Guide for Hairstylists: How to Track Expenses & Calculate Profit & Loss
Running a successful hairstyling business involves more than creating fabulous looks. It also requires a solid understanding of your finances. Knowing your numbers isn’t the most glamorous part of the job, but it’s essential for long-term success. This guide will help you track your income and expenses, and calculate your profit and loss with ease.
Why is it Important to Track Our Finances as a Hair Stylist or Salon Owner
Accurate financial tracking allows you to:
Understand how much money you're truly making.
Identify areas where you can cut costs without sacrificing quality.
Make informed decisions to grow your business.
Reduce financial stress and plan for taxes more effectively.
1. Tracking Your Income
Your income includes more than just the services you provide. Make sure to account for:
Services Rendered: Haircuts, coloring, styling, treatments.
Product Sales: Shampoos, conditioners, styling products.
Other Revenue Streams: Classes, events, or affiliate partnerships.
2. Tracking Your Expenses
To get an accurate financial picture, track all business-related expenses, including:
Rent & Utilities: Chair rental or salon space, electricity, water.
Product Costs: Shampoos, dyes, tools, and equipment maintenance.
Marketing Expenses: Website, social media ads, flyers.
Education & Training: Courses, certifications, workshops.
Miscellaneous Costs: Insurance, licensing, uniforms.
3. Calculating Profit & Loss
Understanding your Profit & Loss (P&L) statement is crucial. It shows whether your business is making or losing money.
Profit: The money you make after covering all expenses.
Formula: Revenue - Expenses = Profit
Loss: Occurs when your expenses exceed your revenue.
Tips for Staying Organized
Automate When Possible: Use accounting software tailored for small businesses.
Save All Receipts: Digital or physical, they’re essential for accurate tracking and tax deductions.
Set a Weekly Check-In: Regularly review your numbers to stay on top of your finances.
Consult a Professional: An accountant can offer personalized advice and help you stay compliant with tax laws.
Use an expense spreadsheet. Check out Prism Profit, the custom business program I have put together. As part of the program, you receive a customizable expense tracker that you can immediately start using at your business.
Final Thoughts
While managing finances may not be the highlight of your hairstyling career, it's a crucial part of running a successful business. By tracking your income and expenses diligently and understanding your profit and loss, you'll make smarter decisions and ensure long-term growth.
Start small, stay consistent, and watch your business thrive! If you are interested in learning how to accurately track expenses and profit and loss, check out my custom business program for hair stylists and salon owners. If you join the Prism Profit program, you will immediately receive a customizable expense tracker in spreadsheet form that you can start using immediately to track finances.
The program includes detailed how-to videos on not only daily tracking, but weekly, monthly, and yearly. Click on this link, fill out the form, or follow the button below to see if the Prism Profit program could benefit you and your business. If you’d like to know exactly how I do my tracking, fill out the form below to receive downloadable daily tracking templates!
