How to Start a Yoga Studio ($180K a Year)

Transcript

how to start a yoga studio and make a hundred and eighty thousand dollars a year hi my name is Nate Jones I run this channel I make videos on entrepreneurship which businesses you should start and how to start businesses and today I'm talking about how you can start a yoga studio um if you get value out of today's video hit so yoga studio we're gonna go through the costs um how much you can make what's your cash flow how you can scale it and we're gonna go through ways in which you can fail and how can we create strategies around making sure it doesn't fail and we're going to talk through how you can legal this up to protect yourself okay so let's get into the cost because we all want to know how much is it going to cost us and then let's raise ourselves back up when we talk about how much we're going to make so the cost we're gonna have to lease a building usually a retail space or maybe a mixed-use space that would be suitable for a yoga studio so I was thinking a decent sized uh building would be about 2 000 square feet where we can fit a good 20 people 25 maybe 30 people in there but two thousand square foot of a retail space would be needed for this business the average retail cost is um per square foot per year is 18 a square feet so depending on where you're at it may be more it may be less but I used an average so we can go through this because I use average on everything so 18 a square foot would put us at thirty six thousand dollars for our lease for the year on a monthly basis that would put us at 3 000 a month to build out that Suite because usually when you get a retail Suite it is not built out for the business in which you're starting unless you can luckily find a yoga studio that went out of business and took over that lease but I would I would ask why they go out of business so um we're gonna have to build out this Suite put our flooring in the mirrors basically make it look like a yoga studio so it has aesthetic that's going to cost you around ten thousand dollars to build out that Suite I put another four thousand dollars of expenses for insurance fees and equipment and mats and all that and just in case the build out costs a little bit more so our total expenses year one is going to be fifty thousand dollars that includes a thirty six thousand for the lease the ten thousand for the build out and the four thousand for the ETC expenses how much can we make well I was looking at what's the kind of middle cost of a month for an unlimited package at a yoga studio and I sold about 150 a month now there's you can have tons of different packages but I said hey let's make a very symbol for the video at 150 a month um how much can we make so 150 a month and I said we could probably comfortably fit 20 people per class and we could probably have five classes a day two in the middle two in the morning one in the middle of the day and two in the evening you can always do more but I'm trying to do an average here so five classes a day times 20 people puts us at a um an average membership of about 100 members I think you can have a lot more than 100 members because not everybody's coming every day but again I'm just saying hey year one we're still getting traction I think we can easily get 100 members so let's have a hundred members 100 members paying us 150 a month is 15 000 a month in Revenue okay so let's go through our cash flow I put everything on a monthly basis because we need to be tracking our cash flow monthly to see if we're doing good so we have our fifteen thousand um dollars that's coming in we have our three thousand a month for our lease our 1200 for our build out and our Etc expenses so basically that four thousand plus ten thousand is going to be 12 000 a month or 1200 a month um so we have 15 000 in Revenue three thousand for the lease 1200 for the build out and the ETC puts us at a ten thousand eight hundred dollar a month profit cash flow a month which is a hundred and thirty thousand a year on a yearly basis from the gross revenue that's where we got the hundred eighty thousand dollar number for a yoga studio with only 100 members now the nice thing about this is going into year two that build out drops off because we already paid for that year one okay so that build out is going to come back into our cash flow so red if we don't even increase our membership we're at fifteen thousand in Revenue three thousand our lease only 200 for the ETC a month expenses but it's at 11 800 that's another thousand a month that we're cash flowing 142 000 a year in total cash flow um I think going into year two you can definitely scale past 100 members and really get your cash flow higher but just from a solo business where you're doing everything you're leading all the classes you're doing everything um you can make some pretty good money doing this but the downside is you're doing everything you need to find a way to scale this business in a good way a good model to scale this business is you need to add locations and while you're adding locations you need to find yoga instructors to pay by class so you don't want to have to pay somebody by hour but you can pay these instructors by class they want to get paid by class because there's a lot of people that they may be stay-at-home moms they may be wanting kind of a side hustle to do so they can show up and get paid forty to fifty dollars a class and I'll show you how you can still make money so let's go through how much are we cash flowing profit right now per class because we need to understand how much our cash flow is per class so we can understand how much revenue we can give up to still make a profit so again we're we're cash flowing that first year 10 000 and 800 a month that's 2 700 a week that's 385 dollars a day assuming we're open seven days a week and we have five classes a day that's 77 that we're making per class okay so we have 77 in class right now profit so what can we give up to ensure that we're still going to be profitable if we have a yoga instructor for the afternoon or morning so I would say if you pay a yoga instructor forty dollars a class