Understand sales, expenses, and profits with a "household account book" feel

First, let's get a handle on the flow of money.

Understanding the flow of money in a private salon is actually very simple. There is no need for complicated calculations; the basic principle is to subtract expenses (expenses) from sales (income) to calculate profit (money left in hand). This alone will allow you to see at a glance how hard your salon has worked.

By the time you finish reading this article, you will be able to start taking notes on your salon's income and expenses, just like keeping a household account book. Don't aim for perfection, but start by getting a rough idea of how your money flows.

Where do you start? Manage your money in just 3 steps

If you're not sure where to start, don't worry. Here are three easy steps you can start today. Think about your salary and expenses when you start keeping a household budget.

Step 1: Make a note of your sales (salary) <br>First, record how much money (sales) you received from customers this month. This is the same as your "salary" in a household budget. It doesn't have to be every day, it's fine to do it every week or at the end of the month.
Step 2: Make a note of expenses (money spent) <br>Next, record the money (expenses) spent to run your salon. These include rent, materials, advertising, etc. These are like "living expenses" or "shopping" in the household budget. Simply put your receipts and invoices in a box.
Step 3: Calculate your profit (remaining money) <br>Finally, at the end of the month, subtract your "expenses" from your "sales." The amount that remains is your "profit," or the pure money your salon has earned. It's the same idea as asking yourself "how much money did I save this month?" in household finances.

That's all it takes. By simply repeating these three steps, you will be able to get a clear picture of your salon's financial situation.

What is this? A simple explanation of sales, expenses, and profits

The words "sales," "expenses," and "profit" always come up when running a salon. Here, we will define each of them in one easy-to-understand sentence, using the analogy of a household account book.

What is sales?

Sales are the total amount of money received from customers. It is like the total amount of monthly salary or part-time wages in a household account book. It is the salon's "income" itself.

What are expenses?

Expenses are the costs incurred in order to generate sales. They refer to the "expenses" necessary to run a salon, such as rent, material costs, and advertising fees. In terms of a household budget, they are the "money spent" on food, utilities, entertainment, etc.

What is profit?

Profit is the amount of money you have left over after deducting expenses from sales. This is the amount your salon actually earned, and it will go towards your living expenses and savings for the future. It's easy to imagine it as the "savings amount" in a household budget.

Grasp the flow of money in your salon! 3 important points

In order to continue managing your money without giving up, it is most important not to aim for perfection from the beginning. Here, we will introduce three important mindsets that busy solo salon owners can use to keep track of their money flow without straining themselves.

It's okay not to record everything precisely! It's okay to do it roughly at first . At first, you don't have to try to get to the last yen. Start by getting a rough idea of how much you spent this month, like "I spent roughly XX yen this month." If you try to keep it precise, you'll get tired and won't want to continue. The important thing is to keep at it.
Separate your wallets and accounts into "work" and "personal" ones . This is very important. If you mix the money you use for work with the money you use for everyday life, you won't know how much you spent on what. If possible, keeping your bank accounts separate will make managing your money dramatically easier.
Simply toss receipts and invoices into a "dedicated box" <br> Receipts and invoices are the basis for recording expenses. It's a hassle to write them down in a notebook every time you receive one, so first prepare a "box for salon expenses." Then, simply toss all receipts for money spent at work into that box. Then, you can check them all at the end of the month.

All you need to know! A money management checklist you can start using today

We've prepared a concrete checklist so that you can start taking action today. Try each of the things you can do one by one.

Get into the habit of always getting receipts and invoices for any money you spend at the salon.
Prepare a special box or clear file to store receipts in.
Try dividing your wallet into two, one for work and one for personal use.
Try writing down at least the amount of sales for that day in a memo app on your smartphone or in a small notebook.
Look at your bank statement and make a list of fixed expenses, such as rent and utilities, that you spend every month.
Check the calendar to see how many days you have left to open this month and set a rough sales goal.

