Pain-free steps to a balanced budget
By Misty Lown
Do you struggle to make ends meet during certain times of the year? Does the seasonal nature of our industry make cash flow a headache? Perhaps more important, are you paying yourself last, if at all? If you answered yes to any of these questions, chances are you’re not working with a budget. Whether you are in your first year of business or your 15th, developing a budget should be an annual priority. Here’s how to make it painless.
Why do I need a budget?
There’s an old saying, “If you fail to plan, you plan to fail.” In no place does this ring truer than in the dance studio world. Can you imagine teaching without a lesson plan or putting your iPod on “shuffle” during class, hoping for an appropriate song to come on? Would you ever show up to recital and pick the performance order based on which group got backstage first? No way!
As teachers and studio owners, you would never come to class or put on a show without a serious game plan. And yet, making a financial game plan for your business is often thrown into the “someday when I have time” category, leaving you in an endless cycle of making decisions based on the greatest financial need of the moment. It’s time to plan for success in all areas of your business, including the financial.
If you’ve ever balanced a checkbook, you can write a budget. A budget has three parts—the plusses (part 1), the minuses (part 2), and the—hopefully—positive difference between them, which means profit for you (part 3). Bookkeepers or accountants can help you with this by spotting financial trends and alerting you to outrageously high expenses. But you have unique insight into the expenses and income opportunities related to your business. Collaboration is ideal.
Part 1: Projected income
Count every dollar you anticipate coming into your studio, including tuition (class and private lessons); costume fees; recital tickets, T-shirts, and ads; dancewear and logowear sales; choreography fees; birthday parties; workshops and camps; donations; and convention/competition payments.
Part 2A: Projected expenses
Look over your check register and include a line item for every category of expense you paid in the last year. Include a salary for yourself; rent/mortgage; utilities; cost of sales (your cost on costumes, dancewear, and logowear); postage/shipping; printing; wages; employee benefits; Internet access and website hosting fees; advertising; repairs and maintenance; education; insurances; business travel (100 percent deductible); business meals/entertainment (50 percent deductible); taxes (personal property, FICA, unemployment); interest; conventions/competitions; vehicle; legal and accounting services; dues and subscriptions; bank charges; credit card fees (if accepting credit cards or using one with a fee); office expenses; and depreciation.
Part 2B: Irregular expenses
Don’t forget to leave room in your budget for unanticipated capital expenses. Your computer might die the week before registration or the sound system could fizzle on the first day of classes. You can’t predict the problems, but you can guarantee that they will arise. If you own your building, you have another range of expenses that can crop up. You might be able to keep shampooing the carpeting for another year, but if the roof needs replacing, don’t wait until your classrooms are wading pools—budget for a new roof now and avoid unwelcome surprises later.
Part 3: Projected profit (or loss)
Projected income minus projected expenses equals your projected profit (or loss).
That’s it! It doesn’t have to be fancy, but it does have to be written. Your budget is your road map for the year, so keep it handy in your office for referral.
What can this do for me?
Once you’ve written out your budget, you can make plans to manage your cash flow, set sales goals, and fill the holes.
Managing cash flow
The cash-flow cycle of dance studios can be feast or famine. For example, at registration time in June at my dance studio, all families pay for their first and last month’s tuition for the coming dance year. (Some even pay the whole year’s tuition.)
On the plus side, getting a good portion of the season’s income up front makes getting through the summer easier. On the downside, I’ve found that the month of May can be a real challenge if I haven’t budgeted enough money to cover expenses. The only line of credit I’ve ever had to take was to cover my overhead for the month of May one year when I didn’t budget my registration tuition well. I didn’t need to learn that lesson twice. Time spent budgeting at the beginning of your season can keep you out of hot water later.
How do you set your tuition every year? Most studio owners I know keep an eye on what other schools in their area charge, shoot for the middle, and hope they get enough students to cover the bills. It’s important to stay competitive, but the primary factor in setting tuition should be how much it costs you to teach each student. Your tuition should cover all expenses associated with teaching, including the cost of the teacher and a portion of all other overhead expenses for the time the class is being held.
Your tuition rates should be such that after you have covered all of the expenses associated with teaching, there is something left over for your investment of time and energy (your profit). When you have quantified your costs of teaching and the earnings it generates, you can set your sales goals for the year. How many students do you need in order to pay yourself and hire some extra help at the front desk? How many more students do you need to enroll to give yourself that overdue raise? Your budget will tell you.
Filling the holes
Perhaps the best function of a budget is that of refinement. A budget, like a gym membership, is helpful only if you use it. You may only need to write your budget once each year, but you need to use it every month. To get real mileage out of it, compare your monthly operating statement to your budget. Because the line items in your operating statement match those in your budget, you will be amazed to find that you can actually see where the business is bleeding (or hopefully building). Monthly checkups will help you fine-tune your budget for the future and make important adjustments to your spending in the meantime.
The fun part!
A budget isn’t just about crunching numbers and scrutinizing expenses. It’s about figuring out what programs are profitable for your studio and strategizing so that you spend the most time on what really works. It’s about making the business work for you so that you can have a life, not just make a living.
