How to Read Your Monthly Salon Financials
Imagine your salon at the end of a long day: the hum quiets, the towels are folded, the color bowls are washed, and for a moment … everything feels still.
Your monthly financials can feel like the opposite of that - loud, busy, and full of numbers that don’t seem to slow down long enough for you to understand them.
My goal with this guide is to turn that noise down.
Think of your Profit & Loss, Balance Sheet, and Statement of Cash Flows like three friendly little lamps in your business: when you know how to switch them on, they make the whole room easier to navigate.
In this post, you’ll gently learn:
What the three key monthly financial reports are (without all the jargon)
How to read them as a salon or spa owner - no accounting degree required
Which numbers actually matter for your day-to-day decisions
A simple monthly ritual to check in with your money without spiraling
It can sound like a lot, but I won’t leave you to figure this out on your own. Just take a deep breath, sit back with your cup of coffee (tea, water, or whatever you prefer), and let’s go through this together. You don’t have to memorize everything. Just let it wash over you, and take what you’re ready for right now.
Start With the Story, Not the Spreadsheet
Most salon owners I talk to feel a little knot in their stomach when they open their financials. If that’s you, you’re not behind - you’re human.
Instead of starting with the report and trying to “decode” it, start with a question.
Each month, ask things like:
“Did all this busyness actually turn into profit?”
“Are my color and product costs in a healthy place?”
“Am I paying myself in a way that feels respectful of my energy?”
Your reports are simply your salon’s answers to those questions.
When you frame it this way, your numbers stop being a judgment and start being a conversation. There’s nothing to “pass” or “fail.” There’s just information you can use.
📌Cozy Tip:
Before you open anything, write down 2–3 questions you’re curious about this month. Then look at your reports only to answer those questions. You’ll feel more focused and less overwhelmed.
💡FACT:
Research in the Journal of Behavioral Finance shows that when people connect numbers to real-life goals and stories, they feel less anxious and are more likely to take steady, constructive action with their finances.
2. The Profit & Loss: Your Salon’s Monthly “Report Card” (In Plain English)
If you only look at one report right now, make it your Profit & Loss (P&L) - also called an Income Statement.
What it’s actually telling you
Your P&L is simply:
What came in
Service revenue
Retail sales
Memberships, packages, gift cards redeemed
What went out
Color and product costs
Payroll and benefits
Rent, software, marketing, education, etc.
What’s left over
Your profit (or loss) for that period
For salons and spas, a few P&L lines are especially worth a gentle glance:
Total Revenue – All the money that came in from services and products
Cost of Goods Sold (COGS) – Your color, backbar, and retail inventory costs
Gross Profit – Revenue minus COGS (what’s left after the cost of doing services)
Operating Expenses – The “keeping-the-lights-on” costs
Net Profit – What’s truly left after everything else
🔍 Questions to ask your P&L each month:
Is my revenue trending up, down, or staying about the same?
Are product and color costs taking up more space than they should?
Did any expense suddenly jump in a way that surprised me?
📌 Cozy Tip:
Choose just three numbers to write down each month:
Total Revenue
Product/Color Costs as a % of Revenue
Net Profit
Then add one short note next to each:
“Revenue a little higher than last month”
“Color costs climbed—brought in a new brand”
“Net profit dipped—extra education this month”
Over time, this becomes a simple story you can actually follow, not a mess of lines and columns.
💬 Quote to tuck in your back pocket:
“Accounting is the language of business.” – Warren Buffett
You don’t need to be fluent. You just need enough to understand what your own salon is trying to say.
💡 FACT:
Industry benchmarks often put backbar/product costs around 8–15% of service revenue for many salons and spas. If yours is consistently much higher, it might be pointing toward pricing, waste, or purchasing habits that need a little tweak.
3. The Balance Sheet: The Organized Closet of Your Business
If your P&L is the monthly report card, your Balance Sheet is like opening the closet and seeing what’s actually there.
It shows:
What your business owns (Assets)
Cash in your accounts
Inventory (retail and sometimes backbar)
Furniture, fixtures, equipment
What your business owes (Liabilities)
Credit card balances
Loans (build-out, equipment, SBA, etc.)
Taxes or other amounts due
What’s truly “yours” (Equity)
Money you’ve put in
Profits the business has kept over time
Why this matters, gently:
You can have a P&L that looks “okay” while quietly carrying heavy debt, struggling with cash, or dipping into credit cards to get through each month. The Balance Sheet is where that shows up.
A few kind questions to ask when you peek at it:
Is my cash balance slowly growing over the year, or always scraping by?
Are my credit cards and loans slowly shrinking, or slowly climbing?
Am I regularly putting money into the business, or constantly rescuing it?
📌 Cozy Tip:
Don’t try to “master” the Balance Sheet all at once. Once a quarter, choose one number you want to gently improve (for example: lower a credit card balance or build a half-month of expenses in savings). Focus just on that.
💡 FACT:
Research published in the Review of Economics & Statistics found that small businesses with at least one month of operating expenses in cash were significantly more likely to weather revenue dips and unexpected shocks.
4. Cash Flow: Why You Can Be Profitable and Still Feel Broke
If you’ve ever thought, “My P&L says we made money, but my bank account doesn’t agree,” you’re not alone. That’s a cash flow issue, not a “you’re bad with money” issue.
Cash flow is the story of how cash moves in and out, separate from profit. It’s shaped by:
Loan payments (especially the principal)
Large inventory orders
Paying off old bills or taxes
Owner draws / how much you take home
This is why you might be profitable on paper but still feel squeezed.
