Your Bank Balance Isn't a Profit Plan | The Salon Owner's Mistake

Most salon owners have a rough idea of whether their business is making money. They've got a feeling, they've got a hunch. Maybe they take a quick look at the bank balance on a Friday afternoon, but a feeling isn't a profit plan and a hunch is not a strategy. My guest today is Braden Weinstock, founder of Pretty Data, and we're talking profit planning, what it really means, why most salons are flying blind without it, and how to finally start making decisions based on data rather than instinct. Let's get him on the show, shall we? Hey Braden, welcome back. Hey Phil, great to be here. Thanks so much for having me. You are one of the select few that's made it onto a second request for an interview on the Build Your Salon podcast. I think there's only about five people that have ever come back twice. Whether that's my choice or theirs, of course, is a matter for debate. So how are we doing? I'm doing wonderful. Things have moved on a lot with Pretty Data since we talked last time. Yes, yes. We keep building and improving and helping salon owners run profitable stores. Cool. Love it. So today we're talking about profit, which is one of my favorite topics. And I said in the intro that lots of salon owners think they know how profitable their business is, but they're not really working with decent data. So a lot of the salon owners that I've come across anyway tend to run their business from their bank account. If there's money in the bank account, they must be profitable. If there isn't, then things are going wrong. So how wrong is that? And how wrong do they get it when we finally start bringing some data in? Yeah, a majority actually. When I was doing research, I started to find that almost more than 50% of either solo pros or independent salons are not always making a profit. And this is actually something that started with my own experience. I have actually run, I own and still run a profitable salon for over 15 years in Los Angeles. So I know this from firsthand experience as well as talking to all of my friends in the industry. The number one thing is what you just said. So many people check their bank about balance and they think that they're making a profit. Then they make decisions and spend money without knowing whether or not they actually have that profit.

And then they get to the end of the year and they either owe taxes or they haven't paid some bills and they find out. And sometimes it's right now during tax season. Oh my God, I didn't make money last year. And that is absolutely terrifying because if you're not making money on every client, you're just working to go out of business faster. Yeah, absolutely. I think the reverse of the coin also is when your accountant tells you that you're making a profit, but actually you kind of, where the hell is it then? Which is always a really interesting one too. And I think that comes from not having decent, timely data. It's that lag that we get through the reporting process being so much detached from what's actually going on in the business day to day. So what should people be doing then? If they're not running their businesses from their bank accounts, how do they know whether they're making a profit or not? Yeah, well, that's, I mean, that's the great struggle. So maybe it'll help if I remind people about my story and how I ended up solving that because I am, I'm a business person by training, did background in like finance and management consulting and operations. But I've owned this along with my best friend and business partner for over 15 years. And he's just like most people. He went to beauty school, did hair, was really good at it and wanted to start a business. And so many of us, you know, we went to beauty school, not business school. So we don't actually get the basics of how we're able to do financial management, let's say. And that's okay because we were trained to go do hair or nails or anything else and make sure it runs successfully. And so when you actually go and you look at your data, I personally have always found the problem is it's spread across all these different systems. So what happens? I end up looking at my booking system, but it doesn't have my expenses. Or I go and I look at my accounting system, but it's out of date and it's confusing and I don't understand accounting. So I'm waiting on my accountant to send me something, but that doesn't answer it. So I end up talking to pretty much every salon owner and they have a spreadsheet and that really sucks. And I know you've run in this problem too. When you sit down to work with a client, one of the first things they need to do is gather all of their data.

And I think that's the core of the problem, getting all the data from your marketing system, your accounting system, your booking system, and being able to put these types of things together in order to know, hey, how many clients are coming in? How much revenue is that making? What are my expenses? And am I making money? And then from there, if I'm not making money, typically the question becomes which staff member is struggling and why? And so the key is getting all of that data together. And that's what I set out to do is pretty data because after over a decade of doing this in spreadsheets, I thought there's got to be a better way, but there wasn't. And so I built it and that's pretty data trying to help you quickly see with data from your booking system. How many clients did I do? What's the average bill per visit? And then we gather data from your accounting system and we put that together. So when you open the app, the first thing you see is this is how much money I made from every visit. This is how much every visit costs me all your expenses without having to deal with the accounting mess. And then what's left over is profit. And that way, for example, you can say, I know every time a customer comes in, I make $20. Great. So if you want to make $20,000, guess what you need to do? I love it. And the reason I love it so much, and you will know, Build Your Salon listeners, that I don't endorse virtually anything ever. So it's very, very rare that I put my name to anything, but the reason I'm putting my name to pretty data is because so often in the coaching journey from my point of view, that gathering the data, that getting all the information together is enough to stop people getting the help that they need at all. Just the thought of having to try and find all those reports and speak to the accountant and get all the invoices together and find the out of date spreadsheet. And that's enough sometimes for people to go, do you know what, I don't want coaching. I just can't face it. So that's why I'm very excited about something like pretty data coming along and just bringing all of those strands together in a way that's actually meaningful and useful for people. And I guess, I suppose what I want is people to open up pretty data and see that they need some help. So that's the flip side. But yeah, bringing all those strands together is exactly what's getting me kind of excited about this.

