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As its popularity has exploded, yoga has become big business. At this moment there are over 6,000 yoga studios in the United States alone. USA Today recently reported that Americans spend about $3 billion a year on yoga classes and products, including clothes, vacations, DVDs, and books. However, Christopher Kim, President of Agoy USA, producers of a successful line of eco-friendly yoga products and keen observer of the yoga market, believes the number is much higher.
“There are an estimated 16.5 million yoga practitioners in the U.S. with an extra 25 million behind them who say they intend to try yoga,” says Kim. “If we consider these 16.5 million regular yoga practioners and assume that they take an average of three classes per week, that would easily amount to $1200.00 dollars per year, per yoga practitioner. That number alone adds up to just shy of $2 billion. Now take the $1500 to $2000 that a good portion of active yoga practitioners invest in yoga retreats each year, the explosive hi-end yoga clothing line sales along with DVDs, books, and products that are available everywhere from yoga studios to Target and you are easily looking at a $7 billion to $10 billon dollar industry per year.”Kim is part of an emerging trend of practical, business-minded entrepreneurs with a passion for yoga, who implicitly understand the business of yoga and the current incredible market opportunities that exist for those with the tools to take advantage of them. Kim links financial success with adding more value in the marketplace and in essence, helping others live better lives.
Sky Meltzer former Head of Program Development and Marketing at YogaWorks now with Manduka, a company that began in 1984 with two LA-based yoga studios, explains that when YogaWorks was bought by private investors in 2002, they implemented plans to expand. YogaWorks now consists of 23 yoga studios in New York San Francisco and Los Angeles, with plans to grow their chain of studios to 50. Meltzer believes that the yoga revolution is part of a larger holistic health and wellness trend that is here to stay. We see it exploding everywhere as indicated by things like the growing interest in organic foods, corporate fitness programs that aim to reduce company health care costs, the growing popularity of eco-tourism in the yoga retreat world, the lifestyle trend of colorful and comfortable yoga-wear being worn both on and off the mat, and the accessibility of yoga through DVD home practices, podcasts, the internet and even television networks.
So, if you are a yoga studio owner or simply a yoga entrepreneur, how do you financially position your business to be a bigger player in this $7 billion plus per year industry? There are four financial habits practiced by most highly successful yoga business owners that can help anyone achieve greater growth and prosperity in the marketplace. Adopting these habits requires most entrepreneurs to step out of their current financial comfort zones, allowing them to begin creating an entirely new set of results for their yoga business income and future growth.
Habit 1: Write Down Your Plan
Create and write down a concrete vision of your business and financial goals in the form of a three-year and ten-year timeline. Why? The more you clarify your ideal future vision for your business, the greater clarity you will have about how to grow your business and where to focus your time and energy. When you clarify what it is that you want, you invoke the powerful process of manifestation, whereby you begin attracting people, situations, and opportunities that will help you realize your ideal future. Plus, you have specific written financial goals to keep you accountable.
If you don’t take the time to start with this template, you lose the opportunity to achieve any new significant financial results and any attempt you make to create a new financial result will most likely be slow moving and challenging. If you want to run a successful business, you must understand that your business can only grow as rich as you do. The richer your knowledge and exposure to continual education about how to grow your numbers in the right targeted areas for your business, the more financial success you will achieve.
Shannon Paige Schneider, Founder of Om Time Yoga, with studios in Boulder and Denver, Colorado, is someone who can attest to the benefit of writing down a clear vision of 3- and 10-year goals. “We sat down, my husband and I, before we solicited additional capital for Om Time’s growth to establish exactly where we wanted to be in three, five and ten years,” she recalls. “Almost as important as the end point was making sure we stayed true to who we wanted to be along the way. We committed to a flexible plan on the path towards our goals. We constantly revisit our goals and add and subtract components so we travel down our path. This is such an organic business. Our plan for reaching our 10 year goal seems to get more and more fun along the way.”
Om Time Yoga started out with 950 square feet of space and six teachers in its first location. Their studios now comprise over 6,700 square feet, employ 35 teachers, 15 management and staff members and produce combined revenues of just under $1 million per year.
Enlightened business folk understand that the present is created from the future against a backdrop of the past. What does this mean? There is a way to honor the past but the present is really created from how much energy you focus on writing scripts of possible and probable outcomes for what you would like to unfold in your future, especially with your business. The more you dream life into your ideal business and financial future, the more you will be clarifying to the universe what you really want. Your daily routine of how you manage and run your business will be an affirmation of your ideal future vision.
Habit 2: Master Your Cash Flow
Once you have written and specific financial goals, you take inventory of what your current business numbers look like today. What are your monthly expenses? What are your monthly cash flows? What areas of your business give you the greatest net profit (profit after expenses)? Your successful business growth will be tied to how often you review your financial bottom-line numbers and how you mastermind asking new questions about achieving greater short-term cash flows for your business in the areas that give you the greatest profit.
An example of this is Audra Santoro, recent founder of Paradise Yoga in Islamorada, Florida. Audra understands that she is in a new market with great opportunity where yoga has yet to be successfully established. She saw two of the three yoga studios that opened in her area go belly up. Santoro was extra focused on paying attention to her daily and weekly business income numbers since opening in early 2006. When asked about how her revenues divide up, she was quick to respond that 50% comes from yoga classes and 50% comes from her yoga clothing boutique.
One of Audra’s greatest challenges is that her big ticket spending clientele are seasonal and now that they have hit hurricane season, things have slowed. Audra has proactive plans to grow both areas of her business in the short term and sees her soon-to-be-launched online store, yogastyle.com, as a way to grow her bottom line revenue year round, combating her biggest short-term cash flow challenge: seasonal customers. When asked what her biggest financial fear was, Santoro half-jokingly revealed, “going bankrupt.” However, Santoro’s daily financial focus deeply minimizes the likelihood of that happening.
