For those of you that missed, I was quoted in an article written by Stacey Soble in Salon Today. The article, titled Pinch Proof, deals with the possible slowdown in salons due to the economy. The following was my contribution.
"Larry Kopsa, a partner of Kopsa Otte CPAs, an accounting firm that serves the beauty industry, concurs. 'As I read about the recession, it's been really interesting to examine our wide range of salon clients from small salons to large chains - many are performing more services per client and seeing numbers go up.'"
"Every strategic plan starts with a budget. 'If you're not working with a budget, you don't even know if you're hitting your numbers. You have to have that information upfront, so you can do things differently.'"
"While Kopsa says some salon owners have protested they can't afford to hire a financial expert to help establish and maintain a budget, he cautions that you can't afford not to. 'If you can't afford it, you shouldn't be in business. That's like buying a racehorse, but not being able to afford the trainer.'"
"Kopsa advises all his clients to establish two-to three-months worth of cash reserves in the bank just in case. 'Whether you are facing a recession or strong competition moves in across the street, it's always wise to establish cash reserves. If you put aside every year and end up never needing it, then you have funds for future projects like expansions and remodeling. What you don't want is a situation where you're going down the tubes, putting $100,000 on credit cards trying to save your business.'"
"One word of caution with the holiday season ahead, don't be tempted to use your gift certificate receipts as cash reserves. 'It's hard not to view that money as operating capital,' says Kopsa. 'Owners tend to spend it, but then you're just postponing your problem. As those certificates are redeemed, you'll be stuck dealing with paying for the labor and products associated with those sales.'"
Read the whole article in the November, 2008 issue of Salon Today.
