Every industry comes with its own set of risks. Combine these risks with individual circumstances like the business’s age or overall financial health, and you’ve got a frighteningly large list of routes to failure. For many beauty salons, managing cash flow is a perpetually uphill battle. The industry has become increasingly competitive as of late, which might not be an issue if the basics of running a beauty salon weren’t so difficult to master. You can bet that even the most successful salons in your neighborhood still struggle with client retention, rising recurring expenses, advertising, and other essential tools for sustainable growth. Yes, today’s beauty salon owners are aware of small business loans but you can’t blame them for having trouble figuring out the best use of the additional business funding.
Before beginning the application process, potential borrowers should know which specific programs are designed for certain expenses or investments. Here are a few of the biggest challenges for beauty salons along with explanations as to how they can be solved with different business loans:
1. Getting New Clients
More and more small businesses are accepting the importance of modern marketing tactics, including beauty salons. While traditional strategies like fliers, newspaper ads or attending local trade shows may never lose value, paid advertising has proven to be an extremely effective way to drive new clients into your door. This usually refers to Google ads and paid social media ads, both of which present opportunities to differentiate your salon from the rest of the pack. At first, you’d think that the most successful campaigns would simply offer an array of steep discounts. Research, however, has found that offering discounts in ads makes customers expect them every time, so you’re only getting a one-time visit. A better offer would be something uniquely convenient like online booking, since it can be utilized outside of your normal business hours.
Unless you’re a marketing expert, you probably have no clue which advertising channel deserves most of your budget, or what kind of strategy is most appealing to your target demographic. This is why the first step for any small business looking to ramp up their marketing is to admit they are not qualified. Luckily, companies like United Capital Source have taken notice that the standard marketing budget has increased significantly. We offer a number of business loans designed for paying private agencies to maintain marketing campaigns every month. Two examples are a merchant cash advance and revenue based business loans (business cash advance). Both options allow you to make small payments when your campaigns are in their developmental stages and larger payments when sales volume increases. If your campaign takes a little longer than usual to gain traction, your interest or the total amount you owe remains the same.
2. Sufficient Staffing
Beauty salons are among the myriad companies that stand to lose a great deal of business without sufficient staffing. Stylists or therapists often take turns answering phones and calling customers to confirm upcoming appointments. During a particularly busy period, this takes time away from tending to in-store customers or performing other revenue-generating activities. The most sensible solution is to hire a receptionist to man the front desk full-time. But not every salon has the budget to add on an extra salary solely for this purpose. And busy periods typically follow slow periods, when the amount of revenue coming in certainly cannot support yet another recurring expense.
United Capital Source specializes in helping service-based businesses recruit new hires and have them fully trained by the time demand starts to pick up. Other business lenders are hesitant to approve business loans during slow periods but some of our products do not require perfect cash flow. In addition to the two mentioned in the previous section (merchant cash advance and business cash advance), a business line of credit is an appropriate option for taking on new hires that will contribute to revenue within a relatively short time frame. A business line of credit is the least expensive when it is paid off quickly, and you wouldn’t be considering a receptionist if you weren’t prone to sharp increases at call volume around the same time(s) every year.
3. Limited Personal Resources
Honesty is a core value at United Capital Source. We are always 100% truthful with our clients when it comes to what they need to do to fix their businesses. One truth that can be hard for small business leaders to accept is that they started their businesses with much less working capital than their industry currently demands. This is especially common with female business owners, who typically have a harder time obtaining business funding compared to their male counterparts.
Banks may be biased against potential borrowers with little credit history or working capital, whereas UCS has a very different approach. We offer special small business loans for women who are looking to grow their businesses with limited personal resources. With the right funding amount and terms that actually make sense, female borrowers can finance considerable investments and increase their contributions to the US economy.