Cash Flow Basics for Pole Studio Owners
Let’s talk cash flow! You might have heard the saying, “cash is king,” and when it comes to running a successful pole studio, that couldn’t be truer. Understanding your cash flow—the money moving in and out of your business—can help reduce financial stress, plan for growth, and even figure out when to pay yourself and how much (yes, you deserve it!).
Cash flow forecasting has helped me set clear goals, like determining the number of members I need to stay cash flow positive and evaluating whether opening a second studio would be a smart investment. If your studio relies on large cash payments upfront at the start of a term, forecasting your cash flow can help you see how much to allocate for expenses.
Why Making Money Matters
Sometimes, it feels like making money in the pole dancing industry is “bad” or taboo. But remember, cash is king to your studio’s future! Without it, you won’t be able to serve your students long-term. Aiming for a cash-positive business is essential for keeping the doors open and creating a lasting impact in your community.
Cash Flow 101: The Basics You Need to Know
A cash flow statement is one of the three major financial reports for small businesses. Here’s a quick overview:
Profit and Loss Statement: Shows revenue vs. expenses, resulting in profit (or loss). Note: Profit isn’t the same as cash!
Balance Sheet: Lists assets (like equipment or cash) vs. liabilities (like loans), giving you an overview of your business’s financial health.
Cash Flow Statement: Tracks the actual movement of money in and out of your business.
The cash flow statement has three main sections:
Operating Activities: Day-to-day income from teaching classes or memberships.
Investing Activities: Cash related to any investments your business makes.
Financing Activities: Cash for loans or investing.
For pole studios, operating activities is often the most relevant section, focusing on the income you generate from classes, memberships, and merchandise.
Why Cash Flow Forecasting Matters for Pole Studios
If your studio operates on a term-based model, where students pay in chunks at the start, cash flow can be unpredictable. This fluctuation can make it hard to cover rent, pay your team, or budget for other essentials. Forecasting helps you predict your cash flow 1, 3, or even 6 months out, providing a roadmap for how to handle your finances throughout the term and the year.
In my case, my memberships include a mix of weekly payments and full-term payments, which provides a steady cash flow. Knowing this in advance alleviates cash flow pressures and makes planning easier.
How to Create a Cash Flow Forecast
Here’s a step-by-step guide to creating your cash flow forecast:
Predict Income
Forecast the cash you expect to receive weekly (or monthly, if you prefer a broader view). For example, if you have weekly memberships, calculate the average weekly spend per student and multiply it by your total membership count.If you’re new to tracking income, use the last term or two to estimate average numbers. Over time, you’ll gather enough data to make accurate forecasts.
List Expenses
Gather 3-6 months of bank statements and note all regular expenses, like rent, utilities, and instructor pay. Enter these into a spreadsheet and subtract them from your income estimate to see if you’ll have enough cash each week to cover bills.Adjust as Needed
If you see a negative cash flow in a given week, here are a few options:Save surplus cash from positive weeks to cover low cash flow weeks.
Review and cut any unnecessary expenses.
Find ways to increase revenue, like a promotion or workshop.
Once your forecast is set up, reviewing cash flow becomes a simple weekly habit.
A Cash Flow Template to Get You Started
If spreadsheets feel intimidating, don’t worry—I’m here to make it easier. I’ve created a cash flow forecast template that does the heavy lifting. Just enter your income projections and expenses, and the template will show you your cash position each week. Send an email to steph@addictivepolefitness.com and I will send it your way.
How to Use Cash Flow Forecasting to Grow Your Studio
Looking at cash flow every week helps you foresee potential issues and make decisions on promotions, membership prices, and other key strategies. With cash flow forecasting, I know the exact number of members I need to stay cash-positive. And with that clarity, I can plan for growth confidently, knowing I have a solid foundation to support it.
