Wednesday, August 10, 2011


Q. I am a salon owner and we are having a terrible time with our cash flow. To make matters worse, we have not been able to fund our retirement account for the last couple of years. What can I do? I am so in the dark.

A. I have been giving a lot of thought to your cash flow and to the retirement question that you posed. I really think the best thing we can do is to measure exactly where we stand financially to determine what course of action to take. If we can get your books up to date, then we can determine what the break-even point of sales is for you. Once we have measured that number, we can determine what steps need to be taken to make sure that we have the cash flow necessary to prosper.

Don’t forget, there are five ways to have more profits and therefore, more cash flow:

• More clients (referral and marketing programs)
• Come in more often (pre-book)
• Spend more when they come in (retail and ad on services)
• Increase prices
• Cut expenses (except accounting) --A little humor there

Regarding the retirement plan, that really depends on cash flow. Lately, many of my clients have been putting off contributions to retirement plans and working on business growth and debt retirement.

Let’s get the books caught up-to-date and analyze. Remember-- "What you can measure…you can manage.”