So when you're bringing all that data together, in your experience then, what are the warning signs that you notice very quickly? So you mentioned, for example, particular team members struggling. What else tends to stand out when you're looking at the numbers for the first time? Usually what I notice is the very first thing is people have a sense, but they don't have a clear set of data to easily tell them how much do they make on every customer? How much do they spend and how many customers are they even doing? Sometimes I'll see people who have a sense of their revenue. Hey, my weekly revenues five. Okay, great. But they don't necessarily know how many clients are doing and what their average bill is. Now, some systems will do that and they'll see that. But then they just are completely missing the expenses. And that's the number one thing is missing the expenses because it comes from their accounting system and it's not connected. It's in accounting language. That's confusing. And so the two aren't there. And so really it's the what am I spending that becomes the number one thing that people don't have in order to answer the question, am I making a profit? And what's really amazing is, you see, we've built integrations to something like a QuickBooks or Xero. And you don't have to manually enter anything. You literally just click and type in your password and it's instantly there. And you can look back over time and you can see, oh, my God, every month I'm spending twenty thousand dollars. Okay. If I'm spending twenty thousand and I know I'm doing about the same in revenue, I start to worry. I might not be making a profit. What I'm seeing is cash in the bank. That's that's the first thing. The second thing is once we connect the two systems and this has been for our UK customers, being able to see the VAT, the estimated VAT they need to hold on to. So I know you've recently talked about the experience of hitting that VAT threshold and how important it is. But in both the US and the UK, we all have problems in the beauty services industry, making sure we've set aside money for taxes. And what happens for a lot of people, and this has happened to close friends of mine as well, is they never have that VAT number in front of them, which is part of your core expenses. And so then tax season comes and they feel like they made money back at January, but April comes and they're like, oh, my God, I just lost it all.

And so just being able to see those two things, what are my regular expenses? And then being able to keep the tabs on VAT, those are when I really see light bulbs go off. After that, I find that about 80 to 90% of salon owners, once they see the unit numbers, unit metrics per visit, they immediately start to know what to go look for. They start looking at rebooking rates. They start looking at whether or not a stylist is costing them more money or generating more money because we can see the two immediately. And that allows them to actually do what they're really good at, which is coach people on how to deal with customers, how to be able to provide great services, how to be able to get rebookings, all the things that we are trained to do and do well. That's the key. And I think it's that is the connection between what we're talking about is performance management and profitability. It's building that bridge between the two, which actually takes up an awful lot of my time is just trying to convince people that there's so many of us. For example, if you've got a team, we're having one to one meetings. We're nagging about retail. We're pushing on rebooking without really understanding why and without really monitoring the impact that has on the business. And it makes those targets feel arbitrary. It makes them feel just, you know, plucked from thin air. And then it's no wonder that the coaching doesn't stick. And it's no wonder that we're not talking about stuff with meaning and passion because they're just numbers floating around. Once we can connect that with a profit plan and a profit target, and we know why we need each team member to perform to a certain level. That's when it gets really exciting, I think. Yeah. And it motivates them because you can show them the math, just like you can say, hey, I'm going to make $20 profit on every customer that comes in and I want to get to 20K. Here's how I always find that our staff feels the same. They'll come and say, I want to get to here, but then they need to see the count of what they need to do to get there. And we do the same thing, right? You have a staff performance report that you can pull up on the fly and just say, OK, what did you do last month? What did you do the month before? How did those connect? How did those connect? And then we added a metric in and this is something that we found really helps people. You know, let's say you're booked 50% and your average bill per visit is $100.

