Cash-Flow Habits That Are Breaking Studio Owners

Hello, friends. I'm Amanda Barr. And I'm Rebecca Lou Brennan. And welcome to Dance Principles United, the podcast. Together, we are passionate about helping studio owners with the business of running their studio. Join us as we talk everything from marketing systems, studio culture, motherhood, life, and everything in between. This is the Dance Principles United podcast. Hey, friends, and welcome to another episode of the Dance Principals Podcast. I'm here with Nathan, the beautiful Opus Studios. Looking a bit fancy. You haven't done one in here yet.

No, no, it's good, it's good to be here. It's good. Good to see you after being away a little, little bit too much at the time of this recording. But yes, no, good, good. Good to see you as well.

Oh, wonderful solo parenting. Super fun. Thanks for having lots of holidays and leaving me at home.

Yeah, I know, I know. I'm very lucky, everybody to have an amazing, supportive. Okay, sorry, I thought we were going to get that on tape.

Absolutely not. Absolutely not.

So, yeah, we wanted to chat today about, like, I was just listening to you and Beck talking about so many people's teachers having their amazing Euro summer vacations as you and Bec were talking about her Euro summer vacation.

Yes.

But, you know, I was chatting with my studio owner that was I just lamenting a little bit that they were watching their own stuff, that they pay a lot of money to off living their best lives and, you know, cash flow had been a little bit tight in the studio and, you know, not paying themselves as much as they were wanting to take out of their studio.

Yes.

And as we, like, we were probably.

Being a bit, you know, resentful to their staff. Yeah, but that's a horrible way, but a little bit. Yeah.

And it's something that I always talk about. Like, I've never heard a studio owner say, you know what, Nath, this studio owner life, I'm done with it because I'm just making too much money. Like, it's just. It's just rolling in faster than I know how to spend it. So I'm done. I'm going to go and do something else.

Yeah.

And as we were talking about that, you were talking about the. The first and one of only, I think two times you were saying that cash flow got tight enough in the studio that you actually didn't pay yourself one week.

Absolutely. And, you know, it was a story and we were chatting about it and I thought we need to share this with the podcast because there I can very much pinpoint in my 20 year journey when I didn't pay myself and I remember it the first time so Clearly I was 21, you know, and I'd had the studio for, like, I don't know, four or five years by then. And, you know, we. It was that January week, those two January weeks before class starts back. It's like the last week of holidays and then the first week of term. You all know the ones we're talking about.

Squeaky bum week.

Yes. Where money gets tight. Right. And I remember that week. And, you know, back in those days, I'd have to process the pays manually or whatever on the Friday, as you did. And I remember for the first time not paying myself that week and going, fuck this. This sucks. I had worked so hard that week. I'd been in the studio, you know, cleaning, answering the phones, getting ready for the new year, prepping classes. We'd had enrollment day, so I'd had stay staff come in, you know, back in the day when you'd have, like, that enrollment day a few days before you'd start term. So it had staff come in to do that. So I was processing all of their pays and didn't have enough. And I remember so specifically where I was sitting and Nath was with me, and I just remember going downstairs there.

At Terra Long Street.

Yeah, this sucks. I have worked like 10 times the amount that all the other staff have worked this week. And then probably some. You know, I couldn't. Didn't have enough money in the account to pay myself. I just remember being so pissed off. Like, my friends were all out. You know, we were 21, so they were. Most of them were at uni full time. They were out, you know, at the beach, hanging out, doing all those things.

At the beach?

Yeah, absolutely. Because Nathan was not working the studio, and I'd been working my guts out for absolutely no reward. And then my friends would be like, oh, I'm just gonna work Sunday this week because I get double pay at my job at Just Jeans. That'd be like, oh, I am working so hard and not being rewarded. And I remember thinking so clearly that time, this. I'm not doing this again. Yeah, this is not how I want to live.

