WOOHOO! You have made it! You started with a dream of owning a salon and now you have made it! You and your staff surely have the skills to pay the bills and keep customers satisfied, but when it comes to salon success and finances , do you have a good grip on how to handle them best? Oftentimes finances are a huge hurdle for salon owners , especially owners who have just opened their own salons. Many people who open a salon have relied on their skills as a hair professional to grow their business and haven’t had to pay much attention to the financial details. Finances are the biggest reasons why salons fail. Understanding your finances in detail can help you create a thriving business that will last a very long time. The nice thing about this is that finances are not as hard as you may assume!
Get Familiar With Technology
Keeping up with bills and expenses can be confusing and messy especially when you dont have a system in place. There are amazing software companies that have developed programs to help businesses keep track of finances and billing. An even better aspect is that there is salon specific software that will do it all for you. Salon software can keep track of your scheduling, communication with clients and even keep track of finances for you. These apps that do it all are the way to go. After you figure out which app you are going to use, dive into the nitty gritty and really understand how that application can best serve your business and how you can keep track of finances.
Pay Attention To Staff Productivity
Your staff and payroll will be your largest expense as a business owner. It is likely that you will spend about 50% of your earnings on payroll. The employee productivity is so important for your success as a business. You will want to figure out who your highest earning employees are and also who the lowest earning employees are. Knowing who is on the lower end of the spectrum will allow you to focus on training and education for those employees to increase their numbers and bring up revenue. In order to find out these numbers you will need to take each employee’s earnings and divide it by their hours worked!
Understand Your Financial Statements
Physically laying eyes on your cash flow is great but understanding and evaluating your business’s financial statements is even better. Precisely estimating your salons cash flow is essential in order to have a successful business. Knowing these aspects in and out will allow you to protect yourself from running out of money or coming up short. You can use a spreadsheet template for cash flow to accurately determine your cash flow. You will need to know all of your bills for the entire year as well as your payroll expenses and any other miscoulous expenses that may occur. If your expenses after the valuation is made end outweigh your income you are in trouble. You’re going to need to make some big changes. The prophets coming in need to be higher than the expenses going out in order to stay a float
Analyze All Aspects
Knowing you’re bringing in more money than you are pushing out is obviously very important but getting even more into detail and learning about those values will make for an even more successful outcome. You should know which products are purchased the most as well as which products are not purchased often. Knowing which days are slowest and which days are super busy is important. Also which hours the salon is busiest on each particular day can help as well. Knowing all of these details will help you to make changes to your salon as needed and focus on the slower aspect to enhance them in order to bring in more business.
Have A Goal To Reach
Having goals through all areas of life is proven to have better success outcomes. When you have something to work toward you are more likely to focus on those areas and reach a goal. Goals should be realistic and also far fetched. It is definitely ok to have multiple goals for your life but focusing on what’s attainable is best for short term success. Financial goals are important in business. Having a financial goal allows you to really narrow things down and reach your goals while bettering your business. Taking your revenue and adding to it will allow your business to grow and your own paycheck to become higher!
Know When Your Slow Season Is
It is inevitable that you will have slow seasons in your business. That is just part of life. Now your slow season may not actually be slow. Your idea of a slow season could be another salon’s idea of a busy season. Just because it’s a slow season does not mean you won’t be bringing in money but knowing when to expect business to slow down will allow you to plan accordingly. Slow seasons are a great time to do training and freshen up the salon. Also running promotions during those times can help generate additional traffic.
Know How Credit Works
Credit cards can be dangerous if they are not used correctly. Your business credit card should not be used to hold debt for your business. The credit card should be used to collect points and use the benefits they give you. Holland debt on a credit can be detrimental to a business because of the interest rates adding even more debt. Putting expenses on your credit card in hopes that your business will take off soon can be risky. Make sure you are being smart with credit and not using it for unnecessary aspects.
A successful business is absolutely attainable if the tools are used properly. Save money as much as you possibly can and stay on top of the expense for your business. Organization can help you to not miss things and fall into the cracks of debt. With a strong foundation of finances your salon will be destined for greatness!