Taking a profit in your Esthetician Business
In episode 139 of the Estheticians Earning More Podcast, Brittany discusses the importance of taking profit in your esthetician business. She explains that profit allows you to see what is working in your business and make necessary adjustments. Brittany also emphasizes the need for mindful spending and decision making, as well as saving for taxes. She reassures listeners that calculating profit is not as difficult as it may seem and offers her assistance in understanding and managing the numbers.
Taking profit in your business allows you to identify what is working and make necessary adjustments.
Mindful spending and decision making are crucial for financial stability and growth.
Saving for taxes is essential to avoid financial stress and unexpected bills.
Calculating profit is simpler than it seems, and seeking assistance can provide clarity and relief.
Chapters:
00:00 Introduction
02:07 Understanding Profit in Your Business
03:05 Reason 1: Identifying What's Working in Your Business
05:07 Reason 2: Mindful Spending and Decision Making
08:27 Reason 3: Saving for Taxes
12:36 Overcoming Fear and Simplifying Profit Calculation
15:01 Conclusion
Transcript:
You are listening to the Estheticians on Your More podcast with Brittany Higginman, episode number 139. Hello, happy Monday, welcome back. I'm so excited to be back here with you today. I have a little bit of a cold, so I know I sound a little nasally. I'm still working on the audio. If you are watching the video of this, this is the first video podcast I have. It's gonna be live on my website, maybe eventually a YouTube channel. I'm not there yet.
But I'm sitting in my new office. It's a little echoey in here. I know I need more stuff in it to help with sound. I have a pillow next to me to kind of balance the sound a little bit, so I'm sorry if it's echoey. I am working on the sound by the end of this year. That's one of my goals is to have a really good sound podcast. Normally I record this podcast and I'm just like sitting on my bed because it's, you know, like the best sound there.
but I wanted to try some video forms as well. I know people, some people like videos. Okay, so today we are going to talk about something that I have realized from working with estheticians and talking to estheticians, a lot of people need help with, and that is taking profit in your business. And I'm really gonna go into what I mean by that specifically. I know if you are afraid of numbers, you're like,
I don't want to talk about this like next podcast. I'll come back next week, but please stay with me I'm not gonna talk actually a lot about numbers specifically today I'm actually just talk to you about what profit is and then why you need to take it in your business every single month and Kind of the back understanding of it more than like how to take profit that is a harder thing for me to teach
on a podcast, something that I work really diligently on with my one -to -one clients. And it's not always an easy thing to figure out either with them because there's a lot of different variables happening. But if you work with a bookkeeper or someone who helps you with your finances, they should be able to tell you how much you can take in profit. Now, there are three reasons that...you should take a profit in your business. Again, if you're watching the video, I'm playing with my veins, I'm sorry. So I'm gonna go over those reasons, okay? The first reason is they're all really important. I actually can't tell you if one's more important than the other, but the one that may be the most motivating for you, because the other two are not as motivating. They're a little bit like, oh, I know, I know. It's like adding to the list.
But the first reason is to see what is working in your business, what's actually making money. What I found with working with aestheticians, one on one with their business is that they think their business is making money because they are booked, right? They are doing services, they are doing eyebrow waxes, they're doing...
Facials they're doing whatever it is that they do lash extensions all the things
And they think that means their business is doing well. Maybe even they're making 10 grand a month. But then when it comes to take a profit, they don't really have a lot of money to take. And there's a number of reasons why, but one of them can be they're not charging enough for their services. Like maybe they're doing a pro -sell.
Service and every pro cell services. I think it's $15 I don't actually know because I don't do pro cell but I feel like one of my clients told me that but you know, they're not taking into consideration how much everything costing them and so they are doing these services and not really being aware of if it's actually making them money and This can be life -changing for your business not to be dramatic here. I know that's really dramatic. But it can, it can be really life changing for your business because if you are doing services that are not making money, whether it means you need to raise your prices or you need to delete the service from the service menu, that information alone can be massive for your business. It can change how much money you're bringing in, how much profit you get to take. It's a really big deal. So that's the first reason, okay?
The second two reasons are not as exciting maybe or motivating, but they are really, really important. So we still are gonna talk about them. So the second reason is to be, if you are not taking a profit every month, you just see money in your bank account and you're like, oh, I can use it to spend, right? However you want on your business. I'm finding this new device, this new skincare line, I'm finding all this extra back bar.
I'm buying this new course, I'm buying this new education, whatever it is, right? It's like money that you can spend, right? And if you're not taking like, okay, every month I take $3 ,000 profit or I take $5 ,000 profit or I take $7 ,000 profit, if you're not making that a goal, when you go to spend things, you'll be like, oh, if I buy that, I won't be able to take the profit that I wanna take. And then you...
You make a better decision. Not to say sometimes like in my business I haven't been like, okay, I'm not taking a profit this month or as much of a profit this month because I'm doing these other investments. Totally great. But I make that decision knowing that like it was a very mindful decision. It wasn't like, oh, I'm just going to spend and then hopefully like I have enough money to pay for everything and then have like some leftover my own bills. Right? Like it's very...
very planned out. So I'm like, okay, I'm taking this course or I'm investing in this thing. And that means I'm going to have a little less profit or less profit than I normally do. Is that really worth it for me? And then you can make the decision. There's no right or wrong answer in this decision. Sometimes the decision is like, oh no, I don't want that that badly, right? Like that, you know, that sounds really great until it comes to like,
I actually want to go on this vacation I'm saving for more, or I actually want to pay off my car more, I want to pay off a loan more with that money. That's when those decisions become much more crystal clear. If you're like, oh, if I buy this, it means maybe I can't have that. But if you don't have that information, if you don't know how much you should be, you're taking every month in profit, then that's when just like spending just can get really out of control and it can be really.
