I’ve been having A LOT of conversations lately with boutique studio owners that are thinking about selling / closing their studios. I bought my studio from a friend in 2011 and sold it to a friend in 2016, and have some thoughts to share for anyone wondering, if it’s time for bigger change.
How do you know when it’s time?
It’s so personal and subjective, it can be hard to decide when your current role as owner isn’t best serving you or your community any longer. Perhaps you’ve had life situation shifts like having a baby or growing your family. Perhaps your market just feels saturated and like it’s going to continue to be. Perhaps you are really profitable right now, and really, it’s best to sell when things are going well, isn’t it?
Personally, I knew it was time when I wanted more and more time away from the studio. When I realized that I had zero ego surrounding my role as “owner”; I knew in my heart I could still find work and serve my community in a great way, with or without the title and it’s implied responsibilities and paperwork. Perhaps I could have transitioned to silent owner, if anyone is doing that successfully, please show me your ways. I know myself, I care too much to be silent. I often find myself wishing I could have drawn better boundaries so I didn’t get so burnt out, but perhaps some of us are lifers and some of us aren’t. For me, after becoming a mom to a sweet little girl, I realized my priorities were shifting and frankly I wasn’t being challenged in the ways I craved by being the studio owner. I also felt like we had reached a peak of sorts with what we could do with our current reality and that the studio could use new energy. So, like the yogi tree-hugger I am, I said to the universe, “Perhaps it’s time for me to move on?” I kid you not, the universe responded swiftly with obvious answers that indeed, it was a good time. All kinds of offers came to my lap at that time. All I can say as someone who knows a lot of studio owners, we care a little too much sometimes, and we don’t realize we are a frog in a boiling pot of water situation. Usually, by the time you think it might be time for bigger change, it was time a year ago, so you need to heed that feeling and do some due diligence.
Pros and Cons List
A pros and cons list never hurts with the bigger life decisions. Questions I find myself asking my wanderlust clients lately: What do you love about your current role? What do you dislike? What other jobs could you get and how much would you make? Would you want to transition to teacher and what would that look like? Are you killing it and is now the time to sell while you could actually sell it easily, and for profit? Are you burning cash you don’t have? How long is your current reality sustainable? Give yourself a deadline for making a decision by.
I highly recommend getting a valuation of your business if you are thinking about moving on. Business Brokers likely exist in your community who can help with this as well as find a buyer for you, kind of like a real estate agent. I have personally seen studios sell for a huge range, from one month of revenue to twelve months of revenue and more, completely depends on the size of the studio and market you exist in $20K-1M). I’ve seen plenty of long standing studios gracefully close. I spoke to someone recently who suggested studios be evaluated with the “Discounted Cash Flow” valuation methodology over the “Asset” methodology. It basically bases the value of the studio on the amount the investment into the studio can expect to grow rather than overemphasizing the amount of physical assets being transferred (as far as I understand it). This exercise helps remove some of the emotion surrounding the decision.
In The Meantime
Clean up your studio management software and ensure you don’t have inaccurate books. In your studio management system, perhaps this means cleaning up account balances, outstanding series, retail inventory on hand. Work on optimizing the amount of ongoing members you have. Do a detailed studio asset inventory and make a list of every piece of equipment and retail in your studio in a huge spreadsheet with estimated price you paid and estimated current value as this will be considered part of the assets you could be selling. Be prepared to share three years of Profit & Loss statements and Tax Returns with prospective buyers with them signing a confidentialty agreement to view them. Put word on the street that you might be changing the ownership structure of the studio. Be tactful and mindful in the way you do this. You don’t want your existing staff or students to feel abandoned, but I personally found this worth doing as I had several offers to buy from within my community that I wouldn’t have predicted were options. Maybe a face-to-face staff meeting is a good place to start.
At The End of The Day
It’s not an easy decision, but I want to remind you IT IS NOT A FAILURE to move on. Your experience is still valid and will serve you well in your next adventures. You will likely be surprised by what comes in to your life once you create the intention and space to make change. The way you’ve directly served your community and your team is an amazing gift that is worthwhile in a deep way. Some relationships are lifers, some are quickies, some are in the middle, it’s the way of life.
I hope this is helpful! Good luck to all those who are in the flow of running a business and feeling like it might be time for change. I’d love to hear your comments.