| Getting the Independent Contractor vs. Employee Classification Right

Posted in Employees, Payroll, Staffing at 9:00 AM by Loftis Consulting

With the Patient Protection and Affordable Care Act (PPCA) becoming fully effective in 2015, it will become more important than ever to get the independent vs. employee classification correct.  In 2015, any company with 50 or more employees will be required to offer healthcare insurance benefits to its employees working at least 30 hours per week.  Independent contractors are not considered employees and thus employers would not be required to provide insurance benefits for independent contractors and would be able to save money not only from employment related taxes but also from insurance costs. 

Given that the misclassification of independent contractors is an ongoing IRS issue combined with the upcoming implementation of PPCA, the IRS will be even more diligent in making sure businesses are following the rules.  The IRS provides the following guidance on classification:

1.  Behavioral – If the company has the right to control and how and what the worker does then he or she is not an independent contractor

2.  Financial – If the company controls how the worker is paid as well what is reimbursed and what tools are used then the worker is not an independent contractor.

3.  Relationship Type – If the worker receives employee-like benefits such as vacation pay and/or the relationship is such that it is critical to the ongoing operations of the business over the long-term then the employee is likely not an independent contractor.

It does not matter if you have a written contract in place.  The treatment of the worker will overrule any written contract if the nature of the work falls into one of the three categories listed above.  In addition, it does matter if the worker is full-time or part-time for classification purposes.  For more insight on worker classification, visit IRS.gov or discuss with your tax specialist.

 

| Loftis Consulting Owner Interviewed for Massage and Bodywork Magazine

Posted in Spa/Salon at 9:00 AM by Loftis Consulting

Loftis Consulting is thrilled to be mentioned in JoAnna Haugen’s article  The Baby Bump – Massage and Bodywork published in the May/June issue of Massage and Bodywork.  The article focuses on how solo practitioner massage therapists and business owners need to be prepared for the unexpected as well as the expected in order to be able to continue to thrive after taking a leave of absence.

| Loftis Consulting’s Tips to Make Your Marketing Profitable

Posted in Spa/Salon at 9:00 AM by Loftis Consulting

Understanding the revenue generated by your business marketing and advertising can be the difference between being profitable and unprofitable. It not only takes some financial investment in your marketing efforts but also time. As a business owner or manager, if you are not consistently making sure that the business is getting a good return on the marketing dollars and time spent then the business may not be as profitable as it could be. Here are some tips to make sure your business is using its marketing dollars wisely.

  • Set a percent of revenue as the marketing budget. For example, if your business earns $500,000 a year or $41,667/month in revenue, then the marketing budget should be at least 3% or $1,250/month including marketing staff.
  • Put into place a way to track marketing results. You cannot plan if you do not know where you have been. Many businesses do not have the habit of asking customers where they heard of the business. It can be as simple as asking the question when the customer calls or arrives or a question on a customer information form but whatever method is chosen it must be consistent for the business to accurately track results.
  • Track the costs and results of all marketing efforts. For example, Wellness Spa has the following marketing spend and results each month:

Marketing Effort

Monthly Cost

# New Customers

New Revenue

Return %

Tourist Magazine Ads

$300

5

$500

67%

Specialty Site Listing

$300

7

$200

-33%

Email Marketing

$50

10

$1,000

1900%

Search Engine Ads

$400

10

$1,000

150%

Social Media Marketing

$200

10

$1,000

400%

 

  • Make decision based on the results. Do not get stuck and keep doing the same thing over and over again. In order to increase profits you need to put your marketing dollars where you get the best return on your marketing investment. Any return (new revenue less cost divided by cost) over 0% means you covered the cost of your marketing investment. Any return below 0% means you will need to find a way to improve the marketing results or reallocate the money to something else that offers a better return. The higher the return the more the profit.

Use these tips and you will know for sure what marketing and advertisement avenues are working for your business.

