From Boutique to Brand: Scaling a Beauty Bar Across Two States
Project overview
THE CLIENT
A passionate entrepreneur and a true marketing expert who built a thriving beauty bar empire. Imagine a sanctuary dedicated to enhancing your natural beauty, both inside and out. This was more than just a facial bar; it offered a curated experience – from expert estheticians and crème de la crème beauty services to a thoughtfully curated selection of skincare products, chic accessories, and luxurious home-care items to nurture your personal sanctuary. Within months, the owner launched a second location, turning both into high-revenue powerhouses. From there, she wanted to capitalize on this success by continuing to expand into additional locations and offering additional services.
THE CHALLENGE
Their revenue was climbing [to seven figures!] – a testament to their incredible services and curated products. But the beauty bar’s brilliance in attracting customers masked a hidden challenge: a disconnect between revenue and profitability. Despite impressive sales figures, there was a cash flow bottleneck and revenue wasn't translating into readily available funds, hindering their ability to expand their team and capitalize on their momentum. (Even though they were bringing in seven figures, this was not enough revenue to cover expansion. The only other option would have been to take out a loan or use personal finances.) Furthermore, they lacked a clear financial strategy, which made it difficult to pinpoint the cause of the cash flow issue and create a meaningful strategy for long-term financial health.
OUR ROLE
The beauty bar owner wanted a full audit of her business to uncover where she could save more money and increase profits. We took this a step further by doing a financial x-ray on each location, specifically highlighting the profit per service and per product so that the owner could see exactly where her revenue was coming from.
We got to work
With our Fractional CFO and Business Consulting expertise, we:
- Audited their profit per service and per product to identify offerings that were negatively impacting profits.
- Established the business burn rate, break even point, and operating expenses to fully understand what profit was needed to survive.
- Tracked product usage, boosted client retention, cross-selling, and streamlined damaged product protocol.
- Created a Cost of Goods Sold (COGS) analysis for services and retail sales.
- Negotiated COGS with suppliers, reducing spend and increasing profits.
- Realigned sales and marketing to prioritize high-margin products and services first.
- Established KPIs for sales by product and service, with bonus incentives for pushing high-profit items.
- Axed low-selling, low-profit services and products to streamline & maximize profitability.
- Created an expansion blueprint with budgeting, forecasting, and a solid organizational structure for multi-location success.
Results
Our audit uncovered significant opportunities to unlock profitability and growth for the beauty bar. Here’s how we transformed their bottom line:
We identified that product costs had never been negotiated. By renegotiating with suppliers and optimizing inventory management, we achieved a substantial 17% reduction in COGS.
Previously, the beauty bar barely broke even due to unaccounted expenses and underperforming products. By implementing our recommendations, we increased their profit margin by a remarkable 32%.
The newfound financial strength and strategic direction unlocked the potential for expansion. We helped the owner develop a plan for opening four new locations, solidifying their presence in the market.
How we got there:
- A comprehensive review revealed missing expenses like product usage, laundry services, and space allocation. This provided a clear picture of profitability for each service and product.
- We identified low-performing services and discontinued them, focusing resources on high-profit offerings. Additionally, we implemented a system for tracking samples, testers, and employee commissions.
- Leveraging the improved cash flow and profitability, we helped the owner develop a comprehensive plan for expansion, paving the way for four new locations.
Just like our beauty bar client, many businesses struggle with unseen financial roadblocks. Our team of experts can provide the clarity and strategies you need to unlock your full potential. Schedule a call to discuss your specific goals and how we can be your partner in achieving them.