Your Pre-Opening Financial Check Up

Vibe check – how you doing studio owner? It’s officially week 8 of the stay at home order, and by now you probably have a bit of a routine going. Congratulations to you for how far you’ve come and how much progress you’ve made over the last few weeks. You are.still.standing!

However, you are not done, and the job of a studio owner is always an adventure – especially as many of us turn our thoughts to how and when to reopen our studios. It’s definitely something we are thinking long and hard about, and currently we are making plans for a slow and safe (as possible) reopen. We’re brainstorming, strategizing, talking with our team, moving equipment around, setting new protocols and making sure our physical space is ready. 

In addition to creating a safe physical space it is also critical that you have clear plan for profitablity in your business. In particular you need a clear way to measure how your business is doing so you can make smart decisions.  

One way to evaluate your business health is through key performance indicators or measurable values that demonstrate how effectively your company is achieving your core business objectives (i.e. making a profit).  The top 5 key performance indicators are:

• Leads – a prospect who may eventually become a customer

• Conversion Rate – you (and your team’s) ability to turn prospects into customers; to get a “rate” or a percentage the equation is: # of new clients/# of leads x 100. Ex) 5 new clients/10 leads X 100 = 50%

• Number of Transactions – specific number of transactions in a defined period of time. Ex) 100 personal training sessions in a month

• Average Dollar Sale – the average $ amount of each sale; to calculate your average $ sale take total revenue/total sales

• Profit Margin – the ability to make money and turn a profit; Essentially income/expenses

And there’s a very simple equation that shows how these 5 KPIs work together in your business.

Here’s an example:

So where are you spending your energy? What keeps you up at night in regards to your studio’s success? We know numbers can be a big source of stress for a lot of studio owners, but we also believe knowledge is power and the more you know the better prepared you are to make decisions in your business. 

Yes, it is important to think about the logistics of how you reopen, but it’s equally important to know your most important key performance indicators.

As we all move towards re-opening our studios now is a perfect time to fully understand your numbers.  Make it a point to find these 5 numbers in your business and make any necessary changes NOW so you can reopen with confidence.