If you’re a start-up business or you aren’t financially savvy and get bogged down by figures and jargon rather easily, it can be hard to fully understand the ins and outs of how to effectively turn a profit. In order to do this, you really need to effectively establish and manage your outgoings and incomings.
What do you need to earn £0?
First things first; you need to work out how much your business costs you before you set your prices to decide how much you want to earn. If you don’t get this key information beforehand you could be setting yourself up for failure before you start. Initial cost and outlay will be high with any new business but going forward it’s important to make sure the figures are right.
Do Your Research
To make money you must work out your price list and add a profit on top. Conduct some market research and check out the prices of local salons that are roughly like yours. Check out those that are of a similar size and offer products and services that are alike. The most important thing to do when researching competitors is to look at businesses that have been established for a long time as these tend to be doing it right.
For example, if Beauty and Beyond has been around for over 10 years, relocated to a larger premises, taken on additional staff and have a client list longer than your arm, that’s the type of place that you want to look into and take inspirations from. When it comes to your beauty business, aim for the top and set your sights high!
Take All Costs into Account
You must keep on top of what money comes into and goes out of your business. If you don’t feel confident dealing with numbers, consider enlisting the help of a professional who can do this for you. This will not only alleviate pressure from you but will also free up time for you to focus on other aspects of the business.
Your overheads are anything within the business that uses your profits or earnings to pay for. These can include the following:
• Wages – all members of staff (including you) must be seen as an overhead cost.
• Bills (electricity, gas and water etc.) – these are essential in the day-to-day running of your business.
• Supplies – as a salon owner, having the right supplies is a must, but can become costly, especially retail stock sat on the shelf.
• Rent or mortgage – whether you own your salon outright or rent it, you will have to pay a monthly fee of some sort.
• Advertising and promotions – most salons, especially those that are just starting out, need a strong advertising campaign to start a client base. This can be costly but investing in marketing regularly can pay off in the long run if you choose the correct channels.
Taking all of the above into consideration can seem daunting, but as long as you are charging your clients accordingly and making enough profit, the bills should take care of themselves. Before you take that leap of faith, however, ensure that you feel confident enough to be able to handle the overheads. Hard work and perseverance is everything!