Dreaming of financial freedom as a studio owner? It’s closer than you think!
In this episode of Your Studio Podcast, Chantelle and Michelle debunk the myth of the struggling studio owner and reveal the 3 Fundamentals of Studio Profitability. Get ready to ditch the ramen and unlock your studio’s true earning potential!
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Michelle Hunter (00:00)
Hi lovelies. Welcome to another episode of your studio podcast with Chantelle Bruinsma and Michelle Hunter. And today we have a big one for you. We’re going to be talking about a thing that we don’t like to talk about studio owners and that is Chantelle.
Chantelle Bruinsma (00:10)
yeah.
Money, money, money, money, money. Yeah, that one. That one.
Michelle Hunter (00:22)
money and studio profitability, but before we dive in today, again, if you are loving what you are hearing, please leave us a review. Tell us what you’re loving, what you’re not loving and simply subscribe so you don’t miss ever an episode of the Your Studio podcast. So Chantelle, I see that we get a lot of studio owners feel very uncomfortable when we come to the topic.
of money and profitability. And it’s been like that for a while. Historically.
Chantelle Bruinsma (00:52)
Yeah. Well, historically it’s a very, very safe stereotypical assumption. I mean, like how many studio owners do I know who you were at a cocktail party say you were in the studio and they say like, what’s your real job? that old one, right? it’s horrible. The assumption that, or you get a new car and the teachers or the students go like, wow, you must be rolling in it. And you’re like,
Michelle Hunter (01:09)
That old chestnut. Mmm, it is.
Chantelle Bruinsma (01:22)
just doing my best to get by.
Michelle Hunter (01:24)
just surviving. And we see it, even taking my kids to different activities, a lot of, there is that kind of assumption with them. It’s like, they’re doing okay, what, because they’re paying the bills. Like it’s a profession where, we wouldn’t be saying this about others. So it’s so interesting.
Chantelle Bruinsma (01:38)
Yeah, yeah.
There is, there’s a real industry wide kind of assumption that this is a labor of love. And because we’re passionate about what we do and we love it, then we’re not doing it for the money. And there’s a real kind of almost a values thing around like a conflict around why don’t do it for that. And I want to make it accessible and affordable. And I want to make sure we’re welcoming to everyone. And so if that means that…
Michelle Hunter (01:51)
Hmm.
Chantelle Bruinsma (02:13)
I’m not comfortable, at least everyone else is getting these experiences which I’m so passionate about. And there’s beauty, it comes from a place of beauty and of love and of service and devotion. It’s just the difficulty comes where the business struggles and you struggle as a result. And so what we want to share with you today is the three fundamentals of profitability for your studio.
And we want to introduce a world where maybe we can have both. Maybe we can have a business that absolutely serves our community and delivers outstanding education and that connects and transforms lives, right? And maybe as well that there can be a fair exchange. And, you know, when I kind of think of the fundamentals of this, you know, as an industry, I want it to be valued. I want…
you know, the arts and I want to kind of serving like, you know, even yoga and pilates, like I want these industries to be esteemed in a sense where, you know, there is good value exchange. And that comes from us, that comes from us. It comes from us.
Michelle Hunter (03:19)
And Chantelle, it’s changing. That landscape is changing. We’re seeing studio owners that we’re working with come in with that fear, with that sense of value is now starting to increase. And it really affects all areas of their business, especially profitability.
Chantelle Bruinsma (03:35)
my gosh, right. We’ve got data now collected from our graduates that people who’ve been in our program for two years have doubled their salaries and the profitability of the business alongside that. And so what we teach and what we’re going to bring you in on is a little bit of what’s inside this document. This companion is called the profit plan. And this goes into what we know to be the proven pathway of if you follow these kinds of principles.
you are going to become more profitable in your studio. And this is not like a business profit. This is specific to the studio industry, which is why it works so very well and is so very transformative for our clients because they’ve got the information and a plan that they’ve always wanted, which we love. So should we dive in Michelle? This is fun.
Michelle Hunter (04:21)
We should, we should, we should so dive in. And before we do dive in, I just want to give a bit more credit to that masterpiece that Chantelle is holding there, holding their hand called the profit plan. And when we say it is really specific studio strategy that we’re about to dive into, you know, Chantelle and the team, we’ve sampled hundreds of studio owners and, you know, reviewed their P and L’s. This is really specific to studio ownership. So no matter what kind of studio you own, you run classes. This profit plan has been tailored to the studio industry. And I just can’t wait.
