Opening and running a business is incredibly exciting and fun, but arguably the most important part of running a hair salon is collecting your paycheck. So as a salon owner, you have to learn how to pay yourself.
Salon owners pay themselves based on the work they are put in. This can be hourly or salary-based, as long as they are making sure their payroll and expenses can be met. Here are four budget management tips to make sure you can pay yourself:
- Learn to track expenses
- Utilize cheap/free marketing
- Inventory management
- Limit Utility Use
Learn to track expenses
Learning to track expenses is one of the most common budgeting tips for both individuals and businesses.
Tracking expenses allows you to decide where you can cut back on certain aspects of your spending.
Doing so is a great way to find areas that you can afford to lower your costs and thus improve your take-home salary.
- Methods to track your expenses:
Tracking your expenses can be tough and more than anything can be time-consuming.
Luckily for you, there are plants of apps that can make tracking your expenses that much easier.
Quickbooks Expense Tracker.
The Quickbooks Expense Tracker is a great way to keep track of all of your expenses in one simple place.
The Quickbooks Expense Tracker is available in-app form so you can download it to your phone or computer, or it is also available in an online form.
Pocket Guard is the best budgeting app for those who are looking to keep from overspending.
The app allows you to keep track of your spending to ensure that you stay under budget.
This makes it perfect for any business owner like yourself who is looking to lower your business costs to increase your profit margins.
Another great budgeting app that can be accessed on nearly any device, Truebill is a no-hassle choice for any business owner and is a great starting app.
You Need a Budget (YNAB)
YNAB is a great budgeting app that can allow you to make a very specific budgeting plan to make a very specific goal.
It’s great for anyone who is looking to do what is known as a zero-based budgeting system, which essentially means that you are planning out every aspect of your budget.
This makes YNAB a bit more intense and requires a bit more dedication than some other apps, but the results are worth it.
Goodbudget is a fantastic budgeting app that has a specific feature that makes it different from all of the others on this list.
Goodbudget allows multiple devices to access the account at once, making it perfect for anyone who is looking to share their budget with others.
This is great for a hair salon owner who is splitting their business with another co-owner or possibly with other colleagues.
Utilize cheap/free marketing
Marketing is crucial to the success of any business, so you can’t simply choose to now market and think that you will stand a chance of succeeding.
In reality, if you don’t market your business, you are not going to survive.
Instead, what you want to look for and to focus on is marketing that is cost-effective or in some cases is cost-free.
This way, you are getting the crucial marketing your business needs to survive while also ensuring that you’ll be paying yourself.
- Ways you can market for low/no cost
Social media is a blessing for business owners even if you haven’t figured out why yet.
Creating a social media account and posting on said social media account is completely and free.
This means you can create an account for your business on any social media site for free and you can use these accounts to advertise your business.
Referral programs are programs where customers get a discount if they refer your business to others.
These programs generally work in a few different ways, but with a hair salon, one easy way to do so is to simply ask your customer when they come in if they were referred by someone else.
If they say yes, you can simply write down the name of the person they say referred them and keep a database of all these referrals.
Then next time that person comes in, you can offer them a discount for their references.
This type of system is great and easy for a couple of reasons. For one, customers tend to feel valued when you offer them a discount in this way.
It shows that you value their opinion and that what they are doing had an actual impact on you and your business, which tends to make people have a more positive view of your business.
It also doesn’t cost you much in the long run. While you are losing a little bit of money on the discounted services, the business that person brought in more than covers the discount you are offering.
Also, this type of business tends to expand and branch off, bringing in more and more people over time.
Offer coupons to returning customers
Valuing returning customers is one of the best ways that you can keep your profits up and your business running.
One of the best ways you can show that you value returning customers is to offer coupons for those who return time and time.
This is most often done in the form of a punch card, but it can also be done by simply giving the person a coupon after their appointment.
This also incentivizes them to come back for repeat business as they know they can save money by using the coupon you gave them.
Managing your inventory effectively and efficiently may be a way for your to save a significant amount of money each month.
Inventory management includes keeping track of all of your supplies to determine when you need to purchase more.
But inventory management can also show you what you’re buying too much of and thus what you can cut out of your spending.
For example, if you are doing some inventory management and you realize you have way more of a certain hair color than you do any other color, it’s a safe bet that you simply aren’t using as much of this hair color as you may have expected.
So next time you go to put orders in, you can order less of that particular color. This can save you money but cutting out spending that you don’t need.
Inventory management can also allow you to get into bulk buying.
If you can keep track of your inventory, you can determine how much of each product you use over a given amount of time.
Doing this will let you know when you should order more of a product as you are getting low.
This saves space in your supply areas which opens the door for bulk buying.
While bulk buying does have a higher upfront cost, it has a lower cost per item compared to if you were to purchase these items in smaller amounts.
This will allow you to save a significant amount every month, and inventory management will ensure that you have the space to do so.
Limit Utility Use
Utilities are of course necessary for you to run a salon, there is no doubt about that whatsoever.
You can, however, limit your utility use to save you money over time.
- Ways to limit utility use:
Use LED lightbulbs
LED lightbulbs are known to be eco-friendly and energy sufficient, using less energy to provide the same result that comes with traditional halogen bulbs.
While changing the type of lightbulbs you are using won’t make a huge difference in your energy costs, every little bit contributes something.
Unplug tools when not in use
While this may be a bit annoying when working, this can save you a noticeable amount on your energy cost.
But if you would rather, you can also leave your machines plugged in during the day while your salon is open and only unplug them at night.
This will still save you money and it will make working a bit easier.
Make sure tools are off when not in use
This seems simple enough, but for a lot of salons, they are losing money by letting tools and machines run when they aren’t actively being used.
Even if it’s only for a few seconds at a time, that eventually builds up and can end up costing you.
Check out our breakdown of cost HERE.
Can hair salons be profitable?
Yes, hair salons can be profitable if ran well and marketed effectively.
On average, hair salon owners make around $75,000 a year.
It is important to remember that this number will likely be much lower for you in the beginning but in time your profits will increase.
How much are the start-up costs for a hair salon?
The start-up costs for a salon will depend on if you are purchasing an existing salon or building a completely new one.
If you are looking to purchase an existing salon, your start-up costs are likely going to be around $40,000 to $250,000.
But if you are looking to start your hair salon, your costs are going to be much higher, and somewhere around $100,000 to $500,000.
Looking to start your own Salon? Get the documents you need to get organized and funded here.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.