And I think that was at a point, though, where you were still, like, the studio had been doing very well and you'd still be able to build yourself up. Like, you know, you always paid yourself. You'd been able to build yourself.

Absolutely. I remember at the time, you know, I was paying myself $500 a week. You know, it wasn't a huge amount. I remember when I gave myself the raise to 600. It wasn't a huge amount.

And taking profits at the end of the year.

Yeah, absolutely. But we are talking. How long ago was it? You know, 20 years ago. We're talking 20 years ago. And I was 21 and like 500 a week was more than enough. Like that was fine at the time. I always loved, you know, I'd get the concert profits and all of those things as well. But I remember so clearly thinking, I am not going to do this anymore. I'm going to make sure that I pay myself. I only ever had to do it another time once. And that was more recently. Not. Well, still. How old, Gigi? 10 years.

It was more than 10 years.

Yeah. More than 10 years ago when we had a cash flow problem when we bought a huge commercial premise. Commercial. And we've told that story before.

We've had somebody run off with $30,000.

Yeah, yeah.

And didn't. Didn't deliver.

And I had a baby and all of this kind of stuff all happened at the same time. But that was a very different kind of thing. Because we'd had so much investments. We just built out this huge studio and all of that. This was just a very much a run of the mill kind of week. It was just the cash flow had dried up by. By that last week of January. And I definitely made a vow then that I wouldn't do that anymore, that I would prioritize myself over my staff. You know, my staff were amazing at the time. You know, they were great. It was awesome. They were. But it wasn't fair that they were getting paid when I wasn't.

Yeah, absolutely. And I think it's super important, like just that whole notion we always talk about because it can't. Like money is something that so many people struggle to talk about. Right. It's that bit of, you know, it's always the bit of the dirty word. And we get. People get uncomfortable talking about it and especially around dance studios. Like some people think that it should be, you know, so much because it's about the creative and it's about changing students lives and all those kinds of things which we a thousand percent agree with.

Absolutely.

The reality of the situation is that money makes the world go round and it's that notion of putting on your own oxygen mask first.

I love that.

If you are looking after yourself financially, then you are more happy. You are able to keep the doors open longer. Not only like you're able to build a better studio as well, you're able to make a bigger impact. On the lives of more students if you're looking after your own financial future.

Right, Absolutely. And I'm a very big believer in that because it isn't all about money and being greedy or anything like that, but it is about not being resentful towards your business.

Yes.

Not because people start to harbor, like, whether you think you are or not, you start to harbor this, like, resentful towards your business, your clients, your teachers, your staff, your students even. And you know, it. It kind of like, it festers. It sits there and it festers. And I feel like some people probably listening, know what I'm talking about and are probably nodding their head along that. Whether it's just this little thing that' under the carpet that's festering and whether it's for them or for their partners, sometimes it actually has to do with your partner as well, that it's kind of a bit of a thing in your relationship as well. And, you know, we've seen that in the past. And that's why I think it's so important that you need to put your own oxygen mask on first.

Yeah, absolutely. And that we, we, we've talked about before, like, we are in the very fortunate position because of the amazing studio that you were able to build and then that I was able to join, that our studio has looked after our family financially extremely well.

Yes.

And it was something that, you know, that, that time probably came as a turning point. Right. Because from then on, that never happened again.

Absolutely not. And I didn't allow it to happen.

And you also got some great financial advice at the time. You were like, you know, you were doing all the right things in what you were meant to do.

Yes.

And like I said, it's something you've never looked back from, Right?

Absolutely. And I wanted to talk about that if you are perhaps in the position that that occasionally happens to you as well, that, you know, things pop up, bills come, you know, bills happen that were unexpected, for example, or, you know, that January cash flow thing hits whatever it is. And like, I'd love to talk about some actual tools that can help you.

