How to build generational wealth as a beauty professional
On top of having one of the coolest brand aesthetics I’ve ever seen, Jessica Crane is a beautiful breath of fresh air when it comes to a tricky, tricky topic: building generational wealth. Her down-to-earth approach to realistic investing (start smart + small) will inspire you to think differently about building wealth from exactly where you are right now!
An award-winning International salon business coach, Jessica has spent the last 10 years developing and supporting highly successful salon owners with her razor-sharp business strategies based on her lived experience.
If you’ve been struggling with your finances lately (I mean honestly, who hasn’t been these days with crazy inflation?) and feeling a bit hopeless about how to save money for your future, please take heart: it’s so much easier than you think, and you can start today!
Hairdressers and stylists, waxing experts and nail artists, estheticians and medspa technicians - this blog post is for you if you need to feel hope about the wealth that’s in your future.
Like many of my previous guests, Jessica started off working in a salon - at the tender age of 12! - on weekends and holidays. She fell in love with everything about it. It felt like a new world that she was desperately missing and was excited to become a part of.
“Straight away, I just loved the environment. I felt like I was in the real world, with real adults. Your salon owners are like your mom and dad when you are young and in the salon environment. And then all the stylists are like all your brothers and sisters. For me it was a family environment that I didn't have.”
Jessica did something bold and brave that set the path for her amazing career trajectory: she left school at 16 and started an apprenticeship at the salon.
By 18, she was the salon manager and thrived in her role.
“I think I just naturally fall into those roles. I can be very organized and like things a particular way. So I think it just always suits me.”
After a few years in the salon, Jessica went on to her natural next role: one of teacher and mentor. She took a role as an internal verifier and assessor, and during that time started to gain the skills that come from formal education.
Then, 9 years ago, her daughter Hailey was born, and her career came to a standstill. As most new moms experience, she suddenly felt a lack of identity from not working and just being a mom.
“I went on maternity leave and I wondered at the time, “What is my next step in the industry?” Sometimes when you [take job roles], you feel like you've hit the glass ceiling. Like there's nowhere for you to go.”
Jessica decided to get a degree in consulting with the understanding that she wanted to continue to teach, inspire, and support salon owners - but without a ‘role’ attached to it. While on maternity leave, she found a lot of salon owners coming to her for advice, which was helpful to crystallize a lot of what she was learning.
“A lot of salon owners [whose apprentices I’d taught] were reaching out to me and they[‘d say], “I know you're off on maternity leave, but could you help me with this?” And I was like, “Of course I can, like, I've got nothing else to do. So then naturally that began to grow into a coaching business [about] nine years ago…very organically.”
Changing your mindset about money as a beauty pro is where wealth begins
A major part of Jessica’s coaching is, of course, around building wealth - and I was curious what kind of real-world experience guides her mission to teach salon owners how to manage their finances and build wealth in a smart way.
“I think that that came from my own - I don't know if I would call it a fear - but I knew that nobody was financially gonna support me. That wasn't gonna happen. [So] I needed to financially, physically, mentally, emotionally support myself.”
“And as soon as I was a manager at a young age, [I was] dealing with the finances and… looking at things and [started to] grasp an understanding very quickly of how these businesses run. And I noticed straight away that everybody feels like, because we're a creative industry, we are doing it out of the goodness of our heart. We have this weird money mindset that we don't talk about money or promote making money as a positive thing.”
One of Jessica’s goals in coaching salon owners is to change that poor money mindset from the beginning.
“[Money] absolutely should be [seen as a positive thing] for multiple different reasons. Because when you have more, as a business, you can give more back. If you don't have anything, you can't give anything to anybody else. So we want more good businesses making more money so that they can expand, they can take on more team members, so that they can grow the industry. And that comes from learning more about money.”
Understanding your financial structure as a beauty entrepreneur
Jessica says that the more education salon owners (and all business owners) gain about how money works and how to work with it, the better…but most of us don’t ever get that education.
“One of the things I think is the most crazy is that we all go to school for like 13, 14, 15 years…and we never learn about money. So most people start their business and don't have financial education or don't have financial structure or whatever. The reason why people feel [their finances are] out of control is because they just don't have the structures in place to control it.”
So that’s where Jessica and her business begins: by teaching each salon owner how to understand money.
“One of the things that we do is put that financial structure in place so that we are teaching them how to handle the money, forecast the money, and really get a grip with every single number and detail of what is happening with the finances inside their business. So they have full control over it.”
Jessica says that whether you’re an independent beauty professional or you run a team, the education is the same: understanding the ‘wealth cycle’ and how to invest in your future based on that cycle.
“One of the first steps you want to do is focus on [generating] your salon revenue. That's your first step.”
(Check out my blog post on selling luxury-services if you want to start increasing your salon revenue through upselling!)
“Your second step is to make sure that you are maximizing net profit, both as a business and as an individual. The more you increase your net profit, you can then use this net profit as a business owner to draw down as a drive director's drawings to put into a pension. You want to invest that money into something else. Security pension, gas pension…some of our clients buy a property or multiple properties.”
“[This] will obviously give you assets, which then will create more income.”
Take a really close look at the way you spend your money for your salon or spa
Profit margins are thin in the first few years as a beauty professional, which is why it’s so important to take a super-close look at every way you spend your money.
“We haven't worked with a client yet who wasn't making a loss on some, if not most of their treatments and services,” says Jessica.
So what should you look for when trying to find out how to cut production costs and generate more revenue?
Jessica and her team at the agency have a specific method they use for getting to the ‘brass tax’ of every client’s finances - and it often reveals things that need to change.