Chantelle Bruinsma (04:40)
Mm -hmm.
Michelle Hunter (04:51)
to show these fundamentals. Let’s dive in.
Chantelle Bruinsma (04:52)
Yeah. All right. Number one, number, if you want to take notes, play along at home friends. So the first of the three fundamentals of the studio profitability is that more students does not equal more profit.
Michelle Hunter (05:06)
No. No it doesn’t. No it doesn’t.
Chantelle Bruinsma (05:08)
Truth bomb. We have had clients join our program who have a thousand students, more than a thousand students. We’ve had million dollar revenue studios, studios who are owning over a million bucks a year with zero profitability. And there is such a, such an assumption that, if I just get more students, I’m going to make more money. And unfortunately, this is horrible for you to hear. I’m sorry, everyone. I’m going to totally destroy your hopes and dreams right now. It’s really sad, but it’s not true.
because if you aren’t making profit with a hundred students, you know what happens is as you grow, this funny thing happens, your expenses grow with it, right? And so if we haven’t got a hold of like making profit with a hundred students, the likelihood of you making profit with 300 or 600 or a thousand students actually doesn’t increase. And I see it every day of the week. Do you know how many kind of 400 student studios I see not making money? It’s horrible. And it’s…
It’s so normal, but it’s crap. And so that’s the first thing I want us to talk about today that it’s, this is about financial literacy and actually understanding, okay, what would need to change in the business model at this point in time to ensure and profitable like something’s got to give something has got to give. So write down on your little notepad that more students does not equal more profit. It is going to come from how we can make sure we’re preserving profit at.
current level, we start there and then we scale up, right?
Michelle Hunter (06:41)
Yeah, a hundred percent. And it’s, it is heartbreaking Chantelle cause even we had an event recently and we meet studio owners who huge, as you said, that million dollar studios or 400 to a thousand students and they are having other full -time gigs to pay themselves. And then they’re running those 400 to thousand students studios outside of their full -time job because they’re not paying themselves a wage. And coming back to that, if you’re not profitable at a hundred, the flip side to that is if you.
are profitable at a hundred, when you really get that financial, financial literacy locked in, when you grow, the profitability is like cream on top, right? If you really get this dialed in at a lower level, and we stress this so much, if you can really have this locked in at that fundamental level, as you grow, the profitability actually gets, gets better, gets bigger.
Chantelle Bruinsma (07:15)
Yeah.
So true. And we get quite excited by this. I mean, we’ve had studios who’ve been around for decades and never made a profit. We’ve had studio owners who, and this is quite normal. Like there’s no shame in this because actually it’s the norm in the industry, which is crap and we’re on a mission to change it. But you know, it’s, there’s nothing to, it’s how it’s been, but maybe we can do things different going forward. And that’s kind of what we want to get you. And fundamental number two, the second topic that we want to talk to you about today is understanding that there are limits.
Michelle Hunter (07:31)
Get so excited.
Yeah.
Chantelle Bruinsma (07:57)
within your business of what to spend on different areas of your business. So the pathway, the profit plan from moving from making zero profit and you know, if you’re a studio owner who doesn’t even pay themselves, that’s really normal too. And it’s also not okay. Let’s just kind of hold both of those things at the same time. So as we’re wanting to move from a studio who maybe is not making profit to one that is making lots of profit and is very financially secure, the first thing we’re going to look at is
what you’re spending on different things, right? If you’re getting all this money in the door and however much it is, but you’re getting this money coming through the door every single month and that money is all being just allocated to different things. How we get profit is actually by just corralling the profit. You have to preserve it. You can’t just hope it’s going to show up. You have to actively plan for it and manage it and make decisions that protects it.
So this is a game of protecting and preserving your profit and knowing that. And as a kind of rule of thumb, we’d be looking for 15 % of your revenue to be pre -tax profit. So of all the money that comes in, if you could like look at how much money made last year, we would be wanting 15 % of that to be precious, preserved profit. And that is essential. So in order for that to happen, what’s fascinating when we do this exercise with our clients at a much, much more detailed level,
Michelle Hunter (08:53)
Mm -hmm.
