Rebooting your business finances
Published
10th Feb 2015
by bathamm
If your business performance is getting slow or sluggish, a business reboot will refresh and revitalise all your systems and put you back in control. Following last month's article on management, it’s now time to focus on rebooting your business finances, writes salon business expert Antony Whitaker.
Imagine for a moment you are buying your salon. After taking a good look around and making an initial assessment, your next step would be to hire a professional accountant to do a full business audit, assess the business's worth and carry out the necessary due diligence from a financial perspective. As with most major purchases, it's a case of 'buyer beware', and though there are always cost savings and shortcuts to be made, assessing a business's financial viability before you make that commitment is one thing you absolutely need to get right.
Even if your business is established, are you are paying for it in blood, sweat and tears and maybe propping it up with loans and your life savings? If so, you’re actually paying for it every single day – and probably far too much.
You need to break the cycle. Asking yourself searching questions is a powerful way to get the focus right. As salon owners, we must understand that these questions are vital, and cannot be passed over to someone else. If you own a business the buck stops with you, and financial ignorance is no excuse; the need to be financially savvy goes with the territory.
As a starting point for your financial reboot, ask yourself the following questions.
- Do you have systems in place to monitor and ensure that everyone on your team is contributing to bottom line profit? If not, why not, and what are you going to do about it?
- Is your business an asset or a liability? Remember, an asset puts money in your pocket; a liability takes money out.
- Is your business paying you what you would need to pay someone else to do the same job?
- How long is it since you gave yourself a pay rise?
- How long is it since your salon had a price rise?
- Do you have systems in place to monitor the percentage of salon revenue going out in rent, stock and employee costs, etc., and do you benchmark those costs against a budget?
- Do you have systems in place to show your salon's profit target and results on a quarterly basis?
- Do you know your break-even point?
- How long since you re-evaluated the expected weekly revenue each stylist should generate in services and retail?
- Do you have the understanding and systems you need to react accordingly when you are not meeting budgets?
- Do you even have a budget?
- Would you buy your business? If not, why not?
