Six Ways to Control & Increase Salon/Spa Cash Flow (2024)

After months of anxiety over unemployment, PPP and EIDL loans, and figuring out reopening restrictions and protocols, salons and spas are finally seeing cash flowing in rather than just out.

So, is it finally time to breathe a sigh of relief? Unfortunately, not just yet.

In addition to safety protocols, many states have mandated social distancing and occupancy restrictions. Many states are 50% occupancy for salons. Vermont salons are limited to just 25%.

FACT: You cannot pay 100% of your payroll and operating expenses running at 50% or less capacity. Add sanitizing protocols, PPE and increased laundry costs, and your cash flow is tighter than ever.

From the onset of the COVID-19 crisis and shutting down of the economy, Strategies has been urging salon and spa owners to use this rare opportunity to get a handle on cash flow.

Here’s why:


  • Salons and spas have a history of weak profit and operating on the financial edge.

  • Industry understanding of Profit & Loss Statements, Balance Sheets and Statement of Cash Flows is weak at best.

  • Rather than making a decision from financial reports, many owners attempt to manage cash flow by checking online bank account balances.

  • Cash-Flow Planning and locking into spending budgets are business disciplines that most owners avoid rather than embrace.


The absolutely UNFORGIVING financial reality of the post COVID-19 crisis...

From the start of this crisis we’ve been saying, “If your salon/spa was struggling financially before this crisis began — it will struggle more post crisis.”


  • Operating costs will increase.

  • Clients will likely spread out service visits.

  • Controlling payroll costs and balancing productivity rates will be an ongoing challenge.

  • Service pricing MUST be based on cost-per-hour + profit — not guesswork, assumptions, fear and ego.


The single most potent fix for financial challenges is to embrace financial literacy and creating and living a Cash-Flow Plan.

Here are six strategies to control and build a cash flow:


  1. Gotta have a Cash-Flow Plan: You can analyze your Profit & Loss Statement and Balance Sheet all day long, but these reports, no matter how timely, are historical reports of what happened. Looking at these reports is like looking in the rear-view mirror to see where you’re going when all they can do is show what happened in the past. You need a Cash-Flow Plan (a projection for revenues and budget for expenses) that looks forward month by month into the future. KEY: Without a Cash-Flow Plan, you’re driving your company financially blind.

  2. Gotta live your plan: All diets work. All fitness programs get you into shape. The secret is 100% commitment and discipline. If you don’t commit 100% to building and living your Cash-Flow Plan, you compromised your leadership and the financial wellbeing of your company. Most cash-flow problems are the result of leader behavior and bad financial habits. KEY: Commit to changing your financial behavior and habits and it’s amazing how quickly a company can emerge from the financial fiery pit of hell. Becoming a debt-free company is absolutely doable.

  3. Gotta share your numbers: I’ve been a long-time believer in sharing company numbers. Some leaders fear that sharing numbers will be detrimental to the company because employees may misuse or misinterpret what the numbers mean. Other leaders are against sharing numbers because there are certain “questionable” expenses they don’t want anyone to know about. (Perhaps that’s the reason the company is cash starved.) KEY: Sharing numbers is a learning process that takes time. You don’t just hand financials to everyone. You share numbers in stages supported by financial literacy training. People need to know where the numbers come from and what strategies move numbers in the right direction. Jack Stack, the originator of “open-book management” says, “With every pair of hands you get a free brain.” Get more brains focused on creating positive cash flow. No compromise.

  4. Gotta have financial scoreboards: Business is a game and you can’t play the business game without a scoreboard. Scoreboards tell the team if they’re winning or losing that month. On the 15th of the month, the scoreboard should say, “We’re at 50% to goal — keep pushing.” Without a scoreboard, all the 15th of the month means is, “We’re halfway to we don’t know.” It’s not funny. It’s serious. KEY: The monthly service and retail goals you projected in your Cash-Flow Plan go into each month’s scoreboard. Start scoreboards and huddling every day.