“One of our famous formulas that we inject straight away is called our Profit Equation. Basically, making sure that you have a pricing structure that you can break down and know how much your business costs need to be covered [per] customer, how much stock cost needs to be covered for that customer, how much tax needs to be covered for that customer, how much wage time commission. [Looking at] whether you are employing somebody or they’re self employed or renting from you or whatever structure you've got going on. And then what is the profit per treatment and service that you are delivering?”
“If one or more services are unprofitable, and you've got a whole team carrying them out every day at that price point…it’s why people feel like they pour all this revenue in, they pour all this water in the bucket and there's no water left in the bucket.”
Jessica says you can’t rely on how booked out your books are to feel confident that you’re steadily increasing your revenue.
“A lot of our clients say, ‘How are we busy, and there's never any money left?’ And it's because of all this granular detail. [You] need to just make sure that [you] are structuring the business model correctly, structuring the pricing correctly and making sure it's bespoke to you.”
An important comment Jessica made at this point stood out to me - and it’s something I talk about so often because it’s that important - being authentic, even in your pricing decisions!
“The biggest mistake people make is they're looking at what everybody else is doing and feeling that they have to gauge their price on somebody else's price with their business. Your business has hundreds of variations that you can't price it the same.”
Stop discounting your value as a salon owner or beauty professional
Jessica says that she feels a particular empathy and affinity for beauty professionals because she worked in the industry for so long. She sees that there’s a mentality of ‘discounting’ in beauty that doesn’t exist in other industries - and frankly, it needs to stop.
“I love working with the beauty industry because it's my background. I feel they're my people. I feel the emotional connection we have running our businesses.”
“[But the thing] you don't see in other trades (and I say this to my clients) - I've never had a builder, a carpenter or electrician come to me and then offer me money off or a discount. It just doesn't happen.”
How to invest your salon or spa revenue wisely
Jessica has inspiring stories of clients who went from just breaking even to buying 10+ properties, boats, paying for all of their kids to go to university, and living a life they’d dreamed of.
But where do you start when you’re just starting to shave some profit off the top and pay yourself, or start saving, or jumping into your first ‘baby’ investment?
“That does depend on your goals,” says Jessica, “But it also depends on [your location]. We have clients in lots of different countries like Australia, America, and the UK. So what you also want to look at is what your maximum allowances are. Because you want to get smart with it. Maybe you want to look at what you can put into a pension, what your maximum allowance per year is (and you want to make sure that you are using that because you won't pay tax on that.) Then you want to look at the tax brackets - how much tax you want to pay and how you want to stay under…it's really just about managing it as smartly as you can.”
When you start to make a lot more money than you’re used to, it can actually become much more complicated to avoid paying crazy taxes and figuring out how to manage it well. Jessica calls it a “wealth problem”, which feels like an oxymoron, but it really is a thing.
The solution? Education and seeking help!
“You want to be in that mindset of educating yourself, because you don't want to be repelling money because you fear how you're gonna manage it. If you fear money, you consciously and subconsciously will repel money. [But if you say], ‘I'm gonna educate myself and I'm gonna manage this. Then you are gonna attract more money just by having that different mindset.”
The most important money mindshift a salon owner can make
In the simplest terms, Jessica wants every salon owner to understand one thing: magic starts to happen when you make the shift from trading your time for money, and instead trading your money for more money!
“One of my favorite examples of this is Beyonce. She was a service based business. If she wasn’t shaking her booty singing, she wasn't making enough money. One of the most amazing things she did was instead of being paid one time by Uber, she asked to be paid in stocks and shares. So instead of charging her private fee, she had the equivalent in stocks and shares, which now is worth 10 times more than if she'd have [been paid] the money up front.”
“This is important. This is how people like Beyonce, Rihanna, Michael Jordan become billionaires. They used their initial money (from trading time for money) and they invested it into intellectual property or assets. And then that now makes them more money.”
How to build generational wealth as a beauty professional
We all have goals we want to fulfill in our lifetimes, and when it comes to our businesses, a lot of those goals are focused on the money we’ll make now so that we can start to work less and enjoy life more.
While there’s nothing wrong with focusing on those goals, Jessica says that expanding your vision to include what your kids (or grandkids, or nieces and nephews) will inherit based on your decisions now is a great start for wealth-building.
“I get that people want to have the holidays and the car and the house and that’s fine. We don't say, ‘Go without’ or anything like that…[but] it's thinking about, ‘What am I leaving for the next generation? What can I invest now?’
“We all look back and think, ‘I wish my parents had bought five houses. So cheap back then.’ Think of the decisions that you could make in order to make some good investments now for the future.”
In terms of practical tips for where to start, Jessica shared the following:
If you find you’re making extra revenue consistently, find somewhere to invest or save it instead of paying yourself
Use a pension calculator online: Enter the age you’d like to retire and how much you’d like to have as a monthly pension, and how much you currently make per month. The calculator will tell you how much you should be putting into your pension fund monthly.
Focus on your ‘future self’ and your kids’ and grandkids future when making financial decisions
Speak to a financial advisor about your financial goals and investing
If investing in properties instead of stock options, be aware of changing tax laws and overall maintenance vs ROI
Stay positive! Even if you’re just starting out as a booth or suite renter or you’re still working out of your basement, you can build generational wealth today by making smart, future-focused decisions
If you’d like to get in touch with Jessica Crane about starting to build generational wealth today, click here to schedule a free, no-obligation 50-minute business consultation.
Jessica is also running a free Masterclass on the steps you can take right now to create long term wealth and grow your salon business in 30 days - check it out right here!
