Business & Marketing
Bring On The Budget
Posted on September 19, 2021
Oh, my sweet, suite owners! As you may know, running your own business is so incredibly rewarding. You have the freedom to set your own schedule, your own prices, and all your own rules. But being in business for yourself can also be very expensive, because we operate off of very slim profit margins. Did you know that as an independent suite owner, your target profit is at least 50%?
While sales and revenue are incredibly important to pay attention to, what's most important is what you're left within profit. So many stylists feel like they have a healthy business because they are bringing in 6 figures in SALES. And let me tell you this, bringing in 6 figures in sales is so amazing... But I have found that so many stylists are sitting at their computer looking at their profit and loss statement or their bank account at the end of the month saying, "Where is all my money going?"
Sales are important, but what's even more important is what happens in between your sales and your profit: this would be your business expenses. Do you have a budget? Do you track your expenses? Do you know the target benchmark and percentage in each category to get you to make at least a 50% profit? Don’t stress if you don’t know any of this, I've got you covered.
Let me break all of this down for you:
Let’s dive into the actual budget and benchmark for backbar supplies each month. This means all color, developer, bowls, brushes, lightener, and liters of shampoo and conditioner; everything back of house. Since you are an independent suite owner, you are allotted 15% of your revenue to spend each month on consumable items, aka backbar supplies. This percentage is relative to your revenue.
For example, if you bring in $5000 per month in service revenue as a renter/suite owner in July, you have $750 to spend in August. This area of backbar supplies has the highest amount of overspending I have seen in our industry... I know this because I have overspent too. It is so easy to just spend and buy what is on sale and even things you think you may be out of. Sticking to this ONE budgeting tip can help you save so much money per month. Of course, there are other benchmarks to be mindful of... I talk about them more in-depth in my Make That Money 5-week course.
Ready to cut costs per month? I recommend setting up a consistent ordering system. Set up a time, whether it be once a month or every other week, to place your orders. That way, you are not ordering a few items here and there.
The second thing I recommend you do is to try NOT to go to the actual beauty supply in your area for your monthly or bi-weekly orders. I suggest you order through BeautyHive, an online distributor, and have all your product shipped. Ordering your product online is recommended because first, it saves time and a trip. But secondly, it keeps you out of the store and from having that kid in a candy store moment. We all know how it is when you walk into the beauty supply. You feel like you want all the latest and greatest. You go in for 4 tubes of color and come out $200 later. Am I right?
Using these tips and staying on budget with that 15% benchmark each month can save you so much money... and saving more means more profit at the end of the day. Don't forget, “A healthy business is a profitable business.” 💸
P.s... Grab your Sola Sessions Reimagined ticket to get more advice on budgeting, pricing and finances!