Today’s hair and beauty industry landscape is more competitive and more complex than ever. Every salon owner is aspiring to best practice and seeking fresh ways to make their business more efficient and profitable. The challenge is real: No one ever said that being captain of your own ship would be easy.
You have a constant stream of “financial” things to stress about – paying bills, keeping on top of taxes, managing employees and more. As a salon owner, you have the added challenge of keeping track of your clients and your ever-shifting appointment book.
No one’s born with money management skills. It’s like learning to drive a car or mastering a musical instrument. When you don’t know how, you can feel frustrated and disappointed in yourself. But when you re-focus that frustration into intent towards learning, you can make progress fast. It’s never too late to get feisty with your finances!
So, how do you get all those “money” balls in the air and keep them there? Start here with my top five tips for managing salon finances.
1. Whip your budget into shape
You need to know what it costs to open your salon door each week. Identify your salon’s weekly income and plan a budget knowing your incomings and outgoings.
A budget is a roadmap; a plan for your spending that helps you make smart choices with your money. Our “tap + go” society makes it far too easy to spend hundreds of dollars without a thought. A budget will help keep you on the right path.
To prepare your salon budget, total ALL your annual salon costs and divide by 52 to give you a weekly figure. Then review your weekly spending to track how you’re doing. Consider having a conversation with your landlord about paying rent weekly instead of monthly. Look into making similar arrangements for power and phone expenses.
When additional debts crop up, break them into bite-sized pieces and set a goal date to pay them off.
Finally, set alerts on your phone to remind you to prioritise and analyse your budget progress weekly, monthly, quarterly and annually.
2. Get accountable
Who’s keeping you accountable for your weekly salon finances? Who’s going to check in on you and give you a nudge when you’re struggling? No one said it would be easy, but having someone asking, “How’s it going?” can really help.
Choose someone you can trust to call you out on your BS excuses. That someone needs to be honest and tell it like it is. For my coaching clients, that person is me. And for me, when I have a goal to achieve whether it’s to work with a certain number of clients, to present on stage or even to lose those extra few kilos that seem to find you in winter, I share my plans with someone I trust. It’s easier to let yourself down than that other someone.
3. Face-up to tax and superannuation
They’re the big things that everyone tries to ignore. Don’t kid yourself – you can’t hide from your tax and super obligations. You need to face them head on and get them under control. The good news is, it’s not as tricky as you think.
You just need to be absolutely realistic about how much you have to pay on a regular basis. Work out how much you owe every quarter. Multiply it by four, then divide it by 52 and you have the weekly figure you need to save into an offset account so you have the funds available to pay your obligations on time.
4. Rein in your supplier accounts
It’s so easy to let your bills get out of control. One or two slip away and all of a sudden you have a stampede of overdue notices coming at you. Start reining it in today.
Make a list of what you owe, the bills that are weighing you down and any outstanding long-term or short-term accounts. Then:
- Set do-able goals to pay back these amounts
- Identify weekly dollars coming in and going out
- Consider what you have committed or promised to pay back with creditors or suppliers
- Stop impulse buying; learn self control and educate yourself about money to avoid looping back into the debt spiral.
Once you’re on top of your bills (or maybe you already are), set yourself a stock budget so you never get behind again. Promise yourself and your accountability buddy (see tip 2) that you will never again lose control of your accounts.
5. Build a buffer
A buffer lets you ride out the natural ups and downs of salon cashflow without the tears and stress.
Plan to save towards your buffer each week – make it part of your budget. The amount will vary from salon to salon, but if you start with just $20 to $50 a week, you’ll get there. Transfer the money to a separate account and don’t touch it until it reaches your buffer figure. Once you hit your goal, transfer the buffer back to your business running account and never (ever) let your account go under this amount.
Get a handle on your salon finances
Now it’s over to you. It’s time for you to plan, prepare and work at never having to feel stressed about your money management again. Follow these five tips and you’ll be on your way to managing your salon finances like a boss.
For more salon wisdom email ZING Coach Marie Drever at email@example.com or visit www.zingcoach.com.au.
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Editor’s note: This article was originally published in 2018 and has been updated in December 2020 for relevance.