How to operate in difficult times

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1. Background

It's essential to recognize that even in the most challenging situations, there's always a potential for further complications. This article presents valuable insights gathered from interviews with 27 leading PMU (Permanent Makeup) artists. These artists represent a small, elite group - only 3.5% of those trained in Powder Brows, Hairstrokes, or microblading techniques - who have managed to capture over 80% of their local market share. Notably, these experts have sustained the growth of their businesses for at least four years, with some even surpassing this mark. Their locations span across the European Union, the United Kingdom, and the United States.

One striking observation is the consistency in strategies employed by experienced artists to handle fluctuations in business, regardless of their geographical location. This article aims to provide practical advice from these seasoned professionals on navigating the ups and downs of business, especially during economic downturns. A key finding is the difference in approaches not just between novice and experienced artists, but more profoundly between those who have weathered an economic downturn and those who haven't. This distinction offers a unique perspective on managing business challenges in the PMU industry.

2. Budgeting and Managing Expenses

Initial Step: Crafting an Accurate Budget

A common challenge for many starting artists in the PMU industry is the underestimation of business costs. A significant 86% of newcomers realized they had underestimated their startup expenses only a year into their business. Handling finances might seem daunting, but it's a crucial aspect that cannot be ignored.

It's not just newcomers who struggle; even established artists often lack clarity on their ongoing expenses. While it's rarely acknowledged, many artists are unaware of their financial outlays.

The initial step to take control of your finances is to develop a detailed budget. This involves creating an exhaustive list including your business and personal expenses. Seasoned artists stress the importance of accounting for personal expenditures alongside business-related ones, as these often intertwine and can lead to underestimating actual costs. Inaccurate budgeting can lead to misguided decisions and negative impacts on your business.

When preparing your budget, ensure to account for every expense, no matter how unrelated it may seem. For example, regular personal beauty treatments like hair, nails, or lashes should be factored into your business expenses. These costs, while personal, are often integral to maintaining the professional image necessary in the PMU industry.

3. Expensive credit

A common oversight among many experienced PMU artists is a lack of awareness regarding the true cost of credit, particularly concerning interest rates on credit cards. It's often only after thorough calculations that the actual financial impact becomes clear. This lack of awareness can lead to significantly higher expenses than anticipated.

Analyzing Financial Commitments

When it comes to fixed financial obligations such as loans, leases, and credit card balances, a vital step is to detail the actual cost of the credit meticulously. This includes understanding the interest rates and how they accumulate over time.

Artists are frequently surprised to find substantial variations in interest rates, with some discovering differences as high as tenfold. While it's common to focus on meeting monthly payments, having a broad and precise understanding of the underlying credit costs is critical. This knowledge not only aids in better financial planning but also in making informed decisions about managing and reducing debt.

Being aware of the true cost of credit is crucial for effectively managing finances in the PMU business. This understanding helps artists to plan more accurately, avoid unnecessary high-interest debts, and maintain a healthier financial status in their professional journey.

Identifying and Addressing High-Cost Credit

After you have a clear picture of all your financial obligations, the next step involves critically evaluating each expense. Ask yourself: "Is this expense absolutely necessary? Can I eliminate it?" You might find that some purchases, particularly those with high credit costs, can be returned or sold, often with minimal loss.

Prioritizing Debt Repayment

If eliminating an expense isn't feasible, your focus should first shift to paying off debts with the highest interest rates. This strategy should be implemented irrespective of any personal attachment or perceived importance of the item in question. For example, you may be reluctant to pay off a leased phone with high interest rates, but prioritizing its repayment can be more financially beneficial than focusing on decreasing the balance of lower-interest debts like a home loan, although that may produce some emotional satisfaction.

It's a common misconception among PMU artists to misunderstand the terms of credit agreements, particularly the frequency of interest rates. As one experienced artist realized, "I thought the interest rate was annual when I leased items. I was shocked to find out it was monthly." This revelation highlights the importance of thoroughly understanding the terms of any credit or lease agreement, especially the frequency and rate of interest charges.

4. Fixed Costs

Many experienced artists in the PMU industry agree that fixed costs can be one of the biggest financial challenges. These are recurring costs that remain constant regardless of your business activity level. Effectively managing these costs is crucial for maintaining financial health and adapting to changes in the economy or business downturns.

Creating a Fixed Cost Hierarchy

A critical step in financial management is to create a detailed list of your fixed costs, organizing them from the highest to the lowest. Surprisingly, this straightforward task is often overlooked by many artists. Once you have this list, it's essential to approach it with an open mind. This means reassessing each cost and not assuming that all are absolutely necessary or unchangeable.

Reevaluating "Fixed" Costs

It's a common misconception that fixed costs are set in stone. However, some of these costs might be negotiable or adjustable. For instance, you might be able to find more affordable alternatives for certain services or supplies, or you might be able to negotiate better terms with vendors or service providers. Regularly reviewing and questioning these costs can lead to significant savings and make your business more adaptable and resilient to financial fluctuations.

**Tackling Fixed costs

5. Not making things worse

Avoiding Hasty Decisions in Times of Uncertainty

In the realm of semi-permanent makeup, artists, especially those less experienced in business management, might react hastily to fluctuations in revenue. This often stems from a "desperation factor" – the belief that investing more in the business, like buying new equipment or enrolling in additional training, will automatically resolve challenges. However, this approach can lead to decisions that don't improve but rather exacerbate their current predicaments.

