Salon Budget Template
Nobody has ever said they regret being organized! Running a business can feel chaotic and when you start wondering where all your money is going it starts to become a huge problem. Setting up a budget template for your salon will help you get easy-to-read insight on all the money going in and out of your salon. It can help you reallocate funds during an emergency, make small changes to increase profit margins, and help you make any business decisions you need in a knowledgeable way with little to no guesswork.
What is a Salon Budget Template?
A budget template is used to create an itemized list of every expense happening at your business and how much money is coming in. It should reflect any monetary transaction that occurs, whether it be payroll, rent, coupons, promotions, or comps if applicable.
How to Create a Budget for Your Hair Salon
To budget, you’ll want to make sure you keep records of any money moving around your business.
Revenue Model. Creating a revenue model gives you a generalized idea of what should be expected in terms of making money. You should carefully think about the needs of your clients, prices for your services, what percentage is taken out for credit card transactions, and any of the who’s what’s or why’s. What services are people getting the most often? What are your busiest days? Research how to make a revenue model and give yourself a good sense of how your business should be operating.
Spreadsheets. it’s a good idea to familiarize yourself with spreadsheets. If you’ve never used a spreadsheet before, now is a great time to learn! Google Sheets is free if you have a Gmail account and there are plenty of completely free sources for spreadsheets. This is the smartest way people budget at no cost, as it does the math for you in a template so you only ever have to enter your numbers. You can even download free premade spreadsheets for budgeting.
- Budgeting Software. If doing it yourself feels overwhelming or if you find yourself swamped in information, budgeting software can help you create reliable budgets without worrying about whether or not you’ve done your spreadsheet right. This is perfect for people who don’t feel completely comfortable with using spreadsheets on their own. With some software, you can also create visual data such as pie charts and bar graphs to have different representations of your expenses and budget.
How Much do Hair Salons Spend on Products?
So what’s a normal amount to spend on chemicals and hair products each month? Of course, this is dependent on the type of salon! Salons that specialize in fashion color will obviously spend more on bleach and color than a salon that does basic services. Bulk lift cream, developer, color, shampoo, conditioner, toner, and more tends to add up to around $3,000 a month and up. There’s no cookie-cutter answer to this question though, as every salon is different.
What is Typically the Largest Expense in Running a Salon?
Depending on the salon, the biggest expense is payroll! Paying your stylists will be around half of what your monthly expenses end up being, the next being things like utilities and rent. Don’t ever try to cut corners with things like payroll though, if you’re looking to save money consider hiring less stylists to start.
Understanding Numbers in Your Salon Budget
You should have 3 main parts to your budget.
- Your expenses will be a description of any and all spending that happened that month, including recurring things like rent and utilities. This can also include any amount of money that was taken off from promotions or comps.
Your income will be any money you made at all. If you’re a salon that does chair rentals, this counts in your income section.
- A summary should be the difference between your income and your expenses, and this will represent your net profit. It’s taking your income and subtracting your expenses from it.
When you create your revenue model, you should also include your projected expenses and income. Comparing your projections to your actual income and expenses can help you adjust your projections and predictability over time, or it can highlight any issues you might be having with your profits.
What are Warning Signs in Your Salon Budget
Bad Debt. Some debt is normal for any business. Bad debt usually comes in the form of loans taken out with high interest rates, or unnecessary debt that you can’t afford. Be careful to avoid incurring debt that does you more harm than good!
Excess Spending. Wanting to be prepared is great, but overspending can cause you big issues in the long run for your profits. Do you need all the latest and greatest things or should you spend a little less to make sure you have the money to spend on supplies next month? If you’re not careful, big spending now will cause you to have to cut corners when it’s time to restock inventory.
- Lost Money. If you’ve done your math right and the numbers still aren’t adding up, it’s time to check for holes in your budget. If you have a company card, look to see if there’s been a series of large coffee runs or unknown purchases. Money doesn’t just disappear, and if it happens once it’ll likely happen again if you don’t investigate it.