We’re excited to host guest author, Christa Gurka, MSPT, PMA®-CPT, of Pilates in the Grove in Coconut Grove, FL for this post!
Let’s face it, most of us opened our studios because we were passionate about fitness, not numbers. So while we may want to share our love of the method, embracing a love of spreadsheets may not be as easy. Being a great instructor and being a great businessperson requires two entirely different skill sets.
During my 10 years in the business, I’ve seen many studio owners fall short in realizing that a fitness studio is still a business. In fact, I would bet many small studio owners don’t have much experience forming P&L (profits and losses) statements or balance sheets, which is why I want to stress the importance of understanding your bottom line. I’ve learned over the years (now having opened my third location) that it’s imperative to have objective data to measure success or failure and to help you set your monthly, quarterly and yearly goals. Only once you have those metrics in place are you able to properly allocate your budget for achieving those goals.
A good place to start is to write out your year-end goal. Don’t be afraid to think big. Where do you realistically want to be at the end of 2016 in revenue? Are you looking at $100,000, $350,000…more than $500,000? Give yourself something to reach for. I like to shoot for a 20-30% increase in revenue from the previous year. It gives me something big to shoot for while still being attainable.
Below is a sample graph that shows a great way to break down your numbers and give you a snapshot of what your business looks like:
|10 Class Package||$15,000||$18,000||$10,000||$15,000||$58,000|
|Single Private Session||$5,000||$6,000||$5,000||$8,000||$24,000|
|10 Private Sessions||$4,000||$6,000||$5,000||$10,000||$25,000|
|Other (Merchandise, rentals, workshops)||$1,000||$750||$750||$1,000||$3,500|
Based on the above sample, the total revenue for 2015 was $165,250. We can also see that the first quarter was the highest revenue generator. Based on these numbers, we can then decide that a good target for 2016 revenue is $215,000. Looking at your numbers in an organized format like in the above chart will help you set realistic and achievable goals. Past numbers can show you which quarter generated the most revenue; which product or service generated the most revenue; and if a specific marketing campaign spurred an increase or decrease in revenue during that period.
Now that you have a realistic revenue goal to strive for, you have to know how to reach that goal. Translate what your sales numbers are telling you into meaningful action items to help you achieve those goals.
You can do this by figuring out what is called the Bridge to Gap number; that is, your goal number minus your dollar amount for business as usual. If you know that each month you can bring in $20,000 without doing any additional work or marketing, that would be considered “business as usual.” Say your goal is $350,000, minus a business as usual amount of $240,000, your Bridge to Gap would be $110,000 — the amount you need to bring in to achieve your 2016 revenue goal.
Now we ask ourselves, “How am I going to bring in an additional $110,000 this year?” Simple. Break it down into quarterly goals. If you want to bring in an additional $27,000 per quarter ($9,000 per month) you’ve now given yourself a manageable goal to work towards. If you know your 10-session card is your biggest revenue generator and costs $300, you would need to sell an additional thirty 10-class cards that month — that means bringing in 30 new clients or inspiring current clients to come in more and purchase more packages. To do that, you’ll now need to develop a specific marketing strategy or campaign. Again, look to the numbers. See what campaigns have been most successful for you and when to plan accordingly.
In the end, your data is the core of growing your business. And though it may not be your first love, it’s truly the key to turning your passion into success.