Return to site

Can you squeeze some more from your stock spend?

Generally the two biggest outlays in the salon budget are stock and wages. Stock spend is an area of your business that can easily spin out of control but luckily, like anything in your salon, if you create some smart habits around stock ordering you will be able to save dollars and also be able to open your suppliers statement without taking a deep breath and big sip of coffee!

How much should you be spending on stock?

"What gets measured, get managed"

The key area of your spending that you need to benchmark is your technical spend (some people call this backbar) What you spend on technical (colour, developer, basin stock, treatments etc) should be around 10% of your services turnover. Ideally track back over the last three months and see what you have been spending percentage wise to check if you are far off the 10% target and your spending trend. To work this out you may need to recalculate your supplier invoices and add up the purchases that relate to technical product only. To calculate this you take the $ you spent on product, divide it by your services turnover $ and then multiply that by 100 - this will give you the % you are spending at present. With this info you should be able to set your approximate monthly budget for technical purchases. Retail buying is much easier to manage as it's much more visual - you generally know when you are carrying too much of a particular range or product. If you have salon software then run a 'stock turn' report. This will highlight the products that have been gathering dust on your shelf. Maybe your team needs some more education on the features and benefits of these products or maybe you should consider streamlining your retail ranges if particular products aren't creating turnover for you.

You need to know what you spend when you place an order

Once you have set your monthly budget you need to calculate each order you make so you don't blow it! If you are using salon software make sure the dollar value of the products in your system is what you are actually paying. When you create the order your software will tell you the value of it. If you are ordering manually you can still tally your spend easily if you create a quick reference guide for the key products you order, grab the calculator and tally them up.

Should I order to levels or just order what I have used ?

Whatever works for you! If you are going to order only what you have used then make sure that you are keeping track/scanning off used stock from your stock bin before you create your order. Whatever way you go it always pays to kick off your new stock habits with a total stock take, you may also find that you are overstocked in certain shades and products.

What if my technical spend is way above 10% and I can't get it any lower?

This is a key indicator that something is out of whack! This could be product wastage (get the product wastage bucket out!) undercharging for extra product/time usage or your technical pricing doesn't have enough margin for costs and profit. Or it could be a combination of all of the above! Whatever it is you need to address your pricing structure to get it back into balance.

Email us on or comment below if you have any questions on stock