Many of us don’t put our profits first. We may think that we do, but we actually don’t. The main reason for that is most salon owners are following a broken method of paying bills first, then what ever is left over you take. This method is flawed for salon owners and I want to show you why.
Sales – Expenses = Profit
We take our sales, minus the costs that it takes to run our salons and whatever is left is ours to take as profit .
The trouble is that we’re often driven by emotions and habits and so this model puts us into the habit of putting sales first and profits last. And often, more sales can mean more expenses, so if we focus on growing too quickly and attracting more clients or doing more services, for example, then this usually means increasing our expenses. What I’ve seen from coaching is this...
if we don’t have our basic financial foundations set and if we don’t have an emergency fund and something crops up that rocks that boat, then it means that we put ourselves under financial pressure.
We have the chance of a lifetime to reflect on our businesses and decide on exactly how much we want to make, how many hours we want to work and to NEVER make the same financial decisions we did before this crisis. We need to make sure we are financially prepared for reopening with a clear plan of action on how we're going to achieve it and this course will deliver exactly that.
This course will run every Monday 10am UK, 7pm Aus
Payment entitles you to come to as many of the sessions as you like!
What does the profit plus setup actually look like in in practice? The profit plus system is set up using four key principles and it’s referred to using the analogy of eating healthily.
Having small plates. So the idea here is to work with the idea that you need to finish everything on your plate. The Profit Plus model talks about how the solution is to reduce the size of the plates, therefore reducing the size of your portion. When money comes into your business, immediately send portions of it out to the following accounts; profit, tax, salary, and operating expenses. I’m going to cover on the practicalities of how those four pots work inner coaching calls but those are the portions that we need to separate money out as soon as it comes into our business.
Serving sequentially. When you’re eating smaller portions, start with your veggies first; they fill you up with all the good stuff. Relating that to business, when you’re dispersing the money that comes into your business, of those four accounts you’re paying profit first.
Removing temptation. You know about this one, right?! Get rid of all the chocolate, all the wine, all the junk food. Get rid of any temptation that’s in the kitchen that will take you off track from healthy eating; in your business it’s about getting that profit account out of easy reach. So moving it into a different pot, moving it into a different bank maybe, automating those deposits. Don’t look at it, and just make it hard to steal it away from yourself.
Enforce a rhythm. This kind of goes back to see the concept of not shopping when you’re hungry; the idea is to have a few calories every couple of hours, and the same holds true for your business. Don’t pay bills only when you’ve got money, pay them on a regular basis. Enforce that habit, and force that rhythm.
When you’re brushing your teeth you need to intentionally make less toothpaste available to brush your teeth (ie money) available to brush your teeth is how you operate your business. When there’s less toothpaste available in that tube, you automatically run your business more frugally and run it more profitably. When you have a full tube of toothpaste, you’re not really that fussed about how hard you squeeze because there’s tonnes in it, but you know when you get to that last little bit in the tube you’re going to really try to squeeze everything out to make it spread further. And that’s the same principle; if you make less available in the first place you just automatically run it more frugally.
The second principle around that is when less money is available to run your business (ie in the toothpaste analogy) when it’s less available, particularly if you’ve moved that money out of sight, you’ll always find ways to get the same results or better results with less. So in other words by taking your profit first you’ll be forced to really think smarter. If you implement profit plus you’ll start to use the powerful human behaviour; Out of Sight, Out of Mind. As you generate profit you’ll move this from your immediate accessibility, set aside money for tax and then whatever’s left is what you have to manage your expenses. So the old formula becomes the new formula;
Sales – Profits = Expenses
Your focus is not so much on the takings but it’s on making profit, and whatever is left is what you have to run your business on.
At this point, there really isn't much else to say.......
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I look forward to working with you,
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