Well, your effective rate, the amount of what you're really bringing in as that individual is actually not $100 a visit. You're making about 50% of that. Your effective rate is cut by your utilization. So what we're able to do then is show people, hey, every day you come to work, you're missing out on five customers at $50 each. That's $250 a day. That's being left on the table. Now when they start to realize what they're losing with their time and they can calculate it as, hey, if I can get 10 more customers, I'm going to make another $500, well, they get really excited. And in terms of getting the salon owner excited, I have met in the past a bit of resistance around profit. And I don't know if it's a British thing. I don't know if it's a not wishing to appear greedy thing. But there's a bit of a, have you encountered that at all where people are almost holding themselves back a little bit when it comes to things like profit and profit planning? Somewhat where I have encountered it. So let's take a step back. As beauty professionals and beauty businesses, we sell time, right? The number of customers you can see in a day are limited by the amount of hours that somebody works. And so you're really selling time. Then you have to think about there's only a couple of different ways to make more money. See more customers or raise prices. If every year you don't adjust pricing, you're losing money to inflation. So one of the areas I see pushback on is people are saying, I'm struggling. I've met owners where they go, I'm struggling. And they actually are having enough customers coming in, but they haven't adjust prices in two, three, five years. And they realize they went from making a 10% profit to zero profit. So sometimes I see resistance on people not wanting to adjust prices because they don't want to hurt or impact their customers. And as a result, their businesses is losing money. I do see people want to know their numbers, but they're scared of the accounting piece or scared of the numbers.

And so, you know, I, my business partner graduated high school, went to beauty school. I've had to sit and teach him and help him feel comfortable. And so when I've sat down to, to build pretty data, I've tried to make all of our information graphical and simple, no extra noise. And that makes it really easy for people to get into it. I think that's the barrier people resist is the novelty of having to learn numbers. I haven't seen as many people try to not make a profit because I think at the end of the day, you know, we all know the truth, which is we're not going to be able to do the thing we love. And we're not going to be able to do our craft and help customers and see the joy on their faces if we're not making a profit because we'll go out of business. And as a business owner, the thing that keeps me up at night is I have all this stuff that are employed. They have kids. You know, if I don't figure out a way for this business to make a profit, their lives will suffer. So I often try to remind people making a profit isn't a bad thing. I think the I think the shift for me comes from spelling out the profit doesn't necessarily mean money that you're going to take out of the business and spend on holidays and cars. Profit is also going to be reinvested into the business to help it grow. It's going to be replacing tired old equipment. It's going to be upskilling your team in new areas of service. And all of those things need profit, too. It's not just about money that you spend on yourself. But I do see I do I think there's some maybe is a peculiar British thing. I don't know. But there's a kind of yes, it's it's OK to be profitable, but not too profitable. Let's not make too much money because that would almost challenge people's perceptions of the kind of people that we are. And also it requires you putting on a slightly different hat. I think once you get to certain milestones in your business and certain levels of profitability and and trying to to get salon a business owners to kind of appreciate that we could easily double their profits, triple their profits, 10x their profits if they want to work hard enough. But that challenge to their identity, I think, is is a struggle from my point of view. Anyway, we digress. We're moving away from from profits and into mindset. But what I really like is once people start looking at profit retrospectively and look at what's going on in the business now, they can start planning for profit as well and start to connect, you know, what they want out of life, what they want out of their business, what they want to to see from their business in future years.

And what the business is going to need to do in order to support that. And sometimes I don't know if you've encountered the same. Sometimes there's a reality check in there, too. Well, people are kind of, you know, I want to make 100K in profit. And yet actually when we run the numbers and we look at the capacity of the team and we look at the prices that the marketplace will endure, there's a disconnect there. There's only so far we can go with things as they are. But that's kind of the fun bit, I think. Yeah, I think that's one of the most important parts of it is, you know, you have a goal, but is it grounded in reality? I woke up today and I was listening to some music and I loved it. And I was like, oh, I just want to be able to pick up a guitar and like, you know, rock like Van Halen. I can't do it just because I want to. I'm going to have to do something to figure out how to get there. And everything you're talking about, it's very real. I mean, we went through this around, I want to say year eight or so in our business. My business partner fell down on the ground. He had a brain tumor, grade three brain tumor. And turns out he had to have brain surgery and go through chemo and couldn't work for a year because of this. And that was when we were at the peak of what our salon was doing at that time. And we did exactly what you said. And this is kind of like some of the genesis of my experience was for that year, he couldn't be in the shop. So I'm in everything. And I started seeing staff who wanted to hit goals, but these goals were unclear. So I started running monthly reports and I would walk up to them. Hey, you want to hit here? Here's the number you have to do. But, you know, you don't really have enough time. And we had to do the same thing with the business. We had to say, okay, what do we need to do to cover the bills? How many customers do we have to see? What is the average revenue per visit? And if we needed to be able to hit that profit goal to cover our bills, how many businesses is that? Okay. And as we started to do that for both ourselves and the team, you could quickly start to calibrate.

