Fellow studio owners,

Today I worked on projections for Elemental OM for the SBA with much care.  The result is what I believe to be a great worksheet for you to use which you can drop your own numbers into to see what investment you will be making back in your studio with social distancing standards in place.  The worksheet has numbers dropped in.  These are not my numbers because I own our buildings and have 2 studios, but I used numbers pretty standard for the Cincinnati Ohio market.

Here are the assumptions.

The return rate once fitness studios are given the green late is based on a survey another studio did of its 477 members.

Assume:

  • Month 1….12% of your revenue stream (students) will return
  • Month 2…Another 22% of your revenue stream will return
  • Month 3 …Another 18%
  • Month 6…Another 18%
  • Month 12…Another 23%
  • loss of 7% of sales overall projected for year 1.

You are limited to 9 people and 1 teacher at least through the summer and possibly through the end of the year if your studio can fit that many socially distanced.   (I know you think you can change the model in September if social distancing is lifted, but remember, this model is based on the above assumptions of when your students will feel safe to come back.  They will not flood in.)

You will not be able to offer unlimited yoga because of limited class size.  Students will have to pre-register and pre-pay with penalty for all classes.  (Penalty will be if they hold the space and don’t show up.) I created a reasonable model where folks pay for access to 1, 2, or up to 4 classes/week.  I don’t think folks will pay for the 4 classes/week in Cincinnati though.  The pricing you can play with.  I was getting to a revenue goal of around $13,000/month which you could reach by May of 2021 if the return rate assumptions above play out.  The revenue goal is limited by class size limitation.  Of course if your class passes are much higher, you would make more, but the challenge is how much your clients are willing to pay.  The calculation is circular in nature.  Just play around in the pink boxes.

When all is said and done, I think you will have to make about a $15,000 – $20,000 investment in your yoga studio depending on your expenses through November with no salary option for you until December (small salary).  You may consider not opening until fall to minimize the initial investment and letting other studios go first.  BUT you run the risk of losing your students to other studios or students just quitting yoga altogether.  You might have to really think about the viability of your studio at this point.  Can you make that investment? 

Online Yoga

I’ve tested the online zoom yoga model this month and I don’t believe it is a big profit zone.  The market appears at a saturation point.  Of course your most dedicated yogis who love your teachers will do it with you during closure.  You can throw that unlimited online yoga pass into your pink boxes as well.  Make sure you add up the payroll cost as well.  The pink boxes are set up to calculate in person yoga payroll.  An issue you may face is if your teaching team is teaching free, donation, or gift receiving yoga online to your students.  You can’t convert those students to a paying customer.  

Memberships…..This is a problem when you open….

We closed on March 16th.  Basically any membership charged 2/16 or after needs some partial refund whether it is a day or a whole month.  Now at EOM we finally turned off the memberships 4/6 when it became clear we were in this for the long haul.   I’ve received the following actions from students:

  1.  Just let the membership ride…they are happy to support us as we transition
  2. Just let the membership apply to an online zoom pass
  3. refund the membership
  4. catch up on the membership when they return.

1 and 2 are awesome but as this drags on, you really do need to turn off the memberships.  It just isn’t fair and I think this will turn against you in the future.   3 is terrible for you right now.  Do any type of backflip to get them to wait.  If they get grumpy, ask yourself if you really want them back or not.  Might not be worth it mentally.   4. is going to affect your projections because (a) you will be providing service with no revenue and still paying a teacher and (b) your membership model will change because of social distancing and they might not like the new membership model and want a refund in the future when you have negative cash flow.

Other thoughts

Projections are good to have.  Don’t be optimistic.  Be pessimistic so you can plan in the best possible way to re open.  All small business owners are starting over.  If you need an ear or a virtual hug, I am here for you.  pamela@elementalom.com

Here is your worksheet:

Model to do projections for any studio

Peace, Pamela

 

*The sole purpose of these articles is to provide information about the tradition of ayurveda, yoga, and meditation. This information is not intended for use in the diagnosis, treatment, cure or prevention of any disease. If you have any serious acute or chronic health concern, please consult a trained health professional who can fully assess your needs and address them effectively. Check with your doctor before taking herbs or using essential oils when pregnant or nursing.