Building a Budget

Tuesday, July 14, 2009
by Celeste Sepessy, Lead Fitness Writer, HFPN

ARTICLE KEY POINTS

A well-prepared budget will create a path for fitness professionals to follow.
Reconcile your relationship with money and charge appropriately for your talent and your services.
When creating your business budget account for both fixed and variable costs.
Be sure to pay yourself. This is a prime mistake many business owners make.

Building a budget is the essential foundation for any business. A well-prepared budget will create a path for fitness professionals to follow. But starting off on the right money-managing course can be difficult for a new business owner with little business experience. “Your average fitness trainer or health and wellness professional is quite often weak in business operations,” says Jaya Schillinger, owner of business coaching company Inspiration, Inc. “In a budget, you try to map out your vision into numbers.”

Since 2004, Inspiration, Inc. has created business plans and budgets for health and wellness businesses.
Schillinger suggests first addressing your own relationship with money: setting a good service fee, asking for the sale, and collecting money. “That’s one of the first obstacles most wellness professionals hit,” she says.

Give Yourself a Price tag

Pre-budget game plan

Before you start your budget, it’s crucial to have basic business skills and essentials figured out. Follow these steps to ensure a solid business foundation, courtesy of fitness business coach Jaya Schillinger.

Enroll in an entry-level business course.   Most colleges offer basic business classes, which will help prepare any business professional.

Conduct an informational interview. Schillinger suggests finding successful business owner to talk to. “Find out if the business is really what it looks like from the outside,” she says. Just make sure to talk to businesses outside of your demographic, or else they may be reluctant to share information with a competitor.

Buy the basics. Secure your business name, license and Web site domain.

Go to trade shows. You can make use of the included technique and business development classes included in the show fee. Plus, Schillinger says, “You get an idea of who your peers are.”

Schillinger says people tend to undercharge for services. This is in part because, when you work for yourself, people tend to feel like they are selling themselves. “You really need to be doing some personal development work around money and building your confidence when you first start out,” she says.

Build Your Budget

Next, it’s time to create a proper budget from scratch. Inspiration, Inc. provides a business feasibility service, in which a client can create a budget and discern whether it’s realistic. Budget services like this cost around $1,000. “It’s far smarter to actually work out your business finances in a mock-up scenario and crunch those numbers before you’re actually using real cash,” Schillinger says.
For those tackling a budget on their own, there are two categories of expenditures to take into account.

Oftentimes, business owners who have strayed from their budget can get back on track with some quick changes. Jaya Schillinger, owner of fitness coaching business Inspiration, Inc., provides some easy ways to scale back your expenses. Schillinger says owners can look for ways to cut overhead through scaling advertising, reducing staff, changing hours and having the owner work more. “If customers are on a plan for 10 sessions and you let that expire without rebooking it, or if there’s down time in between, you’re losing money,” Schillinger says. These cost nothing and can happen immediately. “That’s the quickest route to money,” Schillinger says. Schillinger says owners can look for ways to cut overhead through scaling advertising, reducing staff, changing hours and having the owner work more. “If customers are on a plan for 10 sessions and you let that expire without rebooking it, or if there’s down time in between, you’re losing money,” Schillinger says.These cost nothing and can happen immediately. “That’s the quickest route to money,” Schillinger says.

First, recognize the size and scope of your business with your fixed costs. These expenses stay the same every month, like rent, utilities and insurance. “Getting the right sized space is very important,” Schillinger says. A small change can mean a significant amount of extra (or less) rent money each month.

Quick fixes for cutting costs

Stop wasting money. Schillinger says owners can look for ways to cut overhead through scaling advertising, reducing staff, changing hours and having the owner work more.
Recognize missed opportunities. “If customers are on a plan for 10 sessions and you let that expire without rebooking it, or if there’s down time in between, you’re losing money,” Schillinger says.
Ask for referrals. These cost nothing and can happen immediately. “That’s the quickest route to money,” Schillinger says.

Second, account for the variable costs. Variable costs are harder to navigate, like traveling to clients’ houses. “You’re going to have to pay gasoline, and that’s going to depend on how many clients you have, which is going to fluctuate,” Schillinger says. Businesses in the fitness industry encounter many one-time or yearly costs, like continuing education, certification and equipment costs, “little things that are easy to forget about,” Schillinger says. “People have a real common tendency to underestimate; it’s a guarantee that you’re going to forget things.”

Instead, be as detailed as possible, including every possible expense — even your own pay. “A lot of people don’t pay themselves in our field or they’ll say, ‘I’ll get paid later,’ ” Schillinger says. “We want to build that into your budget from the beginning so you don’t get caught short.” By planning a thorough budget, a potential business owner will be able to see the money it will cost them to run a business and, consequently, the money they need to make to support that. “Can you do those numbers on the gross sale side?” Schillinger asks. If so, determine the number of clients and service rate to achieve the sales number.

Creating a budget is surely a time and (possibly) money commitment. But one must be prepared for business if they want to succeed, Schillinger says. “By preparing a budget, you can see if your business is going to fail before you even begin,” Schillinger says.

Don’t fudge the budget

Business coach Jaya Schillinger lists the top five mistakes fitness professionals make while budgeting for a business — and how you can avoid them.

Underestimating your actual expenses. “Even if you’re not going to do a proper budget, it would be a very smart idea to have a spreadsheet where you list out all of your expenses,” Schillinger says. “When you have those once a year things that people tend to forget about, make sure those things are on there. That way, when it does come time to make a budget, you’re being realistic.”
Not having a plan at all. Schillinger says flying blind is a surefire way to fail.
Forgetting about outsourced work. “Make sure that the rate you want to pay subcontractors fits what you can afford to pay them,” Schillinger says.
Selling services one session at a time. “Selling your services one session at a time, as opposed to having people buy larger packages is a common mistake people make in the beginning,” she says. “You’re always feeling like you never have enough money to cover your bills because you can’t count on income coming in the future. The bigger packages people buy, the more predictable your income gets.”
Neglecting to have a retail component. Schillinger said the best businesses always sell some retail. “If you’re a fitness trainer, you’re probably recommending your client work out with some weights at home as well, so they’re going to need to buy those dumbbells from someone, why not you?” she says. “I would suggest that you take control of that by choosing products that you really endorse and finding a way to make a revenue off of that, either commission or selling it yourself.” Learn about HFPN's Retail Shop where you can earn money on what your client buys!

Learn More About The Author

This article is a part of the Free CEU course, Building Your Business Bundle #2: Mastering the Start-Up

Jaya Schillinger

Schillinger of Inspiration, Inc. is a consultant and Professional Certified Coach who specializes in management coaching and training for holistic businesses. Audiences connect with her mentoring advice & spiritual wisdom, delivered with a street-smart “let’s get it done,” approach. Jaya is the co-creator of the Power Up! seminar and DVD series, a business blogger, trade magazine writer, and popular speaker at industry tradeshows.

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