How to keep a monthly income and expenditure memo just like keeping a household account book! [Steps and tips]

Now, let's explain the specific steps to actually keep a monthly income and expenditure memo. Try using a notebook, a smartphone app, or Excel on your computer, whichever method is easiest for you. Here, we'll show you how to keep a monthly income and expenditure memo using the simplest method, "Notebook."

Step 1: Prepare the materials
First, prepare your favorite notebook, a pen, and a box to store your receipts in. If you're good with computers, we recommend creating a simple spreadsheet using Google Sheets or Excel. There's no need to look for a template; simple is best.
Tip: Use two pages of your notebook as "months." It'll be easier to read if you write "sales" on the left page and "expenses" on the right.
Step 2: What to do every day or every few days (record)
Make your daily tasks as easy as possible.
- Recording sales: When you finish work for the day, write down the date and the amount of sales on the left page of your notebook. For example, something simple like "10/21 30,000 yen" is fine.
- Record expenses: Whenever you pay for something at the salon, make sure you get a receipt and toss it in the box you prepared. There's no need to write it down in a notebook at this point.
Tip: Always keep receipts, not just for cash purchases, but also for credit card purchases. If you shop online, it's a good idea to print out your receipts or save them in a folder.
Step 3: What to do at the end of the month (summarization)
At the end of the month, you can compile the data for the month. It only takes about 30 minutes.
1. Add up all the sales figures written on the left page of your notebook. This is your "monthly sales."
2. Total your expenses: Take out all the receipts that have accumulated in the box. On the right page of your notebook, write down the "date," "content," and "amount." For example, "10/5 Consumables 2,000 yen," "10/10 Advertising expenses 5,000 yen." Once you've written everything down, add up the amounts. This is your "monthly expenses."
3. Calculate your profit: Finally, subtract your monthly expenses from your monthly sales. The remaining amount is your salon's monthly profit.
Tip: If you roughly categorize your expenses into categories such as "material costs," "advertising costs," "consumable costs," and "utilities," it will be easier to see what you are spending too much on.

By repeating this process every month, you will be able to see the financial status of your salon in numbers. You will then be able to think about specific next actions, such as "We made a lot of profit this month, so maybe we should buy some new towels" or "Let's cut expenses a little more next month."

Common mistakes beginners tend to make and how to avoid them

Many people stumble over similar things when they start managing their money. But it's okay if you know the causes and solutions. We've put together a table of common mistakes and how to avoid them.

Common stumbling blocks	cause	A simple workaround
I accumulate too many receipts and hate having to tally them up at the end of the month.	"I'll do it later" keeps piling up, and the amount of work becomes enormous.	Place a box for your receipts in a visible place. Set aside five minutes once a week, such as on the weekend, to organize your receipts.
I stop working, wondering, "Is this an expense?"	I don't have any knowledge about the scope of expenses, so I'm unsure about what to do.	Consider the question, "Does it lead to sales?" If you're unsure, put it in a "hold box" and look into it later, or consult the tax office or chamber of commerce.
I get frustrated when the calculations don't add up	They try too hard to match every penny perfectly, and it gets mixed up with personal expenses.	At first, think, "It's OK if it's roughly correct." Don't worry about a difference of a few hundred yen. Make sure to keep a separate wallet and account for work.
It becomes difficult to look at the numbers and I give up midway.	It's tempting to turn a blind eye to the reality of low sales and negative profits.	Think of the numbers as the results of a health checkup, not a report card. If you find something wrong, it will give you an opportunity to think about how to improve. The first step is to understand the facts.

Reduce waste of money and time! A collection of clever management tips

Saving money and time is especially important for busy salon owners. Here we will introduce some simple ideas and useful tools that you can immediately incorporate into your daily salon operations.