For additional help, consult an accountant or get no-cost tips from one of the following:
QuickBooks: a user-friendly software program that helps you manage financial information, including payroll. www.quickbooks.com
Small Business Financial Management Kit for Dummies: a tool-packed guide (plus CD-ROM) that helps you manage your finances, including budgeting, cash flow, and profit models. www.dummies.com
SCORE: Counselors to America’s Small Business: offers online or in-person financial counseling to small business owners. www.score.org
Small Business Development Centers: provide management assistance to small business owners. www.sba.gov
Women’s Business Centers: provide training for women in finance, management, marketing, and more. www.sba.gov (click on “Local Resources,” then “Women’s Business Centers”)
ChooseWhat (www.choosewhat.com) has a business checklist on its front page that gives the 22 main steps to starting your own business.
Cost-cutting ideas for a quality production
By Diane Gudat
When it comes to recital time, do you dream about putting on that perfect fantasy production? Well, think again—it might actually be the right time to consider cutting back. “Cut back!” you say. “Forget it! Last year’s recital was really good and I am going to have to do something to top it.” But cutting back on recital expenses might be the best business move you could ever make.
Most studios do their shows during the last weekends of May or throughout the month of June. The following two months of July and August are generally the bleakest when it comes to the health of the studio checking account, so depleting your funds at this time of year simply does not make good business sense. Many teachers struggle to put together summer camps and workshops just to pay those July bills instead of taking a little well-deserved time off; yet they do not hesitate to drop unbudgeted money for that extra pair of lights or the live video feed into the waiting rooms.
Let’s take a moment to rethink the situation. A change in your attitude toward the recital itself might be the biggest cost-cutter of all. Start by asking yourself if you are overdoing it. Better yet, consider asking your spouse or mother what they think is “over the top” spending in this area. They have no emotional attachment to the situation (unless, of course, they too are dance people).
If you’re a studio owner, ask yourself what the purpose of the year-end show is and what it does to improve your studio’s enrollment. This becomes a huge struggle between the right and left sides of your brain. The artist in you wants the show to be the biggest, most amazing production known to planet Earth. You want Busby Berkeley to roll over in his grave. We all love big props, big lights, and big ooohs and ahhhs, but the business manager in us needs to look at the show as part of the entire year’s budget.
Does the amount of money you spend on recital extras translate into an equivalent number of new students, or are you simply excessively entertaining your current clientele and their families while feeding your own obsessive, need-for-perfection genes? Do more lights and props make your dancers look better, or would spicing up the choreography and using interesting staging do the same trick? Will the parents be impressed with all the expensive extra lights or would they rather see their children’s sweet faces in simple lighting?
What will your dance students remember about the day or weekend—the teachers who were calm, pleasant, and proud, or the extra props? Hopefully their memories are of a special day when family and friends gathered to give them their undivided attention with pictures taken, lots of applause, and maybe even a flower or two.
Shouldn’t we strive, every time a child steps into our classroom, to ensure that she will want to return the next year and that she will bring her relatives and friends?
Wouldn’t it be more cost-effective to show parents that we deserve their respect by keeping things organized, calm, and simple at dress rehearsal and backstage at the show?
How about showing them that we respect their hard-earned investment in their child’s dance training by keeping a lid on the cost of costumes and extras?
What can be done in the costume department to alleviate some of the financial stress and strain? First, let’s point out that costume costs should include the time it takes the school owner and studio staff to select, measure, and order them. Finding reasonably priced costumes that reflect the quality you expect is a lot of work! Do not leave yourself out of the equation.
- When selecting costumes, consider ordering basics in fun colors. All costume companies offer a wide variety of undecorated ballet tutus and dancewear basics. These can then be decorated with simple accessories like flowers, sashes, or appliqués. Some pieces, like leotards or jazz pants, can even be worn in dance class after the recital.
- Get creative in making costume pieces do double duty. For younger dancers, consider using a banded tutu for their ballet piece and then folding it in half and tacking it to the rear of the costume as a bustle for their tap or jazz piece.
- Build a large accessories “library” that will spruce up your choreography for years to come. You can do this by not including accessories in the costume fee. Collect all hats, headpieces, and handheld props at the end of the recital and store them for future use.
- Order costumes early to take advantage of the discounts offered by the costume companies. Try to use one or two major companies for your entire order. This might require a bit of compromise, but it will allow your order to reach an overall amount that will qualify for even more discounts. Large orders also might receive free or discounted postage.
- Take advantage of companies that offer “two-in-ones”—one costume that comes with a themed base leotard and two choices of accessories that covert it from ballet to jazz. By spacing the classes that wear these two looks far apart in the recital, you can fool the audience into thinking that each is a totally new look. Avoid buying extras like gloves and shoe covers; instead buy gloves and frilly socks on sale after Easter and save them for the following year.
- Consider sharing hats, props, and backdrops with dance studio owners in your area. Offer them yours and you might be amazed at what they will loan to you. I have costumes and crazy props on loan all over the country.
