Today I’m talking about three financial best practices for hair salon owners.
And I’m talking specifically to hair salon owners who have a smaller salon. Maybe it’s just you and a couple of stylists. You’re not putting a lot of people on the payroll.
I’m doing this because of how the COVID-19 pandemic forced the government to introduce programs that were frankly unprecedented for small business owners. If you remember, Congress passed the CARES Act and the Paycheck Protection Loan Program (PPP) in 2020, where salon owners were able to get favorable loans to continue to pay for your staff and yourself.
The reason I want to talk about this three years later is because I believe it has uncovered a number of gaps or issues in the way smaller hair salons are managing their salon finances. Now, this will not be a deep dive into business finance. But it’s going to have three top level things that I see happening over and over again.
If you can fix these three things—or at least start to follow some financial best practices in these three areas—you’re going to be better than 90% of other hair salon owners.
Because this is a huge problem. And these three things are recurring issues.
So, I want to talk to you about three financial best practices that are going to help you run a clean, efficient hair salon business that’s legal and well organized.
The reason it’s stuck in my mind is from when we helped hair salon owners apply for PPP loans. Because at that time, salon owners had to produce things like financial statements, documentation of paying yourself, tax statements, and other documentation.
And a lot of hair salon owners at the time were scrambling to do that. They had no documentation for it. Or if they did, it was a complete mess.
So, this has really uncovered three financial best practices, which are universal. These three things should be the bare minimum you should be doing to run your hair salon.
Of course, it’s by no means an exhaustive list. There are plenty of things that are important to run your salon. But these are the three general financial areas you should have nailed down.
[03:20] How to pay yourself as a hair salon owner.
[08:07] The importance of sound accounting practices.
[10:45] Why you need a system for paying your taxes.
Looking for more tips for how to grow, scale, and ultimately sell your hair salon business? Check out our other Unchained From the Chair podcast episodes.