Best tips to create a financial plan for your hair salon

Only with the help of a hair salon financial plan will your business truly prosper. But wait a minute, formulating one wasn’t part of your curriculum in your beauty school, and economics probably isn’t your forte - should you begin to panic? Certainly not! You’re made of sterner stuff than that, and creating a simple, yet highly effective financial strategy is only going to be beneficial for your business. So here’s how to get started!

Start with...

Why do you need a financial plan and how should it be organised? These are probably the first questions that come to mind. Simply put, this kind of strategy is used to help you effectively distribute your finances in order to better run your hair business. Obviously, this includes taxes, utility bills, rent and business supplies, but also marketing expenses (ads, posters, etc.), staff salaries (if you're an employer) and miscellaneous costs (supplies for events, gifts for clients, etc.). By now, you probably have a financial plan for basic expenses like bills, staff salaries and retail restocking, however, it is also essential that you create a strategy for other expenses as well.

Obviously, you need to prioritise certain expenses over others - namely utility bills, staff salaries and restocking costs, as they’re essential to your operating. Only after paying these should you focus on other areas of your business. To aid in managing these costs, consider creating a digital spreadsheet and include expenses and earnings. Once you’ve made the essential payments, you ought to focus on areas related to marketing and other expenses.

Your goals

Are you looking to implement marketing campaigns in order to attract new customers? Maybe it’s time to do some remodelling or shop for some new equipment? Perhaps you’d like to reward your most loyal clients with a small gift of gratitude in order to tie them closer to your business? You need to have a financial plan ready in order not to mess things up here! Start by prioritising your goals and evaluating the expenses associated with them. Once you have a list of top-priority goals, your next step is to realise them.

Timing it just right

Simply pouring your budget into marketing campaigns, remodelling projects or wondrous gifts for your closest customers isn’t exactly effective financial planning. Sure, you might get lucky and have a boom in sales, new clients and visits, but what happens when your timing is off? That’s right, allocating your budget to the wrong goal at the wrong time can have disastrous consequences. Picture investing heavily in marketing campaigns before the holiday season - you promote your one of a kind, art deco themed hair salon or any number of unique treatments via ads on social media and Google. Throughout the month of December, you get a downpour of clients (like every year), but then something odd happens - you no longer have that great of a budget for marketing after the holiday season and New Year, resulting in a very slow start in spring.

But what about creating a financial plan of a hair salon focused on remodelling or purchasing new equipment - surely allocating your budget anytime throughout the year for such projects is fine, right? The truth is, you should ALWAYS have a backup budget for such endeavours, especially for remodelling projects, as they can quickly get out of control. This means that you ought to focus on these endeavours a few months before a busy season. Why? Well, in case you burn through the budget, you can quickly earn back that money during this period. Imagine allocating your entire budget on renovations or new equipment, only to have it follow up with a slow season.

Many hair salons have a tendency of giving customers gifts on special occasions, be it birthdays or holidays, which are highly effective at earning clients’ loyalty and maintaining it. Just imagine being a first-time client at a salon and receiving a free home care kit - that’s all the convincing you need to become a loyal customer. However, handing out gifts left and right also requires a rather large budget. If your financial plan includes a budget for this goal, make sure your timing is spot on. When do you get the most new clients flocking to your hair salon? During your busy months! So make sure to allocate your budget to this then, rather than during slow seasons. Now, how about gifting your loyal customers? Invest in goodie bags for them during slower seasons! Go with something along the lines of "Clients who spend at least £150 during the first 2 weeks of [INSERT MONTH] will receive a hand-prepared home care kit."

Report generation

There’s just one problem - not every hair salon has accurate financial data from which they can create an effective financial plan. And no, collecting receipts and keeping a tally of sales on sticky pads isn’t going to suffice, at least not long-term. A financial plan requires concrete data, which is best-derived from a reliable system like Booksy. This is specially-designed software for hair salons, which not only helps to run marketing campaigns and manage your business altogether, but also provides highly-developed reporting features. Booksy allows you to track daily, weekly, monthly and annual profits, as well as to generate reports for treatment popularity, commissions, staff work times and so much more.

Whether you’re just starting a hair salon or have been in the business for some time now, a reliable salon system will keep you up to date on your earnings in order to help you better manage your budget for your financial plan. Your 14-day free trial is just a click away - sign up today and start managing your salon and finances like never before!