Most of us decide to work in the hair industry because we love working with people—not because we love working with numbers. If you’re a commission-based stylist working a steady gig at a salon, that’s probably fine.
But if you’re considering opening your own salon, or even if you’re working as a renter or contractor, you’ve got to be comfortable working with numbers. It's crucial to know what your overhead is, how much you need to bring home, and how much you want to invest back into your business, etc.
In short: If you don't know your numbers, you don't know your business.
It’s understandable that you might be a little weary digging into finances, especially if you were never trained to manage books. That’s why we’ve pulled together these tips that you can use to become more comfortable with the numbers involved with running your salon so that you can make sure your business stays profitable.
Tips for Managing Your Salon’s Finances
1. Work with an accountant.
Generally speaking, if you have the funds to do so, we would highly recommend that you find a way to delegate your financial/accounting tasks to someone else, whether that’s an in-house finance guru or a part-time/remote accountant or bookkeeper. Doing so lets you focus your attention on your business and what you’re passionate about, while making sure that your finances are taken care of.
A good accountant should be your BEST FRIEND! This is an area you want to make sure you have set up and secure before opening your business doors.
That being said, this doesn’t mean that you can be completely hands-off when it comes to your money and your financial situation. You still need to take an active role in reviewing your accounts and understanding whether your business is in the black or in the red. But learning how to delegate is one of the most important skills you need as a salon owner and entrepreneur.
2. Think about your pricing.
When it comes to choosing prices for services offered, new salon owners sometimes make common mistakes.
One of the biggest mistakes, which is also common when you’re first getting started, is to underprice yourself to drum up new business in those early days. But that can make it much harder for you to begin charging what you know you’re worth after you’ve built up a loyal following. After all, if someone’s used to paying less for a service, it’s natural for them to push back if you try to raise prices on them.
Another mistake? Choosing an arbitrary price for your services without any reasoning behind the “why.” Services should be priced based on a formula that takes into account your overhead expenses, the cost of product/supplies, payroll, business profit goals, etc.
This way, you can start out each month knowing: “Okay, to meet our goals of making $## this month, we know that we need to book $## sessions”—information you can use to inform your scheduling, your marketing, and more.
3. Find a good payroll system.
Your team members are, quite literally, the people who keep your business running on a day-to-day basis, whether you’re in the office yourself or not. You owe it to them to make sure that they’re paid accurately and on time, every time. Fail to do so, and you risk losing their trust and loyalty and, at worst, send them looking for a new job where they know they’ll be paid on time.
This is why we always recommend that new salon owners find a really good payroll system to manage this process on an ongoing basis. At Salt, we personally use Square Payroll, and we’ve never had a problem.
4. Develop a healthy relationship with money.
More often than not, we’ve found that how you handle your finances is a direct reflection of your relationship to money and your personal money story.
Imagine that money is a person who you’re friends with. What would your relationship with this person look like? Would the friendship be thriving and supportive, or toxic and sabotaging? Do you look at it with hope and confidence and aspiration, or with fear and anxiety and worry?
When you’re financially confident, you respect money. You take care of it, and treat it with the same respect as you would a person in your life. Learning how to become financially confident and build a healthy relationship with your finances—on both a personal and business level—is one of the most important steps that you can take to set yourself up for success.
Want to learn more tips to help you change your relationship with money and realize your worth? Sign up for the Magic of Money Making course with Jamie Sea to learn everything you need to succeed financially!