The profitable operation of a salon requires keeping records of stocks and purchases, along with their movement. A large number and variety of products are needed for the day to day operation of a salon. One cannot run out of supplies in the middle of the day, or while carrying out treatments and services. At the same time, if you overstock, or do not stock according to the need, products may be lying unused for months. Too many products on the shelf means that there can be a cash flow crunch. In other words, your money is tied up. Therefore, it is important to maintain an Inventory, to keep track of stocks and their movement. In fact, the net profits of your salon business are closely linked to how well you manage your inventory.
A Beauty Salon Inventory comprises of the flow of products from your store to the point of sales or use. You may be dealing with two kinds of stock – i.e. material for use in the salon’s daily operation and items for sale. For instance, the Shahnaz Signature Salons have a shop, alongside the salon, for the sale of our products that we prescribe for home use. We also keep our products for use in our treatments. One of the things you need to plan if you are setting up a salon, is to have a place to store your stock of supplies and bulk purchases. They should be categorized and kept in an organized way.
If you have stocks, you need an inventory, where the stocks are listed. The stock should be checked regularly. Checking the stock and keeping a record is called Inventory Management. If it is a large salon, with a good business, stocks may need to be checked frequently, so that they are replenished in good time. Maintaining stock records gives us an idea of your fast moving items and popular treatments. This will give you an idea of the items and numbers that you need to keep, or order, over a particular period of time. The inventory will tell you which products run out faster and the purchases that are needed. Regular stock checks also give you an idea of the slow moving products, so that you can think of promotions and ways to improve their sales.
I feel that it always helps to have a designated person in charge of Inventory. In smaller salons, the owner may be looking after the inventory, but in a large branded chain of salons, a manager is designated. It is easier for one person to take up the responsibility and be accountable. That person can have a team. The designated person becomes experienced and learns the kind of inventory needed by the company. You may have a Manager of Purchasing, or Manager of Inventory, or Salon Operation. The Inventory Manager should know and learn about understanding the numbers and the budget. The Manager should be able to incorporate and improve the inventory system.
The Inventory Manager becomes responsible for the purchase and knowing what to stock and about whether the purchase is within the budget of inventory purchase. Small salons manage their stocks by recording the numbers in a register by hand. Larger establishments use computer systems, spreadsheets and software, so that the numbers are easily maintained and available at a glance. It becomes easier to track the flow of products, to detect pilferage of products or find a bottleneck of products on the shelf. It tells you when you need to replenish a particular product from the factory. Very often, based on the Inventory report, salons have promotion of services and products, offering value added purchases, or discounts. It is said that empty shelves are no good for sales. Therefore, the retail area in the salon should always have more than enough stock. The products should also be kept in an organized and attractive manner, so that the shopping experience is pleasant. Ordering more stocks does not happen when the shelves are empty, but rather it is done when there is supply for a period of one or two months. During busy seasons, turnover is more and products are replenished in good time. A great deal can be deduced and decided based on inventory. Ordering further stocks is not such a simple affair and neither should it be done on a random basis. It should be based on the inventory records. Some experts suggest that a physical stock check should be done once a month, at the same time and by the same personnel. This helps to understand how the products are moving and the numbers to order. Your stock represents your current assets and they certainly deserve an efficient inventory system.
Shahnaz Husain is Chairperson & Managing Director of The Shahnaz Husain Group of Companies. The views expressed are her own.