We could figure out we needed to hire another person and how much could we pay them and how much would they have to do in revenue to cover that? So it actually made decision making easier to figure out what to do. And, for example, after Eric decided to come back to the salon, he couldn't work full time because of the recovery from his brain tumor. And he also decided, wait a second, based off these numbers, I can actually work part time, still pay my bills, and spend more time with my kids. And as you said, getting that chance to see the numbers and realize, because this is a guy for 20 years, he's in six days a week doing hair, 10 to 12 hours a day, never was taking breaks in vacation. And when he was forced to, he realized, maybe I want to change something here. And if you don't know your numbers, you don't know that maybe you don't have to go to work six days a week. Or like you said, the flip side is, wait, I really need to make 100K. But you're just working, constantly trying to get there when you realize that the structure of the numbers aren't letting you get there. Maybe you need to make a price adjustment. Maybe you need to hire another person. And if so, how much can you pay them? So that's the key. It's really up to understanding the information and being able to make well-informed decisions. And unfortunately, the beauty services industry, we just haven't had those tools readily available. And like you talked about, we've done coaches. I've downloaded the Excel spreadsheet from somebody, signed up for their newsletter, tried to input the data every week and memorize it. It lasts for maybe a few weeks and then my spreadsheet's out of date. Or I get conflicting information from different people and, you know, just running ads that can get me all those new customers or they run promos and the customers come in, but then they don't come back. So I'm losing money on them. All of those things, you know, require some sort of data. That's the hard part. And then you've obviously built pretty data with a kind of customer avatar in mind and a size of business in mind. But I want to keep this discussion kind of as broad as we can.

So when we're looking at these kind of numbers, is there a business where it's kind of not worth it? Is there a size of business where it's irrelevant, do you think? Is it when we start to grow a team, build a team, get premises that it becomes important or is it important for everybody? I think it's important for everybody because at the end of the day, you know, so many businesses are renting a booth or even if you're a suite renter, you know, so for example, we've had people leave our salon and go to suite renting and we support them. And one of the first things that happens is about three to six months out, we get this phone call and they always go, I need help with my numbers. And I can't tell you how many people realize that this is a lot of work and that if you can simplify it so they can look at it again, they generally know what to do, but they just don't have the information. So I do think it's useful for individual professionals to just be able to know how much money do you bring in, how much do you spend, how much do you make each person, know whether or not you're getting more or less customers, and then from there being able to see what that translates into profit and so that if you have a profit goal. But it really makes a difference when you're managing a salon, you know, and you start to get to three, five, 15 people, because once you get to that point, a lot of the time is people management, and being able to inform them of what they got to do to get to their goals. And ultimately, if you don't have those numbers to guide them, you're just spending time in spreadsheet health. I think we've all been there. And so that's where I think it brings the most impact. Love it. Love it. So let's pull focus a little bit and just talk about where we're up to with Pretty Data and kind of what's next on the path as far as Pretty Data is concerned. Then I think we're going to wrap this episode. And then what I'd like to do, if that's okay with you, Brayden, is the problem we've got is the podcast is audio and video. So I think it would be really nice to do a walkthrough so you can show people what Pretty Data does. But what I'm going to do is I'm going to stop recording. And then we're going to, for our YouTube viewers, we're going to do the walkthrough and we're going to put it at the end of the episode. And then the audio guys are listening to us going, yeah, that's really interesting and not knowing what the fuck we're talking about.

