January 2011

Lisa Kind - Editor

Esthetic Endeavors | by Judith Culp

 

Ten Tips to Help Your Business Endure and Be More Profitable

People in the esthetics industry are drawn to the aspect of helpings people, the artistic demands and the glitter of "owning your own business."

Many come to our industry either with no business background or from a business environment where they were employed. As a result, it is common for estheticians, and others in the cosmetology industry to participate in poor business practices.

Small business administration and other studies reflect that small businesses are difficult maneuvers with high failure rates that mostly stem from misinformation or lack of business training. Start-up businesses are much like raising a child from birth to adulthood with all the stress and challenges.

Here are ten tips to help your business endure and be more profitable.

1. Participate in accounting practices but rely on a professional. While it is a simple and important process to do the daily bookkeeping and know what is happening in your business, bypassing help with quarterly or annual accounting and review can be disastrous. Professionals in the accounting and legal professions act in your best interest. They have years of selective education. There are thousands of pages of tax laws and legal implications associated with running a business that change frequently. You don't want to be on the wrong end of an audit, be charged with operating illegally or miss out on all the legitimate tax deductions due you.

2. Be cautious about who you go into business with. Much has been written about going into business with friends and family. Crossing lines between personal and professional relationships has proven to be detrimental to many businesses and ruined many friendships. There is an old saying that holds true: the toughest ship in the world to sail is a partnership.

3. Evaluate financial moves based on solid knowledge. Owning and running a business comes with risks that must be taken to succeed. Even though risk-taking is never easy, there are calculated risks that must be taken to progress. The timing for business decisions that may be deemed risky is rarely perfect. What we have to do is evaluate the risk and make plans for managing it.

4. Use market research based on your unique business niche to determine the most cost effective and business generating devices to purchase. Technology can be a business builder but over-purchasing can be a business breaker. Instead consider using the profits from one new device to nest egg and purchase the next. Financing purchases can be a challenge. Only use a credit card if you can pay it off when the bill arrives. Otherwise look for alternatives that involve lower interest rates. Be aware of leasing and the long-term impacts tied to this. Leasing is really long term purchasing, not renting.

5. As a business owner the buck stops with you. You can no longer call in sick, accrue vacation time, or have an employer pay half your SSI burden. You are responsible for all of it. If you are sick you should certainly stay home, but no one will pick up the financial loss. You are responsible for all outstanding debts and making sure the lights will be on when you arrive the next day. You're in charge. You are your own employer. Inconsistent attendance at work, failing to file and pay quarterly sales tax reports, ignoring big and small bills until you get around to them all represent a recipe for failure. You have the opportunity to incur a profit or a loss. You are responsible for daily marketing of your business and consistently caring for it. Remember the analogy between owning a business and raising a child. You can't neglect your business any more than a child can be neglected.

6. A business plan is the heart of a successful business and it must be tended just as that child must be. It must be reviewed and updated at least annually or if circumstances dictate a change. Budgets for marketing, allowances for reoccurring debts and projected and realized income are all part of a plan for success. A good business plan is s pathway to reach your future goals. It can be modified as times change, but just as we have to make plans for a successful vacation, so we have to make plans for a successful business. In either case a lack of planning will probably mean we end up staying home.

7. Dedicate yourself to continuing business education. If you are going to run a company and lack the appropriate educational credits to do so securely, sign up for business classes. Often the Small Business Administration or your local community college can guide you to an appropriate educational program. Having a teacher in class to clarify issues and answer questions is critical.

8. Tax-deductible activities require the expenditure of money to gain the deduction; they aren't free. It is a common concept to spend and deduct. Different activities are deductible at different rates and you have to spend the money first regardless of the benefit of a deduction. Evaluate the activities open to you and select those that best match your goals and personal commitments.

9. Continuing education counts. This is one of your best investments. Continuing education, and/or certification demonstrates your commitment to your profession and is becoming more recognized by consumers. People who do not take additional classes to hone their skills, or who do not belong to professional organizations and acquire recognized and respected credentials are more likely to fail. Luck is rarely on the side of the entrepreneur. Luck is on the side of the planner.

10. Follow all state and federal guidelines for paying employees. Hiring office help or other staff and paying them under the table is a recipe for disaster. While it may temporarily save you taxes, it only takes one disgruntled employee to report you for illegal business practices to the IRS so they can obtain unemployment monies. Dealing with the IRS for tax evasion can ruin a company in short order and the liability for false business practices is high.

Employ all of these business tips to move your business safely forward and avoid the all too common pitfalls based on lack of information.

Judith Culp, a CIDESCO Diplomat has been in the esthetics industry since 1980. A CPCP permanent makeup technician for over 18 years she served a 4-year term as a Director for the Society of Permanent Cosmetic Professionals, two years as their president. She is president of Culp Enterprises Inc. and CEO of NW Institute of Esthetics. Judy Culp is available for consulting. For more information visit www.estheticsnw.com.