November 11, 2011
To set up, expand or modernise hairdressing salons all require money. Quite often this money isn’t just sitting in our bank accounts ready for us to use and has to be found. Hairdressing salons can make use of various forms of finance, in particular commercial mortgages, business loans, asset finance and also a new form of invoice factoring that can be used to help cash flow.
Commercial mortgages are available for hairdressing entrepreneurs who are looking to purchase their salon premises. Purchasing the premises has many benefits, the main one being although mortgage repayments will be made each month, unlike rent one day these payments will end. Also the property could become an excellent investment if the value of the property increases over time. Furthermore although the initial commercial mortgage repayments may seem quite a struggle to begin with, over time they will only fluctuate as interest rates change. Rents tend to increase and keep on increasing, so in 10 or 15 years they maybe considerably more than they are today.
However, purchasing may not be an option and renting premises with a lease can also be an excellent alternative. Business loans may be available from you bank, but you can also look elsewhere for options such as asset finance.
To help fund equipment purchases or to rent up to date quality equipment, hire purchase, finance lease and asset finance can be great options. With asset finance you basically rent your equipment and pay monthly payments to the asset finance company. Arrangements can often be made by which after the asset finance period ends you can buy the equipment from the asset finance company for a small nominal sum. This is a great way to equip your hairdressing salon with up to date equipment without depleting your bank balance. As the equipment then goes to work and makes money it can pay for itself each month.
Asset finance can also be used to finance equipment that you already own in order to provide a cash injection, something that is worth remembering if the bank decides to pull your overdraft facility or you have a large unexpected bill to suddenly pay.
Finally there is an invoice finance or factoring facility available for retail businesses like hairdressing salons. It is based on PDQ sales and can provide a cash advance based on the volume of sales. This is then paid back over a period of up to 6 months from future PDQ sales. The money raised can be used for purchasing stock, equipment, paying advertising costs, rent, rates, credit consolidation or to just provide a cash injection for the business.