Calculating Salon Cash Flow
In order for your salon to run smoothly and effectively, you need to have an accurate picture of how much you are spending and earning each month. Then, you need to investigate these numbers in more depth so that you can get a better picture of how your salon is working.
Once you have obtained your total income amount, you can look at revenue by stylist, revenue per appointment, length of appointment, number of no-shows, and more. This will help you to calculate who your most productive employees are, and what your most profitable services are.
Analysing your cash flow will show you the amount of cash you need available to keep your business running from day to day. If more money is coming in than is going out then your business is successful, but there can also be gaps in this cash flow which can cause problems, or nasty shocks, if you are not prepared ahead of time and you have no money available when the rent is due.
In order to make sure you are completely on top of your salon’s cash flow, you need to make a list of all your expenses as well as the time when each one is due. Then you need to write down (as best you can) an estimate of your occasional expenses, like training, minor repairs, and so on.
Now write down your average salon income for the month – and it’s also a good idea to write down the lowest and highest income each month over the year, as months can vary a lot in a salon and your December income will probably be very different from your February income.
Updating this spreadsheet each month will ensure that your business stays on track, and it can allow you to spot any small problems before they turn into large problems, or into issues that put your business at risk. If you see your business is on a spiral of negative growth you can look for ways to turn this around before it becomes very difficult, or impossible, to do.