S T O R A G E W A R S
Inventory Pro Tip: when I first opened @thehairroomjc I had absolutely no idea how to set my pars for inventory. Sure, I understand the concept and system, when I worked for @gringostexmex I did inventory for the bar and catering department all the time. But how was I to set that up for a brand new business where the expectations for revenue were literally just expectations?
So you've journeyed from my Instagram to find out the secrets behind my inventory game? Or perhaps you stumbled upon this post organically - if so, go follow me and the salon on Instagram too; we are much cooler in pictures! @anatalienicole @thehairroomjc @thehhairroomweddings
What I'm learning through my solo gig as a salon owner is there is not magic formula for success. Success looks differently to me as it does to another salon owner in the same town, different town, different size, same size - you get the idea. What I have also learned is hearing stories from other salon and small business owners have helped guide me towards making decisions that work for us. So here I am sharing some of those learns with you :)
Let's talk inventory! This is the bloodline of your budget and will make or break your bottom line if you don't have a proper system in place. Regardless of what works for me the most important thing I beg of you to have is a system. Not keeping track of what comes in and out of your establishment is just plain silly. I don't care if you keep track of that inventory with a stone and hammer, pencil and paper or state of the art computer system, though let's get real, it's 2019 there really is no reason why you shouldn't be digitizing every part of your business that you can. Time is money, whether you are still behind the chair or not.
Here are a few tips to help keep your inventory on track:
KEEP TRACK OF EVERYTHING: Start Day 1 or Day 601 (just start) and keep accurate records of what comes in and what goes out of the salon. This part is the most painstaking and requires a ton of time (remember time = money, if you can't delegate this to a paid team member than do it yourself)****
WHAT WORKS FOR US: Color inventory - we have a beautiful OCD color wall with custom Wella color shelves. Each shelf holds 4 boxes of color with a tray for ONE unopened tube. When a new box needs to be opened the stylist will tear off the tab and place in a mason jar in the dispensary. Throughout the week the front desk takes these tabs and removes them from inventory - this helps when it's time to order. I don't have to scan the entire salon trying to decide what to order, I can do the orders from home, from Texas, from a local coffee shop. With backbar items (I'm talking everything, foil, gloves, shampoo and conditioner, developer, EVERYTHING) we have a designated container in the back. Same system: stylist uses the last of an item and places in container, front desk removes from inventory.
****Delegating is a luxury for most start up/small business owners. In the beginning you will and should do everything you can on your own if you want to cross that green line and start making a profit. If you are paying people to do a job that you can't really afford to pay them to do, do it yourself - this is YOUR dream. This also does not mean you have a commission stylist do this in their downtime UNLESS you are properly/legally paying them in that downtime. They are not free labor! This is side tracking my ADHD brain into so many other lanes, but we will touch on this in the future.
ORDER IN BULK: By keeping track of what goes in and out you will get a sense of what you're selling and using most frequently. These items you should always stock up on, especially when they go on sale through your distributer. Not only will you save throughout the year on the individual items (hence earning more profit on markups) but you will also save on shipping. On average I'm spending $10-$20 for shipping depending on distributor, if I order twice a month I'm spending $240-$480 a year per distributor versus $520-$1040 if I ordered every week. On top of that I use at least 3 different distributors because no one has figured out how to kill that monopoly. So those figures really look like $720-$1440 for twice a month and $1560-$3120 for every week. I don't know about you but there are ton of things I could do with an extra $840-$1680 a year. That's additional classes or bonuses for my team, upgrading styling chairs, a new computer for the front desk or just plain profit - every penny counts.
WHAT WORKS FOR US: This is where my storage unit comes into play. Having a modest 800 sq feet space outside of NYC comes with great locality but terrible storage options. We've gotten very creative over the years with keeping as much as we can onsite without being overwhelmed but when we do order in bulk I'm able to store the rest in my unit. My storage unit is only $80 a month and before you say well that's what you save in shipping, I'm one step ahead of you. Not only am I able to store bulk inventory but we also have additional furniture, equipment and tools (think weather related) that we just don't have the space for in our current location year round. It's in walking distance from the salon so I never have issues with running in between when we are out of items and as we grow and and evolve I foresee us downgrading and ultimately eliminating the unit altogether. We also purchase grocery & cleaning items in bulk with resources like Amazon and Costco to help with price per item costs. If you don't need the additional storage unit then you are one step ahead of me - the takeaway, stock up when things are on sale and buy in bulk to save!
SET PARS AND STICK TO THEM: For me this was and still is a learning process, keeping proper track of everything that comes in and out will help tremendously with this part of the puzzle. But what do you do in the beginning? I literally have 3 salon start up books sitting in front of me as I type this and not one of them touches on this subject. How do you know what you need to open your salon, how do you know what you need to maintain your salon daily, weekly, monthly?
Let's start first with what a par is: PAR Level stands for Periodic Automatic Replenishment. Traditionally, it means the Safety Stock level but in some inventory management systems named PAR Level instead. Safety stock = the expected minimum inventory quantity required to held in the warehouse to ensure that the customers supply requirements met. What does this mean to your salon? Your PAR is your set level of any item you need in house in order to do your job. You can set a daily par, weekly par or monthly par. Your current clientele will help dictate this in many ways. Are you doing a ton of highlights or just single processes and haircuts? Does your clientele use a ton of dry shampoo or need humidity fighting products? Knowing your target and actual market will help determine these factors. How many stylists do you have on hand? If you have 5 stylists having at least 5 of an item until you find that golden number is a smart place to start. Other things to consider are what you can afford to have on hand at a time. Can your space or budget (more importantly) afford 20 of an item at all times?
WHAT WORKS FOR US: In the beginning I struggled with this by having too much on hand. I ordered every color my line carried and then discovered there were some shades I just wasn't going to use. With my retail I found myself constantly running out of items because I didn't track what we were selling. Now I run reports monthly and see what is selling, what isn't and create a plan of action for the next month. I overstock on things like gloves, foil, and processing caps when they are on sale and set myself up for months without having to reorder. I like to work in Pars of 3's (something that's not a high use item but we still need I keep 3 on hand, 6 is my mid-range and 12 is my best seller.) In year 3 with 6 stylists this is what is working for us. Will that change in the future, sure, am I ready and open to that change, 100%.
I hope these tips help you in getting your inventory more streamlined. Do you have any tips or tricks that work for your salon? Comment below and let's brainstorm together!
Make it a great day or not, the choice is yours!