Over the past 30 years, I’ve helped thousands of people to successfully own and operate tanning salons, beauty salons, health clubs and wellness centers. The common denominator for achieving long-term success has always been related to a clear understanding of the actual, real-world costs associated with day-to-day business operations.
And the best way to understand this begins with a “Break-Even Analysis” of the current business model. To project the profitability of a given business model, you first must establish the point at which the business breaks even: revenue received equals the costs associated with generating the revenue. I learned this first-hand in the 1980s from Kemmons Wilson, the man who founded the Holiday Inn hotel chain. I worked with him on a series of projects, and put many tanning systems in the fitness and exercise areas of his hotels.
He told me that before he laid the first cinder block to build a new hotel, he had to know how many rooms he needed to rent each night to break even. If, given the estimated fixed and fluctuating expenses of the location, the number of rooms required to rent each night to break even was too high, (when compared to full occupancy), he did not build the hotel at that location.
He told me that “once the point of break-even was established, then, and only then, could you project the potential profitability of the location.”
Think of it this way: If you had a hotel with 100 rooms (which would be your max capacity) and you needed to rent 80 rooms every night just to break even, (80% of max capacity), you would realize that number might not be consistently achievable on a year-round basis. You would probably be more comfortable if that number was closer to 50 rooms per night (50% of capacity).
I heeded his sage advice (after all, the guy was a billionaire) and applied the same mathematical principals to the tanning industry. I developed my first “break-even analysis” model way back in 1985 and over the next 30+ years, conducted thousands of studies for salon owners throughout the world.
Year after year, people will still contact me to say that the numbers and calculations provided by the analysis were right on the money. And today, as part of the IST Business Support Program, which is sponsored in-part by Devoted Creations and Argo Networks, we are offering you the opportunity to have a Break-even Analysis conducted on your business – complete with profitability projections – absolutely free!
The information provided by the analysis can be used as part of your business plan and may also help you obtain financing for your business. In any event, it will provide you with a detailed, easy-to-understand analysis of your current business model and help you to better understand the true potential of your sun business.
IST Magazine thanks Devoted Creations and Argo Networks for their sponsorship of the Business Support Program and for making the Break-Even Analysis available to salons at no cost.
We can provide you with a detailed, easy-to-understand analysis of your current business model and help you to better understand the true potential of your sun business.
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Jerry Deveney is the President of SunForce Marketing, Inc. He has been actively involved in the tanning, spa, wellness and fitness industries for more than 30 years. His company provides business analysis and consulting services in the areas of sales, marketing and operations. Jerry has worked in almost every industry sector including salon management, equipment manufacturing and distribution, new product development, regulatory affairs, and sales & marketing.
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