📌 Cozy Tip (a soft cash check):
Even if you don’t look at a formal cash flow report, do this once a month:
Look at your bank balance on the 1st.
Look at your bank balance on the last day of the month.
Ask: “Did cash go up or down this month—and does that match what my P&L is telling me?”
If you see profit but your cash is shrinking, it’s a loving nudge to look at:
Debt payments
Large purchases (like big inventory orders)
How much you’re taking out of the business personally
💬 Quote:
“Revenue is vanity, profit is sanity, but cash is king.” – Alan Miltz
💡 FACT:
A U.S. Bank study estimates that around 82% of small business failures are tied to cash flow problems, not necessarily a lack of profit. Keeping an eye on cash is a powerful act of stewardship for your salon.
5. The Five Gentle Numbers to Check Every Month
You don’t need to read every line item every time. For most salons and spas, looking at these five numbers gives a clear, calm snapshot:
Total Revenue
Service vs. Retail Breakdown
Product/Backbar Costs as a % of Service Revenue
Total Payroll (including owner) as a % of Revenue
Net Profit (and Net Profit %)
As a soft starting place (these can shift depending on your model):
Product/backbar: 8–15% of service revenue
Total payroll (team + owner): often 40–55% of revenue
Net profit: many healthy, sustainable salons aim for 10–20%
These aren’t rules. They’re just gentle guardrails you can compare yourself against, then adjust for your unique business.
📌 Cozy Tip (use the Snapshot):
Create a single-page Monthly Salon Financial Snapshot
(you’ll find a free version below) and fill in:
Total Revenue
Retail as % of Revenue
Product Costs %
Payroll %
Net Profit %
Then, underneath, circle a word that best matches the month:
Steady
Stretching
Needs Attention
This alone can reduce that foggy “I have no idea how we’re actually doing” feeling.
💡 FACT:
A meta-analysis in Psychological Bulletin found that simply tracking metrics—called “self‑monitoring”—significantly improves performance across many areas, including finances. In other words: what you gently measure, you’re more likely to gently improve.
6. Make It a Ritual, Not a Reckoning
A lot of salon owners avoid their numbers because they only look at them when something feels wrong - tax season, a slow month, or a big bill lands. No wonder it feels stressful.
Let’s flip that.
Turn your money review into a small, repeatable ritual that feels grounding instead of scary.
Here’s one you can try:
Block 30–45 minutes once a month. - Call it “Money & Matcha” or “Numbers & Nightcap”—whatever feels cozy.
Set the scene. - Light a candle, make a drink you love, sit somewhere you don’t normally work.
Open just three things:
Your Profit & Loss
Your Balance Sheet (even if you only glance at cash and debt)
Your bank account
Fill in your Monthly Snapshot.
Write three short reflections:
One thing that went well
One thing that felt off
One tiny tweak you’ll try next month
That’s it. No marathons. No financial bootcamps. Just one calm check‑in at a time.
💬 Quote:
“Clarity comes from engagement, not thought.” – Marie Forleo
You don’t have to think your way into understanding your numbers; you learn them by gently showing up.
💡 FACT:
Studies in the Journal of Experimental Psychology show that simple, personal rituals can reduce anxiety and increase feelings of control, even when the situation itself doesn’t change. Pairing ritual with your numbers is a powerful way to ease financial stress.
7. When a Cozy Bookkeeper Becomes Your Best Business Friend
You were trained to care for guests, craft transformations, and manage a million moving pieces—not to reconcile bank feeds after a 10‑hour day on your feet.
If you’re:
Constantly behind on bookkeeping
Avoiding your reports altogether
Or relying on “vibes” instead of data to make decisions
…it might be time to bring in a bookkeeper who understands salons and spas specifically.
A supportive, salon-savvy bookkeeper should:
Keep your books updated every month
Categorize things in a way that makes sense to you, not just to software
Send you clean, easy-to-read reports
Walk you through what they mean in simple, judgment‑free language
Help you spot patterns in product costs, payroll, and profit
You don’t need someone who makes you feel small or confused. You deserve someone who makes your financials feel like a cozy, readable story - one that helps you make good decisions for yourself, your team, and your guests.
That’s exactly what I built The Cozy Ledger to do for salons and spas: calm, done‑for‑you bookkeeping plus monthly financial clarity you can actually understand.
📌 Cozy Tip (if you already have a bookkeeper):
Ask them to highlight your top five numbers each month and add 3–5 quick bullet points in plain English, like:
“Revenue up 12% from last month”
“Product costs a little high vs. target”
“Net profit improved since your last price adjustment”
If they can’t provide that kind of clarity—or don’t seem interested in helping you understand - give yourself permission to look for a better fit.
💡 FACT:
Research from the Kauffman Foundation suggests that small businesses that use outside financial advisors (like bookkeepers and accountants) are more likely to survive and grow than those trying to manage everything alone.
Conclusion: Your Numbers Are Here to Support You, Not Scold You
Reading your monthly salon financials doesn’t make you “corporate.” It makes you supported.
When you understand, even at a very simple level:
What your P&L is whispering
What your Balance Sheet is holding
What your cash is actually doing
… you make calmer decisions. You price your services with more confidence. You pay yourself without as much guilt. And you build a salon or spa that can actually hold the life you’re working so hard to create.
You don’t have to fix everything this month. You don’t have to become “a numbers person.”
You just need one small, cozy way to check in with your money on purpose.
To make that easier, I’ve created a free Monthly Salon Financial Snapshot you can download and use alongside your own reports—whether you’re DIY’ing your books or working with someone like me.
Your salon is already telling you a story every month. Let’s make sure you can curl up with it, read it, and feel just a little more cozy.
