For a lot of dance professionals, one of the pinnacles of their career is to open their very own dance studio.
With a dance studio, you’ll be able to impart the techniques that you’ve learned, mentor students on how to better express themselves through dance, and further explore your art. What’s more, dance studios can also generate income for professional dancers.
But as with any business venture, there are a lot of things that go into planning and establishing a dance studio
— especially when it comes to the financial side of things. With that said, we’ve put together a list of financial and business points that should be taken into consideration before opening a dance studio.
Map Out Your Studio’s Business Plan
Any business venture needs a plan with clear-cut objectives. With a business plan, dance teachers can map out the specifics of their endeavor. For one, they’ll be able to determine how much capital they’ll need to start their operations. Additionally, some topics that should be included in a business plan are the organizational structure, market analysis insights, as well as what you intend to offer as services or products and the marketing efforts needed to accomplish your objectives.
Furthermore, you’ll also have to settle on a name, location, and target market of your dance studio when drafting up a business plan. Your business plan will also include how you want your dance studio to look — from the size and length of your studio’s mirrors to the type of dance floor material. If all of this sounds like a dreary task and you don’t have the skillset to create an extensive business plan, you can hire a business plan writer to do this specific job. Other than laying down the groundwork for your dance studio business, a good business plan consultant will be able to draft you a plan that will detail the pros and cons of your business decisions. Furthermore, they should also be able to help you identify future obstacles your dance studio might encounter and possible strategies to address those obstacles.
Create a Working Business Budget
A part of the business plan that deserves its own section here is the budget. Your dance studio will need an extensive list of preliminary costs before beginning its operations, so a budget is needed to keep your finances in line. More than just being a required section in your business plan, a good budget is crucial to running a smooth business. The benefits of budgeting not only lets you gather insight on your cash flow, it helps you to manage and prioritize your expenses and ultimately gain further control over your money. A good business budget can also help you secure loans from a financial institution, as bankers can use this document to assess your creditworthiness.
If you’re at a loss when it comes to planning your dance studio’s budget, you can look to resources like Microsoft’s useful budget templates or BetterBudgeting’s budget worksheets.
Register Your Dance Studio
After you’ve drafted up a business plan for your studio, it’s time to register your dance school to the proper local, state, and federal agencies. One key step that you shouldn’t miss is registering your business as an entity.
There are four primary types of business entities that you can choose: sole proprietorship, partnership, corporation, and limited liability company. In order to figure out what kind of business entity to pick, consider your legal liabilities, tax implications, and future needs.
Don’t Forget Your Taxes and Licenses
Then, you’ll also have to register with the IRS to receive an employer ID number (so you can legally hire staff) and your state’s taxing authority to figure out what kinds of taxes your dance studio qualifies for.
Furthermore, you also have to comply with local ordinances and obtain local licenses. If you’ll be working with proprietary music, dance studios also need to get licenses in order to play music for commercial purposes from ASCAP and BMI. Doing this allows you to pay royalties to the right organization that owns the music that you intend to use.
Open Financial Accounts in Your Studio’s Name
You’ll need to set up a bank account for your dance studio business to funnel in your revenue and to pay your bills, taxes, and other expenses. It’s crucial to create a separate bank account for your studio because you want to create a clear line between your personal and business assets. If you’re unable to do this, you won’t be able to protect your personal assets — such as your house and your car — in case your business goes under due to bankruptcy or lawsuits.
Furthermore, opening a business account allows your studio to be eligible for its own credit card. Through this, you can easily pay for renovations, monthly dues, and other expenses that are involved in a dance studio. What’s more, your business bank account can help improve your credit score. This can come in handy in case you want to scale up and open another dance studio in the future.
Set Up Your Accounting Books
It’s essential for any business to set up their books. With this, you can track what your dance studio spends, earns, owns, and owes. To do this, you should try to set up a digital infrastructure to help ease this herculean task. There is lots of good financial management software available to buy, but we recommend looking at Quicken Home & Business and Quickbooks Pro. These are ideal for small businesses and have extra features like being able to track inventories, create invoices, and support multiple users.
Setting up a Dance Studio Business: A Checklist
Here’s a quick checklist of all the things listed above if you want to bring your dreams of owning a dance studio into reality:
• Map out an extensive business plan that includes how you want to present your dance studio, your product offerings, identify and reach your target market, and long-term financial goals.
• If you’re having difficulty with creating a business plan, you can employ a business plan consultant to do this crucial task for you.
• Create a budget that corresponds with your business plan. This will help you keep an eye on your finances and keep your preliminary spending in check.
• Use a budget template or worksheet to help you map out your dance studio’s budget plan.
• Register your dance studio as a business entity. Doing this will protect your personal liability and even have an impact on how much taxes you’ll have to pay.
• You should also register your business with the IRS so you can file taxes and receive an employer ID number.
• Consult with your local and state authorities to figure out what kind of licenses you need to obtain before your dance studio can start operating.
• Open a bank account in your dance studio’s name to funnel profits in and keep your transactions in check. This will also protect your personal finances in case your dance studio goes bankrupt.
• Apply for a credit card in your dance studio’s name for easier payment of bills and other necessary expenses to keep your dance studio business running.
• Set up a digital record-keeping book using a financial management and accounting program for your dance studio to easily see all the financial records of your business.
With all this in mind, it’s safe to say that there’s a lot that goes into opening your own dance school, so it’s important that you have an exhaustive plan of what you need to fulfill on the financial side of things. If you’re looking for more ways on how to handle your money well when opening your dance studio, we’ve taken note of the dance floor cost-cutting ideas that might cost you more cash in the long run.
Specially written for StageStep.com
By: Rayna Joy
Rayna Joy is a freelance financial consultant and aspiring visual artist living in Dallas, Texas. When she’s not busy with her clients, you can find her playing with her two daughters at the nearest park.