Okay. I think that would be a good way forward if that's okay. So tell us where we're up to with Pretty Data and what's coming next. Yeah, so like I have kind of described here, Pretty Data is not a booking system. Pretty Data is a business partner. It's your profit partner for running the store. And it's basically a digital Brayden. And so there are a couple of things that Pretty Data does today. It helps you build a profit plan. So type in your goal using all your historical information from your booking and accounting system. It'll literally tell you, this is how many customers you need to do, this is how many visits it is, this is how frequently they come in, this is how many staff you need, how many hours they need to work. And then it just tracks that all year and tells you whether or not you're on or off target. It tells you every day when you open the app whether or not you're making a profit today. Today. Second is it gives you all of the basic financial reports for revenue and expenses, the metrics you really care about, none of the extra stuff that is confusing in pretty charts for both your business and staff. So you can basically walk up to any staff member, open the app, and immediately just do a quick one-on-one. Hey, hey, look, you're a little down here and we need to make sure we hit this thing. Or, hey, let me answer these questions you were asking before about what do I have to do to get here. So that's all on how do I run a profitable store. The second thing it does is it helps with all of your pricing. So we were talking about how important it is to do pricing. Well, we can find your competitors in the local area, all of their staff, all of their pricing, and give you the comparison of how much your pricing is in your neighborhood. So if you're leaving money on the table and you say, wait a second, I could be charging $10 more per week and I do 20 services a week. And you do the math, that's $10,000 a year you're leaving on the table. And so we can actually do that calculation for you real quick. And then if you want, we can update all the prices and show you how much more money you'll make in one click. So it's one click price updates. That's another way you make more money. The third thing we do is we help people with hiring. So we have the largest database in the world on salons, salon staff, salon prices.

And we help you find people you didn't know exist and get their contact information so you can actually reach out and talk to them about potentially recruiting them. So these are the three things we do. And what's coming next in the next 90 days is we have a AI agent that you can talk to. And so you could just ask it, what was I making last year? How does that compare to this year? How is this person performing? And it will actually be your business partner answering those questions using the market data we have on pricing and hiring, as well as the data from your sales and your expenses. So it can actually be like a chat GPT, but with your salon data. And that way, whenever you have a question, you can reach into your pocket and say, hey, I need help. What would Phil do here? I love that. I love that. But, you know, I'm a nerd for anything that's got an AI flavor to it as well. But this is exactly what's been missing is the ability in just in natural language to ask the questions that actually make a difference to how we're running the business. And there's such a great opportunity there. I'm so excited. So I usually finish these episodes with my famous three questions. But, of course, you answered the famous three questions on your last visit to the Build Your Salon podcast. So I'm not going to ask you that. What I'm going to ask you instead is what are you most excited about in 2026? Oh, I think for me, the most exciting thing is seeing how we can really save people time and enable them to do the things they love more. I know from 15 years of sitting with my business partner, he would much rather be working with a client or working with staff on a new creative project and not sitting down and trying to spend two hours in spreadsheets. And I truly believe that what's happening today with AI tools, we can actually supercharge the artistry of hair and beauty and all the services that go into delivering a great client experience.

And I personally, you know, we use this in my salon and my business partner will call me sometimes and he'll go, dude, I can't believe I can get this number so quick and easy. It used to be something I had to ask you to do and wait several days or spend hours in a spreadsheet. And I think that just really energizes people to go focus on the thing that they enjoy most in life, which is, you know, servicing clients and doing their craft. I love that, too. And that's kind of where I see technology's role, really. It's not about giving you 45 things that you didn't know you could do. It's about taking the stuff that you know you've got to do and just making it simple, making it accessible and making it fast. And that's, I think, where tech and AI ought to be going. Wonderful. Well, thank you for joining us again on the Build Your Salon podcast. Those of you on YouTube, stick with us. I'm going to close the show and then we're going to have a little walkthrough of Pretty Data straight after I say goodbye to everybody else. So there we have it, my chat with Brayden. And as I've said, if you're on YouTube, stick with us. We're going to have a walkthrough of Pretty Data now. Otherwise, why not reach out and let me know what you think? How are you using tech in your business? How are you profit planning? What's missing in your salon software that you think actually should be there and could make your life an awful lot easier? Reach out and let me know. Phil at buildyoursalon.com. Scrolling at the bottom of the screen right now. Also reach out if you'd like to be a guest on a future episode of the Build Your Salon podcast. Stick with us if you're on YouTube. Otherwise, I will speak to you in just a few short days when I'm coming all over the Internet with another dose of my Wise Hour wisdom. And until then, take care. Take care.