Money out, constantly?

[NMills]

Does anyone one else working mobile feel that they are constantly buying more equipment and products and general things month after month. I feel that I am trying to have everything that I would have if renting a room which isn't feasible, however I want the client to have a treatment on par with them going to a salon. I'm not expecting to take a profit yet, I adore the job I do, but don't know if my business focus is all wrong. X

 

[Lush-Lash]

Does anyone one else working mobile feel that they are constantly buying more equipment and products and general things month after month. I feel that I am trying to have everything that I would have if renting a room which isn't feasible, however I want the client to have a treatment on par with them going to a salon. I'm not expecting to take a profit yet, I adore the job I do, but don't know if my business focus is all wrong. X

I get what your saying!

spray tan solution, sticky feet, hair nets, barrier cream, consultation cards etc, the list goes on, always something to pay out.

Hardest thing for me though is any money that is left over after paying anything due is used towards training in other courses / driving lessons & a car so I can be mobile (every penny spare is being used for business purposes, not new handbags & shoes unfortunately! lol)

So just lately I'm usually pretty skint! cant wait until things are a bit different & I have money for ME for once! x

 

[tanfastic]

I know what you mean,with me anything left over goes into the fuel tank of my car. (Visions of me on a bike with a trailer again. Ha HA)
This is the first moth that I actually dont need anything, I have bought anything and everything I could lay my hands on.
Next month it's spray tan solution time again, so dont worry yourself, things will ease up. You will get to the stage where you are only replenishing or replacing stock.
My problem is fast becoming storage. My stuff is filling the spare room !

 

[Alpenrose]

I think this is normal when starting out.

The great mistake I did was that when I just qualified I was buying everything I could see, thinking I will need it in the future. Many of these things were later given away or sold next to nothing to colleagues, as I realised that these were not necessary.


Now I only buy the items I use for treatments and the things I 'might' need get saved in a special folder for future speedy ordering as required. Certain items that I will use 100% I buy in bulk (spatulas, cotton wool etc.) - this allows to save quite a bit.

 

[Mike16300]

Hi

You said " I adore the job I do, but don't know if my business focus is all wrong."?

In my opinion, yes!

You are in business to make a profit, end of!
That is the purpose of business otherwise it would be called a charity (and even they are run to make profits nowadays).

Of course, we need to provide a service at the levels and prices we pitch our market to, but the art of good business is to constantly review each aspect of the business and make it more profitable. If you make money on tans but lose money on brows, you have to decide whether to stop doing brows or to accept you make a loss, but all your brow clients have tans too.

Can I buy in bulk and save money on products?
Can I substitute a product for a cheaper one?
Can I find a new supplier and save money or get "free" promotional posters?
Can I improve my equipment so it takes less time to set up, each client will take 27 minutes instead of 32, = more clients per day = more profit!

Do you know your cost per mile including tax insurance fuel tyres servicing parking etc?

Can you afford to drive 10 miles round trip for a £15 tan minus products?

Would a fuel card be cheaper for fuel?
Should I change my bank for another years free banking?
Do I get a discount for immediate payment with my supplier or do I get a better deal if I open a trade account?

Have I got the balance right between friendly client chat and staying too long for a chinwag?

I suppose we all did a business plan before we set up, so why do I hear so often people saying "I'm not taking a wage", how are you supposed to live?
If your business depends on not paying the staff (you), and just covering the costs, everyone would be in business.

Have a look at this to see what the charities are paying their bosses :-
Salary survey: charity chief executives' pay sorted alphabetically | Society | SocietyGuardian.co.uk


It's so easy to be hyper busy, rushing around doing clients, popping into the local (but more expensive) supplier to top up the products, buy the latest gizmo, go on the next training course etc while the fundamentals of your business, and it is YOUR business, are being left to chance.

If you're not careful you can go from doing 10 clients per week making no profits, hoping things will "pick up", to doing 50 clients per week and still making no profit.

Take a step back! Set aside 1/2 an hour, say on a Wednesday night (cos I know you won't do it on a Friday lol) to look at your business and the margins/profits. Yes, I'd like a new xyz, but will it bring in more clients? Will it pay for itself 3 times over? Unless you are a secret millionaire and doing this for fun, you should be making a profit from the services you provide, at whatever level.

I hope all the geeks read this in the spirit it was intended, I don't mean to offend or upset, and I really hope you all manage to find your niche in this exciting business and I wish you success.

Michael x

 

[Redduck]

A really good thing to do is to work out how much each treatment you do costs right down to the last cotton wool pad. This can be quite surprising sometimes.

Also, I always ask myself if the treatment can still be done professionally without x, y and z. I'm not talking about cutting down on essentials or not having good quality professional products as they're a must but just be careful about the little extras you buy.

Like Alpenrose, when I first started out I defintely bought things I didn't need so just think twice about everything in your shopping basket - difficult I know!

Hope everything is going well for you x

ETA: Crossed posts with Michael who said it all much better!!

 

[NMills]

Wow thank you all for your responses, it has massively given me room for thought. I am going to sit down this weekend and aim to work it all out. Its slightly laughable as I have a business degree; however its a whole other ball game when transferring the theory to practical. thank you everyone for responding x

 

[Lady Murasaki]

Im always monitoring the quantity of product I'm using on clients product wastage can also cost money in the long run.

