That’s because this “lean” business-planning method is a no-fuss tool you’ll want to use to make sure your dance business adapts and thrives.
If you hear the words “business plan” and feel only dread, you’re not alone. Aren’t business plans the lengthy, exhaustively researched documents that high-tech start-ups use to pitch their ventures to wealthy investors? Well, no. Think of a business plan as a road map to your studio’s success, outlining your goals as an owner and detailing the path to achieve them. If you want to create a sustainable, successful business, you need to develop a plan and, equally important, make sure it’s a living document—reviewing and updating it as your business and the marketplace evolve.
When Tracy Schwend decided to apply for a $55,000 small-business loan to open her Warrendale, PA–based Premier Dance Academy, she wanted to be well-prepared. With the help of a business counselor from SCORE, a free business-mentoring service, Schwend drew up a business plan that convinced her bank to approve a loan in just four days. Today, she has more than 180 students, and she’s looking to expand her current studio space to include a fourth dance room and a new changing-room area.
What a Lean Business Plan Covers
There’s no need to get caught up in formatting and unnecessary details—instead, focus on what business-planning expert Tim Berry refers to as the “lean business plan.” We’ve outlined Berry’s four crucial sections below, including what kind of information should go into each.
1. Strategy (Why You’re Doing This)
“This isn’t an academic text,” says Berry, author of Lean Business Planning. “It’s a few bullet points—key reminders of why you’re doing this in the first place.”
- Who are you? Schwend gave a brief bio of her dance history, mentioning that she’d been dancing for 32 years and teaching for 13.
- What are you planning to do? “I wanted to create a comfortable, stimulating environment for students of all ages and abilities within my studio,” says Schwend. She provided such details as: when her school year would run (September through June), when the studio would be open (Monday through Friday, 4 to 8 pm), the approximate square footage of the studio and the number of bathrooms.
- What need will this business fulfill? Schwend highlighted her commitment to education and physical activity. After asking around, she found that people were most willing to spend money on their kids—that is, her target market.
- How will this business be different from the competition? Schwend originally planned to offer a unique combination class: While a babies’ tumbling class took place, moms could take a Pilates class in the studio next door.
2. Tactics (How You’ll Do It)
“Strategy without tactics is meaningless,” says Berry. “In this context, this means what sort of classes you’ll offer and for what prices, and how you’ll advertise.”
- How will you implement your strategy? Schwend described every class she planned to offer, noting the age group, how long it would last and what genre of dance would be taught. “I included how many nights a week I’d offer these classes and got a mock schedule going,” she says. She detailed her plans for private lessons—$20 per half hour—and explained the difference between her future recreational students and competition students, noting that her competition kids would need to take at least seven classes a week.
- How will you advertise? Schwend’s business plan mentioned advertising via the newspaper, word of mouth, bulletin boards and bulk mailings. Since then, she’s dropped newspaper ads and direct mailers—“We never found much success with these, and they were very expensive,” she says—and moved on to advertising through social media. “Word of mouth is the best way to advertise, in my opinion,” says Schwend, “and social media gives us an easy platform for our current parents and students to share their experiences at Premier.”
3. Concrete Specifics (So You Can Track Progress)
“This section is more fleshing out the tactics. These specifics give you things that you can track, allowing you to focus on management,” says Berry.
- Who is your management team? Schwend identified herself and another teacher—the only faculty at the time. (Today, she has four faculty members and a studio manager.) Berry recommends using this section to also divvy up who’s in charge of what: “Who’s responsible for social media? What about advertising?”
- What are your dates and deadlines? “What are the dates for the next session?” says Berry. When will your recital be? When will you open your studio? “If you give it a date, you double the chances that it will happen,” he says.
4. Forecasts (Numbers Are Your Friend)
“People think you need an MBA to forecast sales and expenses, and that’s not true,” Berry says. “You just need to estimate sales and expenses.”
- Sales Estimate how many students per class, how many classes and how these numbers will increase over the course of three years. (When Premier Dance Academy first opened, Schwend had 40 students.) For the first year, project your sales month by month; for the second and third years, quarterly estimations are fine. The spreadsheet you create should have a column for unit sales (the number of students); one for pricing (the cost of a class); one to multiply units by price (to determine sales); one for unit costs (like sound equipment or the instructor’s salary); and one to multiply units by unit costs (to figure out cost of sales, or your direct costs).
- Expenses “Who are you paying to do the instruction and marketing?” asks Berry. “What about overhead costs?”
- Projected income With the prices you plan to charge and the sales and expenses you project over the next three years, will you eventually be able to make money—i.e. a profit—that you can invest back in the business?An estimated profit and loss statement will help you determine your gross margin (sales minus cost of sales) and net profit (gross margin minus expenses).
- Cash flow How much money will be coming in and going out—and when? Chart your projected cash flow month by month for at least a year.
Review and Revise (The Reality Check)
Berry advises setting aside an hour or two every month to review and revise your business plan. “Look at the difference between what you planned and what happened,” he says. “The shelf life of your business plan is only a few weeks.” Schwend ended up scrapping or altering a lot of her plans: Her babies’ tumbling/Mommy Pilates class combo never took off—instead, her moms were more interested in starting an adult tap class. Five years later, Schwend reports that the adult tap class is a hit. “The women in the class even performed in the recital for the last two years!” she says. This year, she’s launching another new class, called “Progressing Ballet,” which will use apparatuses like yoga balls.
The Bottom Line
Every dance business deserves a business plan that’s a living document, not a dusty tome stuck in a drawer somewhere. The flexibility of Berry’s lean-business-planning approach encourages frequent revision—ensuring that your business will adapt and thrive. (For more resources, check out the U.S. Small Business Administration, which also has business-planning templates and tools.)
Rachel Rizzuto writes the Business column for Dance Teacher and is a second-year dance MFA student at the University of Illinois at Champaign-Urbana.
Last updated September 25, 2019