Right, yes. And things to do. So I think one of the things that you did that we always talk about, you know, through that growth phase of the studio and the way that you were able to keep enough cash going through the business, because this was something that on my, one of my trips recently to Mexico for our own coaching conference, one of the guys there was a business cash flow and profitability expert. That was who he helped and he was Saying that there was a stat about the percentage of businesses that fail due to cash flow issues, and it was a very high amount and I really should have got this number. But he said out of those businesses that failed because of cash flow issues, there was about 20 to 25% that were actually profitable businesses.

Yes.

They were just experiencing some cash flow issues.

Absolutely.

So it's super important to make sure that you're looking after that as well. And that's an important part of being able to pay yourself on that as well. And I think a big part of that is making sure that you don't overstaff too quickly. And I think that was a big part of you being able to grow the studio. Right?

Yeah, absolutely. And, you know, we all need staff. Absolutely.

It's an important part of growing and scale.

It is definitely an important part. But if you are, you know, still in a startup phase or you only have a small studio and you need to financial or you feel like you're not paying yourself enough, you know, sometimes it is about, hey, where can I cut back on staff? Because. Or maybe not even cut back, but, like, let's not overinflate the staff so that I can put my own oxygen mask on and make sure I can be paid some of that wage.

Yeah, absolutely. Can I say something a little bit controversial?

Okay.

I do think sometimes that I do see not just dance studios, but other small business owners as well. I do see people thinking that their staff headcount is a bit of an ego metric. And they're seeing that as success.

Yeah.

As a defined, like, as a definition of success rather than the profitability of their business.

I have 25 staff members. I must be a big business person.

Yes, exactly. Not knowing, like. And what they don't tell people is that there's never any cash left at the end of every week.

Yeah, absolutely. And I think sometimes that's the case, and sometimes it's just about, hey, you know, what could I do to increase my wage? If you're looking at your wage going, hey, I could really do with an extra X amount. Like, where could you pull that back from? You know, And I think that's a really important thing. Like, hey, if I taught those extra two classes, those two ballet classes on a Wednesday night, I could save X amount on weight and put that towards myself. Maybe it's something you need to consider for, you know, for now or for the new year or for whenever that was. And I think that's the biggest thing. What I definitely started taking back to that story and where we were is I was like, okay, I've got to make a set amount that I'm going to pay myself. And I need to like prioritize that as an expense. No different to paying my lease. It has to be paid. It's a non negotiable. And I think that's where most people fall down. And it's kind of like the profit first method as well. That kind of idea. Right. It's like, hey, this has to be paid. This is not a maybe I might pay it.

I'm going to take whatever's left over that way.

Yeah, we'll see how the cash flow is going. So I was like, okay, I'm gonna pay myself. You know, at the time it was 500. And it doesn't have to always be, it might be you working out what's, you know, what's sustainable, what's kind of, you know, maybe the smallest amount that you can live on that still pays, you know, your personal expenses, etc. Hey, I'm gonna pay myself that, this amount every week as a non negotiable. And then maybe it's like, hey, and then I take profits at the end or at the end of each quarter or whatever. I look at what's left or whatever.

That is like the business covering your phone and your Internet.

Absolutely.

Things like that as well.

Yeah, absolutely. And so I think it's really important to prioritize that and really kind of like calculate it through. So, you know, let's just use the example of $500 a week. Like obviously this is a long time ago and $500 a week is not cutting it for most people these days. Right. But I would really sit there and go, okay, so these are my expenses every week. My lease, my, you know, my wage, all of those things. And then I'd look at that throughout the whole year, so I really could prioritize that. And then it was really important to me that I'd make sure, especially over that January period, that there was enough to pay all of those expenses over that time. And that stopped me buying stupid shit during the year that I'm like, oh, I need that new Acromat because, oh, my blue one doesn't match my color scheme. So I all of a sudden need a purple one instead. You know, it's like stupid shit that sometimes need in our studio.

