Running at a loss?

[jodipodi]

Hi everyone Im wondering -to all you who've been in this position - in a business plan, forecasting cash flow income and expenditure, is it normal or ok to be running at a loss for the first month or so or does your plan need to show at least break-even from day 1? Thanks x:hug:

 

[Bagpuss]

From what i was told from the Inland Revenue its expected that the first YEAR of any business would be running at a loss.

 

[Kim Lawless]

You will be running at a loss on paper for quite some time. However, there is so much that you can claim against your tax, it's never as bad as it looks. xxx

 

[Shine_Studios]

when you first start, you must be prepared to run at a loss for at least a year, and depending on how much money you keep putting back into the business ie; new products, new staff, decor etc. . . as this can affect your profit in a massive way. I ran at a loss for 2 years but i did a huge celler re-furb and kept changing things as i was not happy with the way things looked, but as long as you have savings and your pretty sure that the money isnt going to waste, you should be fine xx

 

[jodipodi]

Thanks peeps, is this ok to work out your business plan like this though for when you put it to bank/ loan supplier? Like month 1-7 run at a loss each month, slowly breaking even as you come to the end of the year and eventually (hopefully) making a small profit at end of year 2? Just did my rough workings out to break even and Id have to make £908 per week to cover everything inc each months lease payment, electric,stock,sunbed lease and personal expenditure etc. As I have never done this before I dont even know if this is do-able or ridiculously unachieveable? :0
This is based on providing sunbeds(4) waxing, tinting, spraytanning,nail enhancements to start off with and opening 9-8 mon-fri and 9-6 sat, 11-2 sun.

 

[Shine_Studios]

Personally, i think that is a lot of hours!! Maybe cut sundays or mondays? And all the banks want to see is realistic figures - they know you wont be making a profit overnight so dont worry! They will appreciate you been realistic. And as for the sunbeds, i advise you to buy reconditioned from somewhere like Helionova, as they work just as good as new but are alot less money, or even better would be a lease to buy / profit share. Dont end up been stuck with a sunbed that is not making much money and that you can sell (like me) lol xxx

 

[jodipodi]

Hi Shine-studios, thanks,the reason I would be open these hours is mainly because of the sunbeds,I feel you need to be open 'after work' hours for those that like to go on their way home. I would definitely be leasing the beds or profit share-far too much initial outlay for me to buy, too much risk if they dont take off aswell.
As for savings we dont have any at the moment - sharp intake of breath - as all money we had went on training and need the rest for further courses as we are now both unemployed-hubbys just been laid off work! Hubbys a joiner so should help a great deal with fit-out costs.
Figure its now or never as we have nothing to lose! Start up will be made mainly funded by grants and a loan and anything we can scrape together ourselves.
Havnt got a clue about what a realistic total is for weekly takings when starting out though...? Any ideas peeps? xx

 

[hippy-chick]

Jodi,
have you got any clients at the moment?

£1k a week is a huge undertaking, thats a lot of pressure on yourself, is their anyway you can cut those down.
What happens if you are ill and can't work? What happens when you go on holiday? You've got to work out that if you take 6 weeks annual leave, you have to make up that £6k into your weekly overheads.

Most people don't actually take a wage for the first 6-12 months.

Have you worked out how many treatments you need to do per week to cover costs? Thats a hell of a lot of treatments before you even make a profit.

I really don't envy you that undertaking.

 

[jodipodi]

Hi Hippy-chick, yes I have a few, not loads but think this has to do with not being in a salon. Have a good few spray tan clients but no enough to live off without it affecting my rent/council tax, this is why we need to do the all or nothing thing now! We wouldnt be relying on us personally taking a wage, just covering costs and basic personal expenditure such as our food, gas,car etc. We are willing to put the extremely hard work into it, juggling the kids and shifts as long as it takes to start being a little easier. I agree that 900 to break even is ALOT but thats the number Ive got
This is based on what Ive worked out that Id have to do 20 hours a week of treatments,get about 60 sunbed users a week at 6mins each and a little retail on sunbed creams, solaroil...? Starting to get disheartened now....

