8 December 2021

Monday Biz Tips! You own the Place… How do you Pay Yourself?

If you are the owner, Summit Salon Business Center believes you should pay yourself as follows:

1. Services. If you are a service provider, you should pay yourself a commission for the services you provide. Your commission rate should be the same as other service providers who operate at your level.
2. Management. If you perform a management role, you should pay yourself the equivalent to what you would have to pay someone else for the same role.
3. Profit. As a business owner, you should also enjoy profit from your company.

Salon owners who do not properly compensate themselves simply “bought a job,” rather than own a company that provides adequate compensation. If your salon company is profitable, it is amongst the top five percent of salons in North America as ninety-five percent are either cash flowing or losing money.

Interesting Facts:

Profitability In The Salon
• 5% of all the salons in American are profitable
• 15% of all the salons in America are cash flowing
• 80% of all the salons in America are losing money

SSBC’s Definition of Profit
• All bills are paid on time
• There is money left in the checkbook
• The owner is able to take money out of the salon over and above what they do behind the chair.

Cash Flow
• Just making enough
• Underpaying myself
• Always waiting for tomorrow’s deposit
• Worry about being able to make payroll

Losing Money
• Wait to cash paychecks
• Unable to pay all of the bills
• Putting money into the business with a second loan or borrowing from family or friends

For more information on Salon Finances, click here!

 

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