Oh, 100%, that's. I think we've done a podcast episode on Profit First. If we have, if we haven't, we'll be doing one. If not, I will link Back to it. But it is that notion of that as a business, you should be looking to, you know, operate on your general running expenses. You should be doing that on maybe 70% of what you actually bring in. Yeah. The money that comes into your bank account every week isn't the amount you should be going close to spending.

Yes.

Because you need to obviously take out tax, because that's not your money. And the government's pretty good at getting that money back.

Yes.

You've got yourself to pay. You've got obviously staff wages, things like that that comes out of the operating expenses. But before you even, like I said, if you're not being able to operate on. It might be 70%, it might be 75 or 80%, depending on. Every business is different. But there's a set percentage that you work out over time that if you're not able to run on that, then you're sort of creating yourself a really poorly paying job rather than a successful business.

Yeah. Which is hard to hear, right? Yeah, that can be hard to hear for some people and can be tricky. But there are ways out of that as well.

Absolutely.

So if you are currently, like listening to this and going, oh, that's me, like, that's okay because we can build. And I think it actually gives you more momentum. And to me, that was always such a driving force. I'm like, no, I want to be able to pay myself this. So what do I have to do today to be able to be able to afford this for the long run?

Yep.

I have to get more students in. I have to do more marketing. I have to do this. I have to do this. I have to do this. I have to do a workshop in the holidays. I have to run, you know, whatever it is, actually use it as a driving force. And I think that's where the power is. Right. Like, it, you know, don't go, oh, I'm not paying. Like, use it as momentum.

Yeah. And I think that's one thing, that why we work so well together as business owners. Because I am of the. I guess I'm not sure if it was how I brought up or just like my mindset quite often goes, when cash flows tight. What can we cut? What can we cut? What can we cut?

Yes. And I'm the absolute opposite. Isn't it funny?

Yeah.

And I'm the absolute opposite. I'm not. What can we cut? I'm like, no, I like my life how it is. I'm like, hey, what can I add? What extra things can I do to bring More money in.

And I think there's a, there's. For every business, I think there's a happy medium.

Absolutely.

So like, when you're at that stage.

Where you're looking like, I think my way's better personally. But you know, whatever.

But there's always, there's always something we can cut, like.

Absolutely.

Like if you're doing personal finances, when you go through your bloody subscriptions, you're like, yeah, do I need the Netflix stand?

All that crap, all that sort of stuff.

But like just going through and just doing simple.

The answer is yes, I do need Netflix stand, Disney plus Paramount, all of the above. All of the above.

But there's always, like I said, multiple levers to pull to be able to increase that cash flow to get more money in your pocket. A big. And generally the better part of it is increasing revenue.

Yes.

But if you increase revenue and decrease expenses at the same time, that's when you really, really start to.

Absolutely. Absolutely.

One thing we were talking about was that notion of staff and not going too hard. Like getting our staff sort of too large, I guess, and maybe not going too hard too early.

Yeah.

And that was probably something when we were chatting about that, like, how did you go about hiring out your staff or building out the team?

Oh, I feel like that's a big podcast in itself. Yeah. And I think it's that thing like don't give away revenue generating activities, I think is a really big thing.

Yeah.

Don't give away things that you're good at. Like it's a really hard, like I can say all these things, but that it's every person being different. You know, for example, I am not a, a trained ballet teacher. So ballet teaching was something that I'd always give away. However nobody else. And like, you know, I, I am not an admin whiz. I do not have any of those things. I learned those systems.

Yes.

Over time. Because no one could do it as good as me because no one cares as much as I do. So giving away some of those things are things that I think you should hold on to is for as long as I as possible until you're making great money in your studio. Because there are always. You can't teach every class if you have two rooms, for example. You can't be in two places at once. But you know, to me, I think sometimes it is about like doing the hard yard, especially when you're starting out and making sure that, you know, you're really working hard and doing everything you can to build your business at the time and make great profit at. To set yourself up.

