Owning a business has never been easy, and right now—with our salons, spas, and beauty boutiques temporarily closed—things are tough. So, what can you do to prepare for difficult financial times ahead? Here are three things you can do to get your finances into shape and be ready to hit the ground running.
1. Change Your Money Mindset
Right now is the time to ditch beliefs that are holding you back and open yourself to positive thinking. Thoughts like, “Money doesn’t grow on trees, it’s earned the hard way,” “I’m just not good with money,” and “Money’s a limited resource, we can’t all be millionaires,” put you in a box and keep you there, so let’s change our focus and write a new money story. By resetting your view on money, you’re creating a mental and emotional space where lucrative ideas, plans and strategies can take root, grow and flower into profits later.
2. Build Your Savings
The average small business has only 27 days of cash reserves on hand, and the average Main Street business—businesses like ours—have less than 20 days of cash available for emergencies. Let’s change that. If you’re more solvent, meaning you have more profit than debt, then your chance of weathering any storm is greater. By changing your savings strategy and being diligent about putting money aside (and leaving it there), you can build up a significant cash reserve with little effort. Try growing your emergency savings to be equal to six months of operating expenses (rent and utilities, insurance, salaries and taxes, retail and backbar stock, etc.). It may sound like a lot, but if you follow through on the final point below, you’ll find opportunities to save on your expenses and grow your income, and both of those things will have your savings growing quickly.
3. Get Real with Your Budget
Every penny goes. And this puts you in a powerful position. But how do you do that? It's easier than you think. Develop a five- to 10-year financial plan. Yes, you’ll project growth and have to make some educated guesses, but having a plan with concrete goals and benchmarks for progress will keep you focused. Review your business and personal budget yearly (yes, you need a personal budget). Your reviews help you stay on track for hitting those five- and 10-year goals, and they also help you identify places where it’s wise to spend money (effective promotions, bonuses, anything that keeps the books and cash drawer full) and where it’s best to save (you may identify places where you’re over-ordering, overpaying, or otherwise letting dollars slip through your fingers). Develop quarterly, monthly and daily goals. Develop these goals for yourself, your business, and your team. By breaking your goals down into these smaller segments, you’re no longer looking at a huge, impossible task; instead you’re looking at small, manageable pieces, goals you can—and will—achieve.
If you want to talk more about this—and get specific about the issues your business is facing—don’t hesitate to reach out by calling me direct at (812) 455-1367 or by emailing me [email protected]. I, along with my team of coaches and mentors at Empowering You Consulting, have set aside time specifically for one-on-one Strategy Sessions, complimentary phone consultations where we focus on the problems you’re dealing with and developing solutions that work.
This story originally ran on our sister site, The Beauty Experience.
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