I'm by no means tight with my products, however every bit of camouflage makeup or normal makeup thrown in the bin is money down the drain.

I use to give out complimentary beauty kits including a lippy to every bride now if they want one I charge .

 

[Sam81]

I was definitely like this in the beginning, then when I looked at my profit/expenses it was the shock I needed! Now each month I set aside an amount for essential expenses (rent/tax/stock/training etc), a contingency fund in case I am ill or want to take holiday, then my wage. If there's anything left over I save it for things I want to buy for the business but don't necessarily desperately need like new products, which clients will benefit from and I'll be excited by, you need a little bit of that to keep the spark in you

 

[angelina221]

Most businesses make a loss in the first year.
If you haven't been going long then you can't expect to take a wage.
Everything gets ploughed back into the business.
It's unrealistic to expect a profit so soon.
Once you become established and have a good client base then you can start drawing a small wage.
One has to speculate to accumulate.
If you're good at what you do and try and keep up with the latest trends then you can succeed and eventually earn a decent wage

 

[Mike16300]

angelina

I agree that the business will take time to build up, and may not make a profit for a year or more, but the business plan should always include a wage.

If the 1st yrs costs are say £10,000 and a years wage = £12,650 (minimum wage), then £22,650 needs to be found in the 1st year to start the business.

Whether this is from savings or loans or whatever, it should be accounted for. The wage and loss in the 1st year can be offset against the 2nd years tax.

This isn't possible if you just live on your savings while the business builds up.

Say the business takes £8000 in the 1st year.
If you don't take a wage, you will have made a £2000 loss that can be carried forward, and you will have lived off your savings.

By accounting for the wage, you will have made a loss of £14,650 in the 1st year that can be carried forward, so you will pay substantially less tax in the second year if you do make a profit.

Hope this makes sense.

M x

 

[angelina221]

Yes it does make sense but for those of us running a business, it is not as easy as that.
A business plan is purely conjecture and used as a guide.
We could all include a wage in our business plan but if the money is not there, it's not there!
So if the business only take £8k in the first year, there is no money to take a wage.
1 in 3 salons go bust in the first year and this is usually due to cashflow problems.
There is no way I could have taken a wage in the first year of my business.
I was lucky that I have a husband who could support me.
A lot of people under-estimate how much money is costs to run a salon.
Taking a wage was bottom of my agenda,

 

[Beauty4all]

My buying motto: Will it make me more money or bring in new clients?

My motivation motto: If it will keep me interested and having fun...and It doesn't cost alot, I'll buy it...whether it be a new Shellac Colour or Moisturiser

 

[Mike16300]

angelina,

that's my point exactly.

your partner was able to support you.

what i was suggesting is that that financial support should be accounted for in the business and therefore you can offset the support you received against the profit that you may make in coming years.

if one doesn't do this and just lives off savings, or "help" from partners, parents or wherever, then one will end up paying too much tax

i'm sorry if i didn't get my point across well enough, it was never my intention to upset or offend

regards
M x

 

[blossom]

angelina

I agree that the business will take time to build up, and may not make a profit for a year or more, but the business plan should always include a wage.

If the 1st yrs costs are say £10,000 and a years wage = £12,650 (minimum wage), then £22,650 needs to be found in the 1st year to start the business.

Whether this is from savings or loans or whatever, it should be accounted for. The wage and loss in the 1st year can be offset against the 2nd years tax.

This isn't possible if you just live on your savings while the business builds up.

Say the business takes £8000 in the 1st year.
If you don't take a wage, you will have made a £2000 loss that can be carried forward, and you will have lived off your savings.

By accounting for the wage, you will have made a loss of £14,650 in the 1st year that can be carried forward, so you will pay substantially less tax in the second year if you do make a profit.

Hope this makes sense.

M x

well maths was never my strong point so that could be why I'm struggling to make sense of this lol - although I can do my own book-keeping!!

Right, now, we are supposing the business takes £8,000 in the first year. We have already established that the years costs are £10,000. Now, supposing a wage or not, isn't that just on paper? Because when it comes to cold hard cash to pay bills etc, there isn't any. In fact we are £2,000 down. So where exactly is the money going to come from to pay ANYTHING let alone a wage?

From where I'm standing that simply leaves one £2,000 out of pocket, doesn't it?

I can see, hypothetically, what you mean about making a supposed loss of £14,000 and carrying forward the loss so that less tax is paid the next year . . . . I just can't see how that business can still be running on those figures unless there is someone else to support

Please please tell me I've got it all wrong, would love to understand the best way to do things.

 

[Mike16300]

I'm more than happy to explain my point.
Please contact me by pvt message.

 

[MrsHBeauty]

I presume it's meant that you should take a loan from the bank or family etc. my dad has leant me near £5k that is all accounted for and any loss will be offset against this years tax.

I don't take a wage tho, my dad wouldn't lend me money to keep line my pockets only to keep my salon going through the first year.

 

[angelina221]

angelina,

that's my point exactly.

your partner was able to support you.

what i was suggesting is that that financial support should be accounted for in the business and therefore you can offset the support you received against the profit that you may make in coming years.

if one doesn't do this and just lives off savings, or "help" from partners, parents or wherever, then one will end up paying too much tax

i'm sorry if i didn't get my point across well enough, it was never my intention to upset or offend

regards
M x

You didn't upset or offend me