The beauty salon industry in the United States is growing quite fast and is also very competitive. If you are running a business in this industry you would know it well that survival here depends on your ability to overcome crises every time you confront one.
Cash flow volatility is a perennial problem for all kinds of businesses and not just for those in the beauty salon industry.
Overcoming such problems becomes easier when you seek financial support from a company like Direct Lenders Funding, which is a leading provider of credit to businesses of all sizes.
The beauty salon industry is already worth around $55 billion in the United States although this figure is almost 20% less than what it was just prior to the pandemic in 2019.
With the industry registering a near double digit compounded annual growth rate (CAGR) it is obvious that you are facing stiff competition.
That’s not something you need to be worried about because healthy competition is good for your business. Just make sure that you do the right things for your business and manage your cash flow efficiently.
What it takes to run a beauty salon efficiently
Running a successful beauty salon requires a combination of inputs, including excellent customer service, a skilled and knowledgeable staff, effective marketing, and efficient business management.
Offer high-quality beauty services, such as haircuts, coloring, styling, facials, makeup, and other related services. Ensure that your salon uses quality products, tools, and equipment.
Employ qualified, experienced professionals who can deliver excellent beauty services to your clients. Provide regular training to your staff to keep their skills up-to-date with the latest trends and techniques.
Offer friendly, professional, and attentive customer service to make your clients feel comfortable and valued. Listen to their feedback and address any concerns promptly.
Set reasonable and competitive prices for your services to attract and retain clients, although that’s not really easy to do, and still maintain profitability.
Develop effective marketing strategies to promote your salon, such as social media advertising, email campaigns, and loyalty programs.
Implement efficient business operations, such as effective scheduling and inventory management, to ensure that your salon runs smoothly.
Maintain a clean and hygienic environment in your salon to ensure the safety and well-being of your clients as well as to make it acceptable for all kinds of customers.
Get a grip on the cash flow management of your salon
You obviously know that cash flow is not really a problem in your salon since payments are usually made upfront by your customers.
However, your revenues can get affected if your customers are unhappy due to any reason. It could be some aspect of your service or the ambiance in your salon, among others.
It could also be due to the way one or more members of your staff behave with your customers. If you have to replace all or most of your staff, that will involve a lot of expenditure.
Similarly, if you have a very basic and spartan ambiance, that may not attract many customers who are willing to pay top dollar for the overall quality of services, including ambiance.
If you decide to invest in the improvement of your ambiance, it will involve a lot of money. Normally you may not have that much savings as beauty salons are mostly small businesses.
Take it easy; you can apply for funding from lending companies like Direct Lenders Funding, which has a long track record of smooth funding of businesses like yours and many others.
Going to traditional lending agencies does not work out well for smaller businesses like beauty salons, as the funding parameters of these lenders are quite different.
How will you handle a cash flow crisis?
There is no business that’s free from cash flow volatility, and even in the beauty salon industry, where you get payments upfront like in any other retail outlet, there can be a cash flow crisis.
There are overheads like inventory stock for which you could get a 15-30 days credit period, but when it comes to payroll and utilities, you must pay on time always.
You could get away by not paying wages on time once or, best, twice a year, but if you push your luck any further, it can get messy and lead to attrition.
Hence, if you run into any cash flow crisis, don’t hesitate to look around for short term business loans from a reliable lending agency.
It is also important for you to get the loan on favorable terms as well as at a cost that is affordable. You need not borrow without properly looking up the terms and conditions as well as the cost of borrowing properly.
What are the barriers that you are likely to come across?
There are several ways that a lending agency assesses the creditworthiness of a borrower. These days, a lot is being spoken of about the credit rating of a borrower, but this is not necessarily his/her creditworthiness.
You need to know that your application for a loan could be rejected on the basis of your credit score. This happens when your credit score is poor, which in turn could be due to a history of loan repayment defaults.
That’s how most traditional lending agencies assess your creditworthiness in addition to another condition, e.g. your ability to provide collateral for the loan you are seeking.
When you approach a company like Direct Lenders Funding for a loan, your application is going to be assessed on the basis of merit.
This means your credit rating and credit history won’t be considered for smaller unsecured loans. For small businesses like beauty salons it is a lot easier to obtain cash advances for meeting temporary cash flow disruptions or even to make a small investment in your salon.
Assessment of your application for a loan on merit means the lender will consider your current cash flow as the basis for approving the loan or not. For that, they would ask for your current checking account statement of the last 12-24 months. If it shows a steady cash flow, chances are high that your loan application would be approved.