Yeah. And I think sometimes people see that, you know, we know that great systems can also, especially like in 2025, like compared to when you started the studio, the systems that are like that we can. The software systems that we can utilize these days.

Oh yeah.

That people understandably at times, I get it. Balk at the price of.

Yeah.

And think like they do the mat and like $10,000 for that system for the year. Like that's not.

We're talking about software.

Software systems. The thing is though, in 2025, some of those software systems can replace a whole staff member. Like almost full or 30 hours a week. What used to take an admin person 30 hours of work a week, which.

Costs a lot more than $10,000 a year.

Four or five times as much as that $10,000 a year. So sometimes having those systems in place can be a great way to help you grow not organically, but grow in a way that is much more cost effective for you, that allows you to keep. Keep a lot more of those profits and be paying yourself more. Right?

Absolutely, absolutely. And I think it's, you know, I just want to get back to the importance of building your business so that it is sustainable for your life. And I think that that's so important. We don't want to be resentful towards our business. We don't want to be resentful for our staff. So put your own oxygen mask on first if you are not paying yourself. Have a look at it now and learn to love the numbers. I'm not a numbers person and so many of our studio and I say, oh, I'm no good at maths.

I know, don't get me started.

Yeah, yeah. But I'm not a numbers person. But learn to love it. Learn to see it as money and future wealth growing as well. And you know, I think that's really important to know what's coming up to plan, you know, your accounts, etc, you know, not be surprised by bills. I think that's a big thing as well. Like know what's coming up, what you're gonna have to pay so that it's not like, oh, I've got all these costume bills to pay and the money is all. I've already taken the money from the parents three months ago and it's, I don't know, disappeared. Like it's all been used in the day to day running. Like be smart, open lots of accounts. You know, to me I would always have lots of accounts. Where I'd transfer money around, you know, so that it was easy. And there, there are whole systems to do this, but, you know, like, let's just keep it simple, you know, put all the costume money that isn't yours into a different account to make it a little, you know, it's not tempting. It's not there. Make sure that if you close for six weeks of summer or eight weeks of summer, you know, that you sit there and go, okay, I'm going to divide my wage plus the lease, plus the, you know, what other, other costs you might have over that time out over my 40 weeks. And that works out to be $1,000 a week. So I'm going to put that into a different account every week.

Yep.

Little things like that.

Exactly. We even had one studio owner I chatted to would prepay their rent.

Yep.

They would pay January or February up to November. They would pay 12 months worth of rent in over 10 months.

Yeah. Awesome.

They range.

And if that works.

Yeah. They rang the real estate and said, hey, can I just pay like a little bit extra for 10 months?

Yeah, of course.

They're not gonna say no, absolutely.

Or transfer it to another account, pay it to the real estate, whatever you have to do, but do something to really make sure that you are setting yourself up for success so that you can really make sure that you're paying yourself and you don't get resentful of that staff's Euro summer. And it's you going on a Euro summer. Because that's what we want to say for our studio owners.

Absolutely. So, so good having you guys. We appreciate if you are watching on YouTube, we've been trying to get. We've been trying. And you guys, I said to Amanda and Beck before they started on the other two, but they forgot. But yeah, if you are watching on YouTube, please hit that subscribe and leave us a little comment.

Like, Jody did mean the world to us. Jody did.

Jody did the other day. And so what did Jodie say?

Oh, look, now I'm putting you on the spot.

But yeah, and we would so, so appreciate that. And if you do listen on the podcast, if you could like and subscribe and or comment, show us some love. It really helps us and helps other studio owners as well, because that's what we love to do. That's the whole reason we're doing the podcast.

Right. Absolutely. Thanks, friends. We'll see you on next week's episode.

Thanks, everyone. Bye.

We hope you enjoyed this episode of the Dance Principles United podcast. If you'd love to learn more from us. We have a special offer just for our podcast listeners. Go to the link in the Show Notes right now to get two weeks free in Dance Principals United Tribe. We would love to see you there.