Posted on June 24, 2021
Keep your massage business financially healthy with regular revenue check-ups
No one decides to start a massage therapy business because of their love of bookkeeping. Recording and reconciling your income and expenses can seem tedious and you’d rather be spending time with clients. But that doesn’t mean you should avoid regularly monitoring your finances.
Keeping track of your income and expenses is critical to the well-being of your business. Reviewing your finances monthly and quarterly allows you to detect cash flow problems before they become cash flow disasters. Plus, it is much easier to prepare your annual taxes and make accurate estimated payments if you track your income and expenses as you go.
Understanding where you stand financially also helps you plan for growth. You probably started your business with a budget that included estimates for your monthly income and expenses. Is reality matching up to your projections? By monitoring each month’s income and expenditures, you’ll be able to tell how close you are to meeting your revenue expectations.
As you drill down into your monthly numbers, you’ll also be able to identify where you can make changes to maximize your profitability.
If you already aren’t monitoring your money from month to month, follow these steps to get started.
1. Create a budget using your current data
List all of your sources of income, including treatment sessions and product sales. Be realistic about these revenue figures. Make an estimate based on your annual average, not your best month. Be sure to note any significant seasonal fluctuations. Then, list your expenses. When listing your expenses, separate fixed expenses from those that you can adjust. For example, your rent is probably not something you can reduce in the short-term. On the other hand, you can control your labor and product costs.
2. Begin regularly recording each of your transactions
Using a ledger book, spreadsheet or accounting software, record every business transaction within a short time after it occurs. Plan to add new entries at least once a week. Otherwise, it can be very easy to let this paperwork pile up. Record both payments made to your business and payments made by your business. You don’t want to miss out on any deductible expenses!
If you are a ClinicSense customer, keeping track of your revenue is easy. Our software includes recording and reporting features that allow you to see your status with just the click of a button.
3. Compare your actual performance to your budget projections
After you’ve added up all your income and expenses each month, compare the results to your budget. Did your performance match your expectations? Pay particular attention to any shortfalls. These can be signs of impending cash flow problems.
If your net profit for the month isn’t where you thought it should be, you’ll need to investigate why. Did your expenses increase? Did you book fewer sessions than expected? Are clients buying fewer products or booking shorter sessions than they did in the past?
4. Look for growth opportunities
Once you know where you stand financially, you can set a course for growth. Look at your biggest sources of revenue. Maybe there’s an opportunity to expand that service or product offering and increase your overall income.
Examine your expenses, too. Are their products or services that produce a low net margin (costing almost as much to offer as you earn)? Maybe it’s time to replace them with something more lucrative.
Knowing where the money’s at is the key to earning more of it
They say that knowledge is power. When you know where you stand financially, you have the power to make the best possible decisions for your business. Stay on top of your cash flow and spot opportunities by making a plan for regular revenue check-ups.
ClinicSense can help you gain the knowledge you need for your business to thrive. Visit our product tour page or contact us for a free demo to learn more about our revenue tracking and reporting features made just for massage therapists like you.