Guest Article by Gloria Murray, Accountant and Director of Murray Associates Accountants
This is a strange blog for me to write as I’m all about increasing sales. My usual point of view is, there’s only so much you can cut before it starts to have a detrimental effect on your salon. The last thing you want to do is penny pinch and create a scenario where it starts to hurt your clients and your team – as they’ll both leave! However, there’s no point in throwing money away either!
Save Money Without Negatively Impacting Your Business
There’s a good chance that there are some savings to be made in your salon – the type of savings that can significantly (and positively) impact your bottom line. As you know, more profit means more freedom. It buys you the time to have holidays, to stop stressing about paying bills, and the ability to give your deserving staff a pay rise. So let’s have a look at 6 key areas of your salon or spa where you can save money without it being detrimental to your services.
Look at how much your bank charges you. Nowadays, it’s easier than ever to change your business bank account, and there are a lot of banks out there that give an excellent service for small charges (some are even free, e.g. Co-op, if you’re a member of the Federation of Small Businesses).
Merchant Services Provider
If you take credit cards, your merchant services provider might be charging you monthly for both the card machine and every client transaction. There are lots of alternatives out there, so don’t settle for what you’ve got. You can compare them online and find a provider that gives you good value as well as a good service. If you have a receptionist, this is the sort of thing you can get them to do. You don’t have to do everything yourself.
Related | Get more tips like these by trying the #30Days2Grow Salon Challenge!
It’s really easy to end up with loads of stock, particularly when you’re tempted by special offers like VAT-free day. But your stock ties up money that could be used for other things. Besides, because of the way your accounts and the tax system works, the higher your stock figure, the more tax you’ll pay, as it increases your profit. On my “Knowing Your Numbers” Facebook group, I’ve got some videos which explain your profit and loss (P&L) in more detail. To find out about this, simply join for free here.
Use plenty product. I know, I know! I’ve just said watch out for your stock, but this saying was drummed into me when I was training as a hairdresser. You see, if you skimp on how much product you use for a client’s treatment, you end up having to do the job again, and that costs much more money in the long run!
If you’re looking for a simple way to save money, keep an eye on your ‘no-show’ figures. If you don’t measure this just now – or if you measure it but don’t look at it regularly! – it could be costing you a lot of money. Becoming aware of how much no-shows are costing your business lets you put some strategies in place to make sure it doesn’t happen. Sometimes it can be as simple as setting up an appointment text reminder for your clients. Other times, you might need to look at your deposit policy. In fact, if you don’t take one, maybe consider this a time to start?
Make sure your accountant understands how your vouchers work. If you are a Phorest Salon Software client, make sure you use the system to log vouchers. There is no VAT on them until they are redeemed, and they shouldn’t be part of your sales figures until someone has the service. Many accountants don’t understand this, and it could save you VAT throughout the year and tax at your year end.
So there you have it. By cutting down on certain costs, you can pocket substantial savings over the financial year. Just make sure that any money-saving measures you implement aren’t detrimental to the way you run your salon and treat your clients.
Thanks for reading!
Gloria Murray is an award-winning Accountant and Director of Murray Associates Accountants. Based in Glasgow, she specialises in helping small business owners grow sustainable and ethical companies that not only provide a better service to their customers but also contribute to local employment. She also runs mentoring and networking groups for entrepreneurs.