Tina, who coaches under the name The Lonely Boss Lady, swears by money pots – if you’re not already doing this it’s a must-watch…
Tina remembers, “When I first opened I just treated my salon as a place where I worked, I was a busy stylist and the salon was the next step for me, but I had no management skills or financial training. I used to stick my head in the sand, pop a bill in the drawer I couldn’t afford that week and pretend it wasn’t there!
“I’ve learnt not to be scared of the numbers, but to use them as my driving force. If the bills don’t get paid then there’s no salon, so I learnt to be open with my team, get them involved and let them be part of the reality check.
“Once that clicked, things became easier! My drive to ensure I hit my breakeven grew and I had a better understanding of my business and which services make the salon more money. Ultimately, many salon owners pay themselves last, and if the money isn’t there at the end of the month, go without. This isn’t a business…”
Follow Tina’s top tips for using money pots and you’ll never have a nasty shock when it comes to paying bills again!
Money pots
A lot of salon owners find managing their money hard. They see money go into the bank but then going back out again quickly and there’s no real structure to how they manage finances. It’s frustrating and de-motivating when you have a great week in takings but the bank account doesn’t reflect this.
So what can you do?
Firstly, it’s so important to know your weekly/monthly breakeven, from this you can create your money pots, which in turn will help you to manage your cash flow better and know where you are with things…
What’s a money pot?
From your main bank account you can create holding accounts (speak to your bank about this.) You can then create multiple holding accounts and every week you can transfer the amount you need into each to cover those bills. These holding accounts could be for your salon’s rent/mortgage, PAYE, VAT, wages, utilities, stock…. Then remember – no spending on new products or shiny tools until all of these pots are full, keep a pot for the nice to haves but pay the essentials first.
From your weekly breakeven you’ll see how much you need to transfer to each account to ensure you cover the payment. For VAT, a good tip is to sit down at the end of each week and look how much you have taken GROSS and then take off the VAT to leave you with the NET takings. Transfer the VAT money straight into a money pot, then you aren’t tempted to use it! When your VAT return is done and you’ve claimed back what you can, you should have money left in that pot, my advice is to leave it in there and then you can use this towards your tax bill or for a rainy day, it’s a great way of saving without having to try too hard.
Want more tips from Tina? Follow @tinahollismce / www.thelonelybosslady.com
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