FOR YOU NUMBER JUNKIES

Being a numbers person, this caught my attention. On July 8, 2009, at five minutes and six seconds after 4 AM, the time and date will be 04:05:06 07/08/09.

This will never happen again!

Well, that particular sequence won’t, but the six figures in order come into play on November twelfth 2013 when at 9 minutes and ten seconds after 8 a.m., it will be 08:09:10 11/12/13.

Oh, wait! On the ninth of August in 2010, when the time and date will be 05:06:07 08/09/10 it happens again.

And don’t forget when it is 06:07:08 09/10/11 on the tenth of September in 2011 it will also occur.

Well, never mind—it happens every so often. So, big deal. But it’s interesting.

TERRIBLE TREND

Larry, as you know, I attended most of the "Surviving" webinar on May 18th and I'd like to show you the depressing revenue trend I've realized for the first two years that my wife and I have owned this business.

I've attached three copies of my sales out of my point-of-sale software program. As you can see, we continue downward in revenues. If my calculations are correct, 2007 was 3.9% less than 2006 and 2008 was a larger loss of 8.4%.

I'm going to have a salon meeting tomorrow with all stylists (8 of them) and receptionists (3 of them). Should I tell them these numbers? Will it scare them too much?

What questions do you have for me to investigate the why's and do you have any immediate suggestions for me?

Thank you for looking at this

Randy

Randy, I hope you are doing well. I am sorry it has taken so long to get back to you. As you may or may not know, I have been out of the office at speaking engagements the last couple of weeks. I was at the IBS Show in Las Vegas this last weekend. Prior to that, I was at the AACS program in Las Vegas. I am sorry about the delay.

I looked at your numbers and I can certainly see your concern. I see no month or quarter where there are any increases. I am curious as to whether or not the same staff was in place this entire time. Sometimes we do see numbers go down because staff has left, pregnancy, or sickness.

I also would be curious as to your average service ticket to staff person.

Your question really is what can you do to reverse this trend. I would presume if you are dealing with the same staff that your staff is also feeling the hit and their commission has decreased. Without more details, it would be difficult to give an answer that I am certain of, but what I have seen many people do is this.

Look at your production software by individual and then meet with your people to determine if they are satisfied with their income. Most likely they are not. The next step is to show them how they can make more money. As I look at salons, I feel there are only five ways to increase the bottom line. These are:

• More clients – referral program.


• Clients come in more often – prebooking.


• Clients spend more when they come in – retail sales – upsell.

• Increase prices – increase your level of competency so you can charge more.


• Cut expenses.

As you can see by this list, four of the five relate to your stylists. Showing them how they can make more money by doing any one of the four items would certainly help your bottom line.

There are systems in place that will help you to achieve the above goals. Setting those goals with your staff and then monitoring those goals and meeting with them on a periodic basis can be the key to helping you become more profitable.

I know this is just basically a general outline of what you can do, but I thought it might help. If there is anything else I can do to assist you, please let me know.

Larry Kopsa CPA

QUESTION ON CLAIMING CHILDREN

Larry, I am supposed to claim one or both of my kids in all of the years-2006 through 2008. The problem is, my wife will not sign the form to release the exemption. Do you have any thoughts on what I should do?

Doug

Doug, unfortunately, you can't claim the kids without the signed Form 8332. If your wife will not sign this form, you will have to take her to court due to a contract violation (the divorce decree). Tax law and contract law are two separate issues. The IRS will not get involved. They say 8332 or no exemption.

If you should claim the children without the 8332 you will receive a notice from the IRS and this could be an audit red flag.

I wish you the best of luck with this situation.

Larry Kopsa CPA

TAX BILL INTRODUCED TO HELP SMALL BUSINESS

Here is a new proposal that would help small business.

Warning: Many bills are introduced that never get passed. This is just a bill that was introduced and has a long way to go before it gets into law.

The bill introduced by Sen. Charles Grassley, R-Iowa, is aimed at reducing taxes for small businesses. Grassley said the wide-reaching bill would help create jobs. "I hope this bill gets bipartisan support," said Grassley. "Job creation is a bipartisan issue and really should be a nonpartisan issue."

Here is a link: Small-business tax bill aims at creating jobs

ARE YOU READY FOR SOCIALIZED MEDICINE?

It was an honor for me to be selected by Nebraska Senator Mike Johanns to be part of an eight-member round table health care reform. There were seven other individuals on the panel representing various aspects of the health care industry. I was on the panel to speak for small business.

According to Senator Johanns, if you don’t want socialized medicine, you better be contacting your congressman to register your opposition. You must do this quickly; it appears that the current administration is hell bent on getting this passed by August 8. It seems like they want to run this through without the public knowing the details. It also seems that is the modus operandi of this administration. “Trust me!”

All of us on the panel realized that the health care issue needs to be solved. The problem is that the issue has been around for a long time. Why is it necessary to push legislation through that would essentially put everyone under a Medicare type program?

There are certainly two sides to this issue. In my comments to Senator Johanns I concluded with the statement that, “there is really no right answer...just a lesser wrong answer to the health care problem.”

I will keep you informed.

Larry Kopsa CPA

QUESTION ON CHARGED TIPS

My employees make 50% commission. For 5 service providers, they were tipped $200.00 on credit cards yesterday. Do you have any discussion on your blog as to whether or not I can legally charge them a fee for charged tips. I am thinking of going to no charged tips if I cannot pass a small fee on to them.

Thanks,
Paula

Paula, thank you for your question. Tips and credit card fee’s are a sticky situation for salon owners and I understand your frustration. I have posted many articles on our blog regarding this issue.

To answer your question: unfortunately you cannot charge the employees for the tips that are run through the credit card machine. This is a business expense of the owner and there is no way around this unless you go to no tipping with credit cards.

I hope this helps and best of luck!

Larry Kopsa CPA

SOCIAL SECURITY MONEY RUNNING OUT FASTER THAN EXPECTED

More news on the Social Security Trust Fund. The loss of 5.7 million jobs since the beginning of the recession, and the payroll taxes that went with them, have taken a toll on funding for Social Security and Medicare, the programs' trustees reported. The Social Security trust fund is on pace to run out of money four years earlier than expected, in 2037, while Medicare is on pace to become insolvent two years earlier than anticipated, in 2017, the trustees said.

The New York Times (5/12), USA TODAY/The Oval blog (5/12)