 

| How To Effectively Manage Cash Flow Through Payroll Management

Posted in Cash Management, Employees, Payroll, Spa/Salon at 9:00 AM by Loftis Consulting

One of my clients who owns and runs a Chicago day spa was paying his employees every week. When the business had a slow week, he was struggling to make payroll. Does this sound like your situation? Employee costs are usually the largest expense for companies, no matter what their size. Here are four tips to better cash management.

  1. Establish a business line of credit before you need it. A line of credit will enable your business to weather short-term cash crunches due to temporary cash flow problems such as weekly fluctuations in business sales.

  2. Pay employees bi-weekly. Pay independent contractors only after you have received payment. By managing payroll this way you can reduce administrative costs and balance cash receipts with cash payments.

  3. Transition from paper checks to direct deposit. This not only clears up administrative tasks such as cutting and distributing checks but also cuts costs.

  4. Hire the right people the first time. If you are constantly refilling positions because you had to fire the person for non-performance or they quit something is wrong with your hiring process. The cost of training and rehiring can add up both in dollars and time. If you do it right the first time you will not only save money but also frustration.

  5. Hire the right people who can fill multiple roles. This works great for businesses that suffer from drastic changes in demand. For example, a day spa may be fully booked on the weekends but suffer from low demand on weekdays. To combat this, I would recommend you hire an employee who could fulfill multiple roles such as massage therapist and esthetician. Instead of having two idle employees you now have one that can service clients in multiple services if demand picks up.

By following these tips you can lower the administrative burden of payroll and save cash.  Visit our website to learn more about Loftis Consulting and its part-time CFO services.

| Client Spotlight: Eshe Day Spa & Salon

Posted in Client Spotlight, Spa/Salon at 9:00 AM by Loftis Consulting

Loftis Consulting is happy to announce that it has added Eshe Day Spa and Salon to its client roster for internet marketing services.  Eshe Day Spa and Salon has been serving the Chicago area for over  15 years. Eshe has been featured in magazines such as Today’s Chicago Women, Lucky and Time Out Chicago.  To learn more about Eshe, please visit here.

| Groupon Advice for Small Business Retailers

Posted in Finance, Retail, Small Business at 9:00 AM by Loftis Consulting

Guest blogger Michael Koploy is an ERP analyst at SoftwareAdvice.com, a company that provides reviews of point of sale system software. He recently published a guide on his blog about Groupon for retailers, titled Retail Software: Your Groupon Advisor.

Many retailers are chomping at the bit to take part in a Groupon promotion. While consumers love the online daily deals site, there have been a number of horror stories this year from retailers that have had their business negatively affected after running a Groupon promotion.

Groupon isn’t all that bad, though. It’s important for retailers to understand how Groupon promotions work before deciding to take the plunge. Here’s a quick guide on the subject, and some tips on how to use retail software to help make your decision easier.

How Groupon Works for Retailers

Groupon offers the following opportunity for retailers:

  • They pitch a promotional deal for your business. These deals will vary, but they’re usually in the 50-90 percent-off range.
  • If enough consumers don’t purchase the coupon, then you don’t have to pay Groupon anything for the free advertising and promotion.
  • But, if enough consumers do decide to purchase a coupon, then Groupon will take about 30-60 percent of the promotion and send the rest back to the retailer in three installments over the span of 90 days.

So in a nutshell, the Groupon promotion will sell your inventory at about 75% of its value, and pay you for it over the span of a couple of months. Doesn’t sound like the best strategy, but Groupon says the idea of its service is to get your brand name out to a new audience, encourage customers to purchase more when they enter your store, and to gain new, repeat customers.

Unfortunately, a report on online social deal sites from Rice University says this doesn’t happen. You can check out the full report here, but the main findings are that most customers don’t purchase anything more than the coupon allows, and they don’t come back because they’re loyal to the coupon site, not your business.

