For most small business owners, budgeting is not fun. But if you don’t budget you won’t grow and if you don’t grow, you won’t survive. So if you are reluctant to budget, reconsider how much budgeting can do for you. Treat it like a high-stakes game, that when you win, deserves a big celebration.
Even if you already do some type of budgeting, consider this. Budgets deal with three things.
How much money your services bring in.
How much it costs to provide those services.
How much money is left over.
Keep A History Of Your Total Income
Stylists and salon owners should keep track of the money they earn each month and should be able to break that figure into income for each week of the year. Fifty-two weeks of income that can be compared year, after year, after year. By measuring your weekly success, you are better able to plan for busy months and improve your results during slow business periods.
Action Item: Buy a ledger from an office supply store to keep track of your weekly sales totals. Don’t forget to add in the cash sales that you receive. Think about keeping a separate category for the types of services you provide and put your tips into their own category as well.
Keep Track Of Your Expenses
Use a debit card to make all of your purchases and pay for your business overhead. If you pay rental for your booth, withdraw the amount from your account in cash and give it to the salon owner. That way, you have a complete record for your budget and for the Internal Revenue Service.
Everything should be placed into a major category such as; supplies, booth rental, advertising, and education. Be sure to have a miscellaneous category but make a note of what items go there.
Action Item: Keep track of your monthly expenses and divide those expenses into average weekly costs. Place your costs into major categories that you use each month.
Deduct Your Average Expenses From Your Income Each Week
Some stylists wonder where the money goes and why it goes so fast. With a budget you won’t have to wonder anymore. It’s all written down in black and white. Some weeks you may pay out more than you take in. That happens in business. But overall, you’ll see the results of you hard work over the year.
Action Item: Measure your financial income and deduct your expenses. Then estimate how much you earn each hour by dividing your profit (income minus expenses) by your total working hours. This will show your financial productivity.
Logan is founder of Donna Bella Milan hair extensions and lashes and author of the Donna Bella weblog.