Opening a studio. For some it is just a fleeting thought. For others, a more serious professional goal. Pursuing the venture of opening, owning and operating a studio, of any size, is not a small endeavor nor is it for the faint of heart.
If you’re considering opening your own facility, here are ten questions to ask – and answer – before you take the plunge.
1. Where are you going to open this facility?
Explore and compare as many options as possible, this may also give you more bargaining power if/when you do decide to move forward on a lease. Look at multiple shopping centers, warehouses, standalone buildings, sublet options in larger facilities, etc. Lots of room for creative solutions!
2. What is the minimum amount of space you need to execute the services you want to offer?
It’s more logical to increase space as you need it, rather than overcommit to a space you’re stuck paying for and don’t have the proven business to support it.
3. What is the business model, your demographics, marketing strategy and unique selling proposition (especially if there are other similar businesses in your area)?
Am I offering 1:1 training? Semi-private training? Small groups? Mid-to-large groups? Are there multiple trainers? The studio market is growing at a significant rate. Are there other businesses out there that you will have to market against in order to gain prospects’ attention?
4. What are the real costs to open the facility? Do I have the capital to comfortably open without debt? What do I need immediately and what can wait?
Create a spreadsheet of upfront costs, and be sure to inflate your costs by at least 20%. Think long and hard before getting loans or investment. Consider bootstrapping your business especially at first to conserve cash expenditures.
5. What are the real costs to maintain the facility?
You’ll have weekly, monthly, quarterly and annual costs to maintain your facility. Connect with other business owners (especially if you’re in a shopping center or shared location with common area) and get as much information from your landlord for year-round expenses so you’re not left with surprise expenses.
6. What is the minimum number of clients/sessions/groups/memberships (depending on your model) I need to meet my costs?
Once you have your hard costs figured out, calculate the absolute minimum revenue needed to cover your costs. The more conservative with your numbers you are, the better.
7. Is there a ceiling or limit that maxes out potential revenue/business?
Make considerations for limits to potential revenue so you can begin to look at other revenue streams. For example, if you are the only one training versus leveraging additional staff or if you max-out clients during popular timeslots.
8. How much time will I need for actual business management (facility upkeep, business management, staff training and issues)?
Seek out advice from other business owners who are successful at business management and get a keen sense of how much actual time you’ll have left for clients (if you plan to continue training clients). Make sure the owner-operator hat is one you’re ready to wear.
9. What are my best-case and worst-case scenarios?
Setting goals for your potential studio is the fun and easy part. But what about worst-case scenarios? What if you get injured or some catastrophic event takes you from the business? What if business isn’t as you anticipated it to be? What if a direct competitor moves in across the street?
10. What are the reasons I should NOT open a studio?
The reasons you want to open a studio are obvious. But consider every possible reason why you should not do it. Playing devil’s advocate and having an honest conversation with yourself, and from people you trust, may save you from making a mistake or will help you have more conviction of the potential success of your venture!