Building up a successful yoga studio is tough enough without wasting money.
One of the best things you can do for your yoga business at least once a year is to carefully go through your expenses and figure out which expenses were worth it and those that turned out to be a waste of money. This is especially true if you have any recurring expenses such as subscriptions.
How do you determine if a business expense is worth keeping?
A good yoga business expense does one of the following:
- Increases revenue more than it costs
- Increases productivity
- Reduces costs more than the cost of the expense
- Improves customer service enough to warrant the expense
- It’s necessary to deliver your core service
- It’s a comfort or luxury you don’t want to do without
For every expense, be sure you’re using it.
For every expense during your internal expense audit, ask yourself whether that expense meets any of the above. Chances are if you review your expenses, you’ll find that you’ve spent money on items and/or services that do not meet the above.
Review wasted expenses to identify your weaknesses for buying and resolve to avoid those purchases in the future.
Include in your audit staffing expenses. You might find you’re paying out more in wages than is necessary. Sometimes cutting back on this expense can make a big difference. Just be sure not to compromise your customer service.
It’s not easy identifying wasted expenses
It’s not easy determining whether an expense is responsible for increasing revenue. Same thing with whether a service you offer enhances customer service.
How do you determine whether an expense is worth it?
1. Set up thorough financial reporting
The more you implement automated financial tracking and reporting (automated is key), the more you’ll be able to identify inputs/resources that generate revenue. A simple example is retail sales. You may be wasting valuable shelf space trying to sell items that don’t sell. Identify the hot-sellers and sell more of that. It’s a trial-and-error process, but one that can improve your bottom line a great deal.
2. Talk to your students
Feedback is invaluable. You might be offering a service or have amenities that you think matter, but in actual fact aren’t appreciated by students. Tell students to be honest. Offer anonymous surveys (keep it brief). Students want the best experience possible and your loyal students will suggest ways to improve. Take their feedback to heart.
For example, you might offer tea after yoga classes, which students stay for because they don’t want to appear rude by leaving. But it may well be the case most students would prefer no tea service.
Another example is room temperature. Heating is expensive. Find out if students are too warm if you have a tendency to offer a warm studio space. Be careful though, if you plummet the temp, you’ll have some unhappy students.
3. Is it really necessary?
Some expenses like rent and power are absolutely necessary. However, is having 2 lines, for example, necessary? Do you often have 2 calls at the same time? Do you really need to print as much as you do? Each little cost you cut adds up.
Calculate different expense scenarios
When going over your expenses, calculate different financial scenarios to see how much you could save each month. Remember, savings are added to your bottom line. Again, be careful not to compromise your core offerings by going too bare-bones.
Sometimes trying new stuff is worth the expense
I’ve wasted thousands of dollars on lousy products and services. However, if I didn’t have an experimental mindset, I wouldn’t have discovered some gems that are a huge benefit to my business. The key is learning from mistakes. Having wasted a lot of money and spending time reviewing bad buying decisions, I’m able to better assess each purchase. Before I buy I ask myself “have I tried something similar before? How did it work out last time?” Although I fall victim to making the same mistakes, I really do try to learn from them which now saves me money.
Don’t cut expenses that save you from catastrophic problems
There are some expenses you might be tempted to cut because you fail to see immediate value, but think twice. For example, hiring an accountant, especially at first, is an expense that can save you huge headaches in the future.
Insurance is another such expense. Insurance is absolutely critical for your business and for your students. That’s not to say that you don’t look for the best deals and limit these expenses, but at the same time you don’t want to put your business in long-term jeopardy.
5 Types of expenses that resulted in wasted costs
1. Marketing expenses
There are marketing gimmicks, courses, consultants, software, etc. that appear to be a good investment, but aren’t. The trouble is that some marketing expenses are worth their weight in gold. In time you’ll figure out what’s worth buying and what’s worth avoiding. Again, set up careful tracking so you know exactly which marketing expenses are good investments and those that are a waste of money.
For example, take a look to find out how much you spend on monthly website hosting. You really don’t need to spend more than $10 per month. Some webmasters really fleece clients because they don’t know any better.
Another example, if you buy Adwords or use Bing Adcenter, is to carefully review your chosen keywords, match-type, average cost per click and overall whether your paid ad campaigns are bringing in new students.
Pay per click campaigns can add up very fast … and they can often be improved so that you save a lot of money each month.
Some business owners love going to Staples and buying all kinds of stuff … stuff they’ll never need. Buy only supplies you need and use frequently. You can always go and buy something when you actually need it. Avoid envisioning every potential need supply-wise … it’s this thinking that results in spending way too much on office/business supplies.
So many of us are suckers for technology. Yes, yoga business software is very useful and you should have it because it saves a ton of time and helps track expenses. However, getting the latest iPad isn’t necessary. Getting a new laptop when your current laptop works just fine is not necessary.
Look at your cell phone service … are you really using all of those minutes and features?
Do you need all of those $1 to $5 apps?
Review your tech purchases and get honest about what you actually use and what you don’t use. Technology is a huge wasted expense for any business because it promises so much, yet often simply doesn’t really help our businesses.
Have you over-hired? It happens. It’s not fun letting people go or reducing hours. In fact, this is awful. But, if your business is on the brink of going under, you just might have to make the tough decision to let people go. Salaries and wages are huge.
At the same time, I’m all for keeping people if you foresee a need for them and you can afford it. Loyal employees are rare so if you’re in a temporary blip, don’t drop the axe too quickly.
5. Yoga props and gear
How many bolsters, blankets, balls, blocks, chairs, etc. do you have in your studio that’s seldom used? If you keep buying props and yoga accessories, but seldom use them, stop buying them. Seriously, most students don’t care if you don’t implement props. They just want to do some great yoga. I know you might find it fun trying the latest yoga gear … but as a core business offering, it’s often not necessary.
It’s never too late to assess your expenses and learn from poor buying decisions. Even if you’re making plenty of money, by carefully dumping unnecessary expenses, you can further improve your bottom line. Just be sure not to throw the baby out with the bath water.