5 ways to futureproof your nail & beauty business

Difficult economic times, unpredictable world events, illness and a fast-changing world can leave small businesses more vulnerable than ever.

It’s much harder to predict where new risks will come from, so businesses need to be futureproofed to protect them in times where there is no regular income. What the Covid-19 pandemic has taught is that unpredictable events can leave businesses in jeopardy and it highlighted how many businesses were not prepared.

1. Savings

Most financial experts recommend a business has adequate reserves of three to six months of operating expenses. These funds should be enough to cover your fixed costs in months when you have no cash inflow.

This contingency should be calculated into your service costs. You need to know your individual businesses cash needs for the next 12 months so you are able to forecast how much cash in the bank is necessary. To calculate your costings for your nail business, refer to my pricing article.

Let’s look at the calculations in this blog as an example. If we take the figure of £1138.33 for monthly fixed costs and multiply this by three to cover three months of outgoings, this provides us a three-monthly fixed cost of £3414.99. This necessary saving needs to be calculated into our service cost.

Take the costing for a full set of enhancements of £40.33. Add an additional £5 to this treatment cost to be saved. If we perform the calculated average of 160 services per month, this would provide £800 of savings. This would take just over four months to obtain the contingency savings required.

But it’s not always easy to build up these savings as they can take time to build up and be used up very quickly. So, while having some emergency money is a good idea, combining your savings with a form of protection insurance might be an option for you to consider.

2. Insurance

While there is a debate about insurance companies not complying and refusing to pay out on business interruption clauses during the Covid-19 pandemic, there are various forms of insurance you can consider to protect your business and your personal finances such as income protection, critical illness insurance or payment protection insurance.

When you have a savings contingency in place, the need to rely on insurance is not so critical, leaving your business better protected. If your contingency covers your business costs but not wages in this calculation, you can fall back on your income protection insurance to cover your personal finances.

3. Loans

While a loan or overdraft should be considered as a last resort, it can be beneficial for short term solutions. In difficult times, adding potential debt is not ideal so you need to consider your future repayment plans prior to any borrowings.

It is important that you have a business plan pre-prepared, accounts in good order showcasing true profits and have maintained good relations with your bank to make this process as timely and efficient as possible.

4. Adapt

Don’t depend on one part of your business for complete success. Consider other avenues of income which work alongside your business. Look for high profit services, upgrades or retail items that you can promote alongside lower profit services.

As a sole trader particularly, you need to consider how can your business continue to bring in revenue when you are not actively working in it offering the core service of nail treatments.

We can use how some nail businesses adapted during the recent business closures as an example for this. Learn how to adapt your business to cater for these customers. Did you offer tutorials, press-ons, homecare products and kits? If so, consider continuing marketing these services alongside your traditional hands-on services. This can ensure a steady stream of income in the event of not being able to offer these.

While some customers would have been queuing at your door upon reopening, others have become used to and adapted to living without their nail and beauty treatments. By continuing to offer alternatives like this, you can continue to keep these customers and attract new ones.

5. Pre-payments

Let’s look at building our saving reserve back up. To obtain quicker funds into your bank account, ask customers to pay you in advance and offer a discount as an incentive to pay earlier, such as a discounted course of treatments. Push your gift voucher sales as this also offers more cash in the bank.

Research funding sources, update your business plan, insurance policies, budget, and saving requirements so you can be prepared and they are available if and when they are needed.

Love Katie B x

www.katiebarnesacademy.com