Do you ever wonder what other studios in your area are doing to create success for themselves? We commonly hear studio owners ask about the best ways to run their business. We hear things like:
- What can I do to ensure my business is successful?
- What are the best ways to increase profitability?
- How can I create the best experience for my students?
- Which marketing tactics have worked for other studio owners?
After hearing these questions over and over again, we set out on a mission to answer them in our first-ever Yoga Studio Benchmark Report. To create the report, we sent surveys to hundreds of studio owners, asking them a series of emotional, financial and operational questions about their business. (Shameless plug, we are actually collecting responses for our 2017 Yoga Benchmark Report right now. Take the survey today!)
After analyzing the results, we uncovered the top three things thriving studios around the world are doing to run successful businesses.
1). Have a larger student base
This may seem obvious, but with more students you can afford to do so much more. There are two ways to keep a strong student base:
- Have a great plan for adding new students through various sources
- Retain the students you already have
In our study, we found that the median number of students for top studios was 1,200 versus 45 for struggling studios.
Even if you never plan to serve thousands of students, regardless of your current size, you need to know the breakeven number of memberships for your business. This is the number of students (whether it be memberships, punch passes or drop ins) you need each month to pay your rent, staff, utilities, taxes and other costs.
2). Get the most out of your space
One of the major expenses that must be optimized when running a successful studio is facility cost. Facility size and cost per square foot are the two main variables in this expense. We discovered that successful studios tend to spend more per square foot ($30/sf), implying they are in nicer locations.
These successful studios also have larger spaces (1,787 square feet compared to 1,300). Remember the previous stat on student base? These studios have more students which justifies having a larger facility. We found the median square feet per student at successful studios was two compared to 24.
This doesn’t mean you pack your students in like sardines. Rather aim to fill your classes and when you approach capacity, add more classes. If you’re growing, look for opportunities to add more classes before making the jump to a larger space.
3). Manage your personnel costs wisely
After facility costs, the second major expense studio owners must manage is personnel. For many yoga studios, instructors pay is their single largest expense. Managing your personnel resources properly is critical to the success of your studio. On average, successful studios spend roughly 27% of their income on personnel.
There are two ways to manage your people costs.
- The rate you pay. Be sure to research your market to ensure your rates are competitive, yet appropriate.
- How you pay. You must be diligent in scheduling your people to make sure they are generating revenue for your business, or freeing you up to generate revenue.