Key Performance Indicators (KPIs): The Building Blocks to Success – #Aesthetics #Business
Maximise profit, minimise losses and ensure you are always playing to your strengths – setting up a few simple KPIs could revolutionise the way you run your aesthetic beauty business.
Many aesthetic business owners, start up because they love the industry and the job, not because they have always wanted to run their own business. This is clear to see, with many businesses being strong on customer care and service delivery, but weaker on profitable decision making. In this article, I’ll give you a really quick introduction to KPIs, why they are important and the six you should look at. If, after having a read, you want to talk about your business, you can reach me on josh@the-smartgroup.com!
All successful businesses have KPIs and measure their performance against them – so aesthetic beauty operators should be no different.
Just looking at your bank balance doesn’t show a clear picture of the health of your business. In contrast, KPIs can quickly show where there is profit and maybe loss in your day-to-day activities. In this way, you can decipher what makes you the most money and what may actually cost you money, so you can work smarter.
The old adage “Turnover is vanity, profit is sanity but cash is reality” has never been truer. A business’ health is a sum of its environment and what is happening within, and that is exactly what KPIs enable you to explore. By using some simple KPIs, you can start answering why and how you get the bank balance you see every day!
6 Simple KPIs
Everyone’s top KPI is a growing bank balance. Try setting up some of these simple KPIs to give you an idea of how your business is performing:
Average revenue per hour KPI – Divide your total treatment income by the total hours worked.
- This is a great KPI to show you what is being achieved. As well as a business total, it can be done by treatment and therapist. This creates a measurable and visible indication of which treatment to focus on, as well as therapist performance.
Cost per hour KPI – Take all your fixed costs and divide by your total hours open.
- This gives a good benchmark figure to show how much it costs per hour to keep your business open. So is a great ‘mean’ indicator to refer to before pricing any activity or treatment.
Treatment revenue per hour KPI – Take a fixed period of time (week/month), capture the revenue generated by a treatment and divide it by the hours taken to deliver.
- This KPI shows you what each core treatment is generating on an hourly basis. We strongly recommend that all core treatments are measured like this at least monthly. Compare this with the average KPI of the business and then focus your team on promoting the higher £ per hour treatments.
Treatment cost per hour KPI – Take the same period of time, all consumable costs and divide by treatment hours delivered.
- This gives you a running treatment cost to compare against revenue and to allow you to explore profitability. Again, this provides you with important information so you can focus on the more profitable treatments.
Revenue & cost per therapist per hour KPI – calculate the revenue achieved and divide by hours worked by individual.
- This is a great benchmarking tool; it shows (irrespective of hours worked) the revenues and profits generated by your team individually and their effect on your business. Whilst senior therapists are expected to deliver higher priced treatments, it can motivate juniors to obtain and reach agreed levels and goals. Also, this is a great way of calculating commissions and creating incentives to up-sell. Don’t be surprised if a part-time therapist turns out to be your best contributor to hourly bottom line profits.
- Promotions KPI – Record the revenue/profit and numbers sold with each promo.
All businesses need promotions, and by recording the results you can measure which types work best for your business and appeal most effectively to clients.
Hopefully this has got you thinking a little more about how to conduct your business intelligently and efficiently, maximising your strengths & profits and minimising your losses. If you have any questions, please feel free to get in touch – we’re happy to help!
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