They were all too complicated for a simple hairdresser like me with limited computer experience. I just needed a system where I could enter my business expenses, the costs of my services and how many items I expected to sell within a set period and have it do all the work for me.
Not finding what I wanted drove me to build the “SMART SALON BUSINESS PLAN SOFTWARE”.
It is a step-by-step guide to fully understand everything it takes to put your business together, track its growth and ensure its survival.
I’ve said it before and I’ll say it again (with thanks to the inimitable J. Woden): “Failure to prepare is preparing to fail.” You wouldn’t drive your car somewhere new without a road directory, so don’t head into uncharted financial territory without a business plan.
When I decided to open my first salon I was broke, with nothing but a great business idea.
When the bank turned down my first loan application, my father approached his boss for a loan on my behalf. It was then, at the age of 20, that I learned the importance of a structured business plan. My father’s boss made me put my idea down on paper. At the time I thought this was lame but, as it turned out, he did me a big favor.
A plan is vital if you’re seeking finance. No lender will give you money without evidence that you’ve done the research and know what you’re doing – and that means a carefully constructed, well-written business plan.
It doesn’t make sense to stare risk in the eye without a plan of action. It helps you set goals, determine the turnover necessary to make a profit, better understand financial systems and procedures, assess your marketing needs and establish operational strategies that get you where you want to go.
At times, putting a business plan together can be frustrating. It will stretch your imagination and test your commitment. I’ll warn you that if you don’t feel fed up at some stage of the process, then you’re not going about it properly. So when it happens, say to yourself: “It’s dangerous when things always go the way I want, because then I’m not being challenged.” The upside is you’ll have to take an objective look at your business concept, assess its (and your) strengths and weaknesses, and recognize the challenges you’re likely to face and might otherwise have overlooked!
It is so simple!
The system is an essential tool to help ensure your business venture will be successful and profitable. With the capacity to manage up to two years of financial forecasts, the software can be used not only when starting or buying your business, but, just as importantly, for your ongoing budgeting and business planning needs.
I have modified this software hundreds of times, spent thousands of dollars with Accountants, Bookkeepers and Spreadsheet Specialists in getting it to work specifically for operating your hair or beauty business.
The spreadsheets have been designed to be user friendly. All reports in the workbook are linked, meaning data is only entered once. The software automatically recalculates the effect of any changes made in one section throughout other linked spreadsheets.
The software is unique in its ability to forecast sales and profitability of individual products and services with differing margins. For salons with both high and low margin products, the “sales mix” of these products can dramatically affect overall profitability.
The format of the software enables you to input your set-up costs, monthly expenses, cost and selling prices for each product or service, and individual monthly sales forecasts. The information you include in these sections will help you to prepare full financial statements for your business including monthly profit and loss statements, monthly cash flow projections, and balance sheets. It is imperative the figures you put into the program are both realistic and accurate to ensure your projections are viable and achievable.
What’s In The System?
The system has six industry-specific worksheets that follow with five critical reporting pages.
Set Up - Worksheet
The “Set Up” tab is where you will start.
In this spreadsheet you simply enter the business name, along with the year and month you plan on starting the business. The month and year you nominate will be automatically transferred to every other spreadsheet in the workbook, and you will be able to forecast and estimate figures over a period of two years from that time.
Start Up Expenses - Worksheet
This sheet allows you to calculate the financial requirements of starting your business. By entering values for the necessary items, you can calculate the total cash outlay required to start the business. You can also list your sources of finance in this section, and if you elect to spread your start-up expenses over time you can allocate them accordingly.
Expenses - Worksheet
In this section you can estimate the costs you will incur on a monthly basis in running your business. Ongoing expenses can be broken into two groups – fixed and variable costs.
Components - Worksheet
This sheet allows you to list over 50 items. Fill in the details for each component including:
1. The component description, e.g., “Shampoo and Conditioner” used on each client
2. The ‘Buy Price’
3. Quantity purchased, e.g., the number of these units used on each client
4. Unit description (just for your reference)
5. Percentage waste factor
Products & Services - Worksheet
The products and services sheet lets you analyze the individual products/services you offer to your clients, using the component details from the previous section. This will give you the total production cost, allowing you to see the gross margin on each item you sell.
From this information, the program will calculate the gross profit margins and percentages for each product or service your business intends to sell, and changes can be made accordingly.
Sales - Worksheet
Here you can estimate the quantity of each product you will sell each month over a period of two years.
Balance Sheet - Worksheet
This sheet brings together various details from previous worksheets to itemize your assets, liabilities and owner’s equity in order to give you an indication of how your business plan will pan out.
Profit & Loss - Worksheet
This report is the first sheet that does not require user input. This is where your prior approximations of expenses and cost of goods can have a big bearing on the position of your business. Gross profit, net profit, cumulative profit and revenue percentages.
Cash Flow Statement - Worksheet
The cash flow sheet shows cash received and disbursed, and the sources for each, as well as the cash balance for each month of your forecast. You will be able to tell which months will require additional cash, and you can adjust items as you see fit.
Tax Calculator - Worksheet
This will automatically use the current tax tables issued by your taxation and revenue department, giving you an accurate understanding of your tax liability and commitments.
Tax Table - Worksheet
This table displays the most up-to-date taxation threshold figures, and all you need to do is add the relevant figures provided by your taxations or revenue department.