No doubt - to run a successful lash business, managing your finances is so vital.
Your profit is at the centre of EVERYTHING. Whether or not you love your work, at the end of the day we all do it to earn more for your business, for your team and to afford a lifestyle you deserve!
If you think about it, it’s really simple - it’s a matter of spending less, or finding ways to earnmore.
If you’re after more income growth then it’s SUPER important that you have your lash salon’s finances under control. Obviously, keeping track of receipts and entering data into spreadsheets may not be the most fun task in the world.
But once you see your bank account getting fuller than your client’s lashes, you have a sure-fire sign that you are doing something right and on the right track!
What does it mean to have a solid handle on your finances?
It means that you can set solid goals and benchmarks, while being able to track your progress against them. This also helps you to understand how much to charge for services, where to invest more in your business, where to cut back costs. Overall, having a good understanding of your financial position gives you a tangible plan of where you are and how to move forwards.
In this guide we’re going to be giving you somesimple, yet super effective tips that will help lay a solid foundationto have your lash empire thriving well into the future! So let’s get started.
Set up a Separate Bank Account
One of the very first steps in taking control of your salons finances is making sure youseparate your personal money from your business’ money.
Keeping your personal and business expenses separate will make thingsway easier when it comes to some of the other topics we’ll cover here (like tracking expenses) but will also make tax time a lot less stressful.
Most banks only charge a very small account keeping fee to open another account (usually around $5-$10) and it’s often completelyfree if you’re making regular deposits into the account.
Just make sure it’s linked with a debit or credit card you can use to make business purchases.
And if you open your account at the same bank you already do your personal banking then you can have your accounts linked so that it’s simple to transfer money from one account to the other when you need to take your profits or inject some more money into your business.
Set up a Bookkeeping System
If you’re just starting out, it doesn’t matter too much whether this is done using a simple Excel spreadsheet or some fancy accounting software like Xero or MYOB.
It might be a good idea consult your accountant to see what best fits your business needs (depending on what stage your at and and the number of clients you have) and their systems, but we’ll quickly cover the some pros and cons of using accounting software here:
They link to your bank account to automatically track income and expenses
They make digitizing receipts easier (Quickbooks make this really easy)
Can be used to invoice customers if you charge online
Can be used for employee payroll if you have staff
Can be expensive (most start at around $50 a month) especially if you need to hire someone to help out
Steep learning curve
Can take more time than using a simple spreadsheet if your business doesn’t have a lot of expenses
Track Your Income & Expenses
Set a regular time where you can sit down and track your income & expenses.
This should be done at least every month but the more frequently you can do it the less daunting it will be in the long run!
Having a record of all your income and expenses is known as aprofit and loss statement. It’s what banks want to see if you apply for a business loan, but most importantly it helps give you an overview of your business’s financial health.
For the sake of simplicity we’ll provide examples of how to track these using a simple excel spreadsheet.
a) Tracking Income
If your salon has different sources of income eg… services, aftercare retail, training etc you should track each one in a separate row.
If you offer different services such as lashextensions, lash lifts, brow waxing etc you may even want to track each service separately so you have a better overview of which services are providing the most income to your business over a long period and be able to track any changes in each one.
Here's an example of how you might track your monthly income…
b) Tracking Expenses
Make sure you’re tracking all expenses related to your business no matter how big or small. The little things can start to add up quickly.
c) Calculate Profit
Here comes the fun part - once you have your income and expenses tracked - let’s work out your PROFIT (INCOME minus EXPENSES)!
Your spreadsheet should look something like this…
There are all kinds of other things you can do with your spreadsheet to make it more neat and organised. We encourage you to do them if you’re so inclined, but the above is what you should have as abasic, bare minimum to keep track of what’s going on with your business.
If you have to pay GST (speak to your accountant to find out) then you’ll also need to keep track of this as well.
Review Your Finances Regularly
At least each quarter (every 3 months) you should sit down and review your income and expenses.
What you’re looking for are
Opportunities to generate more income
Opportunities to reduce your expenses
Got a service offering that doesn’t take as much time to perform as the rest?Then maybe you need to look at pushing that service harder by offering specials. Maybe you can bundle it on top of another service at a discount!
UPskilling could be key. Depending on where you’re located and the density of other lash salons in the area (or if you’re in a busy area where speed is speedy lunchtime lashing is an upsell!), a key way to increase your earnings is to elevate your skills. The more clients you can fit in in a shorter period of time, the more you can earn.
If you’ve noticed that your aftercare retail sales have dropped maybe you need to look at ways to upsell your clients on the products you offer - always lead with the benefits & find a way to package perks for repeat visits & service bundles. Things like referral discounts, strategic marketing surrounding trending beauty looks and other client-first marketing techniques could help in this respect too.
Maybe there are certain expenses that areincreasing over timesuch as your utilities (shop around for other energy providers,etc.).
Maybe the cost of your stock has increased over time while the number of services you’re providinghasn’t - seek out suppliers who offer bulk discounts, or look at changing the frequency at which you order new stock to make it more cost effective)
Look for any opportunities you can find to make more money. Even if they seem small, these will add up over time, especially if you go through each category with a fine tooth comb one by one.
Once you’ve tracked things for a little while you’ll also have a good baseline of how much money you need to set aside each week or month to cover off your expenses. From here you’ll be able to do a detailed financial plan and goal setting for your business (a bigger topic that we’ll cover in a separate article!).
Speak to your accountant to find out if you should be charging GST. If you are then you will need to be putting aside the GST to pay the government each quarter and should also be tracking this in your spreadsheet or accounting software.
Keep track of your receipts & Invoices
If you don’t do this you won’t be able to claim these expenses at tax time.
Make sure you’re keeping any invoices or receipts for ALL business related expenses.
We highly recommend digitizing them (scanning them or taking a photo and storing them online). This will ensure that you have a backup if the physical copies are lost or degrade over time (receipts will fade).
If you’re using bookkeeping software this feature should be available, but if not there are a number of great apps that make it simple. Such as:
Receipts by Wave for Business
Make sure you know what business expenses to claim
Again - make your accountant your go-to! There could be a whole heap of things you’re not claiming and these WILL add up, so find out for sure.
Here are some often overlooked expenses that you might be able to claim:
Utilities for your home salon
Self-education expenses such as beauty magazines, trade journals, online training courses, etc.
Internet & Phone
Laundry expenses for occupation specific clothing
Stick With It!
To recap, make sure that at a minimum you’re doing the following
Using a separate bank account for all business related purposes
Regularly tracking income and expenses
Keeping and digitizing your invoices and receipts
Regularly reviewing the businesses profit and loss statements
Looking for opportunities to increase income and reduce expenses
Speaking with your accountant
While there is so much more to running a successful lash business, the tips we’velisted here will lay a very solid foundation for your business from a financial standpoint and help it thrive long into the future. Good luck and we can’t wait to see your lash empire grow!
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