As a salon or spa owner, you wear many hats to ensure your business is booming. Apart from tending to your customers’ needs for beauty and wellness, you also hire and manage your staff, coordinate with suppliers, and of course, manage your finances.
While you’ve become quite an expert in providing exceptional service and treating your workers as a professional glam team, you might find it challenging to handle your business finances alone. Well, most hands-on business owners can relate to your concern about numbers and books. However, it’s something that salon and spa owners need to learn and do well since your business’s success lies in managing your finances.
Managing your salon or spa’s finances can be challenging, as you’ll need to keep track of everything you earn and pay on a daily, weekly, monthly, or even yearly basis. You’ll need to write down all amounts—from supplies to payroll, utilities to taxes.
There’s no need to stress and pull your hair out. Here are some tips and tricks to help you get a hold of your numbers so you can reach your salon or day spa business goals.
Managing Your Spa or Salon’s Finances
Handling your business finances helps you maximize your earnings, track expenses, and ensures you have enough money for day-to-day expenditures. It can also fund your payroll or let you save for equipment upgrades. Sound money management allows you to stay on top of your bills and helps you comply with taxes without giving you so much stress.
To effectively manage the financial side of your business, you’ll need to do one or more of the following:
- Know Your Numbers
Your cash flow is one of the basics of managing your salon or spa business. You need to keep track of money—money that customers pay for your services and money you use to pay your employees, rent, utilities, suppliers, and even taxes.
Ideally, you’d want to have more revenue than expenditures. Your cash cycle or how money flows in and out of your salon or spa can tell you if your business is doing well or if you’ll need to do a few things to improve its financial standing.
- Use Salon/ Spa Management Software
While you can do well writing down all these in a notebook or using an Excel spreadsheet, you can make money matters more convenient with salon management software. This app can help you do the math for your revenue, sales, and expenses. It can even provide a detailed list of how much you earned per customer, income by the length of the appointment, and even inform you how missed appointments and no-shows can affect your business’s finances.
These bookkeeping tools can help you manage your cash flow and even schedule payments to suppliers and utilities. You’ll need to make sure that you update it every week or once a month at the very least. You may also need to check its compatibility with your appointment software and POS system to make bookkeeping a breeze.
- Create A Budget
You’ll be able to create a budget based on the figures from your cash flow. You can then estimate your income for the week, month, or the entire year so you’ll have enough cash for your business expenses.
After which, you can set up a budget based on your numbers and schedule payments for rent, utilities, payroll, insurance, salon and day spa supplies, taxes, and other regular expenses. It’s best to have a weekly budget that ensures you have enough cash to help you get by and one that can help you make small contributions towards monthly expenses such as rent and utilities. You can set aside $20-50 in a week so you can complete payments before your due date. Once you have a budget, make sure to stick to it to keep you on top of your finances.
- Explore Additional Revenue Sources
Your cash flow shows your business’s financial status. In case your expenses exceed your projected revenue, you’ll have to think of several ways to drive customers to your door and keep them coming back for more.
You can use your estimated income to plan peak and lean season promotions. Come up with bundled services, loyalty cards, or group packages to ensure all salon seats are filled even during lean months. Offer birthday treats and referral incentives so customers know and feel valued by their favorite salon or day spa.
Retail sales can also provide additional income. Allow your staff to use the products themselves or have them demo the product so customers can see how they can extend their salon and spa experience by availing of these items.
- Set Up Payment Options
You’re in the beauty and wellness business to gain profit, so you might as well make the most of it. Look for ways to add value to the services your salon or spa offering.
For example, a cosmetic surgeries surcharge program can provide you with additional revenue by eliminating processing fees for your customers’ services such as skin tightening or stretch mark removal. The surcharge fee of 3-3.5% went to you when customers chose to pay with credit cards. This amount may seem minimal when taken per transaction, but add it up to a month or a year, and you’ll have additional income just by collecting surcharge fees. You’ll need to advertise this service in your salon or day spa and explain how it goes so your customers can take advantage of the program.
You can also maximize profits by offering flexible payment schemes for your customers to pay in easy installments. You can even come up with options for tipping, either in cash or using an app that goes straight to your stylists or attendants.
- Implement Cost-Effective Measures
Aside from adding value to your various salon or spa services, you’ll also need to look for ways to cut down on expenses. You can choose to implement cost-effective strategies such as:
- Buying supplies in bulk from a salon and spa supply distributor
- Using a software program to schedule appointments with the customer’s preferred stylist
- Promoting your business online through promotions and relevant content
These techniques can help lessen costs and provide benefits to your salon and spa business at the same time.
- Save Up
Managing your beauty and wellness business goes beyond having enough cash for day-to-day expenses. You’ll also need to save for a business emergency fund to cover your operations come a lean season or some other unforeseen circumstance.
Saving 5% to 10% of your daily sales can also help you upgrade your equipment without taking on large loans. A pro tip is to have a separate account for your savings, so you’re not tempted to take any amount until you reach your savings goal.
You’ll also need to save up for your retirement. Your self-made boss status implies you have no other pension scheme aside from yourself, so you’ll need to set aside a modest amount towards your retirement fund. Ultimately, all the hard work you’re doing ought to give you a comfortable life in the future.
Managing your day spa or salon’s finances has its triumphs and challenges. As you oversee your cash flow and set a budget, you’re able to stay on top of your payments. It can also help you look for creative ways to increase revenue and add value to your salon and spa services. You’ll also be able to save up for necessary upgrades—even your future just by managing the numbers on your beauty and wellness business.