How a Retailer Should Use Groupon

So as a retailer, should you avoid Groupon at all costs? If used correctly, a Groupon promotion can be effective. One such way is to use Groupon to get new customers into your store, but provide extra incentive for them to return. Examples of this include additional coupons for customers, or just letting them know about future events and promotions.

Another great way to use Groupon is to run a deal on inventory that you have a surplus on. The deal will allow you to eliminate your excess inventory at a rate you wouldn’t have been able to before.

Most importantly, though, is to analyze your business and decide what you can afford and handle before even speaking with anyone from the Groupon team. This can be done with the help of retail point of sale software. By using these systems, you can gain a better understanding of your business, and can approach the Groupon team with the exact deal you wish to promote. Within your point of sale system you can use the following applications to help you make your Groupon decision:

  • Inventory management. Use this to find what amount of “perishable” inventory you need to sell.
  • Retail accounting. Crunch your financials and decide what size of a deal your business can really afford. Do the math, and be firm when working out the Groupon deal on what you will allow. There are many inexpensive standalone systems such as QuickBooks or Peachtree for these very purposes.
  • Retail CRM. Do you need something like Groupon to improve your Internet marketing? If have no way to measure this, it’s a very difficult question to answer. CRM software is a great way to analyze how your business’ marketing initiatives are paying off. You can use something like Salesforce.com to look at your marketing if you don’t have a system that offers this. Alternatively, you can use a system with deep CRM functionality, like Microsoft Dynamics RMS.

 

| Short on Cash? Sales Partnering Can Help

Posted in Retail, Spa/Salon at 9:00 AM by Loftis Consulting

For small businesses, access to working capital is critical to day-to-day operations, business expansion and ultimately long-term success.  Sales Partnering is an alternate to having your cash tied up in retail inventory waiting for items to sell to get the cash you need for your business today. You can eliminate the constraints of time and money that limit your business. The benefits of Sales Partnering are many:

  • Expand operations
  • Invest in your business
  • Hire more employees
  • Enhance cash flow
  • Create a retail operation

As a business owner, you know how important it is to have cash on hand to pay the bills.  In the recent downturn, many businesses lost access to bank loans, maxed out on their credit cards and do not have collateral to get other funding.  For your retail operations, it may take 90-days or more to get back the money you invested in the inventory and you still need to have cash on hand to constantly restock the inventory.

Sales Partnering is a strategic way to free up cash for what you need to do to make your business a success while at the same time still receive profits from selling retail products.  The process works like this:

  • Your Sales Partner buys and stocks the mutually agreed retail inventory in your establishment
  • Your Sales Partner buys your existing retail inventory for an instant cash infusion
  • Your Sales Partner works with you to create retail marketing campaigns to increase sales at no additional cost
  • Your Sales Partner trains and develops staff to increase retail sales at no additional cost
  • Once a month, you provide your Sales Partner a detailed sales report and pay them the wholesale cost for the product that sold plus a percentage-based fee on the product sold
  • Your Sales Partner restocks your sold inventory and adds new mutually agreed products

For example, your Sales Partner stocks $10,000 of retail inventory ($5,000 wholesale value) at your business. You were able to sell $3,000 in retail product ($1,500 wholesale) in January.  You would pay your sales partner $1,500 reimbursement for the product that sold and to be restocked plus $525 fee (based on a 35% fee rate).  So in the end, you received $975 in January without investing a single dime into inventory.

Not only does your business generate much needed revenue without having to invest in inventory you also have other benefits:

  • Frees up time from inventory management to do other things
  • Retail marketing is now done by marketing experts resulting in increased sales at no additional cost
  • Only a one year commitment which is up to you to renew or not

Sales Partnering is best suited for service businesses where their main business is not retail store operations such as salons, spas and wellness centers.

