5 Practical Steps to Cut Costs in your Business Post COVID-19
May 11, 2020
Author: Suzy Levi, NCPT, PMA Board of Directors
COVID-19 is unlike anything we have experienced before. It has impacted individuals and businesses all over the world. While this pandemic and its effects on the global marketplace have been an unexpected shock, you can control how your Pilates business reacts in this time of crisis. Focusing on reducing costs, controlling your spending, and optimizing your workflow with automation will help your business survive during this time and set it up for success when the threat of the virus subsides, and the world begins to rebuild.
Here are five practical steps for Pilates professionals for cutting costs that will improve the financial health of your business. We want to help you weather the storm to survive and thrive, emerging even stronger than before.
Review your current financials, revise budgets and adjust your goals
The first step is to define a clear picture of the current health of your business. You may have started off the year with plenty of cash flow, a healthy budget, and lofty goals. Now things look quite different. Your class sizes, private client schedule and revenue streams may be different now and numbers may be lower for several months.
The key to putting together a success plan is to look at your revenue and see what categories are performing the best for you. With all the economic uncertainty, it is important now more than ever to be aware of your revenue sources and start looking at expanding into different areas. You may have added the virtual programming of group classes and private training. It is possible this could become a top performing revenue stream not only for the short term, but also going forward. You may need to expand on it to maintain the highest revenue possible.
Revise your budgets based on your most current revenue and plan for multiple contingencies, developing financial forecasts for both “best case” and “worst case” scenarios. This will ensure you are prepared for all possible outcomes and will help you preserve your cash flow and spend wisely only on necessary items.
Once you determine your projected revenue and create a revised budget, you can set adjusted revenue and performance goals for your Pilates business for the next 3, 6, 12 and 18 months. This will provide you with a roadmap for moving forward and keeping you on track to achieve those goals.
Re-negotiate fixed expenses
Your biggest fixed expense is likely your rent. Try approaching your landlord for a rent reduction. It is possible your landlord received federal assistance for their mortgages on the property and they may be in a position to offer you a lower monthly lease payment than you currently pay, or at least give you a few months of discounted rent to ensure your sustainability. Identify other fixed costs such as internet, merchant fees, CRM software, phone, and utilities and ask for new contracts that lower your monthly expenses. Many vendors will be experiencing decreased business volume and may be willing to negotiate with you in order to maintain your business. Now is the time to be a frugal business owner and optimize your cost savings.
Make changes to your schedule
It may take a while for your schedule and attendance to return to pre-pandemic levels. Now is the perfect time to cut those classes with low attendance you have been wanting to cancel for a long time. This may also be the time to plan for making virtual programming a regular part of your business operations. How will you build your class timetable with this in mind?
Remove big purchases from your budget
If your pre COVID-19 plans included expanding your facility, substantial capital expenditures for new equipment or other big-ticket items that come with a heavy price tag, consider delaying them at least 6 months. This will give you time to see how your cash flow and operations are performing and decide if it is still the right decision for your business.
Optimize your workflow with automation and processes
This is an opportunity to review your systems and processes and think about how you might use technology and automation to make your business leaner and more efficient. Consider automating your email marketing, appointment confirmations, and client follow ups if you are not already doing it. Implementing more automation and processes will save you time and therefore money. Automate what you can automate.
Taking the time now to carefully analyze your business and make necessary changes will help remove the worry factor in the months to come and set your Pilates business up to be even more successful than before!
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