Understanding the Limits of Investments

It's common for artists to think that purchasing a high-end PMU machine or attending another training program will be a game-changer. However, such investments don't necessarily translate to increased market demand or financial improvement. The issue isn't the equipment's quality or the training's value; rather, it's about understanding their effectiveness in the current market context.

Focusing on Strategic Decision-Making

Instead of making impulsive decisions during economic downturns or revenue dips, artists must take a step back and assess their strategies. This involves analyzing the market, understanding client needs, and determining the best course of action that aligns with these insights. In many cases, the solution might be optimizing current resources or refining marketing strategies rather than making additional investments that may not yield the desired return.

Balancing Investment with Market Reality

The key is balancing the desire to improve and grow with a realistic understanding of what will benefit the business under current market conditions. Strategic decision-making, rather than impulsive investment in times of desperation, is essential for maintaining stability and ensuring long-term success in the semi-permanent makeup industry.

6. Shift in approach

Managing Unrealistic Expectations

A common pitfall for many artists in the PMU industry is the discrepancy between expectations and reality. This often leads to unnecessary spending on luxuries like high-end beauty treatments or designer clothing, which contribute to a "negative delta" – the gap between lofty expectations and the actual situation. These expenditures, driven by the desire to maintain a certain image, rarely contribute to attracting new clients and can exacerbate feelings of disappointment, leading to a cycle of unproductive spending.

Being Wary of New Fixed Costs

It's crucial to approach the addition of new fixed costs with caution. Contrary to what some newer artists might believe, increasing fixed costs often does not rescue a struggling business; it usually adds more financial strain. Listen to the advice of more experienced artists and critically evaluate the necessity and impact of any potential new fixed costs on your business.

Leveraging Existing Assets

Rather than looking for new areas to invest in, consider utilizing your existing resources. You may have skills from previous training that haven't been fully exploited, underutilized social media assets, or equipment for services you aren't currently offering. Maximizing these existing assets can significantly improve your business without the need for additional expenses.

Maintaining a Smart Marketing Budget

Regarding marketing expenses, it's advisable not to slash your budget impulsively. In challenging economic times, costs like search engine marketing (SEM) or social media reach can decrease as other businesses cut back on their marketing. This scenario allows you to expand your audience reach without increasing your spending. A strategic marketing approach can ensure a steady flow of clients, mitigating the impact of economic downturns on your income.

In summary, the key to navigating financial challenges in the PMU business lies in aligning expectations with reality, carefully managing fixed costs, effectively utilizing existing assets, and maintaining a strategic marketing approach. These steps can help ensure the stability and growth of your business, even in uncertain times.

7. Mastering Negotiation Skills

Embracing Negotiation as a Business Strategy

Many PMU artists, particularly those inexperienced with economic fluctuations, may find the prospect of negotiation or declining expenses challenging. Often, it's easier for them to justify unnecessary costs than to engage in bargaining. However, developing effective negotiation skills is vital to financial management in the PMU business.

Breaking the Discomfort of Bargaining

Learning to say "no" or to question costs doesn't have to be confrontational. It's about approaching situations with a mindset of open and polite negotiation. For instance, when faced with a new offer or expense, pausing and considering alternatives is beneficial. Asking questions like, "Is this the best price available?" or "Could you consider a lower price?" can open the door to significant savings. This approach is not about being aggressive but about seeking the best possible terms in a respectful manner.

Negotiation in Practice

A practical example comes from a successful artist in the field who, despite being financially comfortable, never accepts a first offer without negotiation. This approach has been a key factor in her financial success. She regularly asks for better deals or proposes counter-offers, demonstrating the effectiveness of polite yet assertive negotiation.

The Importance of Negotiation in Business

Negotiation is not just about getting a lower price; it's a critical business skill that can lead to better relationships with suppliers, more favorable contracts, and overall improved financial management. By adopting this skill, PMU artists can potentially save thousands over time, contributing significantly to their business's financial health and success.

8. Conclusions

To successfully manage economic cycles and revenue fluctuations, experienced top-earning artists in the Permanent Makeup (PMU) industry recommend a strategic approach that encompasses three core areas:

Tackling High-Cost Credit: The first step involves thoroughly understanding your credit costs. Identify and prioritize reducing debts with the highest interest rates, such as burdensome leases or credit card debts. This step is crucial in managing and reducing the 'expensive money' that can drain your financial resources.

Analyzing Fixed Costs: Evaluate the time and resources spent covering fixed monthly costs. A critical review of these costs can reveal opportunities for reductions, which can significantly impact your business's financial health. By understanding and potentially reducing these fixed costs, you can free up resources and time to focus on more productive aspects of your business.

Avoiding Counterproductive Decisions: Be wary of adding new fixed costs or making impulsive investments that seem promising but don't contribute positively to your bottom line. Instead, take stock of the resources and assets you already possess and find ways to utilize them more effectively. Importantly, resist the urge to slash your marketing budget, as maintaining a strategic marketing plan is essential for attracting and retaining clients.

In conclusion, these strategies emphasize the importance of financial awareness, prudent cost management, and strategic decision-making. By adopting these approaches, PMU artists can better navigate the ups and downs of economic cycles, ensuring the stability and growth of their businesses.

How to operate in difficult times

"Seasoned artists navigate economic ups and downs more effectively. In this article, we concentrate on three approaches that have proven to be effective: analyzing credit costs, tackling fixed costs, and avoiding new bad decisions."

1. Background

2. Budgeting and Managing Expenses