Chantelle Bruinsma (09:19)
is sometimes we’ve seen clients who have had like 70%, 80 % of the money coming in the door every month going out on just wages alone. Like before you’ve paid for rent, before you’ve paid for marketing, right Michelle? It’s kind of scary how things creep up.
Michelle Hunter (09:37)
It can creep up. And I think when you in any kind of business really, and also studio business, when you get to the point where you’re like hiring team and you got the momentum of that and you’re getting better at team and bringing them on onboarding, it can get the wages and expenses we’ve seen with contractors can get out of control. Like you get great at delegating, you’re adding, you’re adding classes, your timetable is increasing, you’re becoming more popular, but that wage and, and expenses, expenditure can skyrocket. And unless that is effectively managed.
with expectations of forecasts. So when I say forecast in studio world, I mean, you know, enrollments, capacity, re -enrollments of existing students and that timetable, unless that’s managed with those expectations, it can really get out of control. And we’ve seen it, especially combined with recital, performances, all those things, it can creep up.
Chantelle Bruinsma (10:24)
Yeah, yeah, yeah. Oof.
And where studio owners get really in trouble is like, if all the money is going out and then something comes like you get a bad tax bill, it just decimates. We’ve seen it time and time again, right? It’s tough. So in this document here, what we’ve actually done is like, given a plan of like, this is how much you should ideally be spending on marketing. This is how much ideally you want to be kind of in this ballpark. Like here are some categories of what we spend expenditure on. Here’s how much to be spending on rent. Here’s how much to be spending on operations. Here’s how much to be spending on.
Michelle Hunter (10:41)
tough.
Chantelle Bruinsma (10:59)
legals and insurances and kind of like giving you some caps, some boundaries, because unless we have some boundaries, it just feels like, this is how much it costs and everything just sky, you know, snowballs out versus, okay, if I’m putting Profit first, which is, you know, if you’ve read that Michael McCalliwitz book, it is really fantastic. We take a slight modification of his process and we’ve really fine tuned it specifically to studio business, which is why it’s quite different from Profit first. But again, if you’re going to start somewhere,
for sure go and check out that book because it’s gonna get you in the right zone. But what we’re wanting to do is to make sure that there is, there’s caps of how much you’re spending on things so that you can’t just kind of like, you know, that teacher walks through the door and says, well, I would like to be paid this much amount of money per hour. And you’re like, unfortunately, that’s not what we’re able to do. You’ve got a limit because you know, you can’t go over this number. And that’s what’s probably missing is the clarity of the boundaries of how much we spend in the different areas of the business.
Michelle Hunter (11:58)
Yeah. And without those boundaries, you can’t plan for recital. You can’t plan for expansion of team. You can’t even plan for progression of your team or your admin, or, you know, if they want to move up in the business, it’s, it’s, it’s really hard to plan without those boundaries in place. And what’s so golden about these, you know, caps that we have in the profit plan is they’ve been tried and tested with hundreds of studios in the business and through our program, but it’s a place to start. You know, you’re not going to hit them.
Chantelle Bruinsma (12:22)
Yeah.
Michelle Hunter (12:27)
straight away. But as we said, we’re finding within, you know, within two years, they’re meeting them and then exceeding profitability. So as long as you’re, you know, it’s like clarity is kind as soon as you start with that clear path. Starting is the biggest step. And we find through this process, you know, in finances, it’s like the ostrich in the sand. But once you get your head up and, and you see it, that’s when I think the big change happens because.
Chantelle Bruinsma (12:34)
Mm.
Yeah.
Yeah.
Michelle Hunter (12:55)
Our goal really is to make you fall in love with your numbers. And you know, we say that so many times and they can’t happen unless your eyes are open.
Chantelle Bruinsma (13:03)
I can think of so many people right now who’ve stepped into our kind of this pillar, the financial pillar of studio evolution and they were terrified, like terrified of what we’re going to do. And then as we’ve kind of taught them, we’ve just like, you know, it’s just something you probably never learned. You know, my dad’s an accountant and so I’ve been really fortunate to have a lot of dinner table conversations around this. I’ve been able to learn and kind of work with him on developing that.
and be able to share that with you guys with very, very specific about studio industry. Financials has been just revolutionary for so many studio owners to see them like, I get it. Like they can calculate their core capital target. They can calculate their labor efficiency ratio because someone’s taught them how easy to do. It’s like, just take this number and divide it by this number and then kind of do this. Like it becomes a game. It becomes a game. And we have a project called Fin Day, which is like actually getting you in the habit of having these financial planning days, a Fin Day.
