Get MORE from your salon accountant

Hi everyone, this is the weekly Build Your Salon podcast with me, Phil Jackson. I'm here with the tools you need to generate the profits you deserve so that you can lead a fuller life. Hello and welcome. It may surprise you to find out that I don't spend all day, every day, stood in front of a microphone shouting at salon owners to do better. I've also got my own salon here in the UK, but I'm also a mentor, so I help other salon owners achieve the results that they want to in their own businesses. And I'm going to make a sweeping statement now, but something that I've noticed in my coaching is that there is one fundamental difference between those salons that will do well in the medium and long term and those who will pretty much stay where they are or start to fail. And that difference is the amount of confidence the salon owner has with their numbers. The better you understand the financial position and the financial implications of the decisions that you're making in your salon, the more likely you are to succeed in the medium to long term. But looking after your numbers is hard work. In fact, there's three jobs that get thrown into looking after numbers. And if you're very lucky, you will have someone in place who can do all of them for you. The first is what we call in the UK bookkeeping. So it's looking after the receipts and looking after the invoicing in your business. So somebody will be keeping track of your bank account, essentially. They'll be monitoring your spend and they'll be paying the invoices as they become due for you. They'll also be submitting reports to your accountant on the amount of revenue that you're earning. So it's the day to day running of your business. Lots of salon owners try and do this themselves. I'm going to share something with you. I was not always a hairdresser. I've been in hairdressing for about 20 years. But before that, I went through the academic route. So I went through school, I did my A levels and then I went to university and I have a degree in banking and finance. So I know this stuff. OK, I will share something with you. I don't do my own bookkeeping. It is a waste of your time. There will be somebody who can do it much more efficiently, much more reliably, and they will also put the information in a format which the taxman loves. The second element is that of the accountant. So the person who submits your returns for you and also gives financial advice. And the third element is somebody who can look after your payroll for you. Now, trying to keep on top of one, two or three of these jobs yourself is inefficient use of your time.

Pay somebody who knows what they're doing so that you can get on with what you know, which is delivering fantastic service to your salon customers. Get the relationship right and you have a really important part of your management team in place. Get it wrong and you will feel slightly ripped off. And I think that's where a lot of salon owners who have accounting firms working for them. I think that's where they are. I think they're feeling that they're paying out this money to the accountant and they're not really receiving value for money. So today I've got three ways I think your accountant could be helping you more. The first is drawing up a plan. So I have two plans in place for my business. One is my five year plan and the other is my 12 month plan. And both of those were drawn up with the assistance of my accountant. I didn't do that on my own. So the five year plan, I went to her and we spent a whole morning. I'd already brainstormed what I wanted to achieve in the bigger world. So it wasn't just about business goals. It was about my life goals. So what I had was a level of profit that I was aiming for so that I could achieve what I wanted to in my life. And we sat down and we thrashed out a five year financial plan for us to get there. That process took about half a day. We spent another maybe two, three hours the following week figuring out our 12 month plan. So a lot more detail. The reason you need your accountant involved in this planning process is that she knows what you've already been spending. So she knows that to achieve a certain level of profitability, to achieve a certain amount that you can take out in a big fat bonus and spend on skiing holidays, she will know the level of turnover you are likely to need to hit those profit targets. So get your accountant involved in the planning process. If you have an accountant who's not willing to get involved in the planning process, it's time to get the yellow pages. Actually, I don't think there is a yellow pages anymore, is there? It's time to get on the internet and find yourself a new accountant. Ask around. Ask around locally. Ask people in your industry who they would recommend. Next up, we're going to look at reports together. So how does your accountant report back? If the only information you're getting from her is company accounts at the end of a 12 month period, she's not doing as much as you need her to. You need something called management accounts. And management accounts are what you run your business from.

So I meet with my accountant every month. We meet for one hour. We have our 12 month plan in place. So what she's reporting on is variance from the plan. Did we take more cash than we intended to or were we a little bit quieter than we expected? Is my wage bill still on the margin that I need it to be or has that started to fall out of sync with turnover? So she's reporting back on my budgets and our 12 month plan. You need these meetings. Maybe not every month. My business is going through quite a period of change at the moment with me coming off the floor completely and focusing my attentions in different directions. So we're meeting more frequently. You could drop that to about every two months, maybe every quarter, though I doubt it. I think every quarter is probably not frequent enough. The final way I want you to improve your relationship with your accountant is to start automating. So there is an app for that. There are lots and lots of ways you can use technology to make the relationship with your accountant a lot less onerous. The first one is have a look at your salon reception system. Lots of them, my own included, will now automate the process of reporting. So instead of your accountant chasing you for figures at the end of the month so that they can report back properly on your management accounts, your system could be sending all the information that your accountant needs automatically. So you schedule and send every month your turnover reports. You can have it broken down by the member of staff as well if you wanted to. Also, don't be afraid to talk to your accountant about how they receive information. So my accountant gets all of our bank statements sent straight to her. There is no point in me sitting on them for two or three weeks and then getting them down to her office just so that she can report back to me. So I get them sent straight to her office and she has no problem with that either. There are also apps that will help with your expenses. Now, I know that salon owners are particularly bad at reclaiming any expenses that they might be entitled to. So if we go to our wholesale suppliers and we forget to take our company credit card, we'll pay for it ourselves. Well, there's an app that you can get on your phone. It's called Kiki, P-I-I-K-K-I. I have no affiliation. I will get no commission if you buy this app. But what my accountant has allowed me to do is scan the receipt.

When I'm in the wholesalers, I don't even leave the store. So I scan the receipt, it gets emailed straight to my accountant and then I can throw the thing straight in the bin. So have a look at ways that you can increase your productivity by reducing the amount of work that you're doing to prepare things for your accountant. The other thing that's worked really well for me is to explore your mail system on your laptop. So have a look and see whether you can run what are called rules through your mail system. So now any time anybody emails me an invoice and we are getting more and more invoices emailed to us rather than in paper form. If it falls under one of the rules that I've set up on my laptop, the email will get forwarded straight to my accountant and deleted from my system without me even seeing it. So if I have, for example, an invoice from my software supplier, the system will recognise that it's from my software supplier and forward the invoice straight to my accountant for payment. So use automation where you can to reduce the amount of work that you're doing over time. Yes, it takes some setting up. Yes, you know I'm a tech geek and I love these things. Honestly, for an hour of investment of your time, you can free up an awful lot of time throughout the year. So three ways you can improve your relationship with your accountant. I hope that was useful for you. If it was, please don't forget to subscribe. I do a broadcast like this every single Monday and I would hate you to miss out on the content that I'm sharing. If you've already subscribed, I will see you here again next week. Take care. Hey everyone, it's Phil again. I hope you enjoyed the episode. If you did, please subscribe and be sure to tell your friends. For more help and information on running your salon and your life, head over to buildyoursalon.com. I'll see you there.