Ep 6 | The Boutique State of the Industry
In this episode, hear a sneak peek on the results from The Boutique State of the Industry with Lindsey Roberts, the founder of HarQuin Boutique Bookkeeping Co. We created The Boutique State of the Industry to be a blessing for boutique owners, helping them to gain a larger perspective in their specific industry. As a business owner, you may get afraid, confused or feel alone when you're making business decisions that are different from those who are not in your industry, so seeing the big picture of what's going on in the boutique industry nationwide and what it's like to be a boutique owner in America helps you not only learn from others mistakes, but grow in your confidence and knowledge as a boutique owner, equipping you to make smart business decisions and reach your biggest goals in life and business.
Our research found that the majority of boutique owners own only one boutique and did not own any business prior - so we have boutique owners coming in with zero business knowledge learning how to run a business. There are many layers and components to owning a boutique. Our advice to new boutique owners:
Don't panic. Economies go up and down. They change. Customers preferences change. In the beginning our company went office to office and now we're 100% online. We have a baker who before COVID was not profitable at all, but now after COVID he is rolling in the dough (pun intended!) because it forced him to slim down and get rid of bad spending habits as a business owner. The financial challenged caused him to reform and now he is a stronger business owner than he's ever been. So don't panic - and don't duck out on your business. If business dips, you can learn in slow times and learn from mistakes and save and plan for the future during slow times. While you're in busy seasons it's hard to think about the future when you have so much work coming your way. It's exhausting being in the reactive, flight or fight mode and you're looking down not ahead.
Another finding is that very few boutique owners start another business after starting their boutique business. What boutique owners can do now to change this:
Most business owners have that entrepreneurial spirit. That's why people own multiple businesses because they see that opportunity and go for it. One thing to change is outsource to professionals. So many boutique owners try to do everything and then years later they still haven't filed their taxes and they're ashamed in frozen in fear because they're afraid to speak up. And you can't be good at everything unless you're an accounting professional and you know bookkeeping, taxes, payroll, payroll taxes, employment laws, sales tax and nexus laws. That's a lot of things to always have on your mind. Then you have to switch to your creative side and find product that has a good enough margin to make good money and your customers will be happy to pay premium dollar for. Personally, I can't switch back and forth and I know a lot of boutique owners that are creative minded and that's why we created Boutique Bookkeeping Co. We noticed boutique owners were getting confused - for instance they were saying "I paid my sales tax so I don't need to file with the IRS not realizing that sales tax and income taxes are two different taxes." What often happens is when we inherit a new client, we find they've overpaid or underpaid on sales tax because they didn't understand the law or they didn't understand their sales flow and how it was reflecting on their liability. Oftentimes they overpay we get them a refund but when it's the other direction, there's fines and penalties. In one state, there's a $500 for one day late on a sales tax return when you could've outsourced it for $40.
Some trends we noticed when it came to successful boutiques:
Successful boutiques treat themselves like an actual business. There's a trend especially after COVID where online businesses started popping up and people started businesses like a hobby. But their hobby started making money and they got months and years behind in their financials. One thing to remember is you are a business owner in the eyes of the law. And with that comes responsibility - if you hire employees, you have to treat them a certain way, not just niceties but it's the law. In the State of the Industry, 60% profitable, 40% unprofitable — that means their net income was either positive or negative - that's the number at the bottom of your profit and loss. The cool part is that 80% of the profitable boutiques have hired a bookkeeper. So knowing your numbers is that important and to hire someone who knows what they're doing, gives you real numbers and knows your specific industry. Boutique owners have a difficult industry with all the technology that accepts your money these days and all the different ways that money flows through platforms - we have seen so many overpay in sales tax and income tax just because of the incompetence either by doing their own bookkeeping or hiring someone who is not familiar with retail or online retail. It's just hard and boutiques are not an easy industry so having someone who's doing your bookkeeping who understands it and give you real numbers.
Why do some boutique businesses fail and others succeed? What do boutique owners need to know about mental health and how to not only protect their relationships while running a boutique business - but also make those relationships a support system for their success?
The biggest thing I've seen is that business owners are forgetting that their business is an asset that is not only something they can make money on but something you can pass down for generations. I was speaking to man this week who was struggling in his generational business and he was about to shut it all down and start a lawn care business so I had to remind him that he was able able to inherit a family business and he could offer the same to his children. Small businesses are always going to be around. So get your children involved in the business. Maybe you could make more money now or sell your business - but think about the next generation. I buy my milk from a fifth generation farmer. Boutiques can get in this mindset, too. Shifting from thinking of your boutique as something to building a legacy may be a hard jump - but it pays off in a bigger way. There's a biblical precedent, too. You can save $100,000 and give it to your kid one day, but it won't be that much money then. So teach a man to fish and they can learn to support themselves off this thing. Hobby verses legacy are two completely different things and one fulfills self for a little while, while the other serves for many generations and is much greater fulfillment. When you're looking at your business like a legacy, you'll get through bad days more easily and you won't want to give up.
Mistakes boutique owners make is working too much and not having proper balance. Think about how much you're working. In the State of the Industry, we found that 35% work more than 46 hours. As adults, children remember when their parents were never there, not all the things they could buy them. We have to remember we only have one life to live and on our deathbed we won't think about the extra buck we could've made. We're going to cherish our memories of raising our families and the future generations. It's counter cultural to think this way. There will be busy seasons that you can plan ahead for, but it shouldn't be that way all the time - you should create balance. If you don't you can even create health issues.
Finally, don't forget to look at your bookkeeper as an asset and if there's something you're confused about talk to them about it, talk about your goals, ask questions. You could ask them to help you understand your financials show if going online verses brick-and-mortar would be more profitable. Talk to them, they're people, too and you can have a longterm friendship with that person because they care about you and they're taking care of a very important asset of your business - your financials!
If you want to hear the full results and download the PDF for The Boutique State of the Industry, join us in Boutique School - a membership training with our boutique bookkeeping experts to equip you in how to run a business.