In golf, we call it a Mulligan. We should look at 2020 as a muffed shot, and I don’t think we should count it. As we enter the fourth quarter of 2020, I’m lining up a second shot. 2021 is going to be that second shot. I wish I had a magic potion that would make this all better, but I don’t. We are going to have to plan carefully and work our way through this.
Do you remember last year when we really didn’t know what the words “Social Distancing” or “PPE” meant? My, how times have changed. Last year at this time, we were working on our budgets for 2020. Now we must change the way we do our planning. We must now plan week to week, month to month, and quarter to quarter. The sum of these will eventually equal a year, but for now, we need to plan these shorter segments more accurately.
Things are changing quickly. We find ourselves in start-up mode once again. Hopefully, once we reopen our businesses, we will be able to stay open. Being responsible adults, we will only do so if we are doing everything possible to do so in a safe environment for our staff and our guests.
Unfortunately, some of my clients in California, Tennessee, and Hawaii have gone through the yo-yo of opening, closing, and re-opening again. A couple of them have had infected guests or staff come to their business, and they had to close until the local Department of Health said otherwise. After the initial flood upon re-opening, business in Day Spas is seeming to slow down. Injectable Services in Medical Spas have continued to grow, but guests are less willing to buy more expensive series or programs. We are learning that many of our guests, specifically in the Northeast are not comfortable coming in for services.
After reopening, we’re learning that it is more expensive to operate. PPE is expensive, adding $1.50 to $4.00 per service. The amount of services we can perform has decreased. We can’t have as many people in our business as we could. We’ve shut down or limited access to our lobbies, saunas, and relaxation areas. Not only do we need to re-cost our services, we also must re-think our compensation and staffing to maintain a proper (or livable) gross profit margin. Some of my clients have increased service pricing anywhere from $4 to $10.
To maintain some semblance of Net Profit, we must re-negotiate our Overhead Expenses. Yes, this means rent, leases, marketing, and insurance. Some of these conversations are not comfortable, but they are necessary.
Now, more than ever, it is so important to plan. We need to look forward to a better and brighter 2021, and it is upon us. The fourth quarter is the time when we need to do our budgets and create our roadmap as we move our businesses forward. Please, don’t go into 2021 blind. Schedule time to do your budget for the upcoming year. In most cases, we can get this done in about six to eight hours. Because I get dizzy when looking at too many numbers, we will break this into one-hour meetings. Our projections need to be conservative and realistic. Look at your schedule and let’s get an appointment on the books to build your budget and plan for what is ahead of us.
As always, we’re here to help.
Monte
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