Ep 425 - Budgets and Savings in Your Massage Business: "Business or Pressure" with Allissa Haines

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0:01:03.8 AH: Welcome to Business or Pressure, taking the pain out of massage business with me, Allissa Haines. This is your no-nonsense guide to building a happy, sustainable, massage therapy business. It's my mission to make sure that every massage therapist and body worker has the tools to make a living wage and a thriving business. So let's jump in. We are continuing our money series. And today, we're gonna talk a little bit about budgeting and savings. Now we had an episode a little ways back about cash flow management and that was really geared toward how you pay yourself and prioritize your cash flow in your massage business. There's a lot of overlap with cash flow management, and sometimes, it's even just two phrases to mean the same exact thing, but there's a bigger picture here to be seen than just paying ourselves. So I wanna talk about all the decisions around the rest of our business money and expenses and all the things that go on.

0:02:05.1 AH: I also wanna acknowledge that it can be really, really hard to budget when you have an irregular gross income. When some weeks, you have 10 clients, and other weeks you have 15. It can be really easy to overspend on a busy month and then the next month when it's kind of lean, you're just living client by client and hoping for the best. Quality budgeting and good savings make it so that you don't have to live client by client when you have a lean month. I also wanna note that tracking your expenditures is not budgeting. It's good bookkeeping, but it's not budgeting. Making a budget, making a plan in advance of how you're gonna spend your money is budgeting. Looking later and seeing what you spent that money on without having had a plan, that's just tracking and bookkeeping. So a good plan, a good budgeting system is one in which you check your plan before you make an expenditure instead of opening your bank app and checking your balance.

0:03:13.7 AH: We have all done this where we thought, "I really do wanna buy this extra set of essential oils, it's gonna add $150 onto my product order." And you open your bank app and you're like, "Oh, I had a really good week last week. I can totally afford this." And then two weeks later you're hurting because you had a whole bunch of sick cancellations or you had to cancel a couple appointments 'cause you or your kid was sick and you kind of wished you had not spent that money on the essential oils. A good plan is where before you buy those essential oils, you open your budget or you consult your budget in one way or another and see, "Hmm, I don't have extra money in my product budget, I don't see any other expenditures I could pull from to make money in my product budget, so I'm gonna hold off till next month."

0:04:00.0 AH: It's about being proactive instead of being reactive. All right. Tools for this. I've mentioned it before, I love my budgeting app, YNAB stands for You Need A Budget. It is a bit of a brain flip to start using the YNAB software. They have really good onboarding and intake that teaches it to you. I do not make any money by telling you that I like YNAB and think maybe you might too. I like it because it's proactive instead of reactive. It's really flexible. It automatically imports my expenditures from my bank business, my bank savings, credit card if you got it, whatever business accounts you have. You can also have a separate budget completely separate for your personal stuff, but it's essentially like an electronic envelope system, a way to forecast how you wanna spend your money. Some of you may have had the experience with your parents or grandparents where they cashed a paycheck and they literally got cash in their hands.

0:05:00.4 AH: And I know that when money was tight in my house when I was a kid, my mom just had like almost like a recipe box of envelopes and it was... She literally would split the cash up. This much money was going towards groceries, this much money was going towards Christmas presents or Easter baskets or whatever the time of year was, and this much money was set aside in case my brother or I had school activities, and... You get the idea, it was literally envelopes that said what that cash was gonna be for and then you only spent cash. And if you needed more, you had to pull from another envelope so you kind of knew where you were robbing yourself if you had to readjust your budget. Now we don't really use cash all that much anymore. So I think in a lot of ways it's made budgeting and planning a lot harder because there's nothing tangible in front of us.

0:05:46.9 AH: There's just a debit card or a credit card or however you're paying for stuff. So anyhow, I need an electronic system. So I use YNAB, there's a bunch of other ones out there. I have just found with the other ones, they tend to be reactive instead of proactive. A good plan is one that you consult before you make a purchase. So for me, I used to open my bank app and be like, "Oh, I totally have plenty of money for massage oil." But if I was to open my budgeting app, I would see I only have $75 assigned to that for this month. Can I pull from anywhere else? Yes or no. If not, it's gonna need to wait unless it's an absolute necessity, in which case, I'm gonna pull that from somewhere else. All right, enough about YNAB. You can use a spreadsheet. If you're good with spreadsheets, you can totally set one up to be like an envelope or bucket system where you assign all of the pennies in your bank accounts to categories where you want them to go.

