Whether you are studying to be a cosmetologist, a barber or an esthetician, opening your own salon is always a possibility. The artistic and technical aspects of the beauty industry are often at odds with the pragmatic and orderly aspects of running a business. From payroll to end of year taxes, there is a whole world of finance in which salon owners need to be familiar. The primary goal of any business is to make a sizeable profit. Without the skills to interpret their profit & loss statement or balance sheet, a salon owner will not have the tools needed to determine viability.
According to Bloomberg, 8 out of 10 entrepreneurs who start a business fail within the first 18 months. How many of these failures are attributed to mismanaged finances? According to the Small Business Association there are several:
● Not enough cash reserves – underestimating how long it will take to turn a profit and therefore running out of money
● Failure to price your products and services appropriately – charging too little and losing money
● Inadequately anticipating cash flow – not taking into account that some vendors require upfront payment while products and services sold on credit could take time to hit your account, leaving you with less cash than planned
● Financing issues – not properly utilizing credit in your business
● Tax-related issues – the world of taxes can be a complex and confusing ocean and most small business owners do not have the skills needed to navigate the waters or even understand when it is necessary
Entrepreneur.com spoke with a salon owner in Mount Laurel, New Jersey and had this to say about his business skills:
“I really wish I would have understood business better when I started rather than just having industry-specific knowledge. I was an education junkie but only in the salon business. General education and focusing on sound business principles is really better because [if you’re like me] no matter how successful you are, your success always feels like luck.”
It may feel overwhelming now to take into account how you will ever manage all the financial aspects of a salon. Ron King Academy’s programs are designed teach students business skills that will help ensure their success behind the chair, which can help a salon owner lead stylists in their salon someday.
Share this Post