3 Things Independent Stylists Need to Know to Increase Profits
In today’s economic climate, independent stylists are doing everything they can to stay one step ahead of inflation. While you’re offering your clients the best service and experience possible, you also need to be taking steps in order to maximize your cash flow and profitability. We know that juggling your appointments, your orders, your marketing, and then worrying about your finances can be an overwhelming challenge. We also know how difficult it can be to find the time to sit down, crack open the books, and understand all the numbers.
The average career of an independent stylist is three years. A lot of this is due to feeling unsupported in the salon environment, lack of career growth, and that they’re not making enough money to cover bills.
So why does this happen?
Many stylists struggle or have difficulty breaking down their weekly and monthly cash flow or they struggle to find the time to do so. Knowledge is power and it can be more simple than you think. Bottom line, we don’t want you to be vulnerable to leaks within your business and allowing money to walk out the front door. Obviously, you didn’t become a hair stylist to do math every day and we know that it can be overwhelming at times and that’s why we’re here to help.
You became a hair stylist for your love of the industry and people. Now that you have made it to this point as a stylist, you need to take the next step in increasing your profits!
Profit = Revenue – Expenses
The money you get to take home at the end of the month is the profit left over after you have paid all your expenses, but how can we use this formula to our advantage in keeping more profit for ourselves?
Here are three things you need to know that will get you started on your path to profitability!
1. Revenue Reports
Getting into the habit of tracking your services can be a huge step in the right direction for you to increase your profits. Revenue reports are a super underrated exercise to understand your income. These reports don’t have to be complicated, you can start by taking a pile of your clients’ invoices, writing down the totals on a piece of paper, or entering them into a google sheet. From there, you can compare how much revenue you generate per week, month or quarter. We recommend going back at least 3 months! After this, you can see which of your services are in the highest demand, and raise the price of those services. Just like that, you’re on your way to becoming more profitable!
2. Understand Your Expenses
Now that you have an understanding of the revenue streams coming into your business we need to analyze the money going out. We know you have a lot of day-to-day expenses as an independent stylist. The cost of color is now triple the cost of alcohol per ounce (cheers?). With inflation driving up the price of your products now is the most important time to be on top of your expenses. Similar to your revenue review, taking the time to look through a list of your expenses and tallying up the weekly or monthly total can give you a better understanding of areas where you could potentially be spending money you don’t have to be.
There are plenty of places where your expenses can get lost. Going through email receipts, bank statements, credit card transactions, a crumpled-up paper receipt in your glove box. Taking a quick look through these can be an effective way to get a hold of your numbers!
Hot Tip: At SalonScale we often stress to stylists that one of the most effective ways of keeping their back bar stocked is to think of it like stocking your fridge at home compared to your pantry.
Having a quick monthly (or weekly) review of your numbers is a great strategic step towards profitability and can get you into a good rhythm of financial review and will allow you to further break down your cash flow on a larger scale. Setting a reminder on your phone a few days before the end of the month to take ten minutes to sit down is a great starting point! Working towards consistency within your reviewing process is critical towards
We know that at the end of your long work day, sitting down in front of a spreadsheet to look at numbers probably isn’t what you are after. However, in these weird (and expensive) times we are living through it’s critical that you take the necessary steps to give yourself the best possible chance for success. You deserve to be successful. You’ve invested in yourself to get to this point in your life, now you have to continue that investment and get your numbers where you want them to be!
You’ve got this!