52 Music Studio Money Hacks That Will Save You Thousands!

1. 

Improve your School Billing System.

• Make it predictable: Get into a pattern of updating your prices every year on the same date. In New Zealand, we did always increase prices at the start of term 2. This way, any new kids would already be hooked on lessons from term 1 and it also aligned easier with our tax year. You will have your own cycle where you can choose your optimal increase point. 

• Reduce your tax obligations: Record any unpaid fees you were unable to collect as an expense, as this reduces your taxable income. Chat with your accountant on how to set this up in your accounting software. It's something you're able to do because services were delivered (lessons taught) but you were not paid in full (for whatever reason). 

• Make it easier for the customer: Move to direct debit billing for all students in the school. You want to be in control of the date lessons are paid. If people get cranky about it and refuse, then hike up the lesson prices by 15-20% and then say 'We have a 15-20% discount for those on direct debit, which card would you like to use?

• Incentivise paying early: If you do quarterly/ termly billing, then offer early pay incentives, not cash discounts. For example, we offered movie tickets to the first 50 students to pay their invoices and everyone else that paid by the due date went into the draw to win one of 10 double passes. This way you get the kids excited about lessons and they help encourage their parents to pay on time! 

2. 

Clever Tips for Managing Your Staff and Students.

• Strong policies prevent lost income: Have a strong cancellation policy that forces families to give you notice when stopping lessons. This buys you time to replace students from a waiting list or increase your marketing. 

• No more refunds: Do away with refunds or reschedules. Replace all missed lessons with a “recap” video from the teacher. The teacher can record this video during the normal lesson time that has been missed. Legitimate refunds are replaced with credits that they can use for future lessons or donate towards your charitable focus (e.g kids that can't afford lessons).  This is win/win/win, the student still feels they have received good value for what they paid for, the teacher still gets to use the time the set aside for this lesson, the school doesn't have to debate the details or accommodate inconvenient catch ups which saves you time and mental energy. 

• Plan around public holidays: Make a plan for missed lessons due to public holidays. Know the dates of all of these in advance, decide how you will handle it within your school and only give families that one option. Depending on how your school operates you may be able to still bill for those lessons but move them to school holidays or weekend slots with lots of notice. 

• Pay staff for the job they do: Create multiple contracts for your staff team. E.g 5hrs admin, 10hrs teaching and pay these two tasks at 2 different rates. They don’t have to be paid the same rate for all the work they do. Separate the teaching hours and non-teaching hours into fair rates which may differ.

• What is best for the business is what is best for the team : Remember to always hire for what the business needs, not what the applicant wants. Don't feel guilty for thinking of the business first, if you don't, no one will.  Everyone wins if your business wins. 

• Invest time into a good retention system:  New students are nurtured and stay for longer. This means that new students will be an increase to your profit margin, and not just what keeps your business stable. The more leaky holes you plug up in your bucket/funnel, the more money stays in your pocket. 

• Go paperless: For posters that kids hold up in social media photos, have them hold the poster on an iPad. Have a QR code for concert programs at your events for parents to scan.

• Charge for concerts: Opportunities for students to perform is essential to their learning progress, but often these can be a bit of a drain on the bank account.  An entry fee should at minimum cover the cost of running the event, especially if you make it worth the money by having good photos, fun decorations, a theme, prize givings etc. 

• Add more value: Justify bumping up your lesson fees by offering add ons e.g. lesson books, video demonstrations library, weekly live q & a's etc.  No longer do they just get a weekly lesson, they get a comprehensive structure built to help them succeed. (A library of demonstrations can be hosted in a number of places e.g. google drive, kajabi)

• Make Up-sells, Cross-sells, down-sells wherever you can. Examples include things like:

  • Get students learning a second instrument with you
  • Entice students to take two lessons p/w instead of one
  • Get siblings booked in for lessons 
  • Get students to join your band program
  • Create special workshops
  • Down-sells are when someone can't afford to pay the full price so you offer a more limited experience e.g attending fortnightly/bi-weekly, being on call during cancellations to pop in for a one-off lesson, joining group classes, joining short 4-6 week challenges than taking a break. 

3. 

Get Good With Your Accounting! 

• Know where your money goes: Get set up with quality accounting software as early as possible. This will save you time and stress.

• Leave yourself with margin:  Budget and forecast from the previous year's income instead of predicting that you'll experience x% growth. This way all the growth you do experience is net profit and cash in your pocket.

• Plan for the off-season: Set aside money for the quiet months during the year. Especially if you haven’t got a reliable summer program implemented yet. Figure out what you're going to need across that period (e.g $20k for 6-weeks without income) then divide that amount by the number of weeks you have until that period starts to calculate the $ amount you need to set aside each week. Set up a separate bank account for this money so you don't touch it.

• Don't get stung with huge tax bills: Set aside your tax throughout the year, consistently. Especially when you take cash out of the business. Set up a separate bank account for this money so you don't touch it. 