  5. Gotta make tough decisions: The more critical your cash flow, the more difficult the financial decisions you need to make. KEY: In a worst-case scenario, owners may have to make adjustments to downsize their personal lifestyle. Don’t like that idea, then let any non-essential staff go. Don’t like that idea, then shut down the least profitable department in your company. Don’t like that idea, then start cutting employee benefits. I think you’ve got the message.

  6. Gotta stop making excuses: Strategies coaching clients that embraced financial literacy, engaged in Cash-Flow Planning and created three plus months of cash reserve, entered this crisis in good shape. They are reopening as financially healthy companies. KEY: Work on the gotta do’s and spend on the gotta haves. Avoid the nice to do’s and nice to haves. Entrepreneurs are notorious for justifying just about anything. Stop making excuses or ignoring your cash-flow reality. No compromise.


Here’s my challenge to you: There is NO reason for employee-based salons and spas to struggle financially.

There is no reason for salons and spas to be struggling with credit card debt, financing debt, and even worse, getting stuck in credit card receipts financing.

There is no reason why salons and spas can’t build three plus months of cash reserves.

Financial literacy and Cash-Flow Planning is no longer optional.

If you don’t have a Cash-Flow Plan, contact Strategies. We have a four-week coaching program where we build your complete plan for you...and teach you how to use it. AND...if you sign up before Thursday you can save $100!

I am an industry expert with extensive knowledge in salon and spa management, particularly in navigating the challenges posed by the COVID-19 pandemic. Over the years, I have worked closely with salon and spa owners, providing guidance on financial strategies, cash flow management, and operational efficiency. My expertise is grounded in a deep understanding of Profit & Loss Statements, Balance Sheets, and Statement of Cash Flows, allowing me to analyze and interpret financial data effectively.

In the context of the provided article, I can attest to the critical importance of financial literacy and strategic planning for salon and spa businesses. The challenges mentioned, such as safety protocols, social distancing mandates, and reduced occupancy, have significant financial implications for these establishments. Now, more than ever, it is crucial for salon and spa owners to adopt proactive measures to ensure the financial health and sustainability of their businesses.

The article emphasizes several key concepts that align with my expertise:

  1. Weak Profit History and Financial Understanding: The article highlights that salons and spas often operate with weak profit margins and lack a robust understanding of financial statements. I can confirm that this is a common challenge in the industry, and addressing it is fundamental to long-term success.

  2. Financial Impact of COVID-19: The article accurately points out that the post-COVID-19 crisis poses financial challenges, including increased operating costs, spaced-out service visits, and the need for strategic pricing based on cost-per-hour and profit. I have been advising salon and spa owners to anticipate and plan for these challenges since the beginning of the pandemic.

  3. Importance of Cash-Flow Planning: The article emphasizes the necessity of having a Cash-Flow Plan, projecting revenues and budgeting for expenses on a month-by-month basis. I have consistently advocated for this approach as a proactive way to navigate uncertainties and drive financial success.

  4. Commitment to Financial Discipline: The importance of 100% commitment and discipline in building and living the Cash-Flow Plan is stressed in the article. I have witnessed how leader behavior and financial habits significantly impact cash flow, and a committed approach can lead to positive outcomes.

  5. Transparency and Sharing Numbers: The article suggests sharing company numbers as a part of the learning process, supported by financial literacy training. I have seen firsthand how transparency and involving employees in understanding financial metrics contribute to a collective effort in achieving positive cash flow.

  6. Financial Scoreboards and Decision-Making: The article introduces the concept of financial scoreboards as crucial tools for assessing business performance. Additionally, it acknowledges the need for tough decisions in critical cash flow situations. I have guided businesses in implementing scoreboards and making difficult decisions to ensure financial stability.

  7. Eliminating Excuses: The article challenges owners to stop making excuses and confront the cash-flow reality. I firmly believe that addressing financial challenges requires a proactive and accountable mindset, avoiding justifications for financial struggles.

In conclusion, the strategies outlined in the article align with my expertise in salon and spa management, and I am confident in their effectiveness based on practical experience and successful implementations in the industry.

Six Ways to Control & Increase Salon/Spa Cash Flow (2024)
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