My 5 Steps to Increasing Profit
One huge barrier that gets in the way of Salon Owner success is profit.
Not enough Salons are making a profit, not enough Salon Owners know how to make a profit!
When I started my Salon at only 20 years old, I was exactly the same. When I came out of training, my goal was to make $30K a year. I didn’t know what profit looked like, or that it was even possible to make any more than that!
But for so long, my annual profit was $20K. I knew I wanted to gain profit... but the truth was, I just didn’t know how!
After years of seeing that same number turn up annually, I finally had a realisation: profit is a choice! Those years of minimal profit really gave me the push that I needed to decide for myself that I was going to focus on making a profit, and implement some actionable steps toward gaining profit.
I felt as though I owed it to my team, who worked so hard for me and wanted the Salon to succeed (so they had a job to come back to tomorrow). I owed it to my loyal clientele, who kept coming back to my Salon and also wanted the best for us. I owed it to my family, who had made sacrifices for me and had invested time and money for me to pursue my dream.
But, most importantly, I owed it to myself. I had worked way too hard and come way too far for my Salon not to be as profitable as I knew it could be.
So, I made the change—and never looked back.
Now, I want to share with you the 5 key steps that I took to make profit a priority so that my business would become profitable.
1. Know Your Numbers
To make the choice to make profit a priority, daily, you have to know your numbers. No more hiding away from the daunting tasks!
Burying your head in the sand is going to get you nowhere.
I know what it feels like to feel nervous, or even scared to look at your numbers. But trust me, you only feel that way because you don’t know them!!
So, the first step that I took was to look at my numbers daily, and really start to read and understand the story they are telling you... get to know them.
You owe it to yourself and to your business to have the knowledge you need to make your business profitable- and this is a key step.
If you don’t know why something isn’t working then you don’t know how to make it work.
It’s essential to know where you’re at any given moment so that you know if there is a challenge ahead of you, and you can make the change you need to make to aid, or even avoid that challenge.
Knowing what loss looks like, and what profit looks like, will give you the clarity you need to move your business forward. You don’t have to do it alone though. Don’t be afraid to get an accountant or a coach to help you out with the money side of things. Numbers can be bewildering to the best of us, and no one expects you to be a hairdresser or therapist aaaand an accountant!
Getting a professional to help you with your finances can be so beneficial. My accountant pretty much saved my life! (but I’ve equally had one head me in the wrong direction) So make sure you don’t just sit back and turn a blind eye to what your accountant is doing. Be involved so that you can understand what’s going on behind the scenes...ask the important questions!
2. Have a Purpose for Your Money
You’re ten years old. Every night you count the coins in your Piggy bank...10 dollars, 11 dollars, 12 dollars. Only a few more weeks of pocket money until you can afford that new Barbie Doll you’ve been saving up for FOREVER!
Sound familiar? When we were younger, our money always had a purpose and a destination. So what happened?
The more money you got... the purpose started disappearing. Don’t let this happen!
We all need to learn a lesson from our ten year old selves. Having a goal for your money ensures that you have set priorities, and implement those when you are making decisions with your money.
I’m sure you’ve all heard of the term when money is “burning a hole in your pocket.” Well, I think that sometimes it can feel like our money is burning a hole in our bank accounts! Especially if money is something we aren’t used to having, we begin over-spending... just because we can!
This is why we need a purpose for our money, so that overspending and unnecessary spending isn’t a problem!
There can be a stigma around people that have money. Terms like ‘filthy rich’ critique people with money and assert prejudice upon a certain group of people.
But... newsflash!
If you’re someone who wants to be profitable, then listening into these prejudices will only hinder your progress. Rise above it and fully step up and into your decision to be wealthy. If you’re having money blocks… then I suggest you listen to my podcast with my good friend Jessica Giles... she will sort you out.
3. Making Budgeting Easy
One essential step in making profit is having the ability to budget your money. Part of this is having some discipline around budgeting. Don’t feel intimidated by the word ‘discipline’ though, don’t let it make you feel like it’s hard work. ...because it can be easy if you let it be!
Having the discipline to budget is simply having the strength to say ‘no’. When I had my Salon, I had one team member, who was absolutely lovely, but she always came to me with new things that we needed for the Salon. She was only trying to help, but in the end, I always felt the pressure she laid on me to spend every little cent I had… I had to learn to start saying ‘no’ if I wanted to prioritise profit.
I had a destination for my money, and so I knew that some of those things this team member was proposing to me, were not at the top of my priority list at that time.
I decided that I didn’t like the term “I can’t afford that,” because what we can afford is a choice. I still stick by this today, and when my kids ask for something, I instead say something like “I’m sorry, that’s not at the top of my list right now.”
And saying ‘no’ isn’t a bad thing. Your team wants you to be disciplined, they want to know that you’re putting profit first and making smart choices with your money!
Your team wants to feel secure in the business as much as you do.
4. Put Profit First
If you want to make profit a priority in your Salon and in your Life, you need to make sure that you’re paying yourself market prices.
You need to decide for yourself what you want to earn, then work your business plan, your budget and spending choices around that amount.
Putting profit first when making business and strategic decisions inside and outside of your business will ensure that you are making choices based on your priorities.
Set your income goal and stick to it—don’t change it if things go awry, just make sure you set a realistic goal and adjust your decision making to suit that goal.
This means that whether you’re working as the CEO or on the floor, you need to ensure that profit is being put first. If you’re wondering how to do this- you may need to ask yourself: what is profit for you?
5. What is Profit for You?
I often talk about the idea of ‘wearing multiple hats’ as a Salon Owner.
And this couldn’t be more important when it comes to making a profit. I see Salon Owners working overtime, unpaid, to make sure their business can make ends meet.
But, despite what you may think, this is not what makes you, or your business profitable.
Whether you’re working as an income generating employee and servicing clients, leading your employees and being a manager, or being a CEO and working behind the scenes— you’ll want to ensure your business is first paying yourself market rates for that role, as if you were an employee. Then start to work toward profit over and above that employee role… and as the CEO.
So those are the 5 steps that I implemented in my Salon to become profitable. And, let me tell you... it worked!
After practising these 5 steps and making profit a priority every day, I began to see that annual profit grow more and more, and my small $30K goal was blown right out of the park many times over!
If you’ve been wanting to gain more profit from your business, but wasn’t sure how, I hope these 5 simple steps gave you some clarity around what you can do to reach your goal and that that goal is achievable.
Profit starts today! Today is the day to start implementing these steps.
I want to know, what’s your biggest barrier when it comes to profit? Come and join me over in the Salon Owners Collective Facebook Group and tell me all about it.
Want to know more about achieving Freedom & Profit in your life?
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About the author, Larissa
Business Coach helping Salons reach $1 Million+: After 20 years as a Salon Owner, I worked in online marketing & technology development, Business Development Manager at Timely Salon Software and co-founded HAIRshare app for Stylists.
I realised that I love helping Salon’s with their marketing, implementing the latest technology and developing strategies that have been proven to help Owner who smarter, not harder in their Salon business.
I founded Salon Owners Collective nearly 10 years ago as an online community with the mission of inspiring and empowering Salon Owners across the globe, to build a business of Freedom & Profit without stress and overwhelm. We have already helped 10+ Owners reach $1 Million+ success.