you're still cash flowing 77 minus 40. so you're still cash flowing that twenty seven dollars okay so that's not that much but if you add it up you as the owner it starts to become more of a passive business passive income business and that's where you would want to add locations and you as the owner is not leading every single class you're having other people come in lead the classes and you can really scale a yoga business and potentially franchise it down the road but that's where you want to watch your expenses and watch where you can pay your instructors and know what wiggle room you have if they ask for a raise because if you don't know your numbers and somebody asks you for a raise you're probably just going to say yes and then you're not going to be making money so let's make sure we make money in this business the next thing we need to do if the numbers are there and we understand what our build out is what our monthly income is all this stuff and it makes sense what we need to do is we need to think of all the ways in which it will fail you need to tear down this business and essentially create strategies around why you will make it successful I have four things in here in which why this business would fail number one no memberships sales sales sale sales everybody starts a business and they don't think about the sales they're like well you know it'll come in like we'll we'll handle the sales once we start it's like no you need to have a sales strategy before you start you can have everything mapped out about how you're going to get people interested in your yoga studio what type of local marketing are you going to do have everything planned out from the sales perspective so every day that you're going in you're working on the sales how can you get people in the studio Word of Mouth local sponsorship showing up places handing out flyers what are you going to be doing you need to be having a marketing approach to get memberships in number two your quality of your class you need to make sure that you are either a great instructor or you're bringing in great instructors because if the quality is not there people are going to say hey why am I coming to this place to get my yoga and if I can go somewhere else where the quality is a lot better you have to keep your quality because quality keeps you in business after you start bad quality takes you out of business faster than when you started because nobody wants to go to your shop and nobody wants to pay you a monthly premium okay number three here your location and your Vibe is not attractive I use the word Vibe because I feel like it's kind of a yoga word and you need to have in a very attractive kind of relaxation yoga studio feel and if you don't have a good location you don't have a right feel for it people are going to say I just don't feel comfortable will not feel relaxed people like to go in there and and have an experience and if you're not giving them an experience and it's not a great experience for them they're not going to stick around Long the fourth thing is failing to scale this business which that means is you're controlling everything you don't want to sub out any of your classes to another instructor and you're a slave to your business we don't want to be a slave to our business we want to have our business work for us someday at the beginning we work on our business and then eventually we want our business to work for us so if you fail to scale you don't have a business you just have a job in which you're holding yourself accountable okay so we want to make sure that we scale this out and add locations and have instructors be able to lead these classes where our revenue is going to go down but our time is going to go up and when your time goes up it frees you up to go make more money in different businesses or scale out your current business and have time to think through the ways in which you're going to scale that business if you don't have time you can't think of ways to improve your business because you're so busy running it okay what we're going to do next is we're going to Legal up so let's say all that's good you have your strategy you want to do it you're going to Legal up you're going to create an LLC because it separates you from your company having a completely legal separate entity allows you to protect your personal assets if something goes south let's say somebody comes in yoga studio they slip some Falls because there's water and they hurt their back and they're going to sue your studio well depending on the state and where you're at there's gonna be a separation from you and your yoga studio so they can't go after your personal assets they can only go after the assets of the business so making sure that you have an LLC is very important because things happen and things go south and think and speaking of things that go south you need to buy insurance for your a studio because things happen and you need to ensure your build out and your equipment inside the yoga studio and you need to have liability insurance just in case somebody gets hurt you also need to have a waiver which protects you again from people saying that assuming the risk of coming in and working out that they're in good condition that they're able to come and and potentially get their heart rate up have a waiver that is approved by a local attorney in your area so they can evaluate hey let's make sure this waiver is boilerplate so everything can be handled the proper way in the event that something goes south the last thing is once you've done all those things you need to commit to starting a business because so many people they talk about starting businesses but they never do it right and if you believe in this Vision you have this dream of doing this you need to do it because there's always going to be an excuse for you not to start a business and the only excuse to start a business is hey I want to create my own life I want to be my own boss and I want to scale this business to provide my family and my community in a monetary way and a community way of giving back so if you've got value out of this video hit thanks