Take advantage of free plans for accounting software: Cloud accounting software such as "freee" and "Money Forward Cloud" offer free trial plans. If you link your bank account and credit card, your statements will be automatically imported, significantly reducing the effort required for data entry. We recommend trying the free plan first to see if it's right for you.
Get a business credit card: Consolidate all your expenses onto one credit card. This way, your statement will become your expense record. You'll also earn reward points, so it's a win-win situation.
Introducing cashless payment: Introducing credit card or QR code payment as a payment method for customers will make cash management easier. Sales data will also be automatically recorded, eliminating the need to tally up daily sales.
Review your fixed expenses: Reviewing your fixed expenses, such as rent, utilities, communication fees, and monthly subscription services, can bring lasting savings. Simply switching your electricity provider or smartphone plan can make a difference in your annual expenses by tens of thousands of yen.
Use a receipt capture app: There are apps that will automatically scan the date and amount of a receipt and convert it into data just by taking a photo of it with your smartphone. This eliminates the need to manually enter the information, allowing you to do this in your spare time.

Want to know more? Money Management Q&A

Here we answer some common questions about money management that salon owners often ask.

Q. First of all, what kind of things qualify as "expenses"?

A. Basically, all payments that were directly necessary to increase the salon's sales are considered expenses. Typical examples include the cost of cosmetics and oils used in treatments, consumables such as towels and slippers, salon rent, utility bills, and the cost of promotional flyers and advertising.

If you use part of your home as a salon, you can deduct part of your rent and utility costs as business expenses (this is called "household apportionment"). For example, if you use 30% of the floor space of your home as a salon, you can deduct 30% of your rent as an expense. Don't overthink it at first, just ask yourself, "Is this for work?" and make a decision.

Q. Which is better: handwritten notes or accounting software?

A. If you're comfortable with computers and smartphones, we recommend accounting software. If you want to get started quickly, we recommend handwritten notes. Understand the advantages and disadvantages of each and choose the one that's right for you.

The greatest appeal of accounting software is that many aspects can be automated once the initial setup is complete, and it even supports the creation of tax return documents. On the other hand, the advantage of handwritten notes is that they are inexpensive and you can write however you like. It's a good idea to try using a notebook for a month or two first, and if you find it too tedious, consider introducing accounting software.

Q. When I calculated it, my profit was negative (deficit). What should I do?

A. First of all, it is important to stay calm and find out why you are in the red. Being in the red is not a bad thing, but a sign that tells you about the state of your salon.

Look back at your income and expenditure notes to see if your sales were low or if you spent too much. For example, a month in which you spent on advertising may temporarily result in a deficit. Once you know the cause, you can come up with specific measures, such as "I'll try harder to post on social media next month so I can get more reservations," or "I bought too many expensive products, so I'll do more thorough inventory management."

Q. Can I file my tax return using only this income and expenditure memo?

A. This income and expenditure memo is extremely useful as a "basic document" for preparing your tax return. If you are filing a white tax return, you can create an "income and expenditure statement" based on this memo.

However, if you file a "blue return," which allows you to receive a special deduction of up to 650,000 yen, you will need to keep your books according to more detailed rules called "double-entry bookkeeping." The method introduced here is just the first step to understanding your money flow. Once you get used to it and want to seriously consider saving on taxes, we recommend considering filing a blue return or using accounting software. If you have any concerns, you can also get a free consultation at your local chamber of commerce or tax office.

Next Step: Your Action Notes for Tomorrow

It's not enough to just acquire knowledge; it's meaningful to put it into action. After reading this article, we'll suggest three specific actions you can take starting tomorrow.

Tomorrow's first move: Try keeping an empty box in the corner of your kitchen or desk to put your receipts in. Call it the "Salon Money Box." The key to continuing is to start with the basics.
A 5-minute review: Open your smartphone calendar or planner and check this month's reservation status. Then, try to make a rough prediction, such as, "This month's sales will probably be around XX yen."
If you're unsure, bookmark this article and reread it at the end of the month. Then, even if you think you're being fooled, try doing the "sales tally," "expense tally," and "profit calculation" for just one month's worth. Just being able to see the numbers will make the world seem different to you.

Next helpful article to read

Once you understand the basics of money management, the next step is to learn how to attract customers and increase repeat business, thereby increasing your sales.