In truth, 80% of businesses fail in the first five years and 96% fail in the first 10 years. One of the main reasons for this is the lack of focus on short-term cash flows. Ask any small business entrepreneur what his or her role is and he or she will usually give you an exhaustive list of 10-plus jobs he or she juggles each day. It’s the “Jack of All Trades, Master of None” syndrome. Small business owners tend to be good at doing many things at once, yet they rarely focus on mastering any of them. Successful small business owners focus on their short-term cash flows. It is important to discover which areas within your business revenue model you can focus on growing significantly in the next 30, 60, or 90 days. The idea is that if you can master creating new cash flows in the short term, then you will have the additional income to expand the company, while also having identified a key cash cow area of growth in your business to build new successes. From that you can continue to expand and implement other new projects. Plus, your business skill set from mastering one cash flow will have improved to the degree that it will be infinitely easier to master the next cash flow you choose to focus on within the business.
Habit 3: Know Your Numbers
Do you know what type of margins your business has? Do you focus each day or week on how to implement new strategies for growth that would increase those margins? Are you talking with other business colleagues who can make educated suggestions about how to encourage your business’s growth? Paige Schneider from Om Time had savy daily fiscal business habits to report. “We watch cost daily,” she explains. “Each invoice goes through two sets of hands. We budget and review and budget and review. The extra time spent allows us to know our margins completely and make qualified decisions about what people are really purchasing from us, what services and classes they really like and want more of, and what products and services are better removed from the equation. There is nothing more valuable than knowing your customers, what they want, and how that is affecting your margins.
“We create a monthly forecast,” Schneider continued. “We then review monthly and adjust that forecast. We keep detailed records so that when we look back across the past we can create a much more informed present and plan more effectively into the future. This allows us to ebb and flow with awareness and adjust the plan in monthly and quarterly forecasts.” Having said that, the areas of income that have been identified as the most financially profitable for yoga studios have been hosting teacher trainings, setting up yoga retreats, and having a full service clothing boutique both in store and online. Kimberly Wilson, Founder and Creative Director of Tranquil Spaces and Tranquil Boutique in Washington, D.C., began her yoga studio out of her home in 1999 with nine students. Today, with over 600 students per week, Wilson says, “Teacher training has been one our biggest profit source for the studio. I started our teacher training in 2002 out of a need to have good quality teachers on staff and find new talent.” Shortly thereafter, Wilson explained, she also began creating her own clothing line, due to the lack of yoga wear that existed in the market. Kimberly admitted that today, “My yoga studio revenue is about 50% of my net profit and my yoga boutique revenue is the other 50%.”
Habit 4: Create Passive Income
There are other areas of revenue that can help you significantly increase your net margins beyond the more traditional ones mentioned above, and although they may not be as easily acquired or implemented into the yoga business immediately, they can bring tremendous financial impact to your business’s bottom-line revenues and net assets. Linear income comes from things like a studio retail space. You sell one item and you get paid once for that item. But residual or passive income is when you work once and you get paid thousands of times.
One vital practice for financially successful business owners is to gear their business toward as much residual income as possible. This can come from things like real estate, licensing, and “info-preneuring.” Audra Santoro, whose Florida studio was discussed in section two, has also created a passive income source for her business. She bought and renovated her first yoga studio. When she sits down to pay her monthly rent, it is actually a monthly mortgage. As a result, her hard-earned yoga studio dollars create an additional passive income stream that encourages the success of her yoga business and cements her financial future.
Given that real estate prices have averaged a 7% rise each year over the long-haul and at that rate of return, real estate prices double in 10 years time, Santoro’s smart move in purchasing her yoga studio space rather than renting will most likely yield her $1 million plus in equity wealth alone within a decade. Plus, Santoro plans to purchase two more pieces of property for studios in Islamorada in the short-term. Her yoga studios will most likely be valued in the millions in 10 years time, with just her real estate business plans alone.
Not everyone can afford to buy real estate in their areas right now. But residual income can be created from publishing books, DVDs, licensing the right for other yoga studio owners to open up their own studios from your brand, or even licensing the right to a specialized teacher training system for others to use. Poverty can be defined as a state in which large efforts produce small results. And by the same token, wealth can be thought of as a state in which small efforts produce large results. If you don’t have any residual income at this time, write down in your 3-year and 10-year plans that you would like to begin to create some residual income within your current linear income streams of your yoga business. Do the necessary research, learn all you can and watch the magic unfold.
The yoga business owners who are happiest with their results are those who continually review their numbers and ask themselves, along with their community of business advisors, how they can more effectively focus their energy and resources on areas that have the greatest profit potential. It requires asking the right financial questions and focusing on the areas that will give your yoga business its greatest financial return for the time you and your employees spend on it.
A commitment to growth and learning will be one of the quickest ways to achieve the results you want for your business. When you make conscious decisions about your business on a financial level, you will immediately begin seeing opportunities to expand your education and grow more effectively and gracefully toward your ideal financial future visions for your business. Financially successful yoga business owners habitually focus on achieving their business financial goals, make knowing the numbers a daily practice, and master new short-term cash flows of the business, while implementing new passive income stream ideas. The more value you bring to the market with your yoga business, the more profitable your yoga business becomes. The more profitable your yoga business becomes, the more funds you have to continue to grow your yoga business and make an even bigger difference in the world.
By ensuring your yoga business’s financial success, you achieve the freedom to spread whatever mission inspired you to open a yoga business in the first place. A very successful businessman once said, “There are three reasons to be in business: 1. To make money, 2. To make money, and 3. To make money. If your business focus is not to make money, that is perfectly fine, but don’t call it a business, call it a hobby.”