Successful salon and spa management chapter 3

Operating costs
The day to day expenses incurred in running the business, such as sales and administration, as opposed to production
Gross income
An individual’s or business’s total income before taking taxes or deductions
Profit
The positive financial gain, after all expenses have been subtracted, from an investment or business operation
Capital gain
Profit that results from selling stocks, bonds, or real estate at a price that exceeds the purchase price. The result is a financial gain for the investor
Capital investment
Money that’s invested in the business with the expectation of income, and recovered through earnings generated by the business over several years
Gross sales
The total amount of money taken in by the salon and spa during the year, overall sales, before deducting operating expenses, cost of goods sold, payment of taxes, or any other expenses
Economic condition
A state at a particular time; “a condition (or state) of disrepair”; “the condition of finances”
Wages of technicians
Wages paid to productive workers to turn out a finished product- hair stylist, manicurist, estheticians, nail care specialist, and massage therapist
Wages of non-producing laborers
Wages paid to employees who do not directly produce income – administrative staff, front desk associates, Salon & Spa managers, shampoo assistance, beginning of personnel ( those who did not work on customers themselves), and repairment (those who keep the equipment in working order)
License
Means to give permission; a license may be issued by authorities, allowing an activity that would otherwise be forbidden
Retirement plan
A special savings account, such as a 401 or Roth IRA where an employee they differ as part of his or her current income into a tax shelter, where it will grow tax-free until the employer withdraws it, or make contributions into the account from after-tax income, or any gains on the principal or text free
Rent agreement
A contractual arrangement between two parties were the landlord agrees to rent the tenant for the agreed amount of time
Property tax
A tax that a property owner is required to pay, determined by the value of the property owned
Depreciation
A decline in the value of assets
Cost of goods sold
The inventory costs of those goods the business has sold during a particular period of Time
Salon & Spa expenses
40-50%
Supplies
5-10%
Rent
5-10%
Cleaning and maintenance
2.5-4%
Towels and linens
1%
Utilities
5%
Marketing and promotions
5-10%
Depreciation
4-6%