At last count, the Office for National Statistics reported more than 53,000 beauty businesses were in operation in the UK. The majority are small businesses with less than five employees.
The cost of maintaining a salon, marketing the business, buying supplies and employing and training staff is not insignificant, making strong cash flow management an absolute must. Building a profitable salon is not easy, especially in the years since the Covid-19 pandemic. With all salons forced to close for several months, the reopening of the sector has been tested by the cost of living crisis and rising inflation.
There’s no question that many beauty businesses have found post-pandemic recovery difficult. Our client was facing a tougher challenge than most.
High debt and bad credit
Eve (*name has been changed) built her beautiful salon from scratch. Stylish, modern and inviting, it was the ideal foundation to build her beauty business up into a thriving enterprise. Eve funded the not insignificant cost of the build herself.
However, despite the air of professionalism this well-equipped and modern salon exuded, the business was struggling. It had built up a substantial debt and wasn’t making enough money to get back into the green. With her income declining rapidly, Eve was forced to remortgage her family home.
Rather than deal with the root cause of the problem Eve ignored the mounting bills. This situation isn’t uncommon. Admitting that you owe a significant amount of money because your business isn’t making enough profit is a bitter pill to swallow. Like many of us, Eve didn’t want to feel that she had failed.
By not facing the problem head on, Eve’s situation worsened. With the debt continuing to grow and too little money coming into the business, Eve’s relationship with her husband began to suffer. She also experienced high levels of stress and anxiety related to her business and its future.
With over £120,000 owed to various creditors, Eve realised that she needed help and called us. At this point, she was unable to get a loan or credit card due to bad credit, so couldn’t borrow money from traditional lenders to help clear the debt.
Moving forward
After one 20-minute conversation with Eve, we knew immediately what needed to be done to rescue the business. Our business rescue expert chatted through Eve’s options and helped her to reach a decision as to what to do next. We were able to get most of the debt written off, meaning payments on the remaining debt were much more manageable and sustainable for the business.
Eve now has a healthy business, a strong client base, and is a much happier business owner.
If your business is also experiencing financial hardship, don’t wait for the problem to become worse. Call us and we’ll discuss your options in confidence.
