I want to go to Greece, but I really like my $30 foil...
I have always wanted to go to Greece.
It's on my list and one day down the road, I will be basking in the Grecian sun and visiting all the cool places I studied in one of my favorite classes in 5th grade. Yes, it goes that far back.
Here are a few things that will help me get there faster, and I'm sharing them with you because whether you want to go to Greece or live your version of life your way, financially, you need to be able to put your money where you want to put it and NOT overspend in areas you don't have to...
Let's talk Salon Supplies for a second. It's the #2 budget-breaking expense, next to rent, that any salon owner faces.
But unlike your rent (unless you're moving), controlling your supply costs is actually relatively easy.
If you've ever wondered what your budget for supplies should be, here's a quick tip.
Most financial 'experts' in our industry will tell you to allocate anywhere from 5-10% of your revenue to supply costs.
No context. No explanation. No guidance.
Just pick a number out of the sky, and that's your number.
Remember first and foremost, that anything you do with your finances is 100% up to you and how you want to construct your business.
But how about some context, truth and guidance?
The only thing you can't control is the math. There are 100 pennies in every dollar. That's it.
Figure out how you want to spend those pennies, and you can literally do whatever you want.
When it comes to supplies, 6% of SERVICE sales is a good place to start. Any more is unnecessary and any less will require some creativity, but it certainly can be done!
To avoid overspending, consider these 3 things before you set your target.
- Only consider your SERVICE revenue when factoring supply costs. Your retail revenue has to cover its own expenses, so including those numbers in addition to service can cause over-spending.
- 6% is a good starting target, BUT if you work with a brand with a great rewards program (we have brands that offer 15% back for instance), you can keep this lower and add additional % points to your bottom line. Take advantage of this!
- Buy in Bulk! Most brands will work with you if you buy in large quanitites. For instance, if you will buy in cases, you may receive a 10% discount. Simply buying 12 every 3 months, instead of 4 every month will give you the same product quantity with a lower price!
Ideally, you would not spend more than 6% of service revenue on supplies, and think about it...
Do you really want to spend your money on things that are going in the trash and down the drain?
Would you throw your money there if you didn't need this stuff to do your job?
No, you wouldn't because you're a smart business owner, and spending money you could use on other (more fun) things than FOIL, isn't the game you're in.
No one ever said, "you know what my goal is? To buy all the beautiful foil in the world!"
So let's not spend our next trip to Greece on Aluminum.
For a lower cost option with a great, family-owned company we support, check out Styletek HERE.
Until next time,
Ash
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