Here’s a scary one. While I have had my studio open, and even before, I have been learning what it takes to run a business. Well, looking at the profit and loss report for this year, got me thinking.
Normally, I run one of these reports at the end of every year. It shows me how much inn the red I am (expenses being greater than income). I have been using QuickBooks as my accounting software since I got my massage license. Every expense and every fee has gone into it giving me a good idea how my business has done in the past four and a half years. It also showed me some figures that have been staggering.
For the last three years, I have ended the year in the red. Each year has been similar, about $9k in the hole. It’s hard to think that I could have even spent that much, but it does make sense. I put carpet in the shop, fixed the shop up initially, bought computers, software, supplies (massage and computer), taken training, an so on and so on.
For example, last year was a pretty typical year with the exception that I spent a bit more on training and travel expenses than normal. I made 15k in massage sessions, 2k in Reiki sessions, and 2.5k in Reiki classes. My total income was almost 22k.
Amid that, I spent 5k in advertising, 2.2k on computer supplies, .5k on fees to the credit card companies so I could accept them for payment, 2k on insurance, 1k on equipment and supplies, 2k on classes and such, 9k on rent, 2.4 k on travel expenses, 1.2k on electricity, and so forth. Bottom line last year put me 17k in the hole. (Wow. That is almost twice the year before. I wonder how I didn’t see that.)
At any rate, you get the idea. It takes money to run a business, lots of money. What made this painfully clear was when I ran this report for the entire time that I have been in business.
During that time, I have earned 39k in massage sessions, 5k in Reiki sessions, and 15k in Reiki classes. I have earned .5k in other types of classes and over 5k in tips, bringing my total income to 64.5k.
On the other side, I’ve spent 11k in advertising, 6.7k in computer supplies, 1.2k in credit card fees, 7k in insurance, 3k in licenses and permits, 6k in equipment, 5.7k in classes and such, 1k in accounting and other fees, (and this is scary) 22k in rent, 4.2k in shop improvements (including the initial makeover), 5.8k in phones (cellular and studio), 3.8k in electricity, and 5.3k in travel expenses. The total expenses come in around 104k. Ouch. This basically leaves the business in the red for 40k for its lifetime.
Now, profit is measured year by year, and I really think I can come in above zero this year. Eventually, that money that the company is in the hole since inception will drop down to zero and start going into the black to stay.
Numbers can be interesting, as long as I don’t dwell on them too long.