 

[jodipodi]

I have incorporated into my costs the leasing of 4 sunbeds at £200 per month each, th reason I thought 4 was because the place I am looking at is right next to a college and has great parking which I was hoping if I had more beds I would get the majority of clients as they can be in and out in their lunch break without waiting for a bed. Maybe as they are so costly I would be better halving this to one of each and this would bring my outgoings on leasing and electricity estimates down considerably? xx

 

[rachael204]

I would only get 1 or 2 sunbeds to see how it goes. I only have 1 and I find people are ok to wait as the session times are not too long! It sounds like you have room for 4 sunbeds you can always get a couple more if you need to rather than committing to all 4 straight away.

Another thing that you probably already know but just in case (!) you may need three phase mains installed if you want to have lots of sunbeds. I own 2 but only have one working as found it was too expensive to get the supply upgraded so could have both going at once.
This link might help Sunbed and Leisure - New and Used commercial sunbeds and sunbed parts

 

[Blue Rose]

I have incorporated into my costs the leasing of 4 sunbeds at £200 per month each, th reason I thought 4 was because the place I am looking at is right next to a college and has great parking which I was hoping if I had more beds I would get the majority of clients as they can be in and out in their lunch break without waiting for a bed. Maybe as they are so costly I would be better halving this to one of each and this would bring my outgoings on leasing and electricity estimates down considerably? xx

I totally agree with this. You need to keep your outgoings to as minimal as possible. Don't put unecessary pressure on yourselves.

 

[jodipodi]

Hi Rachael thanks for that. Did you get quoted a price for getting 3 phase installed? Whats your average customers using the bed per day on a good day and on a bad day?
Cogsi I think youre right but Ive worked it out again and my outgoings still come to £783 per week to cover everything xx

 

[rachael204]

We didn't get official quotes but its meant to be thousands and if I understand it correctly the electricity board have to do it and at their convenience after a survey etc so can take a while - this is only what I was told so it may not be correct for your area. I would definitely speak to an electrician as there is conflicting advice on the internet.

With regards to sunbeds they are not that popular here to be honest, people in my town seem to be going away from sunbeds and towards spray tanning! hth x

 

[jodipodi]

Sunbeds are still very popular round here-I think people think they are getting more for their money when they buy a course of say 60 minutes and use them over a few weeks compared to a spray tan which is the same cost but in their eyes will only last a week? Dont get me wrong I prefer spray tans myself for many reasons but at the minute I think if I didnt have my own machine I would be looking to go back to my local sunbed shop to have a session as £20 for one weeks worth of tan wouldnt be in my budget.Im just glad Ill be able to offer both services.
So Rachael do you have a rough idea of what your average users are per day- does five a day on a bad day sound right or is 10 too many ? Thanks for helping me out xx

 

[Terese]

I was going to mention about the 3 phase....as I looked at sunbeds last year

I found out it would take at least 6-8 weeks to install by the electric company.....and cost money I didnt have

£200 per month for sunbeds, how are you averaging that out? I would be inclined to look at the profit share for the first half of the year as been said before...Hellinova is who I was looking at doing this through

Wishing you all the best for the future

 

[jodipodi]

Hi Teresa, the £200 is the average top cost £50 per week lease on a decent bed. Have considered the profit share but need to look into it in more depth to how it works.
Did you get a quote for getting 3 phase installed? xx

 

[rachael204]

Hi again - we can have noone in all week for sunbeds so am probably not the best person to ask!! It sounds like your area is different though! x

 

[RedAdmiral]

Jodi work out a timetable based on all beds firing, spray tan room, nail bar, beauty room going solid based on how many staff you have and thats the most you can make in a week excluding courses and products. the least you can earn is nothing!

I worked out that based on 2 staff I could perfrom say 12 sets of nails per day or whatever my highest priced treatment is. I also worked out that in a hour I could do 4 15 mins treatments and 1 hour treatment so I had different priced treatments to compare against. if after a week of those treatments I couldnt cover my costs then tehy had to come down as its unlikely that you will be flat out all day everyday (i hope you are tho!)

 

[kimberley87]

Hiya Jodi,

I am opening a tanning studio very shortly... still haven't decided what beds to get? i want a stand up and a laydown to start and look at getting one or two more eventually! Do you know what beds you want and what company your going with?

I am also going to offer spraytanning and nails.

Thankfully my premises already has 3phase electricity but I did look at another building prior to the one I have got now and it didn't have 3phase. My friend is an electrician and he claimed it costs between £4000 -£8000 to install?!