Get Smart with Your Money!

BY LIZ MCKEON

A disruption in the economy is a worrisome subject for barbershop business owners, with a big concern on keeping sales up when clients may be cutting back on spending.

Follow these steps and get smart with your money:

1. Focus on your Balance Sheet

Make sure you are managing your cash flow very well. This needs to be attended to on a very regular basis, but it is even more critical in a recessionary environment, because there might be less discretionary spending happening.

2. Diversify and Launch

Believe it or not, economic downturns have a benefit for business; it gives you an opportunity to step back, rethink and review all sectors of your operation. Consider launching a new product or service. Use the time to diversify, so you don’t have too many eggs in one basket.

3. Look at Credit and Debt

Look at increasing your line of credit – in the event you need to use it. Negotiating with a bank form a position of power and good financial resources now is a lot easier to do than trying to negotiate in a deeper recessionary environment.

4. Review your barbershop’s discretionary spending items.

Although small businesses tend not to overspend, recession survivors still manage to cut back on discretionary items, such as travel, operational costs, and staff outings. Take whatever steps you can to reduce your debt – the less you have to pay out in economic tight times, the less painful it will be.

5. Review your clients.

Start reviewing how an economic downturn will impact on your clients. Search for alternatives. Somebody is always making money, even in tough times, so if you can find out where those pockets are and if you have services you can provide to them, maybe you can expand those services?

6. Improve customer service.

Now is definitely the time to take your barbershop’s client care to a new level. Get in touch and stay in touch with your active clients. Take nothing for granted. Make sure your pricing is competitive, your service exceptional and your attitude reflects how much you value their business.

Revisit dormant clients and see what you can do to bring them back to your barbershop. Sometimes it takes as little as just asking; other times it can take some imagination and insight. Reattracting past clients can still be easier and less expensive than finding new business. Ask your clients for referrals – they will be happy to recommend your barbershop if you have an outstanding level of service.

7. Keep marketing.

Regardless of economic shifts your barbershop cannot afford to stop marketing. If marketed properly, new products are always certain revenue generators. Determine what sets your business apart from the competition and market it like crazy.

Marketing doesn’t have to cost a lot – for example, get more strategic about your social media activity, so it becomes more lead generation than brand awareness, spruce up your website, start a monthly newsletter campaign, attend local networking events and position you barbershop as the best and only option in the client’s mind.

8. Know your books.

Many barbershop owners don’t know the first thing about financial statements and book-keeping, and they don’t want to know. Even if you use an accountant to help you with your end of year accounts, you still need to know the basics of how to keep your ‘books’ throughout the year. This really matters because good accounts are the basis of good business. If you don’t have an accurate grasp of your financial situation, your business plans will be based on little more than guesswork.

As the barbershop owner you are called on to make financial decisions on a daily basis. To make quality financial decisions, you must deal in facts that you own, know and understand.

9. Manage your stock.

Being properly prepared is one of the biggest assets in business. Effective stock management is one of the main elements required in running a financially successful and profitable barbershop. If you want to mind your money, learn to manage your stock, professional and retail.

Stock control, otherwise known as inventory control, is used to show how much stock you have at any one time, and how you keep track of it. Effective stock control is necessary if the barbershop is to offer a full range of products and services. It applies to every item you use to deliver a service and every homecare product you retail. It covers stock at every stage of your service to clients, from purchase to delivery, to using and re-ordering again.

Maintaining effective stock control is critical in small business. Under stock will result in loss of sales and overstock will result in excessive amounts of money tied up in stock.

10. When the going gets tough...

An entrepreneur is an individual, who rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea or product/service for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes.

Entrepreneurs play a key role in any economy.

You have chosen to be a barbershop owner/manager – welcome to the bumpy road of entrepreneurship! From time to time you will encounter setbacks, defeats and failures – some of which might seem fatal, but they are not. As entrepreneurs, there is no such thing as failure, only experience of different feedback. You have to keep going, stay strong and even cheerful when the going gets tough – use tough times to become the master of the comeback!

11. Spot the opportunity in challenges.

When the going is smooth, we can switch to cruise control. The reality is that things rarely go as planned. What happens when your plans don’t work? When an unanticipated challenge arises, it can throw everything into a tailspin, knocking you off course and off centre.

But, if you can develop the mindset of always looking at the opportunity, no matter how bad the economy is or how difficult the situation appears, you will develop an invaluable business skill. Whatever size of type of obstacle you encounter running your barbershop, try not only to make the most of it, but actively seek out the opportunities it brings.

Finally, remember your long-term picture. All business is cyclical – it is of little value to your business to leave a short-term downturn unable to capitalise on the return to better times.

@lizmckeonbizliz