What motivated you to open your own studio? It’s safe to assume you were passionate about yoga and inspired to share your practice with individuals living in your community. However, passion is just one component of running a thriving studio. To ensure you can pursue this passion for years to come, it’s vital your business is financially sound.
After surveying over 200 studio owners from around the world, these are the three commonalities shared by financially thriving studios:
Large Student Base
It might seem obvious, but studios with large student bases can afford to do so much more. The median number of students at financially thriving studios is 1,200 compared to 45 at struggling studios. Every studio owner, regardless of size, needs to understand the breakeven number of memberships for their business. This includes the number of students needed to pay rent, staff, utilities, taxes and other costs each month. Keep in mind this is related to the average membership price. If most of your students pay for monthly memberships, you may need less students than a studio who has more drop-ins.
Building a strong student base takes a combination of great marketing to bring prospective students through your doors, a welcoming introductory experience to turn these prospects into paying students, and consistent retention efforts to keep your students loyal for the long run.
Exceptional Utilization of Studio Space
Thriving studios have larger spaces, with a median of 1,787 square feet compared to 1,300 for struggling studios. Thriving studios can afford this because they have more students to fill the space. On average, thriving studios have two square feet per student, compared to 24 square feet for struggling studios.
The key to managing facility costs is not necessarily the cost or size of the facility, but how well you use your space, i.e. square feet per student. To retain your students, you must provide an exceptional experience, so avoid packing students into classes like sardines. Instead, aim to fill your classes, and when you approach capacity, add more classes. If you’re growing, look for opportunities to add more classes before making the leap to a larger space.
Properly Manage Personnel Costs
For many studio owners, the cost of teachers is their single largest expense. Properly managing your personnel resources is critical to the success of your studio. On average, thriving studios spend roughly 27 percent of their income on personnel, while struggling studios spend over 50 percent.
Be diligent with scheduling to ensure your teachers are generating revenue for your studio. Since thriving studios have more students per class, incentivizing your teachers to fill classes by compensating per class and per student is an excellent way to optimize personnel costs that benefits both you and your teachers.
Running a financially stable business needs to be a priority for all studio owners. To get started, take steps to obtain more students and have a strategy in place to retain them, work to fill your classes to get the most out of your space, and ensure you compensate teachers in a manner that encourages them to fill classes.
Nicole Kennedy is the vice president of finance for Zen Planner. She can be reached at email@example.com. If you’re looking for additional insight into what thriving studios are doing right, get your copy of Zen Planner’s 2017 Yoga Studio Benchmark Report.