And that’s where it becomes like what has been possibly one of the most stressful, overwhelming and kind of cringy elements of the business that’s just this kind of shamy kind of like, because we’re not sure how to shine a light into that cave. Now we just turn the light on, we know what to do, we know how to move forward now there. That’s what is so exciting to remove all of that angst from the biz.
Michelle Hunter (14:05)
Mm.
And then your accountant will be like, what are you doing? This is the biggest thing. It’s like my accountant doesn’t even recognise who I am. And it’s, it is awesome. There’s you’re not scared of the account anymore. You’re excited to call them and tell, and tell them, you know, how much you’re in control of. It’s awesome.
Chantelle Bruinsma (14:27)
Yeah, right? I love that.
It’s so good. We have clients come back and say like, so I walked into my account in this room and I said like, so here’s my three year plan to increase my average annual student value. And the account just looks like, so what? Like, wow. Okay. Like, wow. You’ve really come. It’s like, yes, yes, I know my, I know my accounting ratios. Here’s my color coded P and L. Look at me. So good. So good.
Michelle Hunter (14:50)
What? Huh?
Yeah, yeah, yeah, yeah. And so while we’re talking about profits, let’s jump into fundamental number three, Mythbuster. Chantelle, we hate to crash people’s kind of thoughts and myths on this, but we have to.
Chantelle Bruinsma (15:16)
I know, again we’re gonna do it.
It’s the truth and here it is friends. It is that the studio’s profit is not your salary. Or in other ways, in other ways of saying this, whatever’s left over dregs is in the bank account at the end of the month is not what you take home.
Michelle Hunter (15:29)
Okay, say that again, say that again.
Mm -mm. Bye -bye.
Chantelle Bruinsma (15:42)
Bum bum. And this is going to be hard to kind of, you know, look at transitioning to. So in, in our belief and in our profit plan, we believe that the, you should be paid a salary or depending on the legal set up of a studio, what you should take home is the money. Like we will call it whatever you want. You should take home some money and the business also makes profit. And those two things are very different. So you take home a wage for teaching or for being the leader of the studio.
for being the studio owner and the business takes a profit. Now in the profit plan, we actually catered to both. We’re gonna have a plan to make sure that the studio is profitable and that you will have a very, very strong wage progression. Here’s the thing that normally happens, Michelle, right? Is that A, there’s nothing left in the bank account at the end of the month. And so poor little studio owner after all their blood, sweat and tears just doesn’t take anything.
And that’s why they go decades without getting paid, right? Or like whatever is left, like, I’ll just, I’ll take that kind of 200 bucks here or there, and we’ll just kind of supplement things. And so what we’re wanting to encourage you to do is to really connect with the idea of the worth of you get paid and we also need the business to be paid, which is going to give the business some savings to be able to kind of draw back on it. It allows you to kind of do a big expansion if you’re.
Michelle Hunter (16:40)
anything.
Chantelle Bruinsma (17:05)
wanting to hire a studio manager, we can actually build up some savings in the business to do a kind of, you know, a significant expansion. And these are all things that even if you’re a small studio, it would, this plan works kind of regardless of where you are. It’s about kind of taking you from maybe you’ve never taken it. It’s because we just hadn’t looked at our categories. We hadn’t kind of like really protected and preserved that profit. And that’s the key.
Michelle Hunter (17:29)
And it is, and the beauty of the profit plan. And we say this, we have, we have had studio owners do the profit plan with us and they’re not paying themselves like a dime. And it’s amazing how it does cater to like, okay, let’s just start with this consistent wage of, you know, let’s tidy up these categories. Let’s tidy up these limits. it’s created a bit more for you to have this consistent wage. It is small and the profitability is only small now, but those categories are set and those funnels are happening. And then it grows. Like we just see it. We see it.
And that’s when you see studio owners going from nothing to paying themselves 60 grand, which is nothing to be sneezed at, right? That jump. And then, you know, two years later, they’re six figure, they’ve got six figure wages plus profitability dialed in. So it can start small, but once you’ve got those limits in it, the trajectory just, you know, once you keep playing with those boundaries, you know, finessing everything, balancing it out with the forecast, it grows.
