When Numbers Don’t Add Up: An Insight into a Salon’s Financial Reality
As someone deeply involved in the salon business, I recently found myself questioning the financial health of the salon I work at. Despite the owner’s confident assertions of profitability, the numbers seemed to hint otherwise.
Having considered the possibility of acquiring the salon through seller financing, the financial discrepancies have become more glaring. The monthly sales report generated by the Point of Sale (POS) system indicates that the salon brings in around $8,000 each month. However, the arrangement with the nail technicians, who receive 60% of the sales revenue, leaves the owner with only 40%, equating to about $3,000 monthly.
Adding to this, both I and a fellow hairstylist contribute a total of $2,000 monthly by renting booths at the salon. In theory, this should push the salon’s monthly revenue to approximately $5,000.
However, the owner disclosed that the monthly operating costs are at least $8,000. This revelation contradicts her claim about the salon being profitable, particularly as she asserts its valuation at $300,000 based on her initial investment. She also cites her tax documents as proof of profitability.
This inevitably leads me to question whether there is undisclosed income that justifies her claims or if these assurances are simply an attempt to recover her initial investment. It leaves one wondering if this is a genuine oversight or a strategic play.
