Profit First for Salons: Turn a Packed Schedule into Real Owner Pay

You check your booking app. Wall‑to‑wall clients. Sales look strong. Then payday hits…and there's nothing left for you. That ends now. Profit First flips the script so you pay yourself first, tame expenses, and finally see cash in your account—every month. It works because it's built on behavior, not spreadsheets. Sales − Profit = Expenses. You take profit first, then run the salon on what remains.

The Profit First Imperative: Why Salons Need This System

Traditional reports tell you what happened. Profit First changes what will happen by forcing profit into your bank accounts before a single bill gets paid. Five core bank accounts create guardrails: Income, Profit, Owner's Pay, Tax, and Operating Expenses (OPEX). Many salons add a sixth account for Opportunity or Backbar so cash for color and slow seasons is always earmarked.

Salon‑Ready Setup: Your Accounts and What They Do

• Income: All deposits land here. You never pay bills from this account. It's a holding area only.
• Profit: Your reward and safety margin. You move a set percentage here first.
• Owner's Pay: Your consistent paycheck. Separate from profit distributions.
• Tax: Set aside money so tax time never hurts.
• OPEX: Every bill is paid from here. If the balance runs tight, it's a spending signal, not a sales problem.
• Optional: Opportunity / Backbar: Build cash for growth campaigns or product purchases so they don't drain OPEX. Track backbar with a tool like SalonScale and fund this account from each allocation.

Real Revenue: The Salon Twist That Makes Percentages Work

Apply your target percentages to real revenue—your collected sales minus true pass‑through costs like significant materials or subcontractors. If materials and contractors are a big slice of your operations (20%+), use real revenue to size your allocations accurately. For many salons, that means backing out heavy color/backbar spend before you split cash.

Your Allocation Rhythm: The 10th and 25th Habit

Twice a month—typically the 10th and 25th—you empty the Income account into the other accounts based on fixed percentages. Then you pay bills from OPEX only. This "small plates" cadence makes Parkinson's Law work in your favor and keeps spending honest.

How Much to Allocate: Practical Targets for Service Businesses

Start small. Build the habit. Adjust quarterly. Below are starting ranges commonly used by service businesses that map well to salons—dial them to your reality and refine every 90 days.

• Stage 1 (≈ up to $500k revenue): Profit 1–2%, Owner's Pay 30–50%, Tax 10–15%, Opportunity 3%, remainder OPEX.
• Stage 2 ($500k–$2M): Profit 5–10%, Owner's Pay 25–35%, Tax ~15%, Opportunity ~5%, remainder OPEX.
• Stage 3 ($2M+): Profit 10–15%, Owner's Pay 15–20%, Tax 15–20%, Opportunity 5–10%, remainder OPEX.

Prefer simple ranges? Mike Michalowicz's guidance also frames owner's pay at roughly 30–50%, tax 15–20%, OPEX 50–60% depending on stage and margins.

Quarterly Profit Distributions: Pay the Owner Like an Owner

On the first day of each quarter, take 50% of the Profit account as a distribution. Keep the other 50% as a stability reserve or to attack debt faster. This is the built‑in celebration that keeps you committed.

Seasonality Without Stress: Fund Slow Months on the Good Days

Use the Opportunity account to stockpile cash during prom, wedding, and holiday peaks so summer travel dips and February lulls never squeeze payroll or rent. This single move removes stress and gives you pricing power year‑round.

What Changes on Day One

• Clarity: Account balances show you, in seconds, if you can afford an expense. No more mental math.
• Consistency: Fixed allocation days create a money routine your whole team understands.
• Control: OPEX becomes a hard cap. When it feels tight, you reduce waste or adjust pricing. That's leadership.

Salon KPIs That Pair Perfectly with Profit First

• Color cost per service: Weigh color, set targets, and fund Backbar from each allocation.
• Stylist utilization: If OPEX is always thin, either lift utilization or revisit compensation models.
• Rebooking and retention: Predictable repeat guests stabilize Owner's Pay and Profit.
• Retail %: Improve cash per guest without extending service time.

Tools and Automations

Use a banking platform that supports multiple checking accounts and nicknames so your "envelopes" are real. Relay is one option built with Profit First in mind and allows many named accounts with automation. Pair that with calendar reminders for the 10th and 25th.

Implement Profit First in 7 Steps (You Can Start This Week)

1. Open the accounts: Income, Profit, Owner's Pay, Tax, OPEX, plus Opportunity/Backbar if needed.
2. Calculate real revenue: Subtract major materials and subcontractors if they're 20%+ of operations.
3. Pick tiny starter percentages: Even 1% to Profit builds the habit.
4. Allocate on the 10th and 25th: Move money from Income to each account, then pay bills from OPEX only.
5. Lock in backbar discipline: Track color costs and buy product with the Backbar/Opportunity account only.
6. Review quarterly: Increase Profit and Tax a notch, trim OPEX, and celebrate with your profit distribution.
7. Get expert eyes: A certified Profit First advisor can tailor allocations to your team comp and growth plan.

FAQ

"My salon software already gives me reports. Isn't that enough?"

Reports explain the past. Profit First shapes your future by moving cash before you spend it. It turns Parkinson's Law into your ally so expenses fit the plate you give them.

"This sounds complicated. Can I actually do it?"

Yes. Open the accounts, start with 1%, and run the 10th/25th rhythm. Complexity fades once the habit locks in. You can tune percentages over time.

"How fast will I feel a difference?"

Immediately. The first allocation gives you clarity. The first quarter's distribution proves it.

Your Next Move

Ready to learn how to implement this in your salon? Join the Level Up Academy and get step‑by‑step guidance on installing Profit First, setting your starter percentages, and building a 90‑day plan that eliminates guesswork and puts cash in your pocket—every single month.