Chair-hour

One station available for one hour. The unit of production in a salon and a perishable inventory: 20 566 are available a year and an hour unsold on Tuesday cannot be sold twice on Saturday.

Chair utilisation

Chair-hours sold divided by chair-hours available. The binding constraint on the business: 51% in Year 1 rising to 66% by Year 5.

Contribution per chair-hour

Price less product cost, divided by stylist hours consumed. Ranks the menu almost exactly opposite to ticket value and is the correct basis for managing the diary.

Column

A named stylist’s section of the appointment diary, together with the personal client book attached to it. A departing stylist takes her column with her.

Debt service cover ratio

EBITDA divided by interest and scheduled capital repayment. Negative in Year 1, 0.95 times at Year 3 and 1.27 times at Year 4.

Development time

The interval during which colour processes on the hair. It frees the stylist but not the station, and managing it with a junior is worth 8 to 12 percentage points of effective utilisation.

EBITDA

Earnings before interest, tax, depreciation and amortisation. Stated after all stylist and founder remuneration.

Prime cost

Product cost plus payroll as a percentage of revenue. Reviewed monthly against a 57% ceiling.

Rebooking rate

Clients who book their next appointment before leaving, divided by visits. Above 55% is the target; the colour client rebooks on biology, the cut client must be asked.

Retail attachment

Retail revenue as a percentage of service revenue. Rises from 13.6% to 20.6% and carries roughly 44% gross margin at almost no chair time.

Revolving facility

A drawn-and-repaid working capital line, held off the project funding table. Sized at R650 000 against a modelled peak draw of R500 000 in Year 4.

Section 20 limitation

The South African rule capping the set-off of assessed losses at the higher of R1 million or 80 per cent of taxable income.

Yield instrument

A price applied to perishable inventory that would otherwise go unsold. Half-price Monday cutting contributes R140 per chair-hour against R0 for the empty chair it replaces.