If you’re like most of us, we open our studios because we are so passionate about teaching and about sharing what we love to do with our students every single day. But because we open our businesses coming from that love, that teaching perspective, and not necessarily as an entrepreneur, sometimes we fall down financially.
More often than I would ever want to see, studio owners have to close their doors because financially they’re not able to sustain the business.
And that just breaks my heart. I think of all those kids who are just out there waiting to be taught by these incredible studio owners who no longer can because of money.
And so, I want to share exactly how you can develop greater awareness of how you’re running your studio financially so that you can not only help your students to thrive, but you can thrive as well.
Reason #1: You’re too nice.
The first reason that studio owners stay broke is that you’re all too nice. As a rule, studio owners are the most generous and giving people out there. But this sometimes works to our detriment.
So we want to make sure that you’ve got really concrete boundaries. Boundaries for when someone says to you, “Is it okay if I pay for little Suzie’s tuition next month when I get paid?” And instead of replying, “Oh sure, that’s okay. I understand,” you’ve got a strong way to go back to them and say what you require and when you require payment.
We want to build your muscle for your boundaries.
Reason #2: You avoid raising your prices.
The second reason is that studio owners stay broke is because they avoid increasing their prices. If you’ve ever heard yourself saying something along the lines of “I don’t want to put my prices up because I really want to make sure we’re affordable for families,” this might be something that relates to you.
And even if you have raised your prices, it has been so incremental that it’s not actually covering the majority of your costs. I would also hazard a guess that you are probably undercharging, and that is what’s contributing to the financial situation here.
So if this feels like you, I’m going to take a little bit of a punt and say that more than likely, your prices need a bit of a good price hike – even upwards to a 30% increase. That’s usually how much I find that studio owners are undercharging.
We need to get your prices back to a comparable level where you can actually run a sustainable business. But if it has made you feel a bit sick at the thought of increasing your prices up by 30%, don’t worry. Stick with me, and I’ll share with you how.
Reason #3: Your are heavily discounting your classes.
The third reason why studio owners stay broke is that they are heavily discounting their classes. Here is the reality, my friends. You don’t need a sibling discount.
And in fact, when I look at some of the discounting models and pricing tables that I see a lot of studio owners have, often when you kind of work out, when after you’ve offered like a multi-class discount, some of the classes are legitimately like one, two, three, four dollars they’re making per class. Next to nothing.
This is what we have to really think here: As a business owner, how can I ensure that every single bit of my business is profitable?
Reason #4: You don’t have a strong financial collection system.
The fourth reason why studio owners stay in this position is because they haven’t got a really strong financial collection system, such as direct debit or automated credit card payments.
The difference here is that probably at the moment, you might be sending out invoices and hoping and praying that people pay on time. But this is when you can find yourself in that awful situation where you’ve got $4,000 or $8,000 or $15,000 in outstanding tuition. It’s not fair to you, and it’s not easy to run a business when you have no control over your cash flow.
So instead, we want to transition to a system where literally, you’ve got all their details on file. And once a month, you go in and you press the button and it just collects all the tuition for you.
You’re never having to chase money again. You are never left in the dark in terms of funds. And you will sleep so much better at night as a result.
Reason #5: You keep trying to do everything yourself.
The fifth reason why studio owners stay broke is that they keep trying to do everything themselves. They don’t delegate. Consequently, their time is spent so much in the day-to-day at the business instead of thinking, “How can I really grow this business? How can I free myself up to work on scaling this studio to reach more students?”
So I want you to think about how you’re delegating your time. I want you to identify which lower level tasks you can give away so that you can lead, so your time and attention are freed to focus on making the most powerful decisions in your business that are going to make it more profitable, more scalable, and more rewarding to run.
This has been a little bit of tough love for you here. But truly, I am on your team.
I know that once we do a few of these things – when we give you some stronger boundaries, when we put your prices up, when we stop discounting, when we get an automated collection system for your tuition, and when we help you lead your business as opposed to being stuck in the day-to-day, you will see enormous changes not only in your studio itself but in your own levels of prosperity. And that is the greatest gift you can give yourself.