The income statement reports the overall performance of your spa over a specific time period .
snapshot of their business ’ s performance over time . By comparing current financial results with those of previous periods , you can assess progress and make intelligent business decisions for the future . l Cost-saving opportunities : Reviewing expenses on the income statement offers spa owners the chance to identify cost-saving opportunities . For instance , if the cost of supplies has significantly increased compared to the previous month , it should prompt further investigation . l Cash flow performance : Understanding how to project cash flow is essential for spa leaders . By analyzing the relationship between income , expenses and net profit , you can anticipate cash flow needs , ensuring you will have enough funds to cover daily operations and invest in the spa ’ s future growth .
To illustrate the income statement , to the right is an example report for a spa business . Please note this is a general template and the specific categories and amounts will vary depending on the individual spa ’ s financial situation .
TIPS FOR SPA OWNERS
1 . Monitor seasonal trends : Many spa services experience seasonal fluctuations in demand . Use cash flow projections to anticipate periods when cash flow might be tighter , such as during slower months , and plan accordingly by setting aside reserves during busier times .
2 . Manage appointment scheduling : Encourage pre- booking and offer promotions for advanced payments . This can help smooth out cash flow by ensuring a more predictable revenue stream throughout the month .
3 . Keep a cash reserve : Aim to maintain a cash reserve that covers at least three to six months of operating expenses . This cushion will help your spa navigate unexpected expenses or downturns in business without disrupting operations . n
CITATIONS : Besley , S ., & Brigham , E . F . ( 2005 ). Essentials of Managerial Finance . Kieso , D . E ., Weygandt , J . J ., & Warfield , T . D . ( 2007 ). Intermediate Accounting ( 12th ed .). Fotopulos , D . ( 2014 ). Accounting for the numberphobic : A survival guide for small business owners . Schmidgall , R . S ., & Korpi , J . R . ( 2011 ). Financial management for spas .
IBANESSA SOTO HOGAN is a business and financial strategist for spa and wellness industry companies . She is the founder and owner of Masterpiece Accounting Services and an associate professor of tax and accounting at Monroe College . She holds a Bachelor of Public Accounting and an MBA in Accounting , and is a licensed tax professional / enrolled agent ( EA ) and a certified professional business advisor ( CPBA ).
OCTOBER / NOVEMBER 2024 n PULSE 19