Loftis Consulting offers Sales Partnering services through its affiliation with Feltis Investments LLC.  To find out more contact Loftis Consulting at info@loftisconsulting.com or check out retail management program details.

| Top Strategies to Increase Profits

Posted in Spa/Salon at 9:00 AM by Loftis Consulting

To have a successful business, you must always continue to not only improve your skill set but also market and upsell your clients. Your business can not sustain itself without this because clients leave for various reasons. Some reasons are your fault and some are out of your control such as a client moving away.  If you did not do any customer building activities then your business would just fade away in no time.  To ensure increased profits and growth you should incorporate these strategies in your business.

Marketing

  1. Gather and share customer testimonials everywhere it makes sense. This can include tactful signs in-house and making sure clients know how to post positive testimonials to the social websites such as Yelp and Yahoo Local.
  2. Create reciprocal relationships with businesses that have the same target customer as you do. For example, a local bridal store and your business could cross-promote each other since a salon and spa business offers a different service and product than the bridal store but both have the same target customer.  This creates a win-win for all involved.
  3. Create a marketing calendar for the entire year by month so that your marketing promotions are well planned and gives you sufficient time to advertise.  Last minute promotions only give you mediocre results.

Retail Sales

  1. It is important that your staff use in backbar the products that you are selling to customers. If they don’t the customer will be confused and thus not buy your product. Wouldn’t you wonder why someone is selling you a different shampoo than the one that they washed your hair with and think it was a scam?
  2. Expand product selection just from spa and salon to products but to lifestyle products too that your target customer would like. For example, candles are a great addition to your product selection.  Who doesn’t love the great scent of candles?

Add-on Services

  1. Many salons miss the opportunity to sell additional services to their clients. If you believe that your client could benefit from the add-on service then mention it to your client.  Add-on services can include hair color, hair trims and short-time commitment services such as eyebrow waxing.
  2. Use pre-booking opportunities to provide add-on services.  A lot of times clients are already getting these services done but just somewhere else. Why not you? Because you never asked for the business. Make sure you do so when scheduling your clients.

As a spa consultant, I believe with these strategies you will be well on your way to increasing your profits in 2012 and beyond.  To learn more about Loftis Consulting and its subscription-based consulting services, give us a call at (312) 772-6105 or email at info@loftisconsulting.com

| Spa/Salon Retail Is Not Just for Salon/Spa Products

Posted in Retail, Spa/Salon at 9:00 AM by Loftis Consulting

Many salons and spas only stock retail related to the services they provide such as shampoos or facial products.  This is a mistake.  Your clientele come to your establishment on a regular basis and have needs beyond self-care products. If you know your customers very well meaning you have defined your current customer such as age range and type of profession such as 25-40 professional women then you should be able to stock lifestyle products that meet your customers needs and expand your retail revenue base.

Additional products beyond self-care may include jewelry, inexpensive handbags and scarves. You should also take into account the individual needs of your customers and the season. For example, during rainy season it would be good to sell umbrellas and hair scarves for the unprepared client.  You could sell flip flops during the summer for clients who had pedicures but not the proper shoes to leave in.  Let your imagination take you and I am sure you have lots of surefire sellers if you take the time to think about it in the context of your clients needs.

As a spa consultant, I believe by incorporating other products you will take your profitability to the next level.

| Client Spotlight: Amazon Natural Essentials LLC

Posted in Client Spotlight, Spa/Salon at 9:00 AM by Loftis Consulting

Founded in the 1970s, Amazon Natural Essentials LLC is a leader and trendsetter in the natural haircare industry in Chicago. Amazon not only offers haircare services in its salon, it also offers workshops and training on maintaining natural hair. To expand on its current success, Amazon opened its own spa in January 2011.

Loftis Consulting was happy to have Amazon as a client and help with the opening of their spa. We are providing retail management services as part of our Spa/Salon Group service offering. Our Retail Management Program provides retail inventory stock, retail shelving and marketing collateral as well as sales staff training to ensure that Amazon Spa is a great success. As we know in the industry, retail sales are very important to the success of your business.


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