What an Underutilized Team Costs Your Studio and How to Fix It

Figuring out how to make your business as profitable as possible isn’t just about increasing revenue. You also need to reduce expenses, which can be a challenge if you aren’t exactly sure what all your expenses are.

One of the most overlooked expenses is an undertrained and underutilized team. Many business owners try to minimize the amount they invest in training new employees, thinking that they’re reducing expenses. But the result is usually the opposite — undertrained team members typically underperform, which can reduce revenue.

How much does it realistically cost to train a new employee? What’s the immediate and long-term cost of an underutilized team? Let’s look at the numbers and see how to develop an experienced, efficient team that maximizes profitability. 

How much does it cost to train an employee?

It’s easy to underestimate how much money you’ll have to invest in a new employee. Let’s say you want to hire a new Pilates instructor. If they’re not certified yet, you may have to cover their training and certification costs, which could be $5,000 or more.

Maybe you decide to hire someone who already has their certification. Even then, you may still have to invest in specialized training or licensure. 

Plus, you have to take the time to train your new team members on your studio’s processes and procedures. That might not seem very expensive — it’s not like paying for a certification course. 

But training takes time. Whether you’re training your new employee or having another team member do so, those training sessions take time that isn’t going toward revenue-producing activities, like teaching a class or providing physical therapy.

Additionally, you have to factor in the cost of paying your new employee’s salary while they’re in training (before they start working with clients). That means you’re spending money that isn’t immediately being covered by extra revenue, which also needs to be factored in as an expense.

The true cost of an undertrained team

As you can see, training a new employee can be a significant expense. And it’s tempting to try to mitigate those costs by minimizing on-the-job training so an employee can start revenue-generating activities as soon as possible.

But the long-term expense of having an undertrained team far outweighs the time and financial cost of comprehensive training.

Without adequate training, it’s harder for employees to make the best use of their workday. They may not have the tools (or motivation) to seek new clients and increase their utilization rate. Employees who don’t fully understand your business’s processes can’t use their time in the most efficient way.

Undertrained employees may end up spending several hours a week simply being at work without actually contributing their time or energy to valuable activities, like working with clients or helping with “behind-the-scenes” tasks.

Undertrained employees are often underutilized. If you have an underutilized staff member, that means the money you’re spending to pay them isn’t recovered through revenue. Depending on the exact setup of your business, underutilization can cost hundreds or even thousands of dollars every month!

Maximizing revenue after training

How can you see a quick return on all the time and money you put into training a new employee? Make sure you have a process for them to start working with clients as soon as possible.

You need a clear plan to start attracting new clients or moving clients from an over-scheduled employee to a new team member. Without a process, things will likely just continue as usual — your existing team will be overbooked while your new employee won’t have enough work!

You can avoid this issue by having a plan. For example, if you want to move some existing students to a new instructor’s class, start preparing them with positive messaging while you’re training your new team member. Remind them of the benefits they can expect from working with a new instructor.

Likewise, if you hired a new employee in order to expand your operations, start investing in your marketing to get new clients through the door. Advertise new class times or expanded appointment hours. Consider running a new client promotion. Take intentional steps to bring in new customers so you can have revenue to offset those new employee training and onboarding costs.

Finally, make the most of the team you have. Once you have highly trained employees who know their work and understand how your business runs, optimize their schedules. Try to distribute clients or classes evenly between team members. Evaluate your schedule to see if it makes sense to change some class times or appointment hours.

And continue investing in your team. Offer employees opportunities to earn new certifications and enhance essential skills. Provide clear, consistent feedback so team members know how they’re performing and what to change. Identify outstanding employees who might be interested in more responsibility, and prepare them for a possible promotion.

Finding and addressing revenue leaks

Your business’s profitability depends on the ratio of revenue to expenses. While increasing revenue can improve profitability, it’s just as important to find ways to lower expenses.

An undertrained and underutilized team can be one of the biggest expenses but a boutique fitness or wellness business. While it might seem like spending money on a new employee’s certifications or training isn’t cost-effective, the truth is that you’ll lose far more money down the line by keeping an underperforming staff. 

Take the time to train your new employees. Then, make sure you have systems in place to optimize your team! Build efficient schedules, market to your target audience, optimize your pricing, and make sure work is distributed as evenly as possible among your employees.

It might sound overwhelming, but it doesn’t have to be. If you’re not sure whether your business has revenue leaks or how to fix them, I’m here to help. 

Schedule a 1:1 coaching call with me! We can talk about any aspect of your business and find ways to decrease expenses and boost revenue. Book a 1:1 coaching session to get started right away, or schedule a free discovery call to chat with me and make sure we’re a good fit to work together.