indicators are non-financial metrics that many business owners use to measure performance outside the raw numbers. KPIs are unique to each type of business, and are a great way to measure progress and growth in your business. For Jens’ waxing businesses, some KPIs are sales, products, number of tickets, number of services, number of new guests, and number of repeat guests.
Within Ceterus Edge, Jens uses the same group benchmark to view the performance of one store versus all of the rest of his stores. This allows him to see which stores are being managed best. He also uses the same age benchmark (your store compared to all Ceterus customers in your franchise of the same age) to view how his stores overall are doing compared to the rest of the franchise.
How to use this for your business:
Inspire a little healthy competition in your managers by sending a screenshot of each store’s benchmarks against same group for each KPI, allowing them to see where they are leading, and where they need to invest more time and energy.
Note the same group benchmarks and how they compare to the same age benchmarks for each KPI in the email to inspire your managers to work together and compare notes to bring all of your stores up in each KPI.