Our hosts discuss the escalating issue that Mago has nicknamed “the money problem.” As your studio grows, its costs spiral upwards. For anyone handy with economic parlance, this puts us in the land of diminishing marginal gains — each new sliver of profit for your studio is worth less and less, speaking as a percentage.
So, as you enroll more students you need to hire new staff, maybe lease a larger space, buy more paper towels, and so on. Each new student brings in money, sure, but they also add to your studio’s costs. As the owner, your take-home share might not increase even as your studio grows. Your studio isn’t turning a profit yet even though it has doubled or tripled in size.
“When we’re stuck inside the money problem, we miss out on larger opportunities.”
Okay, well, given, but why is this so bad? Well, as Mago details, the money problem can keep us in a certain mindset. Many studio owners aren’t in it for the money, of course, but approaching one’s work from a place of privation can be detrimental to both your business and your self-image. I don’t deserve more, we may tell ourselves.
Also, when we’re stuck inside the money problem, we miss out on larger opportunities. The money problem keeps us tied very closely to the daily trials of the business, with little time to poke our heads up and look around and take stock and make decisions about where we spend resources or what mission we should adopt for ourselves.
Once we outrun the money problem, we also leave many of our excuses behind. Suddenly we have time and money on our hands, so now what? What are we passionate about that we should institute into our businesses? This is a seminal decision. Not only can we feel good about it ethically, but it also helps avoid burnout. If every day at the business is “So-and-so didn’t show up, can you cover? and oh by the way someone threw up in the bathroom and also such-and-such parent has a problem with their tuition payment” then our time grows ever more Hobbesian — nasty, brutish, short.
Take a gander at this episode to learn some strategies and join us in outrunning the money problem.