If you are a studio owner or plan to be, you will wear many hats. In addition to being a teacher, you are a manager of resources and people. There are checks to write, hours spent updating your website, Facebook page, writing newsletters, proofing ads, recruiting and training teaches, scheduling and maintaining client accounts, making follow up calls, and writing thank you cards. For profit or not, all of these tasks require money, time, and energy.
Return on Investment
Being smart with your resources is one of the best ways to insure your studio’s longevity. Regardless of how many new clients you welcome to your studio, you can be sure of a few things, your overhead will remain constant. When considering how use your money, time, and energy, always ask questions: “How will this improve and grow my business? Will it keep my current clientele happy and satisfied, or will it bring new clients to the studio?” Here are a few things to consider before allocating your money, time and energy.
Budgeting your Resources
Cash flow is a dynamic variable that ebbs and flows with the tide of economic change and by itself determines your budget. Setting a budget is a good way safeguard your business’ cash flow. Positive cash flow makes maintaining and growing your business possible. Cash flow is the amount of money you have in the bank at any given time. Experts recommend a minimum of three months worth of cash to cover minimum operating expenses (rent and utilities, bank card processing, and payroll). If your monthly minimum is $5,000, you would need to maintain a cash flow of $15,000. Here are a few budgeting strategies to help you maintain a positive cash flow, and grow your business.
1. Forecast Revenues
Do you know what your gross revenue and payroll were for last year and the year before? How about your product sales, expenses – fixed and variable? Being able to anticipate, allows you to plan. You’ll know when you it’s best to make a large purchase and when it’s best to wait.
2. Plan for Taxes
Since we all must pay taxes, its best to build them into your budget. At the end of each month, save a certain percentage of gross revenue and place it into a separate account to be used to pay taxes quarterly.
3. Develop Systems of Efficiency
Consider using a software program to manage your business such as the Body Mind Software program. It allows clients to make purchases and reserve classes on-line, and you can manage your studio even when you are not there. When managing your studio create efficiency such as form letters for your newsletters, emails, and ad promotions. Constant Contact is a great program for web emails. Once you create something that really works, keep using it.
4. Trade for Services
We only have so many hours in the week to teach classes, manage, and grow our business. Always ask yourself how best you could be using your money, time and energy. Trade a client for cleaning, accounting, or personal services. Trading with hair stylists can have the added benefit of being a great source of referrals as they know countless people in your community.
5. Maintain your perceived value
Generally the client who can afford a class that costs $20 or more three times a week has a different budget than someone who spends to $99 per month for unlimited workouts. We are only as valuable to our clients as they are pleased with their last lesson. There are countless other exercise venues competing for our client’s time, energy, and dollar. Each time you teach a class or private, always remember that you need to resell your service and its value. If we take care of our clients, they will take care of us. Our clients are our greatest source of referral. Always place tremendous value on client contact and service.