This article by NYTimes writer Jay Goltz, is a must-read for small business owners which also means… studio owners.
Many times studio owners open their businesses because they love dance, teaching dance or didn’t like the way their previous studio ran things. And many studio owners fail because they don’t have any understanding of how a small business operates. To start any business, including a dance business, you need to have a basic understanding of accounting or at the very least, some business understanding.
One trap that many studio owners fall into is not understanding profit, which is discussed in the NY Times article. Business owners will see a steady flow of cash coming in but at the end of the year are shocked when their accountant says they made only a few thousand, if any profit at all!
BEFORE YOU OPEN YOUR DOORS
There are many books out there that are geared towards small business owners who don’t want to sift through accounting jargon. Borrow one and read it! Many times, your town or city will have a small business organization who can help you understand. Use these resources before you begin your studio.
WHEN SETTING YOUR TUITION PRICES
First figure out what you need each month to break even. Then look at studios in the area and adjoining areas to get an idea of the range. Then push quality over value. Being the cheapest in the area will only make you look like your instruction is cheap. When it comes to their kids, people want quality instruction. John Morgan of Brand Breakout said it best in his recent tweet: “Don’t be the cheapest price in your industry. You’ll never win. Sell value, not discounts.”
SHOULD I OFFER DISCOUNTS?
Should you offer multiple class discounts, family discounts or other rewards to your most loyal clients? A word of advice: Make your highest discount the REAL price that you want for classes. If you need to bring in $50 per student, per class, per month, then make sure your lowest discount reflects that. The non-discounted tuition is more money in your pocket.
Even if you have had your studio for a while, but are not seeing the profit you think you should, you can use these resources to make changes to your current tuition system or business plan. If math is not your forte and the word accounting makes you tune out everything else in the sentence… hire an accountant who will review your business and make suggestions. For a few hundred dollars investment, some small changes could result in thousands of more profit for you.
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