Here’s an interesting notion: Do you realize that there are mistakes you can make at various stages of your business’ growth that can be slowly killing it for months or even years if you don’t watch for them?
Well, these mistakes do exist and they are not just reserved for the newest of studios. Many working studios, including those you might think are 'successful' because they’ve been around for 10+ years, are often still making them… and are possibly losing a lot of money and/or wasting a lot of time in the process.
Different studios have their own variables as far as costs go and you need to be aware of them for your pricing. You need to take into consideration what you are paying for your teachers and staff remembering that employees cost more than just salary. Take into consideration how much your rent or mortgage adds up to and the overall cost of your utilities. Every studio also has insurance to pay for. There are tons of overhead expenditures that need to be part of your price. Oh, and by the way, the big one that many people forget about in their price is the quality factor.
Not Charging for All of Your Time & Costs- This seems like a stupid statement to some but I bet most studio owners will admit that they have given away a little too much at times. Hey, there is nothing wrong with giving a little extra here and there to show you care. But either way, my concern is for those of us who give and give to our students and their parents and end up not being paid for all of the time and effort given. The fact is that people do not value extra time that you may give to a student if it is free and when they don’t it is easy to start feeling slightly used. Perhaps your customer service is far superior to the other studios in your area and your facility more state of the art. Is your faculty better qualified than at other studios? You need to take all of these things into consideration when setting your prices. You want to be careful not to have the cheapest classes in the area but you do not want to be overpriced either. Always keep in mind that people usually value it more if it is well priced. You can always help your customers out by giving them payment plans. Find out what your competitors don’t offer and then try to find a way to offer those things to your families. Make sure that your present and future customers are aware of all the good things that you can offer both them and their children at your studio. They will be much more willing to pay a good price if they feel that you are going out of your way to give them excellent value. If anyone doesn’t consider that the value you are giving them is important then you probably don’t want them as your customers. As a studio owner, you need to believe in yourself, your staff and faculty and what you are able to provide to both students and parents.
Are you having issues with people not paying for their classes on time? Having difficulty keeping up with sending out reminders to customers? The answer is to get your customers on a recurring payment plan that you will just charge their credit or debit card. You will be able to totally get rid of billing which is time consuming, expensive and frustrating. Your customers will be relieved that they don’t have to remember when it is time for them to pay and you will know exactly when you have money coming in so that you will always be able to have a steady cash flow. We take out payments on the 1st and the 15th of the month. The customer chooses which of the two dates they would prefer, they sign a payment agreement and we give them a copy so that there can be no misunderstanding on either side. This method works very well and takes a lot of the stress out of running the business.
The second part to slowing down or stopping a regular cash flow crunch is to not only have your customers pay on time so that money comes in on a regular basis but to try to pay out money as slowly as possible to your employees and or independent contractors. If there is any way not to pay employees any more than twice a month, you should try to do that. If you must pay weekly, then tell them before they are hired that they will be getting the first week held back, essentially buying you a week. It will help, I promise.
Part three involves credit. If your company can get a credit card, then get it. This allows for certain important things to be bought (that you can afford) that might come up during a cash flow crunch. Better yet, do your best to get a company line of credit.
Working actively to prevent making small business mistakes can help to eliminate stress from the daily running of the studio and give you the opportunity to develop the side of your business that can increase your enrollment.
Stay tuned as next month I present part II!
