Rewind and think back 10 years. What three financial decisions could you have done better?
It’s always easier looking back. My three are clear to me (now):
- slow down before you speed up on any financial decision
- remember to plan, plan, plan
- continually project a 3-5 year financial plan.
Money mastery comes with experience and there’s no time like now to get started. First, let me explain why sound financial decisions are the cornerstone of your salon business.
Imagine a big football game where you can’t see the scoreboard. You’d never know who’s winning or losing. If you don’t watch your business scoreboard, you can’t identify where to put your focus. It’s like running your business blindfolded. As Warren Buffet, considered one of the most successful investors with a net worth of more than $83 billion, famously said: the language of business is accounting.
Are you ready to learn the language? Start your money mastery journey with these key steps
1. Remove the blindfold and focus on your numbers.
Knowing your numbers is the key to pivoting your business into the future. Right now, as businesses re-emerge from the global shutdown, it’s even more crucial. Watch your numbers coming in and your numbers going out. For salon owners, I call this your ‘business summary report’.
Look into your salon’s business summary and shine a light on the KPIs.
Learn to love reading the numbers, and learn how to read your business summary.
As a salon owner, your key KPIs to focus on are:
- total weekly turnover
- average client spend
- number of clients
- number of retail products sold
- number of specialised services delivered
- detail versus client number
- lost clients
- new clients.
When you know your KPIs, you can better understand where to focus your energy in your business, for example:
- designing promotional activities
- delivering team training
- improving team culture
- increasing service levels
- tweaking the client journey
- boosting client retention.
Thoroughly understanding your business summary learning about your profit and loss statements, and doing tax planning with your accountant well before tax return time are all essential for financial success and mastery of your numbers.
2. Where did you spend your grants?
If you’ve been fortunate to receive government grants and Jobkeeper payments to help your business (and our industry) stay afloat, review where and how you’ve spent the money. The lockdown has likely allowed you critical thinking time to review your budget, oversee expenses and make adjustments where necessary. Make it count! Money is a common factor when we think about stress. Make sure you feel more confident about money by saving for a rainy day and having a buffer of cash in your accounts to help you weather any tough times ahead. If it’s smooth sailing (and we
all hope it is!) you’ll have a nest egg ready to fund salon improvements or a complete revamp, or to onboard your next superstar team member.
3. Future-proof your accounts.
Future-proofing means there is always enough money in the bank for everything. I mean everything. Now we’re talking financial freedom! Start by revisiting the costs to open your salon door in a spending plan (also known as your budget). Go through your current bank statements to confirm your outgoings.
Cash flow is the oxygen for your business – set it up for success. Having buffers, or buckets of money as I call them, means security for your future. These ideas will kick start you – areas to budget in to your business and personal spending plan. You should include these amounts in your budget as a weekly transfer.
- tax, including personal and team ‘pay as you go’
- profit account or dividends
- superannuation – team and personal, with up to $25,000 to reduce your taxable income
- salon improvements.
- white goods and household items
- home improvements.
Once this is set up, stick to it and you’re on your way to money mastery. You’ll be playing the ‘business game’ at a whole new level.
4. Make your weekly overview a must-do.
How much time do you devote to reflecting on results? As a salon owner critical thinking time is a must for financial success and freedom to do what you want.
Every -single- week, create time and space to think. Treat this as a non-negotiable weekly task, especially if you’re looking to move the needle on your business to the next level. Slot it into your diary as a recurring schedule so you have time to review or journal where improvements could be made to pivot.
Don’t forget to celebrate your weekly wins, however small.
5. Bring in more dollars to your salon.
This has everything to do with your plan of growth.
But let’s start with your client journeys.
Trust me – a makeover of your client experience will take your average client spend to new levels.
It’s been proven time and time again, that in our industry, clients value the quality of their in-salon experience.
Sit down with each team member and talk about why clients aren’t returning.
Prepare a 6-12 month marketing plan with a showcase product of the month to tease your clients’ curiosity. Map out an education plan that will keep your entire team ahead of our industry. Schedule team planning days to inspire, encourage and involve everyone in the process of your big picture vision, values and purpose.
Let’s face it, we all love to be involved and work together to plan the path ahead.
Remember: results happen with measurements; they don’t happen when you’re in reactive, stressed mode. Take control, put the steps into action and start mastering your money like a boss.