Mind Your Money - Planning, Budgets and Cashflow
Running a salon successfully really boils down to one critical point: making money.
It is important to know how to manage a beauty salon business and how to make money in beauty business. Your money will work for you and your business will have enough, more than enough when you give it energy, time and understanding. You need to know about your business financially, it is your responsibility
Have Enough Money from the Start
Owning and operating your own beauty salon can be incredibly rewarding. It’s certainly a lot more enjoyable if you can reduce your stress levels by having good financial planning and a realistic approach to how much money it will take to get you to where you want to be.
Ensuring that you have enough money to start or buy a business is essential
. While you are getting established and building your client base, you will still need to pay for all your fixed expenses, so adequate start-up capital is vital to the survival of your salon.
Welcome to Reality – Budgets and Planning!
A common mistake in business is poor planning and unrealistic expectations in terms of income and expenses. From my experience, the 3 most common errors are:
- Underestimating costs
- Overestimating how much money will come in, and
- Failing to recognise that money will be slower coming in than expected.
Obviously the end result of these errors is a serious lack of cash, (or a cash flow problem). Take a realistic approach to salon budgeting. Don’t plan for the best possible scenario, plan for the worst.
If everything turns out better than expected, you will just end up with more money in the bank!
Income isn’t guaranteed until it is in the bank. Cashflow problems can destroy a business quicker than anything else. When planning for cashflow, always be conservative
, allow for slow days and the odd bad debt and have a back-up plan just in case cash flow becomes tight.
Your business needs to be able to afford to grow and you need to manage that growth. Give value for money and charge what you are worth. Determine what to charge based on your costs, your desired profits, the competition and your unique beauty salon features.
Setting tight, conservative budgets is a trademark of successful Hair and Beauty salons and it will certainly make running your business easier. If you find it hard to manage your finances, get advice from someone impartial, such as an accountant.