Tamika Tabb, owner and founder of Her Crown Accounting, shares her insight on this important topic.
As a spa professional, it is common to immerse yourself in the latest trends in the market to stay innovative and relevant. Whether attending trade shows or purchasing new equipment and products, a financial investment is required. These financial investments are not cheap and must be thoughtfully planned out. To avoid creating a debt pile you will regret later or depleting your business bank account, a financial plan is necessary.
A financial plan provides you with a comprehensive picture of your current finances, your financial goals, and any strategies you have set to achieve these goals. Here are four ways you can take control of your finances and strategically make investments in your business that will earn you more money and save you time!
- Shift Your Money Mindset. No matter if you have only been in business for one year or 10 years, your mindset must shift from “going with the flow” to “I tell my money where to go.” The goal is to operate a profitable spa business and that is only possible if you spend less than you earn. Centering your mindset on long-term growth and wealth creation will allow you to make more strategic decisions in your business, because the funds will be available for you to do so.
- Organize Your Money. The basis of your financial structure will be the setting up of your bank accounts. By opening various bank accounts (i.e. operations, taxes, growth, and general savings), you will find more structure and predictability in the underlying information used to monitor your business income and spending monthly. All business bank accounts (not personal accounts) should be synchronized with your bookkeeping system and properly categorized. You should have a system in place that minimizes the number of ways you collect payment and simplifies recording transactions in your bookkeeping system.
- Track Your Money. On a periodic basis (whether weekly and/or monthly), you must review your business results and continuously monitor how you earn your money and what you spend your money on. You want to know which services are booked the most, which clients are new versus returning, how many cancellations you have, how many late fees were charged. All these activities are important in understanding how your business generates income and where you have opportunities for growth.
- Create a Budget. With an income-based budget, every dollar earned is accounted for and budgeted in categories based on your needs, wants and savings/investing activities. Your budget should align with your short-term and long-term goals. Your long-term goals should drive every decision you make in the short-term. Your business budget includes things like paying yourself and your employees (which is part of your needs), investing in your business (your wants) and saving for new equipment or future business travel for an industry trade show. On a monthly basis, you should compare your budget to your actual spending and monitor your business performance against your goals.
Now the only thing left to do is act! Can you imagine the memories you will create when you are making money in your spa business while sitting next to the beach enjoying your favorite cocktail (or mocktail)? The dream is closer than you think, once you take control of your finances and implement a strategy that works for you and your spa business!
Tamika Tabb will be teaching a class, "Mastering Financial Growth: Essential Budgeting Techniques" on October 13, 2024 at the IECSC Florida show. To attend Tamika's class or any of the classes offered at IECSC Florida, be sure to register here to attend IECSC Florida from October 13-14, 2024. What's more, use code AMERICANSPA to get 20% off education classes.