SNEWS attended the Yoga Journal Live conference in Estes Park, Colo., Sept. 14-21, 2014, and throughout the next few weeks, we’ll bring you coverage from the event with news, education and trends from one of specialty retail’s fast-growing sectors.
As a business owner, it’s easy to have an initial mindset that if you build it, they will come. Unfortunately, when reality sets in, that’s rarely the case.
Successful entrepreneurship is far less sexy than bright lights and big money (and Kevin Costner, for that matter). It takes planning, budgeting and measuring.
“In order to have a viable business, you have to understand what’s happening financially to make the best decision that you can,” said Christy Wenning, sales operations manager for MindBody Online Business Management Software. “And if you’re not a numbers person, know that it is important to have somebody help you with this.”
Wenning’s discussion “Creating a Viable Business” at a Yoga Journal Live daylong business workshop focused on yoga in particular, but her advice is applicable to any small business in the outdoor or fitness space.
Your role as entrepreneur
Before embarking on the process of opening up a new business, understanding why you want do this and considering the challenges is vital. Determine whether it’s your passion for the industry, an opportunity to serve the community, a chance to work for yourself or something else that pushes you to open a store or studio.
“When reality sets in, you’ve got 800 things that you have to do to be able to run and sustain this business. It can be overwhelming. It’s easy to get burnt out,” Wenning said. “It’s really important to take time to step out of that wheel and reconnect with why you decided [to open a business.] That has to constantly be able to drive you.”
Then realize that obstacles like a poor location, conflicting personalities among team members, misjudging the competition and marketing ineffectively can all grind progress to a halt — if progress even begins in the first place.
In the process of creating the business, and once the business is up and running, categorize your to-do list into four quadrants: urgent and important; not urgent, but important; urgent, but not important; and neither urgent nor important. Drawing on advice from Stephen Covey in his bestseller The Seven Habits of Highly Effective People, Wenning recommends shifting your focus to items that aren’t urgent, but are important: the budget, for example, or a work schedule for lower-level employees.
Planning and budgeting
When it comes to budgeting, small business owners need to analyze revenue and expenses by not only recording the numbers, but graphing them in order to see the seasonal spikes and dips. Remember that some expenses vary. Wenning used yoga teacher payroll as an example, noting that since it should equal 30-50 percent of revenue, it will become a larger expense as the studio grows.
With planning for the business, look forward three months, 12 months, five years and 10 years and set goals. “Know that we have to accept our reality as it is today, but we can also make choices for the future,” Wenning said.
When writing an initial business plan, map out who your target audience will be, who your competitors are and what their average prices are. Figure out how to make your offerings unique, what your value proposition will be and where opportunities exist. When the business is off the ground, check in regularly with clients in order to gauge how they feel about your business.
Expectations for growth will depend on the age of your organization. A one-year-old business should be growing at a far faster rate than a five-year-old business; after all, it’s easier to grow from three to six customers than it is to go from 50 to 100 customers. Use your marketing budget (rule of thumb allots 10 percent of total revenue to this line item) to increase those numbers.
Years in Business
One to Three
Three to Five
Each year, reflect on what you planned and what you budgeted and how those numbers stack up. “A budget is just a plan. Obviously there are going to be things that change,” Wenning said. “That’s why you have a budget: to keep you on track and to guide you through your landscape.
Gauging the progress of your business involves measuring key performance indicators. Look at revenue by category to see where sales are growing, declining and remaining stagnant. Consider the year-to-year revenue change and profit margin.
In the yoga world, Wenning advises paying attention to attendance numbers like how many new clients take a class, the total paid visits, how many unique visits there are per month and the average number of visits per month. Also record retention rates and referrals.
Scenarios and the following action plans will vary, Wenning said. “You might have a lot of clients, so the total unique visits is large, but have a low average visit per month. You have a good community base, but they’re not engaging with you, not coming in that often. Your focus is on how to engage more with the client base. The opposite [scenario] is a small clientele that’s very engaged. As a business owner they want to increase the client base.”
To boost your business acumen in person, check out the next Yoga Journal Live conference, which will feature a similar Business of Yoga daylong workshop.