Do you own a hair salon, gym, or other service-based business? Service-based businesses have been in lockdown for nearly a year, bringing a great challenge of survival. This week on our Live, we hosted Evolve Hair Studio to discuss the challenges of the lockdown on service-based businesses and how to jump back to operating successfully.
How have personal care businesses been surviving during the lockdowns?
Expenses have been drastically reduced during the lockdowns as businesses had to lay off employees. By being mindful of their expenses and allocating some of their profits for savings consistently before COVID, some businesses were able to stay afloat and create a financial plan about how they can cover their expenses with their savings.
Without the opportunity to provide their services to customers which is the main source of profit, some service-based businesses pivoted to creating online shops to sell some of their inventory as products. By creating this additional stream of income, they were able to cover their costs and keep their business operating. Our guest who owns a hair salon started selling hair products to help their customers style their hair as they couldn’t get haircuts.
In addition to creating online shops, businesses have been taking advantage of social media and email marketing to engage with their clients and find new ways to stay connected. Evolve Hair Studio gave examples of how they created videos that showed how to style your hair if you haven’t been able to get your roots done or a haircut. By creating fun but relatable content, they were able to connect with their customers while reminding them of the services and products they offer. If you have or are opening up your business soon and want to inform your audience about the COVID protocols in place, you can create posts about what customers should expect from their visit to help them prepare before they come in-store.
What resources were available to these businesses?
Fortunately, there have been subsidy programs for employee wages and rent for business owners. These subsidies allow businesses to lower their expenses which helps them financially survive the lockdown periods with no revenues coming into the business.
What tips can we give to help service-based businesses relaunch their business during the reopening?
Mindfulness: Putting a healthy barrier against getting an overwhelming flow of news has helped business owners to focus on understanding their situation and finding solutions. Practising mindfulness and staying in the moment is a good practice to prevent you from worrying too much about the parts of the present and future you may not have control over.
Understand customer insights: As many people are stuck home facing screens to compensate for lost time outside, there are great opportunities to engage with your audience online, whether it’s on social media, emails or your website. Find ways to engage with your clients and remind your business to capitalize on each channel!
Have an emergency fund: Having a savings account for a business has helped businesses like Evolve Hair Studio to cover up expenses when their revenues decreased significantly during the lockdowns. If you want to have a safety net for risky times like COVID, make sure you have a savings account for your business and allocate a part of your monthly revenues to savings.
Be on top of your taxes: You should be on top of your taxes to understand your financial situation if you want to make sure that your business won’t face challenges during tax season. By understanding your tax strategy, you can identify ways to use more of the amount you owe towards business expenses than tax dollars. In addition, having your taxes in order can also speed up the process of applying to subsidy programs. If you took advantage of subsidy programs like CEBA, you may have to pay taxes on the amount you received so working with an accountant can help you financially prepare for upcoming tax payments.
Have a financial identity for your business: It might be tempting to not show some part of your cash income as revenue to lower the income tax you pay, however this might bring you some challenges in the future when you apply for subsidy programs or mortgages. The subsidy programs the government has been offering have been funded by the taxes we pay, so paying your taxes is very important to help your business in times in need. Also, if you want to purchase a property for commercial use your lower levels of revenue might prevent you from qualifying for a mortgage.
How can we help you?
Does your business need a financial plan to help you lower your expenses, create a tax strategy and reach your financial goals? Book our complimentary 30-minute consultation session with us!
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