Creating and Meeting Financial Goals for Salon Owners
Establishing and following through on your salon’s financial goals isn’t always easy. For many business owners, financial goals often start as an over-generalized notion: I want to increase profit, or I want to cut costs. Having a non-specific goal, however, makes it harder for business owners to determine the next steps for meeting that goal. It helps to create goals that are unique to your salon’s mission, culture, and brand. In addition, the best goals are specific, measurable, attainable, relevant, and time-based, or SMART for short.
Creating Financial Goals
As 2020 reminded us, sometimes unexpected variables present themselves that can have bearing on your financial goals and plans. IBISWorld’s industry research shows an expected decline of at least 12.5% for 2020 revenue in the hair and nail salon industry. This means your salon’s goals may look a little different in the coming year, but there is a path to meeting your goals if you think creatively. For example, it stands to reason that today’s salon customer is likely more health-conscious and cautionary when in public places. A corresponding financial goal may be to obtain the capital necessary to reconfigure your salon's layout for better social distancing. Another may be to budget for increased wages and expenses to remain open longer each day to ensure fewer clients are booked in a single time slot.
It also helps to have a clear picture of how your business model affects your financial goals. Salon owners can start by determining key performance indicators (KPIs), which may include things like total sales, retail sales, services sales, customer count, and customer retention rate. Consider working with your outsourced advisors to perform a SWOT analysis to uncover strengths and opportunities. Based on those results, focusing on the areas with the most potential for growth and creating a small set of SMART financial goals is a lot easier.
Meeting Your Financial Goals
Creating SMART financial goals is only one side of the coin. You also need a strategic plan in place to meet your goals and monitor progress along the way. Perhaps your analysis shows a need to reach a larger customer base, so you set a goal to increase your marketing budget and build your brand. Do you have room to move things around in your current budget, or is there a gap to get where you need to be? If there is a gap, you may set a goal to increase each sales transaction to close it. Our team can assist with financial projections to help you determine the percentage increase needed and the appropriate timeline to reach your goal.
If your analysis shows a weakness in your overall or repeat customer count, creating a new customer incentive program may help you attract a certain number of new customers each month, and creating a customer loyalty program may help you increase your repeat rate. Once again, you will need to figure out where the extra dollars to support your salon’s goal are going to come from and how to measure your progress.
If all of this sounds like the right path forward, but you’re feeling a bit daunted, don’t worry. By assisting you with financial planning, projections, and budgeting, and by providing tax services that maximize your deductions and minimize your tax liability, I can help you find some of those extra dollars you need to meet your financial goals. Contact me today to get started.
by Mellinda Abbott, CPA
As a CPA and small business owner with experience in corporate America, Mellinda Abbott is a distinguished, invaluable personal and business tax advisor. She understands the everyday issues, compliance matters, best practices, and operational concerns of her clients. Mellinda prides herself on fostering personal client relationships while providing year-round, customized services to her clients designed to maximize savings, limit tax exposure, and, most importantly, to help her clients attain their financial goals.