Financial planning alone is not a skill that comes naturally to most salon and spa owners. Finances can be incredibly stressful, especially in the early days when you may be on a tight budget.
Owning a successful salon or spa requires a combination of skills. You must be talented in your craft and ready to rush for clients. On top of that, you also need to have a solid head for a company’s running figures, and that starts with financial planning.
As a salon owner, you will have to make many decisions about cash flow, budgeting, and finances. But do not worry! Just as you learned the art of cutting hair or massaging stress, you can learn to plan your finances. We are here to help!
Basic Financial Planning For Spas And Salons
There are a few key decisions you need to make first when opening a salon or spa. Before financial planning begins, you may need to process special licenses and decide how to hire workers.
You will need basic permits and licenses to open your salon, and these vary by region. Check your local laws to see what types of permits you need and how often you will need to renew them. You may want to consult with an accountant or bookkeeper who works with beauty and wellness companies in your area for recommendations for structuring your business entity and saving for taxes.
You will also hire workers for your spa or salon. There are two main hiring models to consider:
- Commission-based model: you hire specialists and pay them a percentage of what they contribute.
- Booth rental model: You rent space to specialists, who then act as their own small businesses.
Both models have pros and cons. With an employee model, you have more control over consistency, scheduling, and training. With a rental model, you lose some control, but you also reduce the costs associated with paying benefits and payroll taxes. Of course, each country, state, province, and city will have different labor laws, so be sure to consult with a local expert.
All ready? Let’s talk about how to create a solid financial planning strategy to support your business for years to come.
Check Your Numbers
Good financial planning begins with understanding how your business is doing. Fortunately, you don’t have to be an accounting genius today to understand your numbers; You can use any number of great accounting technology apps that do everything from tracking expenses, receiving payments, managing your accounting, and paying bills.
When considering salon accounting software, consider the other applications you use: your scheduling software, POS system, and more. For maximum transparency in your numbers, you will want them to be integrated. You probably want to check with your own accountant or accountant to find out what accounting software they recommend (such as Xero, QuickBooks, etc.)
3 Analyze your numbers
In the past, getting information from your numbers meant hiring an accountant to analyze your books and write reports. These days, you can use salon management software that gives you instant reports on earned revenue, product sales, and other key performance indicators (KPIs).
You need to honestly analyze how your business is doing. That includes knowing how much you’re spending and earning, of course, but also breaking down those numbers in a variety of ways to get as much information about your business as possible, such as income per stylist, income per appointment, length of appointment, missed appointments, and no. introduce yourself, etc.
I hope you found this article helpful. Please share your thoughts, questions, or your own experience in the comments box below.
Have a great day!