0:06:42.0 AH: Predicting and accounting for what you will definitely wanna spend money on like payroll and taxes and electric bills and then assigning the rest to less urgent things, less regular expenditures. If you're good at spreadsheets, you can totally do this. I can't teach you how, I'm terrible at spreadsheets. There is old-school paper and pencil. They've got great ledger books out there. You can just use a legal pad, whatever works for you, and you're just gonna make a list of all the categories of your expenditures, look at the money that is currently in your account and assign all of those pennies to different categories. And then maybe the next week, you update that amount that's in your account based on what you have taken in and any expenditures you made the previous week, which hopefully, you have tracked. And then make a list for the next week.

0:07:31.6 AH: You can do this monthly too, I found with paper and pencil, it might be easier to do it more often, but those are the tools. You can use an electronic system, a spreadsheet, paper and pencil, doesn't matter as long as you're making some kind of plan. There are a couple of methods to budgeting. One of them we kind of touched on in the 'Cashflow Management: How to Pay Yourself' episode. It actually comes from a book called 'Profit First', which is the concept of paying yourself first, putting money in your savings and then adjusting the expenses of your business to accommodate that. It is a little weird to get used to. If you haven't already go listen to that episode. There is the hope-for-the-best method, in which you pay expenses as the bills come in and then you give yourself the rest, if there is any left. If you don't pay yourself, a reminder, you have a volunteer gig, not a business, totally cool, but make it intentional.

0:08:20.6 AH: I personally do not do well with very strict structure or rules. It makes me rebel immediately. If you tell me I cannot buy another bottle of eucalyptus essential oil, I will immediately go out and buy another bottle of essential oil. But I need some kind of structure. It just needs to be flexible. And I also have a really bad memory. So for me, doing my money management, my checking on my budget, 'cause you don't have to do a budget every week, you just have to set it up and then adjust as you go. But for me, doing that weekly is super important because I forget. I got a lot of numbers spinning around in my head, I got a lot going on in my massage business, I will forget. And this leads us to a something in between how to get started kind of flexible system.

0:09:10.3 AH: You gotta guesstimate your payroll. What you're gonna pay yourself, and hopefully you've figured this out already from the cashflow episode. You are gonna decide your savings priorities. Your first savings priority should always be setting aside tax money and decide if you have any savings priorities after taxes: An emergency fund for your business, vacation pay, sick pay, saving up for a big massage table, whatever, and decide what you wanna put aside for that particular savings. And you gotta look at your expenses. This might be a guesstimate depending on how long you've been running your business and how consistent your bills are. Or you might get a really good grip because the bulk of your expenses are fairly regular or you might have a really good grip on your monthly expenses because your bookkeeping has been fantastic and a lot of your expenses are very regular. If you've been running your business for more than a year or two, you can get a grip on the annual expenses.

0:10:05.0 AH: So that helps. And it also helps to separate your expenses out for needs versus wants. Your electric bill is a need, an upgrade on your hot towel cabbies, probably a want. Until it's not working anymore. And then it becomes a need. Again, flexible systems. So if you add all of this up, your payroll, your savings priorities, and your expenses, and you can't make it work, you have two options: You can make more money, or you can lower your expenses. I think in our little individual small businesses, it gets really easy. Instead of hustling to make more money and instead of really thinking deep to lower expenses, we do neither of these and then we lower our payroll or we lower our savings. Especially if you are a person who does not rely on your massage business income for living. If you are part-time, if there's other income coming into your home, pretty big deal for us who are caregiving, it becomes easier to just pull from our payroll or pull from our savings.

0:11:14.9 AH: You get to decide your priorities, but please make sure it's intentional. And if you don't know what I'm talking about, please go back to the first episode of this year, 2024, where we talk about how to make money when you're also caregiving. Okay, so our next episode is gonna be very specifically about lowering expenses. So for today, I wanna concentrate on budgeting and savings. You look at how much money you have to spend, you assign the money that you have to the expenses coming up, and then you jiggle a little, you readjust as-needed. If expenses increase or decrease a little more than you thought, you can kind of wiggle around between categories. Use software, use a spreadsheet, use paper and pen, whatever you want. Let's talk about savings. There are a few ways to jumpstart your savings. If you have not been regularly saving, if it's a varied amount every week or month, I strongly encourage people to automate it.

