January 2012

Lisa Kind - Editor

Esthetic Endeavors | by Judith Culp

 

Building Your Profession

Tips to Improve Your Business

People in the esthetics industry are drawn to the aspect of helping 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 an employee. As a result, it is common to see owners who do not use the best business practices.

Studies done by the Small Business Administration and others reflect that small businesses have high failure rates that stem from misinformation or lack of business training. Starting a business is much like raising a child from birth to adulthood with all the stress and challenges.

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

Participate in accounting practices but rely on a professional for guidance and assistance in those things you are not skilled at, like quarterly or annual accounting. Professionals in the accounting and legal professions will 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 do not want to be on the wrong end of an audit, be charged with operating illegally or miss all the legitimate tax deductions due you.

For the same reason, do not give another person 100 percent access to your checking account and credit cards. You need to know what checks are being written and to whom. There are many stories out there of an employee, especially someone in the accounting department who is handling all of the monies without checks and balances, becoming too tempted and embezzling from their employer. Have proper safeguards in place.

Be cautious about who you go into business with. Much is 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. The problem is compounded if the business contract does not detail all of the obligations, requirements and compensations for those involved.

Evaluate financial moves based on solid knowledge. Owning and running a business comes with risks. Even though risk-taking is never easy, there are calculated risks that must be taken to progress. The timing for risky business decisions is rarely perfect.

What we have to do is evaluate the risk and make plans for managing it. This includes doing thorough research before making the decision to move forward. Research should include how the move fits into the mission statement and business plan, that the demographics are correct and how any debt is repaid.

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 long term purchasing, not renting. Be sure you know if you have the ability to prepay the lease and any consequences that may be involved.

As a business owner, the buck stops with you. If you call in sick who will cover for you? How will you notify your clients and how quickly will you get them rescheduled? Vacations, although important for stress management may become wistful dreams. Now there is no employer to pay half your SSI burden. You are responsible for all of it.

If you are sick, you should stay home, but no one will pick up the financial loss. You are 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 cannot neglect your business any more than a child can be neglected and have a successful outcome.

A business plan is the heart of a successful business. It must be reviewed and updated 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 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.

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. In most areas, the Small Business Administration or your local community college can guide you to an appropriate educational program. While you can access many on-line classes be sure to have a teacher available to clarify issues and answer questions.

Tax-deductible activities require the expenditure of money to gain the deduction. It is a common concept to spend and deduct. Different activities are deductible at different rates and, first 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.

Continuing education counts. This is one of your best investments. Continuing education and certification demonstrates your commitment to your profession and is becoming 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.

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 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.