I don’t think I’ve ever met a salon or spa owner who doesn’t LOVE looking at their bank account on December 31st. After 4 weeks of promoting and selling bucket-loads of gift certificates and watching your business account swell to delightful heights of a busy service month, one feels the constriction of tight finances finally release. You have the ability to take a deep breath of relief over money.
However, this can also be a time where the perfect storm of emotions and lack of planning and organization could land you in a hot mess of money.
You see, most salon owners keep their gift certificate sales in the same operating account as their business. So when you go to purchase that new computer you are desperate for…it seems like you have the cash to pay for it.
But the truth is, you might not.
Gift certificate revenues are not a real ‘sale’ until they are redeemed. In accounting terms, they are a ‘liability’ until the recipient uses it.
Think of it as money that is not really yours to spend until that guest has cashed it in.
What happens if you spend it before the gift card has been redeemed? You are spending money you don’t have. You will also end up feeling the financial burn when the certificate comes in.
So in 3 months, when you’ve already spent the money you are doing the work for right now, you’ll be wondering why you are so cash strapped.
What is my advice to you
1. Open up a new bank account and transfer everything you generated for gift certificate sales into that account.
2. LEAVE the money in there until the end of every week.
3. Every Saturday look at your weekly gift certificate redemptions report and transfer ONLY that amount from your gift certificate account into your general operating account.
4. Breathe easy knowing you are a responsible entrepreneur and using your revenues wisely!
Here’s to a prosperous and peaceful year in your salon!