There are really only three ways to make more money in your business, without selling anything else. Things you can do that will increase your profit immediately. They are: Cut your expenses, charge more, and collect it faster. Of course, you can always sell more memberships, retail, programs, etc, however there comes a point when more isn’t always better, or feasible. If you teach martial arts, and the size of your practice floor is only 2000 square feet, you are limited by the size of your facility and hours in the day. These tips below will help you maximize what you already have and quickly make more money. Enjoy!
1.Cut Your Expenses. Want to earn more money? Spend less on running your business. Sounds simple right? You would be surprised at how many of your expenses could actually be altered, giving you more money to keep in your pocket. “But all of my expenses are fixed!” No, they aren’t. Check out some of my suggestions, and stories of how I shaved off thousands, just by asking the right person for a better deal, or not being satisfied with the status quo.
I know you probably think your rent is fixed, and can’t be lowered or adjusted. But there’s no harm in simply asking. Years ago, I moved my karate school to a high end neighborhood that was up and coming, and I paid top dollar to be there. Just one year later, most of the businesses were failing, and in order to entice and attract new clients, the leasing management slashed prices tremendously. Then they made the mistake of letting the local newspaper post it as a front page article. As soon as I saw it, I called my property manager and asked for a reduction in my rent. I got it.
On hearing that my landlord reduced my rent, another one of my friends called his landlord and said he was having difficulty paying all expenses and needed a reduction in his payment. He got it, too. Was he really hurting? That’s questionable. But it goes to show you that everyone that you do business with is in business, and if they are susceptible to losses, you may be able to leverage that.
Now, both of these stories happened around 2008, right as the recession hit. Everyone was afraid. Everyone was losing money. Maybe that worked in our benefit. But the reality is, you never know which, or how many, cards your landlord is holding. Ask for a reduction. All they can say is no.
- Debt expense.
This is another just basic ask. If you are carrying a balance on credit for inventory or something pertaining to your business, call the company and ask for a reduction in the amount of interest you pay. Cry poor mouth, or simply tell them that you are looking for another vendor and would like to keep doing business with them, but you want to pay less for the debt. If they say no, you’ve lost nothing. But if they say yes, depending on your credit line, you may be able to save some significant money. Maybe the line of credit was offered to you at a time when your personal credit wasn’t in the best of shape, your credit score sucked, and they charged you more points accordingly. You may qualify for a lower rate now. Just ask.
This is a big one. And a tough one. But it’s important to regularly look at your payroll numbers and make sure they still make sense. Are you employing too many people? Is your highest paid team member still as valuable as she was when you gave her the position? Is overtime killing you? You have to keep your eye on this closely and make adjustments as you go, and sometimes make tough calls. Below are four options to consider regarding payroll.
I recently looked more closely at my payroll numbers and realized that one of my main team members was getting about 15 hours of overtime each week. $17/hour at time and a half, that adds up quickly! What was the fix? Give those same tasks and hours to someone who wanted more hours, and who earns less. Now, $26/hour turned into $12 per hour for 15 hours per week. Huge savings.
- Excess staff
Did you hire more people during a busy season, and forget to let them go? Or did you think that the busy season would continue forever and now you watch staff trip over each other while some are twiddling their thumbs? Cut the slack. Yes, I know it can be tough and harsh, but what’s MORE tough is not paying yourself enough, or worse yet, not at all. Don’t forget that the reason you went into business was to KEEP money, not spread it around.
This can be significant. No matter what industry you are in, there is absolutely some type of app or piece of software that will make your life and job easier, and one that will save time, and consequently, money.
Let me give you a personal example. For my karate school, I use a software company called Rainmaker. They are awesome. Before Rainmaker, we used to process all billing and payments manually, text and confirm all appointments by hand, and follow up with each lead one at a time. Due to the automation that Rainmaker provides we can do all of that now from one platform, and with the click of one button. I would have to estimate that they save my full time team members a total of 20 hours per week, each! 9am used to be an early day, and 10am was a typical starting time. After Rainmaker, 2pm is a normal starting time for our day unless there is an important meeting. I literally shaved off 20 hours per week for my guys. They were working 60 hours per week, now it’s 40-45. They are more productive, happier to have a social life, and I’m not spending several THOUSAND dollars more on payroll. The best part? Rainmaker costs me $197 per month. Look at your operations, and find where you have people spending a lot of time. Is there a technology fix that could shave off an hour per day? One person, an hour per day at $15 per hour, $300 per month, times how many employees do you have? Your welcome.
If you run a company where you are selling, you probably have bonuses in place. Keep that up, just make sure the bonuses make sense. Do you reward everyone collectively, or is it a personal bonus based solely on their own efforts? Be sure that you aren’t giving money away unnecessarily. I am much more in favor of rewarding personal effort instead of collective achievement. Don’t let the slackers mooch off the performers.
- Buy in Bulk
Are there any products that you use on a regular basis that would cost you less money if you bought in bulk? Do an inventory of things that you use, vendors that you see monthly, and find out if buying more at a cheaper price per item makes sense. It may hit you harder up front, but over the spread of a year, could end up saving you thousands of dollars.
