If you’re like most business owners or managers, you’ll experience the occasional dry spell—a period when cash is especially tight. No question about it: Reduced or nonexistent cash flow makes running a salon difficult. But with creativity, hard work and a bit of luck, you may be able to free up cash much faster than you think. Use these thirty cash-building tips as starting points.
Ask suppliers for temporary concessions, such as lower fees or waived charges for certain services, such as delivery.
Make sure you confirm all of your next day’s appointments. You don’t want to lose $60 because a client forgot her appointment.
Ask outside professionals, such as a small business advisor or an accountant, for cost-cutting and cash-boosting ideas.
Ask your suppliers for suggestions on how to reduce costs.
Turn your attention—and your staff’s attention—to nontraditional services that have the potential to generate additional cash. Add a paraffin dip to your regular manicures and pedicures for an extra $5. Offer every client nail art for an extra $2. Create an upscale relaxation manicure and pedicure: Provide each client with a heated neck pillow and signature beverage for an extra $5 per service.
Watch your utility expenses. When heating or cooling the salon, a difference of a few degrees can add up to a considerable sum of money.
Offer discounts to customers who pay with cash.
Consider using any lines of credit you have available.
Freeze all purchases other than essentials, and centralize responsibility for all salon purchases.
Consider slightly increasing prices on services or retail items that are less sensitive to competition.
Maximize the value of all available cash by investing it in an interest-bearing money market account.
Cut all but essential telephone services. For instance, you might cut caller ID features or extraneous phone lines or even switch to a Voice over IP system like Vonage or Ring Central.
Eliminate or limit overtime pay.
If you need to hire more help (thereby adding to overhead costs), consider hiring seasonal or temporary workers to perform some operations until the fiscal situation improves.
Take a look at those clients who are especially sensitive to competition. Let them know you want and appreciate their business, and you want the opportunity to beat your competitors’ prices and terms.
Watch your inventory. Stock popular items, but minimize your investment in products that don’t sell quickly.
Attempt to negotiate payment times for services provided over the course of a year, such as insurance.
18. Pay early
Attempt to negotiate early payment discounts with long-standing vendors.
Sales slow? Offer discounts and incentives to push slow-moving goods and services.
In many businesses, a relatively small percentage of clients produces a disproportionate share of accounts receivable problems. Take time each day to contact delinquent clients with significant account balances.
Leave no time slot empty. Each morning, check your schedule for empty time slots. Call the clients scheduled before and after each slot to see if they want to come in earlier or stay later for a pedicure at half-price. Fifty percent is better than nothing.
If your income reflects a short-term decline, consider reducing the amount of the estimated tax payments you’re sending to federal and state taxing authorities.
Look into switching to a twice-monthly statement mailing, instead of the traditional monthly statement. In some cases, you may save money on interest payments.
Offer staffers incentives to cut costs. For example, reward employees with a portion of the savings incurred as a result of their suggestions.
Obtain bids or quotations on all purchases, and be sure prospective suppliers understand that you’re aggressively searching for the best possible price.
If financial hardship gets really tough, try to negotiate time payments or extensions on large orders.
Review the costs of outside services (consultants, insurance and cleaners, to name a few) and renegotiate their duties and fees.
If all else fails, use credit cards to obtain short-term cash advances. But beware: Interest rates can be high! Be sure you have a realistic payback plan.
Join with peers in noncompeting businesses and purchase key goods and services in bulk, hopefully at a discount.
Don’t tie up your cash by paying bills early; pay them just before they’re due.
– Richard G. Ensman Jr.
[Images: LendingMemo.com, Camilo Rueda López, 401kcalculator.org]