Chantelle Bruinsma (18:26)
It’s so bloody cool. We’ve got, it’s probably happening like about every two weeks at the moment we get notified by another client who they’ve reached a million dollars revenue and they’ve hit a six figure salary. So one of our things is that we want to get studio owners to be earning a hundred thousand dollars salary and the business earns profit. Right. And we call it the 8 % club because I did a huge data research project across the industry and we had hundreds and hundreds of studio owners respond to what salary they took home. And it was shocking. It was, it was, it was actually very interesting.
So it was the data came in that only 8 % of all of the studio owners who responded, we’re looking at a survey size about 350 students, studio owners. So like a nice little sample size, 8 % took over $100 ,000. But what was fascinating is like in that once you hit $100 ,000 from there, the range was huge. So we had studio owners kind of taking home to 50, $400 ,000. But.
getting to a hundred, it was like this kind of flick that switched. Like there was so many who either weren’t like maybe 20 % weren’t earning anything. There was a lot in that kind of 20 to $40 ,000 a year salary and then kind of, you know, 60, 80. But once you got to a hundred, it was like the sky’s the limit. You’d cracked the code on the business model to make your studio profitable and also give you a great salary. And then from there, it was like, what do you want? Like, what do you want? So good.
Michelle Hunter (19:44)
Yeah. What do you want? And that’s so reflective of getting the foundations of your financials in place. It’s just the key. Once those pillars are in there, you just keep on going up and the sky’s the limit.
Chantelle Bruinsma (19:58)
We love it. So fundamental number one is that more students does not equal more profit. So that’s incredibly important for you to remember that we got to make sure that we’re earning profit wherever we are. And we do that by fundamental number two is understanding that there are categories and limits of what we can spend on the different kind of price, the kind of cost areas, cost centers in the business. So we want to know, you know, you would don’t want to spend more than X amount on marketing and having that perfect clarity. And then fundamental number three is that your
Michelle Hunter (20:06)
Mm -hmm.
Chantelle Bruinsma (20:27)
Studio’s profit is not your salary that the studio can hold both that we have, we want to get you a plan for you making a salary and the business making a profit. And if you can kind of get those three fundamentals locked in your mind, life is about to get very, very fun, my friends, very fun.
Michelle Hunter (20:46)
It is.
And friends, we’re going to be really open here. If this is something you want to explore more, this is what we do in studio evolution. Like a lot of our pillars, but a lot of clients say this pillar is sometimes the most transformational with their business coming in and doing positive prosperity, which, you know, is that little companion that Chantelle showed you of profit plan. This is what we do here. And if you are interested, check us out, check us what we do here at studio evolution.
Chantelle Bruinsma (21:11)
So if you’d like to find out more about what we do and you know, the full comprehensive kind of training that we offer around finances and marketing and everything else, check us out. And the easiest way to do that is to book a call. So you can go to studioevolution .com forward slash begin, and you can speak with one of our graduates, a studio owner who’s been through the everything in the course and who knows it inside out and can share with you in real words.
what it’s like and what the transformational effect is for studio owners who go through studio evolution. And we would love to work with you on this because it’s, there’s like a moment in time of what life has been like before you have this information and what life is like after you have this information. And many, many studio owners struggle. We’ve had studio owners in their seventies, in their eighties, been owning studios for decades and they have struggled for such a very, very long time because they just didn’t have the information. And it would be lovely to be able to share this with you and to watch.
Michelle Hunter (21:53)
Yes.
Chantelle Bruinsma (22:02)
what is possible and even from that modeling perspective, like I think it’s wonderful to be able to demonstrate to your children, to the community, to your students that you can do what you love and you can make a lot of money doing it, right? What if those two things could be true? And that comes from you stepping into that place of knowing your worth being paid because you do wonderful work and you offer a phenomenal service and…
Michelle Hunter (22:15)
Yes, you can. You can.
Mm.
Chantelle Bruinsma (22:32)
there is such power and beauty in being really okay with that.
Michelle Hunter (22:38)
Yep. Totally. Totally. Well, that was a big run, friends. A lot to digest, but we can’t wait to hear from you, what you’re loving, what you want to hear more of. And we’ll chat to you soon. Bye.
Chantelle Bruinsma (22:50)
Bye lovelies.
