Business Question???

[kirsty_]

hi all, have been reading some threads on here regarding starting up a business and the first year being very hard etc. Some people are saying that most businesses run at a loss in the first year, does this mean that you dont take any money home at all? if this is the case, how do you all survive and pay mortgage/rent/bills at home etc? or is it that one of your outgoings is a salary to yourself? I am not expecting to be earning lots but i do need to be taking enough to cover my mortgage otherwise i just cant take the leap!! am i being naive? please help

 

[persianista]

You either live on savings or run up an overdraft. Savings are the best bet!
It is usually impossible in the first year to pay yourself a regular wage. Salon cashflow is unpredictable, and salon taxes are currently very high. If you MUST have the security of a regular paycheck, self employment can be tricky as it can be feast or famine

 

[leonnib]

hi all, have been reading some threads on here regarding starting up a business and the first year being very hard etc. Some people are saying that most businesses run at a loss in the first year, does this mean that you dont take any money home at all? if this is the case, how do you all survive and pay mortgage/rent/bills at home etc? or is it that one of your outgoings is a salary to yourself? I am not expecting to be earning lots but i do need to be taking enough to cover my mortgage otherwise i just cant take the leap!! am i being naive? please help

ive been open since june/july
salon is not making enough for me to have a wage or pay any home bill etc..
i basicially make enough to almost cover the salon rent and if im lucky some of my other employee wages..

as persianista said its very hard...so if there is no way you can cover your mortgage etc unless salon is making a profit its a big risk.

 

[angelina221]

My salon has been open just over a year and i don't take a wage.
I am making a profit now but everything i make is ploughed back into the business.
I know a lot of people think it is easy to start a business and that once you start making a profit then you can take a wage. This is not the case. You have to continually invest in your business if you expect it to work and if that means foregoing a wage, then so be it.
I don't have an overdraft but i am extremely fortune to have a great dad and husband who have helped me through my first year.
When i start making a good profit then i will have to pay back the money that i owe and only then will i be able to take a wage.

 

[Martin Duffy]

When I first went self-employed (on commision in a newly opening salon) I took a part-time job to supplement my income, and although it was only a small amount it was better than the next-to-nothing I would have earnt otherwise! Thankfully when I went the whole way & opened my first salon I had 6 years of clients, allowing me to make a very good profit in my first year.

Having your own salon is not easy by any stretch of the imagination!

 

[nixnewcastle]

Im finding more and more people are trying to set up in the beauty industry thinking it's an easy task and not being willing to sacrafice things like their nights out and certain other luxuries. Those people tend to fail as they expect to start self employed, make a killing and live like a queen and it's just doesn't happen straight away as you do have to constantly invest money back into the business by bringing in new products and services and such

 

[jes]

I've had my salon for nearly a year and my profits have been very disappointing, when, compared to what I made when I rented a space. There's so many expenses involved and the current economic climate is just a disaster!:irked:

As mentioned above, there's so many things you need or want to buy for a new salon, that any profit made is soon re-invested anyhow.

 

[allyballybee]

I suppose I was quite lucky and did manage to take a wage out from the start, but before I opened I worked in local salons for 7 years and had I good clientele already. Without this, I may have struggled.

You have to be determined and work loads of hours, it's not a walk in the park as something might think.

You can do it if you put your mind to it babe xx

 

[kirsty_]

I am so confused. I have done a business plan and to break even and cover the monthly salon bills I only have to earn an average of £42 per day, £210 per week. The salon would be in partnership with another therapist so the bills are all split which helps. This sounds very reasonable and therefore surely I would have a wage for myself. I have savings to plough into the business up front and have exactly the equipment and services on day 1 - i dont want to live like a queen, however i am really confused as my figures show profit. are all the above experiences from when you were in a salon alone therefore bills were higher?
Expenses we have included are as follows -
rent
rates
water
electric
phone
ppl licence
inusrance
broadband
pdq machine
stock

What am I missing?

 

[ADiva1]

If you really want your own business it can be done, Nothing is impossible. However the beauty industry is certainly not for the faint hearted!

As mentioned before, you need to keep putting the money back into the business for it to grow.

If you find a way round covering your bills, then go for it. I'm still clinging on to my office job 3 days a week. That covers me well enough at present for bills etc.

 

[angelina221]

I am so confused. I have done a business plan and to break even and cover the monthly salon bills I only have to earn an average of £42 per day, £210 per week. The salon would be in partnership with another therapist so the bills are all split which helps. This sounds very reasonable and therefore surely I would have a wage for myself. I have savings to plough into the business up front and have exactly the equipment and services on day 1 - i dont want to live like a queen, however i am really confused as my figures show profit. are all the above experiences from when you were in a salon alone therefore bills were higher?
Expenses we have included are as follows -
rent
rates
water
electric
phone
ppl licence
inusrance
broadband
pdq machine
stock

What am I missing?

Gas
PRS Licence
Advertising
Printing costs
Solicitor
Accountant
Salon computer system
Any other licences that your local council require
Refuse collection
I'm sure i've missed loads but on top of that you have little things that add up like; Coffee, tea, sugar, milk, washing powder, cleaning stuff, toilet rolls, magazines etc..........

 

[kirsty_]

there is no gas in the property so thats a bonus!! can i ask what sols costs are - i know there are costs at the beginning but why every month? Salon comp system isnt essential is it?

 

[jes]

Hi Kirsty,

As you're in a partnership you're obviously only paying half the costs of the rest of us so your sums may work out ok .

However, what you need to realise is the amount of money needed to get started. My lease took 8 months and £1600 to sort out, there's land registry fees and surveys etc to be considered.

Shop sign writing will cost a couple of hundred, advertising etc (several hundred). Even an A board outside you salon will cost £100.

Salon furniture and salon equipment can go sky high too... it's easy to spend £1000 on, just, an reception desk. Flooring and decoration can cost silly money as well

Normally, rent is payable in advance and another months rent is taken as a deposit. This could be another £2000, before you've even opened!

Insurance £400, music licences £150, etc etc...

jes

 

[kirsty_]

thanks for all the feedback everyone, trying my best to stay positive. The other therapist is currently in a salon so she has all her own clients, we have all furniture already, however I understand the costs for advertising etc. Only renting so wont be any searches etc, just the rental to sort out. We both have a few thousand earmarked for start up, i guess i have lots of decisions to make x

 

[jes]

Yes, you must stay positive. It sounds like you are both experienced technicians, have existing clients and have savings put asides to get you started, so I reckon this puts you in a very good position to take the plunge.

Personally, I think you should take out a lease as without it you won't have many rights or security and I don't think you'd have a sellable business without one.

 

[persianista]

er, you didnt mention vat and taxes. I am not convinced that a salon can be run on 210 per week. My last electric bill in my smaller salon was over 900 quid for a quarter!

 

[leonnib]

if your paying staff youd save money that way

but for me it was loads of little things that added up especially stock

 

[persianista]

Am I missing something here? I spend £250 on accountancy alone.Per month.
My costs are astronomical compared with your figures.

 

[hippy-chick]

Am I missing something here? I spend £250 on accountancy alone.Per month.
My costs are astronomical compared with your figures.

Yes, but you are talking about running a salon with staff, wheras Kirsty is talking about being a sole trader.

 

[leonnib]

is the 210.00 before the split of after..?