Getting your business finances in shape post-lockdown
A couple of months ago, we shared our 3 golden rules for managing your salon or freelance business finances. Now we are back and have consulted experts to give their top tips on how you can keep on top of your finances post-lockdown.
1. Good accounting is crucial. Accountants don’t need to cost the earth, and they’ll help cover everything from your day to day bookkeeping to your VAT returns and company accounts / self-assessment. If you want to save more money and you’re handy with numbers, there are tons of software options to explore to do it yourself. Have a look at one of our previous blog posts on how to manage your salon and freelance finances, where we explore some of the software options.
2. Keep on top of your costs. Costs pile up quick. £10 a month here and there for different tools and subscriptions might not seem a lot individually, but you may change your mind when you get them all down in a list. Review everything you pay for and cut the fat. There are some great apps out there that can help you with tracking costs – from basic money management apps like Moneyhub, to more advanced AI driven apps such as Cleo and Plum who will help you make decisions. Some of the newer banks, such as Tide and Starling also have integrated money management and expense tracking built in to the apps.
3. Never mix business and pleasure. Separating out your business and personal expenses is not only important for managing things, but a requirement if you have a registered company. It will help your accountant (or you) do the books and give you a clear view on what your cashflow.
4. Pay yourself. An extension of the previous point, it’s good practise to pay yourself a wage. Set an amount you can live off comfortably rather than just dipping into your profits as and when you need. Then when it comes to holiday time, give yourself a bonus! There are lots of benefits to this approach – first and foremost that you’re keeping a healthy bank balance, but also from a tax perspective - your accountant or tax adviser can then explain the most profitable way to take your profit at the end of the year.
5. Invest in marketing. Even if things are going smoothly, you need a pipeline of new clients coming into the salon or onto your books. Getting a marketing plan together will help you cover yourself for the future, not just the now. These don’t have to cost anything but time, such as marketing tactics such as ensuring you’re listed properly on Google and having a good social media plan. Take a look at our previous posts on how to attract new customers and how to grow your social media audience.
6. Review your utilities. It’s really easy to be complacent when it comes to things like your gas, electric, water, phone and internet. But depending on the size of your salon, you could make real savings by regularly reviewing your providers. There are even companies out there who will constantly search and suggest new providers for you. Uswitch are a great starting point if you want to do it yourself, and you can even sort your personal utilities whilst you’re there, whilst companies like Love Energy Savings can provide you with regular recommendations.
7. Keep an eye on your business credit score. It’s always helpful to have credit options. Whether it’s to cover unexpected bills or dips in client numbers, or even for expansion plans. Don’t wait until you need it to start getting your credit file in shape. There are a lot of places you can now get a copy of this for free, along with advice on how to improve your score – head to Experian if you’re a registered business or if you’re self-employed you’ve got even more options, such as Clearscore.
8. Be frugal where you can. It can be easy to get carried away with business spending, especially when you’re setting up a new business. In our industry, you, your premises and your staff need to look the best you can for your clients, but if you’re contemplating a purchase you should always ask yourself – will this win me clients or help retain clients. If the answer is no then it may be unnecessary, so go for the cheap option!
9. Stay liquid. Keeping cash in the bank is a basic rule for any business, big or small. You never know what is around the corner, but if you’re prepared with strong cashflow then you’ll be far more likely to weather a storm!
10. Plan expansions carefully. Obviously a carefully planned and executed expansion can bring new revenue to your business, but they should be exactly that – carefully planned and executed. Don’t get ahead of yourself, and put as much attention to detail into it as you did first time around.
In addition to all of these tips, make sure you’ve got the most out of the covid-19 support available from the government. We’ve previously covered a rundown on how they best apply to salons and freelancers, and you’ll find any government updates on this page.
We hope you’re as excited as us to get salon doors back open again! Visit our advice section for more content on reopening and relaunching your business, including our reopening checklist and tips on keeping your salon clean.