Running your own studio, gym, or PT clinic gives you the freedom and flexibility to serve your clients however you like. But being a business owner also means more responsibility — including the responsibility to make sure your business makes money.

Having a profitable business isn't just about earning a living. It's about serving your community, creating jobs, and ensuring that you can keep providing exceptional services to your clients.

If your business isn't profitable, it won't last long — you won't be able to continue serving your clientele. In other words, there's nothing wrong with wanting to make a profit — doing so is best for everyone!

So, how do you make sure your business is profitable? Let's look at some of the common challenges that boutique fit biz owners face and how to overcome them.

Why Profitability Is Hard for Boutique Fit Biz Owners

It's not uncommon for small businesses — especially boutique studios and clinics — to be underwater in terms of profit. And in many cases, it simply comes down to a lack of experience.

When you're first starting out, it's difficult to figure out how much to charge. Many business owners simply look at what their competitors are charging and figure that's the "right" price.

But pricing and profits are so much more complicated! Setting your prices solely based on being "competitive" ends up being a race to the bottom that benefits no one. 

Likewise, many new business owners struggle with setting salaries. Figuring out how much to pay yourself and your team members is challenging. You can't just follow generic guidelines for salaries — there are so many factors to consider. 

Running an unprofitable business is stressful — and it isn't sustainable. But this issue is fixable! Follow these steps to optimize the profits in your boutique wellness business.

Business Profitability Strategy #1: Determine Your Break-Even Point

Before you can start modifying your pricing and salaries, you need to know what it would take to make a profit. The first step is figuring out your break-even point, and the easiest way to do that is to calculate your average monthly expenses.

1. Pull your annual profit and loss (P&L) statement. 
2. Find the "total operating expenses" figure.
3. Divide that number by 12. 

Now you know how much your business expenses are (on average) every month. So if you want to break even, you need to bring in at least that much revenue. 

For example, if the total annual operating expenses for your studio are $120,000, that means the average monthly expenses are $10,000. (120,000 / 12 = 10,000)

(If you haven't been in business for at least a year, just pull as many monthly P&L statements as possible and use them to find the average.)

Business Profitability Strategy #2: Calculate Your Pricing

Now that you know how much revenue you need to bring in each month, you can figure out how to price your services. The first step here is determining how many services (classes, appointments, sessions) you can offer every month. 

Here's an example. Let's say a Pilates studio owner wants to spend 20 hours every week teaching classes. That means she has 80 hours every month to teach classes. 

This owner calculated her average monthly expenses to be $10,000. If she has 80 hours every month to bring in that much revenue, she must earn at least $125 per hour to break even. (10,000 /  80 = 125)

In other words, for this Pilates studio to break even, it must be bringing in $125 per hour and be 100% booked for all 80 available hours every month. But remember, this situation doesn't provide any profit — it's the bare minimum that prevents the studio from losing money each month!

Business Profitability Strategy #3: Set a Profitability Goal

Breaking even is OK for your first year or two in business. But that's not enough for the long term — you need your business to be making a profit if you want it to survive!

How much profit should your business make? In general, a healthy profit margin is 15%. In other words, you want to bring in 15% more than the amount you need to break even.

Let's continue with our Pilates studio example:

• Expenses = $10,000
• 15% of $10,000 = $1,500
• $10,000 + $1,500 = $11,500

So if this studio owner wants to have a 15% profit margin, she needs to ensure that her monthly revenue is $11,500.

Now let's go back and adjust the pricing. To break even, this studio needed to bring in $125 per hour with a 100% utilization rate. To make a profit, the business's income needs to rise to at least $144 per hour. (11,500 / 80 = 143.75).

Now this studio owner knows what she needs to do to make her business profitable. She either needs to raise her prices OR increase the number of sessions she's booking every month.

Business Profitability Strategy #4: Figure Out How Much to Pay Your Team

The example above focuses on a  Pilates studio with a sole proprietor. But what if you have a bigger business with a full team? How do you pay your employees fairly without compromising your profits?

This is where gross margin comes into play. A good rule of thumb is to pay employees about 30% of the gross income.

Let's look at an example of a physical therapy studio that charges $150 per session:

• Employee salary: 30% of $150 = $45
• Profit: 15% of $150 = $22
• Remaining: $150 - $45 - $22 = $83

That means for every session, the studio only has $83 left for operating costs after paying the employee and setting aside a profit. 

In other words, the studio has about 55% of its income left to cover operating costs, like rent, insurance, admin costs, equipment maintenance, and marketing.

Running the numbers like this can be a wake-up call. Many studio owners start with unrealistic views of operating costs, salaries, and income. That's why it's so important to do the calculations and figure out how much you can realistically pay your team — without sacrificing profitability.

Remember, if your business isn't profitable, it won't last. And if it closes, you won't be able to pay those team members at all! 

Paying your team a realistic salary is much better for everyone in the long run. And if your current pricing doesn't allow you to pay your team as much as you'd like, then it might be time to increase your rates.

Profitability Is Important

Many business owners struggle with profitability. It's completely normal and natural to want your business to make money, but that doesn't mean it's easy.

If you feel "greedy" when you focus on profitability, you're not alone. Many business owners feel guilty about making tough decisions to protect profits. But making those decisions is crucial — if you don't protect your profits, your business won't survive for long.

So, take the time to run the numbers. Figure out your break-even and profit points. Determine if you need to make any changes to your prices or team salaries. And then, move forward with confidence knowing that you're doing what's best for everyone — your clients, your team, and yourself!

If you want personal support, encouragement, and accountability to make those hard decisions in your business, join Fit Biz Foundations. As a member, you'll get access to comprehensive educational resources plus live coaching support to apply what you learn in your business. Learn more and join the Fit Biz Fam today!