- Payroll services
At my preschool, we recently changed from ADP to Paychex. ADP was being difficult to work with, and a sales rep from Paychex walked in at just the right time. I listened to his pitch, the transition would be seamless, and better yet, I would save $40 per pay period. Not a lot of savings, but times twice per month, times 12 months per year, I just saved $1000. Figure out a way to shave off money here and there, and a bigger payday could show up in your pocket immediately.
How about looking at the prices that your wholesaler is charging you. Is it possible you could get a better deal somewhere else? I bet you could. Years ago in my martial arts school, I looked more closely at the cost of our basic white karate uniforms. We give these away for free as leverage to sell a membership on the first intro class, so it’s just a cost of doing business. But I wanted to see if I could shave off some dollars. Turns out I was SIGNIFICANTLY overpaying, to the tune of an extra $10 per uniform. I go through about 40 uniforms per month, so shaving off $10 each, well, that was a $400 per month savings. $5,000 per year? I’ll take it.
Do you have a staff member that constantly leaves the AC on each night? That shit adds up fast. Fine them $50 per occurrence. Do you have additional fees on your cell phone bill that have crept on there? I remember once that I signed on for a specific cell phone plan, and a year later, it had somehow jumped an extra $50 per month. So I called, straightened it out, and saved $600 that year. It’s not a lot, but every little bit helps.
- Line By Line
In essence, look at your bank account and review every single line item, and figure out if it’s necessary, and if it’s not, cut it. And if it is, then see if there is a way to reduce it that wouldn’t make life difficult or challenging. Anything that you cut is money in your pocket, and often times, isn’t a one time pay day, but month after month you continue to reap the benefits.
2.Charge More. Want to make more money without selling anything extra? Raise your prices. Easier said than done? Why? Because you want to be affordable? You want to make sure that everyone can buy your product or service? No you don’t. How about this idea…if you’re expensive, you must be good. Pretend you are about to go through a divorce, and you need to hire an attorney. Do you get the cheapest one, or the one who comes at a higher cost? Of course there are those who will say they will always choose the cheaper lawyer, but many of us question the value of someone who is cheap. Are they inexperienced? Not so good? Do they suck and they know it so they are willing to give you a better price? Now compare that to the expensive lawyer…you automatically assume he or she is the best. Is it the chicken or the egg? Does the value equal the price, or does the price equal the value? It can absolutely be both. Charge more money for your service, and you automatically become worth that amount, simply because you ask for it.
I can remember years ago when my karate instructor and I wanted to raise our tuition rates. At the time, we were only charging $59 per month for unlimited classes (ridiculously low), and we decided that we would charge $69 per month. We were SO NERVOUS! “Will they still enroll? Will people pay it?” Guess what? Our closing ratio stayed the same, and people still enrolled. So the next month we said, “I wonder if we could charge $79!?” You guessed it. We enrolled the same amount of people as when we were charging $59. We kept this $10 incremental increase to the tuition each month until we finally got the resistance we were looking for…at $149 per month. And so that’s where we kept the tuition. Same classes. Same instructors. Same karate school. We more than doubled our income just because we asked for more money.
3.Collect Faster. This method of earning more money is predicated on the idea that you have a monthly subscription or membership that you sell…or that you could CREATE one and leverage this idea. It’s quite simple, yet many people fear going for it, because it does require that you actually sell. Here’s how it works:
Let’s say you currently run a dance studio, and you teach group lessons, and those lessons are $100 per month. If they aren’t on a contract, that would be the first step. Rather than month to month and they can quit any time, you need to put them on a timed contract, that way they are obligated to a specific amount of money over a specific amount of time. Then, at the point of enrollment, you say something like this: “So, Mrs. _____, now that you are a new member of our dance studio, let me show you another way to pay the tuition, other than the monthly plan, that will save your family extra money. See, right now, you have 12 payments of $100, totalling $1200. However, for a single installment, I can save you $200 by paying a thousand today. You can write a check, but most people just put it on their credit card. Which would be best for you?”
So many things to dissect about this little script, but it works brilliantly. Depending on the demographics of where you live, usually 20-30% of people will take the Pay-In-Full option. And if you’re signing up 20 people per month like you’re suppose to, an extra 5k in your pocket is nice.
So there you have it. Three basic ways to earn more money in your business without increasing your sales. Put these ideas to work for you. I would love to know how much money i just saved you from reading this article. Let me know in the comments if you have any questions about it, or give me some examples of what you changed!
Now, if you want to go all in and earn more by acquiring more customers, that’s a totally different conversation. I have developed a unique method of enrolling students specific to martial arts schools, dance studios, and yoga studios. Watch the video below to check out the idea behind the VIP Method of Recruitment, and Click here to download the exact script that we use to enroll over 20 new members every single month. It’s life changing. Before I implemented this script and student acquisition method, we always grossed between $8-$12,000 per month. Now, we never do below $70,000 per month…and 70 is a bad month. Enjoy!