Small Business Loans for Beauty Salons & Spas
Back to Blog Feed

We will help you grow your small business.

Learn More

Join our Newsletter for great tips and updates.

Your profit and loss schedules tell you things are good, but you never seem to have enough cash on hand. If this describes your situation – then you, my friend, have a cash flow problem.

A lot of small business owners conflate profit and cash flow. Having a profitable business doesn’t guarantee that you’re managing your cash flow well. It helps. But it’s no guarantee.Think of your cash flow as a monthly temperature of your business’s financial health. If that month’s cash flow covers all of that month’s expenses, you’re in pretty good shape with a positive cash flow. If your monthly income doesn’t cover your monthly expenses, then you’re in a negative cash flow for that month. Too many months like that and you’ll start to see a more direct, connection between your cash flow and your P&L – a negative one.

There are lots of reasons a salon or spa can suffer a cash flow crunch. With some investigation and planning, you get a financial health makeover that ends the cash flow cringe.


Let me explain. How many big quarterly or semi-annual payments does your salon have? Taxes, insurance, certain vendor contracts. I’m not saying you should pay these businesses early. Why should they get the interest on your cash advance? What I am saying is to pay each month’s expense into your own reserve account, separate from your operational bank account.

So if you pay your insurance premiums semi-annually, set aside a sixth of the total semi-annual premium every month.

When you do this, you’re assured of having the cash on hand to make these larger quarterly or semi-annual payments. You also want to pay this out into a reserve account so you don’t think you have more cash on hand to spend on other things than you really do.


My first recommendation assumes you’ve already opened a reserve account for your business. If you haven’t, do it. In addition to using it to separate out and protect your cash for things like taxes and insurance, you want to put some monthly savings into it as well. The unexpected happens. Start building a cash reserve so you have a cushion.


If you are carrying debt, pay that off before you start building your reserve cash, but don’t make larger payments than your cash flow allows. Our natural instinct is to want to get rid of debt as quickly as possible. But that could be a false economy. Don’t make larger monthly debt payments than is due if that’s going to mean you leave another bill unpaid or risk a vendor relationship by delaying paying on their invoice.

On the other hand, it may be your minimum monthly repayment that’s eating all your monthly cash. If that’s the case, you can look into other financing options that tie repayment amounts to your actual cash flow. A merchant cash advance  (MCA) fixes a repayment percentage to daily credit card receipts. Small businesses like salons and spas, with a high volume of credit card sales, are excellent candidates for an MCA. The overall cost of a cash advance is typically higher than for a business loan, but with an MCA you never get stuck with a painful payment to make (or risk default) during a difficult month.


Are you trying to do all your financial management and accounting on your own? Stop it. Hire a professional You don’t want people doing their own highlights with drugstore dye, right? Don’t expect to be expert in handling your own finances – hire an accountant. You’ll not only benefit from their expertise; you’ll gain time to focus on your own areas of expertise.


If your small business doesn’t already have a business credit card in its own name, you may want to get one. It’s a great way to build a positive credit history for your business, which can help keep costs down when you want a small business loan to invest in an expansion opportunity. Just as with consumer credit cards, the market is awash with fantastic cash back business credit card deals. Why not get a small return, even two to five percent, back on all your expenses?

Here are the two main tips to using this type of card to improve your cash flow situation: Use it for as many operating expenses as is appropriate. Get that cash back on everything you can. Second, turn the cash back right around to pay down your credit card balance and lower that month’s expenses.


At least, it may be time to consider it. If you haven’t raised any of your prices in a couple of years, it’s probably time to revisit them. Regardless of the timing, look at your bookings. If you’re consistently booked at 85% capacity for a good period of time, you can give your prices a boost. Look at your best performing services. If you don’t see that kind of capacity utilization overall. Consider just raising nail prices if your mani/pedi stations are booking at 90% capacity, but your facial rooms aren’t.

If your costs to provide a service have gone up, then you need to account for that in your pricing. If your must-use, organic, Brazilian honey wax has gone up, then increase the prices for waxing.


This could be a last resort, since it can get tricky. But if you can, you might try to renegotiate some vendor contracts, such as your laundry service or equipment leasing. If you’re on a standing order for product, consider slowing that down if you’re accumulating product.

Don’t be afraid to freshen up your cash flow look to improve your financial situation. Stress wrinkles don’t look good on anybody.

We will help you grow
your small business.

Get Started

Leave a Reply