Transform Your Salon Suite with These 3 Key Budgeting Strategies!

Ready to take your salon game from 'meh' to 'wow'? I've got the lowdown on three crucial calculations that'll totally switch up how you run your business. And guess what? They're easier than mastering the perfect balayage. Let's dive in!

1. Nail Your 'Sweet Spot' Rent: Aim for 12% 🎯

I bet you never thought about budgeting your salon rent. If I’m being honest, when I first started out as a renter, I never thought that was something important. I just thought I pay my rent and whatever I have left over is what I have left over. Most businesses allocate 2% to 20% of revenue to their rent. However, we are a one-man show, running our own businesses. Keeping overhead as low as possible is not only important but it’s imperative!

The Golden Rule:

• Keep your station rent or suite rent at just 12% of your total revenue. With the rise of inflation, don’t go above 15% of your revenue. It's like finding the perfect temperature for your flat iron – not too hot, not too cool.

Quick Math:

• If you’re scouting new spots: (Monthly Revenue) x 0.12 = Your Rent Cap

• Already renting? Flip it: (Monthly Rent) / 0.12 = Needed Revenue

• Example: If your rent is $1,200, you should be making $10,000 monthly.

Why It’s a Game-Changer:

• Paying more? Ouch, that's eating into your well-deserved profits. Time to up your game – find more Insta clients, get policies in place for fewer no-shows, or even flirt with the idea of becoming a social media influencer.

2. Back Bar Supplies: Stick to 10% 📊

A golden rule I use in my salon is sticking to an 8% to 10% max budget on color and backbar supply. If I am going over that, then I need to figure out where I’m over using product. Here are some additional tips to help guide you through budgeting.

Stay on Budget:

• Your back bar supplies (yep, all the essentials behind the scenes) should only munch 10% of your revenue. If you are in the 20% club, start by budgeting at 15% and work your way down. Figure out your cost per service and see if there is an opportunity for price increases. Remember: when product cost goes up, so should your prices.

How to Calculate:

• (Cost of Supplies) / (Total Monthly Revenue) = Your Supply Cost %

• Example: Spent $1,000 with a revenue of $5,000? Your supply cost is at 20%. Ouch! Aim for 15% or lower to boost your profit margins.

Pro Tip:

• Be a budget ninja with your supplies. Only splurge on what you truly need. Remember, every dollar saved is a step closer to your dream profit!

3. Target a 50% Profit: Because You’re Worth It 💰

The average booth renter or suite owner's profit hovers around 25-35%, you should aim for at least 50%. This is why when you’re starting out, the commission route isn’t so bad. You can rack in 50% just starting out! But if you are already on the path of business ownership, it’s time to start taking your profit margin seriously. You're not average; you're exceptional!

The Real Deal:

• It's not just about what you earn; it's about the sneaky expenses in between. Stay vigilant and keep those costs in check.

Baby Steps to Big Gains:

• Regularly review your numbers. The more you know your percentages, the more control you have over your business's financial health.

🌟 Make Numbers Your BFF!

• Stay Techy: Use budgeting apps or software to keep track. Make numbers as fun as scrolling through TikTok!

• Be Socially Smart: Use your social media skills not just to attract clients but also to learn new budgeting tricks and tips from other savvy stylists. You can even start listening to some business savvy podcasts like HairB&B 😉 

• Knowledge is Power: Educate yourself. The more you understand your business finances, the more empowered you'll feel to make smart decisions.

Wrap-Up:

Your salon is more than just a place to create stunning hair transformations. It's your business empire in the making. With these simple yet powerful calculations, you're not just cutting hair; you're cutting unnecessary costs and boosting your profits!

So, go ahead, run those numbers, make those changes,

and watch your salon business flourish. You're not just a stylist; you're a savvy business owner shaping your future.. Remember, it's not just about the style you create on the outside; it's about the smart decisions you make on the inside.

You've got this! 💪✨

Cheers,
Mirella Manelli
Your Go-To Business Guru for Salon Success 🌈✂️

P.S. - Got questions or want more insider tips? Drop a comment in Discord or listen in to the HairB&B Podcast. Let's keep this conversation going and grow together! 💌