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Business Insights #14: Turning Your Business Into A Valuable Asset

When you start a new business three things happen:

  1. You invest a significant amount of money,

  2. You give birth to a business that can potentially give you a good standard of living

  3. And most importantly, you create an asset.

On the day you open your business (your asset) has a negative value equal to what it cost you to open your doors. Whether this was money you had saved, borrowed from friends or family or taken out a business loan your business has a negative asset value. You are in debt.

From that moment on your number one goal should be to pay off the initial start-up costs and to then grow the asset value of your business. There are stages you will need to go through which I will cover in this blog, however the starting point is to plant the seed in your mind that everything you do, every decision you make, is based on the idea that one day you may want to sell your business. Without this guiding principle, you might end up selling for next to nothing or just closing down and losing your asset completely.

Having said that the main reason you opened your business in the first place is to make money. Coincidentally, growing a successful and profitable business is the best way to increase the asset value of your salon. Making money can be attributed to three things:

  1. Generating turnover,

  2. Controlling costs and...

  3. Protecting the profit line.

Unless you are literally turning business away, generating more turnover is always going to be the key to increasing profit. The operative word being 'generate'. Just sitting and waiting for the clients to come into the salon, whether by appointment or as walk-ins will make turnover but will never build the asset value of your business. To 'generate' turnover you need to be pro-active in a number of dynamics ways:

Getting clients into the salon is a science on its own. The nature of our industry is that regular clients keep returning provided they know how much you value their business. However you cannot take this for granted, you need a mechanism (software) to see exactly how many new clients you are getting, from what sources and how many come back for a second and then a third visit. AND how many clients have stopped coming to you... and why. Clients go where they're invited and stay where they're valued. This undeniable fact should be tattood inside all service providers' eyelids so that every time they blink they are reminded of this golden rule. To generate more turnover while clients are in the salon you need to pro-actively 'invite' them to try other products and services. Or, if completely satisfied, invite clients to extend your invitation to their friends and colleagues.

Staff are your internal customers which should be valued as much as your paying clients. As with your clients your relationship should remain fresh, objective and relevant. For clients consultation is a wonderful tool for unlocking new business. For staff, periodic performance reviews, identified training needs and help in setting and achieving goals goes a long way to keeping staff in place and loyal to the business. My Salon's Key Performance Indicators reports (KPI) are the ideal tool to give factual feedback to staff and to identify their strengths and weaknesses and most importantly, training needs.

Secondly, while generating turnover is great it doesn't mean a thing unless your costs are under control, and this requires a lot of discipline as well as honesty about what you can or cannot afford based on your turnover. If you work with a budget (projected turnover versus projected costs) it is a lot easier to protect the profit line provided you monitor costs to turnover on a regular basis. Using the 'My Salon Profit Protector' allows you to protect the profit line from day one.

At the end of the day the value of your business is based on four things:

  1. Location

  2. Value of furniture, fixtures and fittings

  3. Turnover

  4. Profitability

If you would like further advice on building a profitable business contact

us on or call Terry 083 650 0952 or Aletta

064 504 6001

This blog is one of a series of business insights which can be accessed on If you have any questions or specific requests please email

For more information contact us HERE.

Aletta: 064 504 6001 |

Terry: 083 650 0952 |


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