Where do I start?
Start by having a good hard look at your salon’s financial situation. You need to know exactly how
much money is coming in and how much is going out. What brings in the big money at your salon? Is it product sales or services? Are your promotions proving popular? Which are your busiest periods? And where is your money being spent? Staffing costs, rent, advertising? Take a closer look at your financial reports and go over everything with a fine tooth comb. You want to know where
your business is at now before you decide how you can make improvements.
How much work is involved?
Good financial management means good budgeting. It’s boring, but it’s an essential part of running a business. When you set a budget you know where your money is headed and what it’s being used for. Outline all your expenses – how much you need to pay your team, what you’re allocating for advertising and how much you spend on rent. Every little expense needs to be in your budget – those small amounts here and there might not seem like much, but they all add up. The more detailed your budget is, the more control you will have on your salon’s financial situation.
Can't I just do everything manually?
When you’re dealing with financial management, a good operating system is key. There’s a lot of software systems on the market that will take care of all areas of your business – taking payments, ordering stock, paying bills. Shop around and find one that suits your needs. Whatever system you use, make sure it’s compatible with other systems already being used in the salon. Get your head around how it all works so you can be on top of all the financial aspects of running a salon. These systems are useful for generating reports which provide a snapshot of where your finances are at.
OK, what can expect to find?
The right operating system can offer a few insights you might not have been expecting. These little surprises could make all the difference to your bottom line. When you pull all the figures together you might see just how much you’ve been spending on monthly rent - could be time to negotiate a better deal. Perhaps you’ll find out how much you’re losing on no-show appointments – might be worth sending out confirmation texts. Or maybe you’ll find you have a super star team member bringing in more than their fair share of revenue – an appreciation gift might be in order!
When you can see exactly what you’re dealing with, you can think about how to address it. If your financial reports show that a particular day of the week is always a bit slow, step up promotions for that day. Cheap Tuesdays, Tradie Wednesdays, half-price conditioning treatments on a Thursday – there’s lots of options! If your finances are telling you that some part of your business needs to change, you need to address it. Your team is a great resource here – ask them for ideas and start brainstorming!
What else can I do with the information?
Once you have a good handle on your salon’s financial situation, you can set some goals. What would you like your financial reports to look like by the end of the month? How about in six months’ time? A year down the track? Your goals might be small and achievable or super ambitious. Maybe you want to increase product sales, maybe you want to reduce expenses or perhaps you just want to
improve cash flow. Decide what you want to achieve and really go for it!
Goals are important because they give you focus. You’ll be more inclined to push your salon just a little bit more if you have a goal to strive for. Make sure your goal is measurable and has a time limit – it’s important to be really specific. If your goal is a bit general it’s too easy to wriggle out of! Write it down, then be honest with yourself about whether you have achieved your goal. If you have, be sure to celebrate and keep up the good work! If not, you need to come up with a new plan of attack.