Budgetting & cash flow.. Where am I going wrong??

[LauraLush]

Hi geeks,

I am new to this business malarky.. I have had the salon running for 4 months now so still early days, we're making money and we're getting busy but seems to be all or nothing at the moment.. Should I be worrying that I am having to put money into the business to cover costs and wages and not taking a wage myself? Or is this normal at this stage?

Can anyone see anything blindingly obvious I may be over spending on..

Monthly outgoings.. TOTAL £5050
RENT £1085
WATER £55
ELECTRIC £50
PHONE £20
HAIR STOCK £500
BEAUTY STOCK £60
NAILS STOCK £90
ACCOUNTANT £110
TEA, COFFEE, ETC £30
LOAN REPAYMENT £350
STAFF WAGES £2500
TAX/NI CONTRIBUTIONS £200

Just to name the majority really, I'm sure there's a few I've forgot off the list!

Is there anything anyone can say that may help as I am struggling a little bit meeting the budget.. I am not taking any wage at the minute which I am finding difficult.

Any advice would be greatly appreciated..

Laura. X

 

[catsaremad]

Hi your tax NI looks low hairdressing stock looks high where is your budgeted income ? If you are paying your account 110 per month what is he doing for you ? He should be telling you where you are going wrong !
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[persianista]

your figures look ok. your wages figure looks high for your turnover. Just keep pushing the turnover up. 4 months is no time at all to judge a business

 

[The Geek]

Hey Laura,

There isn't enough information to go off of here primarily because you haven't posted your turnover.

Its pretty tough to find cost savings in your fixed overheads such as rent and utilities.

Your Cost of Goods (the products you are purchasing to use in services and/or retail) should most likely be a very small percentage of your turnover and will increase the more your turnover increases. You can find some cost savings there through identifying shrinkage (theft) or waste, however as it is most likely under 10%, I doubt you will squeeze much more savings.

Wages are your greatest cost centre which is common in a service business. The question is, how do you ensure you are maximising their return for you? Is there downtime where you are paying them that you could utilise them to grow and expand your business? Staff is your most expensive resource and your greatest asset, make sure you are utilising them to their fullest potential!

My suggestion is to get 2 very, very important books and devour them instantly!
E-Myth Revisited and Raving Fans. I hand these books out like candy in the office as IMO they are essential reading for anyone in our industry.

Also, make sure you are getting monthly management accounts from your accountant.

 

[The Geek]

ooo. Just noticed Michael Gerber is actually conducting a seminar down in London in a couple weeks. Get to it if you can (that goes to everyone!)

An evening with Michael Gerber

 

[daisyl]

I second that. E myth is a great book and totally makes you rethink.