If you're always spending more money than you're making in your business, because you're like, what? What am I working for? You're just so exasperated. I'm working so hard, I don't see any money. It's you're spending the money without knowing that you're spending it really. So that also can be such a massive game changer for my clients. We spend time on this because I want them to see what their profit is and look at all their expenses and we look at them together. And it's not judgment, like there is no judgment. I actually have a profit calculator that I have started using with my clients, which they put in all their expenses, their back bar, any kind of loans or business credit cards that they may have that they're trying to pay off. I put in how much they should be spending in back bar in retail based on their previous sales, month sales, make sure they're investing back smartly and then I help them take their profit based on that. Which leads to the third reason, there's another part of this calculator that I use with my clients that is really, really important to know what your profit is every month, it is that it's taxes. Whether you're a sole proprietor, LLC, S -corp,
whatever it is, and if you don't know, if you're not like any, if you don't have an idea, you're definitely a swap proprietor, but definitely look into talking to an accountant about that because if you're making a certain amount of money, being a swap proprietor is not a good idea from a tax perspective. I don't have those numbers, I can say, with confidence, but I know that to be true. So I was a swap proprietor when I made over $100,000. I paid a lot more in taxes than if I had been in LLC or in S-corp.
So I wish I had known that then. So if you were on track to making $100 ,000 in your S -corp, talk to a tax professional. But, side note, if you bring in all this money and then you spend your money, which is your expenses, right? So that's like your revenue is all the money you bring in, expenses is what you spend your money on. You take those, you take, you take the expenses out of the revenue and that technically is left over as profit.
But you don't get to keep all that money because of taxes. So you have to take out a percentage of taxes and put it aside and save it, whether, and again, your accounting is the only person who can tell you that number, that percentage, whatever, however you are.
However you are set up as a business, only again, only your tax professional can tell you that, but you have to take taxes out of that profit.
or the year will end, like tax season is upon us and you make it a tax bill that you don't have the money to pay for because you were not saving money for taxes and I know this is a fear for so many of you and it can be so simple. I have been a fear for me too, so I'm not trying to be like, you guys need to figure this out. I have been here too where I'm like, oh, what if I don't have money for taxes and like panicking, right? So you need to put aside money every month.
for taxes and people pay quarterly taxes, people pay yearly taxes, whatever it is, again, talk to your tax professional, but you still need to start saving your money. But if you don't know your profit, you don't know how much you need to save for taxes.
So it really is a guessing game. It really becomes a guessing game because you don't know. Isn't that wild? So if you are that esthetician, which I know is now, I now know as many more people than I thought that just moves money around that like, oh, I have this personal bill that I need. I'm just gonna transfer money from my business checking account to my personal checking account to pay for that. Or if...
You have everything in one checking account. Please have a separate checking account for your business, please, please, please. Actually from a tax perspective and a legal perspective, you need to, but also just from like a sanity perspective, but like the transferring of money of like, oh, I need to pay this, I'm gonna pay, putting that money there, I'm gonna pay this with my money over there, like not keeping things separate, not having mindful spending. You don't know how much profit you took. It's not possible. So you don't know how to save.
So then taxes is terrifying. Oh my gosh, it's so terrifying. If you're like, I don't know, I think I saved like X amount of money, but you actually had a much bigger profit than you thought you did when the accountant does your numbers at the end of the year. That's a problem. That is where the anxiety is coming from. So we're still new in 2024. If you listen to this afterwards, whatever, still like do it today.
but you need to know how much your business is profiting every month to save for taxes. It's imperative. It's an imperative business thing to do. It's actually not that hard to do. I'm gonna tell you right now, you don't have to be good at math. You don't have to be good at Excel. It's really simple. It's simple. I promise you it's simple math. The biggest part is getting over the fear of it more than doing the math itself.
I've walked many estheticians through this, and they're always like, oh, I don't wanna look at my numbers. And we look at the numbers and like, oh my gosh, I feel so much better. Oh my gosh, that actually is better than I thought it was gonna be. This is actually easier than I thought it was gonna be. The relief is actually always there. I've never walked an esthetician through this and they're like, awful. I wish I never looked. That's never happened.
Right? Like it's always like, okay, now I have a plan. I know how to do it. It's actually not that hard. It's kind of like, you know, someone starting a new skincare routine and they're like, why, how, I don't want to, can I not? You're like, no, but seriously, if you just do it this way, I promise you it's gonna be so much easier. I know it's not what you think you need, but I know it's what you need. That's me telling you right now. You need to figure out your profit every single month.
And you need to save money for your taxes every single month. Then you need to use the decision of what your profit is to figure out your spending and to make healthy business decisions of things that are working for you versus things that are not. If you need help with this, this is a thing I spend a lot of time on with my one and one if you walk through it.
Very simply, I help gather all the information. I help put it all together in a really easy to understand spreadsheet that makes it very black and white. It's not a scary spreadsheet. There's rainbow colors on it. It's very easy to understand.
I help you do it every single month so that at the end of our six months of working together, you can do it by yourself, you understand how to do it, understand the numbers, and you can just really know these things in your business. And it's gonna be life changing for you, I promise.
That is it for today. It was so fun doing the video. If you want to watch the video, I'll put a link in the show notes to the podcast that has the video on it. Yeah, thanks so much for watching and listening. But mostly for listening, I know we're all podcast people. I'm more of a podcast person. The videos are not going to be fancy, but just for people who do like video and talk to you next week. Have a fantastic week. Bye for now.