• Depreciating your assets: Make sure you are depreciating your assets - this lowers your taxable income. Keep a list of all the assets you buy in your business e.g new instruments, vehicles etc... Get your accountant to help you do this as part of your annual tax filing.

• Implement a debt collection system: to chase unpaid debts when you know you’re in the right. Especially if these debts are quite high.  The ideal is to not allow families to fall into debt. No payment = no lessons! Being a nice person is a very different thing from allowing people to get into debts they cannot sustain. You have to watch unpaid debts like a hawk!

• Subscription Audit: Check your subscriptions and cancel anything that is doubling up something you’re already paying for. Also, cancel anything you’re not using. You'd be surprised how many subscriptions you might still be paying for even if you don't even need them anymore.

• Knowing your numbers is power. Track your number (daily, weekly, monthly, annually). If you don’t know how to run the appropriate reports, ask your accountant. Bonus tip: Want to get back control of your cashflow, take 5 day challenge!

• Every dollar counts: Sign up for a business fuel card to save on petrol.

• Review all your expenses regularly: Ring and ask for deals and discounts, especially on items where you could use another competitor as they usually have the most wiggle room on their prices (e.g phone, power and other service industries)

• Move expenses to annual billing where you can: Most businesses give bigger discounts if you pay for a year upfront.  Just remember to space out the different annual expenses over the 12-months so that it’s easier for cash flow. At BAM (Build a Music School) we even offer up a massive discount for an annual membership.

• Maximise all of your tax-deductible expenses: Look through your personal accounts to see what you might be purchasing there that could actually be legitimately paid by your business. 

Marlayna pays someone else to manage her finances and this financial manager approves all purchases over $250. She makes decisions based on forecasting. She has a great grasp of Marylayna's AP, income, savings, and taxes and can decide if the school can “afford” something and still remain financially healthy long term. Allowing a financial manager to handle the spending in this way, frees up Marlayna's time and mental energy.

As Marlayna says, "It’s basic accounting, really. And that is NOT my superpower!".

We love that because these clever money hacks are all about doing things smarter and not harder. If there's someone else who can do it better than you, let them!.

Sharon only buys instruments and books once a student has already purchased them. This way, she doesn't have money tied up in stock. She keeps a very minimal supply on hand. 

She has a system to make sure she isn't accidentally over purchasing books, too. So, for group lessons, the students book and pay in advance of the term, so she knows exactly which books are needed.

For private students, they do a half-price trial lesson and use the "teacher" copy or the one copy that Sharon keeps for sale. Her book supplier posts new book orders usually within a couple of days, so if the student books in for lessons, she can usually get a copy delivered by the time of their next lesson. If something unexpected comes up, she'll sell the student the one copy she keeps onsite and immediately orders another copy to replace it.

One extra tip she had, was to check the cost of commercially printing PDF style books as it's usually cheaper per book to purchase a bigger quantity at one time. 

David has managed to cut down on the headaches and/or money often lost from lesson cancellations. He has all his tutors use that missed-students lesson time to record a video lesson and send it to that student.

These videos are uploaded to YouTube as an unlisted video and he then sends the link via My Music Staff lesson notes. E.g A 30 min lesson means a 15-20 minute recording and then 10min to upload and send the video in that same 30min lesson time slot.

He has a strict 7-day notice for makeups. So if the student cancels outside of that window, they don't get a take-home video. He said that he keeps this policy strict, and then when he is able to offer that video lesson, the parents really appreciate it. Because his teachers do the whole video within the scheduled lesson time it doesn't add any more work for them, or extra wages being paid by the studio. 

Shawn also follows the same lesson cancellation process as David and says that video lessons at home have been a complete game-changer. No more make-ups or scheduling headaches. At his school, they use Lessonmate and love it. It is a super easy software to use and very smooth. As Shawn says, "Lessonmate is incredibly affordable for what it is and what it can do for your business. They are super nice people as well and the customer support has been very good. Definitely worth checking out"

You can check out Lessonmate here.

Nicholas highly recommended going through the "Profit First" system by Mike Michalowicz. There is a book that outlines all the steps that Mike suggests for having a profitable business. The main point he makes is that you need to prioritise taking home a profit from your business, even if it's a tiny amount. He works in percentages and helps you organise your business finances and accounts in a way that works for each individual person. 

As Nicholas says, "I have figured out some of my own percentages based on what I know I need. For example, I put way less than 15% in taxes because I know I won't be paying that much. I follow the others pretty closely. I always take my profit first though. It has been amazing for my business and peace of mind. I really don't worry about money at all"

You can check out more details on Mike and his worldwide famous book and method here.

Kelly has saved hundreds of dollars by purchasing the premium Canva subscription and doing any design work in-house. She no longer has to pay the hourly rate for a graphic designer! As Kelly says, "Because Canva is so user friendly, the product still looks good while I'm learning!"

We agree, of course. Here are some designs she's created on Canva, without paying a cent!