- Pair inexpensive, trendy tops from bargain fashion stores with nicely structured jazz pants or modern shorts. By investing in an airbrush machine, you can convert basic costumes into colorful, one-of-a-kind masterpieces that enhance a story line. You can achieve the same effect with cans of spray paint from the dollar store and some homemade stencils. (As the winner of a few overall costume awards, I can attest to the effectiveness of this technique: My garage floor shows the signs of many spray-painted costumes.) Of course, the costumes will need time to air out in order to minimize the paint smell (fresh-air sprays help the process), and the painted fabric will lose its stiffness quickly with use.
- Well-fitting, basic dress pants can be accented with suspenders or embellished with rhinestones, sequins, or ribbon along the seams or at the cuffs.
- Dying white or light-colored basics also creates beautiful effects. Tie-dyeing, drip dyeing, or dipping the costumes to create color levels are all reasonably easy projects.
- Take advantage of the online convenience and splurge control of shopping online at discount department stores like Target, Wal-Mart, and Kmart. These are excellent sources for hip-hop basics like hoodies, baggie jeans, overalls, cute skirts, and multicolored T-shirts, as well as matching sneakers. Shopping online also cuts down on the valuable time you would spend and gas you would use in trying to find 15 identical shirts in a variety of sizes.
- Use your imagination instead of buying ready-made costumes. For example, convert black sweatshirts and sweat pants into “faux tuxedos” for your guys. Remove the sweatshirt’s ribbing, slice it down the front, peel back and shape the lapels, hot glue some buttons on, and add a stripe of ribbon to the outside seam of each pant leg. Under the jacket, place a white T-shirt with multiple layers of edge lace glued down the front and you’ve created the impression of vintage tuxedos for your Nutcracker party guests. A few safety pins alter the size and keep the front closed. With the same kind of simple basics you can easily make Dalmatian, clown, and chicken costumes. Add black felt dots and tails to large white sweatshirts and you’ve got a pack of Dalmatians; for clowns, use large, colorful sweatshirts with small hula-hoops threaded through the bottom ribbing; to make chickens, add stuffing to yellow sweatshirts and top them with ball caps with orange bills.
The rule of thumb for all costuming is that it must create the correct illusion from the front seat of the theater, which is usually at least 20 feet away from the performers.
How about showing parents that you respect their hard-earned investment in their child’s dance training by keeping a lid on the cost of costumes and extras?
Props and backdrops
With scenic elements, simpler is better. For example, if you want a forest set, do not allow your dancers to get lost in the confusion and color of a full forest backdrop. Instead create the suggestion of a forest with these simple but effective methods.
- Place a few wire and papier-mâché trees upstage right or left. Alternately, or in addition, build triangular, three-sided flats on casters that can be painted to look like trees and rotated as the scenes change. These can be repainted repeatedly for years of use.
- Use a gobo to throw the image of a forest or clump of trees on the back curtain. Gobos (circular metal plates used to create patterns of projected light) can be as inexpensive as $12 each and can cover the stage with any shape or design imaginable. Creative souls can make simple gobos out of soda cans. (Beer cans are more fun and can actually enhance your creativity! Plus, some of them are thinner and therefore easier to work with than soda cans.) Ask your theater crew if they have a supply of gobos that you could borrow and if they have lights that are equipped with fittings to hold them. Renting a light or two to hold a variety of gobos can be infinitely less expensive than renting, installing, and returning rented backdrops.
- If you insist on using a backdrop, check with the theater to see if they have any from previous performances; they might already be hung and available for your use.
- In this day of mixed-media events, consider using the computer skills of your dancers or their “geek” friends to project beautiful still or moving images onto the stage.
- Owning your own fog machine and simple accessories like a disco ball and rotating mount will eliminate rental fees for such items and allow you to create special “club nights” at the studio for your jazz or hip-hop classes during the year.
When you ask the staff at your rental facility for favors, loans, and freebies, be sure to treat them with the utmost respect and kindness. Send them a thank-you note for a job well done and enclose a small gift card to a coffee spot or local restaurant. This will go a long way to getting those extras for your next show.
Other ways to save
One essential that you should never compromise on is an excellent sound system. However, that doesn’t mean you have to race out and buy the latest equipment. Check with your theater staff to see what they have before ordering or transporting your studio systems. And don’t forget to use your clients as a resource—I requested help with sound equipment in my newsletter and unearthed two studio dads who were in small rock bands; they let me use their full stack of concert-quality speakers absolutely free. They also hooked up the speakers and loaned me their strobe and laser lights. Do not be embarrassed to ask for help.
Check to see if a business that you or your students frequent would be willing to sponsor the printing of your recital tickets. Defray the cost of your programs by including business sponsors or selling “good luck” lines. But be careful not to overload your already insane schedule with these extra endeavors. Delegate, delegate, delegate—and when that does not work, beg for help.
Quality, not quantity
With the crumbling economy we seem to be facing, many families will appreciate any efforts you make to ensure that their out-of-pocket expenses for their children’s extracurricular activities are kept as low as possible. “Less is more!” is a wonderful motto to aspire to. The key is to be organized, start early to meet deadlines, and go for quality, not quantity. We can be our best for less.