Advice for Dance TeachersQ: Hi Rhee,
I have been teaching for 42 years and I’m ready to retire. I have a beautiful studio in the center of a very nice town. My teachers love to teach but no one wants to take over. Is there any procedure to follow? I am not sure where to start. —Kim
A: Dear Kim,
Congratulations on 42 years of teaching dance and for summoning up the courage to move in a new direction.
The first step is to determine the value of your business. Here’s a rough formula to get you started: figure out your studio’s gross income, then multiply that number by 2. Next, add up five years of your studio’s profits. Average those two numbers—that’s your business’ approximate value.
Of course, other factors—such as whether or not you will continue with the business in some capacity—might play into this value. That number also doesn’t take into consideration any physical property—such as barres and mirrors, or a building—that you own. Your financial adviser can help you work out all the details.
Perhaps your teachers are not interested because they don’t believe they can get financing for the purchase. In that case, you might consider holding the mortgage for them. In simple terms, they purchase the studio, but you are the mortgage holder. Just beware: your relationship with these teachers could become strained if bad business decisions or other financial difficulties prevent them from making their mortgage payments. And if they fail, the business will revert back to you, and you’ll be a business owner again.
If you need to look for a buyer, consider securing a business broker who can contact interested parties on your behalf. Before discussing details with interested parties, the broker will most likely insist on a confidentiality agreement. I cannot stress enough how important it is to keep news of your potential sale from spreading through the community. If word gets out, that information could encourage others to open a studio or start up a new location in the area, thereby threatening all the hard work and goodwill you have achieved with your successful studio.
Take your time and do it right. And remember—dance is in your blood, and that will never change. Perhaps there is a way you can be involved in dance, but with less stress and responsibility. This is your chance to discover how. All my best to you. —Rhee