There I was, sitting with my Accountant/CPA as he went through all the numbers in my dance studio with my business partner and me. I was 16, she was 18, and to be honest, we had no idea was he was saying or what we were looking at.
There were big numbers, small numbers and numbers with a minus in front of them. All I knew is that each week I took home a few hundred dollars for a night of teaching.
Fast forward 14 years and I couldn’t be more aware and passionate about the numbers in a dance studio business. Although I was 16, that meeting really showcased how much I didn’t know about my own studio and how much I needed to get a handle on if I was to grow the business.
Today, I see my 16 year old self in so many dance studio owners I come into contact with, whether it’s at a live event, through an online training or when they start the Studio Success Formula program. Many studio owners are neglecting the numbers and simply focusing on teaching and the creative side of the business. Of course, the creative side of the business is important, but if you want to earn money and bring in more students you need to make a shift.
Am I saying you need to be a math or accounting genius? Certainly not, but you need to understand the crucial numbers in your business.
You need to identify the Profit and Cost Centres in your studio.
A Profit Centre is a department in your business that contributes revenue to your business. For you, these are things like group classes, merchandise, recitals and birthday parties.
A Cost Centre is a department that doesn’t produce revenue but are required in order to keep things running such as customer service and administration departments. Although these departments aren’t profitable, they do add value to your overall service and business.
Right now, I want you to identify the Profit and Cost centers in your studio. This exercise alone will be an eye opener. From there, you may want to look at adding more resources to your more profitable profit centers (to scale and grow your studio) and look at where you can decrease money going out in your cost centers (while not cutting back on delivering and awesome customer experience).
While monitoring your income and expense reports at least weekly is certainly part of running a successful dance studio, I also want to bring up the importance of knowing your class capacities.
One of the first things I look at when working with our program members is how their classes are operating from a numbers point of view. Some important questions to ask yourself on each of your classes:
- How many students do I have currently in this class?
- How much revenue am I making from these classes (gross)?
- How much does this class cost me to run (teachers, overheads, etc.)?
- How many students could I take in this class?
- How much revenue would this class make if it was at capacity?
- How much additional revenue could I be making weekly if this was at capacity (income minus class running costs)?
Warning: This exercise may have you crying at first, but then you will see the opportunity…and that’s what this is all about. It’s about recognizing where you’re losing money (those classes with just a few children) and where you could be channeling your marketing efforts to bring in more students or to upsell current students.
Just The Beginning
This is just the beginning of getting a real, solid grip on the financials in your business, but it will make a real difference to the way you approach the running of your studio.
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