There’s no doubt about it – your teachers are what keeps your students coming back. You and your people are the reason your members walk into your studio each day instead of big box gym that offers yoga classes down the street. But what keeps your studio open? Money.
How many times do you get a first-time student walk in with little to no foundation? Do you turn them away? Of course not. You get them into a beginner’s class and work on building the fundamentals. Chances are that student is not going to turn into a world-class yogi, but they are going to live a better, healthier life because they took that first step into your studio.
Likewise, you don’t need to be a financial expert to understand the foundation of operating a successful business and we don’t plan to turn you into one. Let’s get the basics down, get a pulse on your finances and from there, it’s just learning one new flow at a time.
Revenue and Expenses: Your Nutrition and Exercise
Think of your revenue and expenses like your nutrition and exercise; inputs are equally as important as outputs and you have control over both. Also, like your nutrition and exercise, if you don’t record it, you tend to leave things out.
Step One: Record it in One Place
Keep everything recorded in one place. Whether this is in your software platform or on paper, write it down and make it a habit. Break it out by category and make sub-categories for both revenue and expenses.
- Membership Revenue
- Teacher Training Revenue
- Private Session Revenue
- Drop-In Revenue
- Retail/Merchandise Revenue
- Events and Camp Revenue
- Other Revenue
- Utilities and Building Expense
- Certification or Professional Fees
- Marketing Expenses
- All Other Expenses
Looking for additional financial tips for your Yoga Studio? Download our free 40-page Guide to Financial Management!
Step Two: Establish a Timeframe
For your numbers to make sense, we need to make sure they are apples to apples. As most of your revenue and expenses are monthly – rent, utilities, monthly memberships – let’s stick with that. This may mean you need to adjust some of the numbers you wrote down previously. For example, if you pay your employees twice a month, make sure you are recording both of those amounts together. Conversely, if someone buys a six-month membership, divide that revenue equally over the next six months.
Step Three: Measure Your Baseline
Now you have your revenue and expenses in one place and broken out in a comparable timeframe, where do you stand? Go ahead and look down at that scale. Take your monthly revenue minus your monthly expenses – if that number is positive, you’re on the right track. If it’s not, let’s get there.
Your breakeven point is the amount of revenue you need to cover your total expenses – net income of zero. If your net income is less than zero there are two ways to approach it, increase revenue or decrease expenses. These are not mutually exclusive concepts but to start, you need a focus.
Similarly, if your net income is greater than zero, you’re not done. Just because your yoga practice is better than it’s ever been doesn’t mean there isn’t opportunities to improve. Whether you are in a good place right now and just want to get better or you recognize something needs to be done, now you know what you are measuring against.
So, like you tell your students, just start. Record it, put it into meaningful terms and figure out your baseline. The next step will be to determine where you go from here. Do you want to maintain, gain (revenue) or lose (expenses)?
We highly recommend you check out our 40-page, A-Z Guide on Gym Finance. It’s written for boutique gyms, but is equally applicable for yoga studio owners looking to get a better handle on finance fundamentals.