0:12:15.8 AH: And I don't mean all of a sudden, decide you're gonna take $100 every week and move it to your savings. If you're not where you wanna be as far as client volume and amount of income coming in, that's really hard to do. Automate a tiny amount. If it's $5 a week, that's a win. If it's $10 a week, that's a big win. Whatever you think you can pull out of your business checking and put into your business savings without it hurting you too much, do it. Go to your banking website, set up an automatic transfer, every Friday to move $10 from your business checking into your business savings. Super easy. It'll happen automatically. And as you do that, make a note in your calendar four weeks from now or 12 weeks from now, so monthly or quarterly and revisit this.

0:13:09.4 AH: See if you can increase it. If in three months, you can increase it to $15 a week. Whoa, Nelly, you're doing great. I think so often people don't start saving because they think they have to start big. They're waiting to get an extra 100 bucks to get started. They're waiting for something. Stop waiting, start saving now, even if it's tiny. Seriously, I give you permission to set up an automatic withdrawal for five bucks a week if that's what you can manage without panicking about paying your bills. All right, the next one is super low-hanging fruit because you hear it on every budgeting and money and savings resource, is to sell stuff. If you have stuff of any value that you could probably get rid of, it is a really nice chunk of change. You know this is like the new wave of yard saling.

0:14:00.2 AH: If you have any massage equipment that's sitting in a closet because you're not using it very often or you have a full hot stone set up but you hate doing hot stones and you just wanna take it off your menu, if you have a stack of 50 therabands from back when you were teaching rehab exercises, but you're not doing that anymore, sell your stuff. Sell it on Facebook marketplace, sell it online, have a yard sale. Go into some local massage group on Facebook and see if they have any ability to list things you have for sale, old textbooks, anything that you have that you could sell that has any value to it, do it. Put that money right into your savings. Also, as you're clearing things out, you're gonna find that you have things that don't have any value to them, but you still wanna get rid of them.

0:14:50.7 AH: Do it, recycle it, donate it, get rid of it. Get it outta your life. All right. The next idea is something that someone told me early on in my career and I actually did it for a while and it was really helpful. If you've got a handful of regular clients at this point, choose one of them and make them your savings account. Which means every time that regular client comes in and pays you for a massage, immediately, like, that day, move that amount of money from your checking into your savings. So if you have someone come in and they pay $100 for their massage and you get like 95 of that after the credit card fees, whenever they come in and you finish the massage and they pay and they walk out the door, before you leave work that day, move $95 from your business checking into your business savings, just for that client. They can be your savings account.

0:15:35.2 AH: I would always move that amount of money, whatever he paid for the massage from my business checking into my business savings. It was a really nice way to get my savings bumped up without feeling it too much. 'cause in my head, if you just think of it like, "Oh, I'm not getting that income 'cause I got a sick call," or a last-minute cancellation, or whatever. Just get that money immediately into your savings. And I've said this a few times, it's good to have a business checking account, something that you only use for business so that you're not mixing business and personal expenses and a separate savings account or more than one to be saving for sick pay, vacation pay, emergency savings to cover operating expenses if you, for whatever reason, can't work for a month. If you're saving up for a big expensive piece of equipment or a big expensive continuing education course, awesome.

0:16:27.4 AH: You also might want a separate savings account for taxes. You might have that in your business, you might have that in your personal accounts, you might have both, but have whatever you need to keep those savings aside so they're there when you need them for this specific purpose. Ditto that for your personal accounts. Like, I'm a really big fan of having a personal checking account. And then I have two savings accounts. I have one for emergency savings, which is three to six months of living expenses. And then I have another one for vacations or whatever. That's budgeting. That's savings. If you only got one tip, one nugget, outta this whole episode of how to improve your budgeting or how to improve your savings, that's a win. This is big stuff. So if comfort with money is not something you experience, if you have not had training in dealing with business finances, this stuff is not always intuitive.

0:17:24.1 AH: You can take a deep breath now. We won't talk about it anymore. All right, today's high five is my friend Carlene. Carlene is a massage friend that I have had pretty much since the beginning of my career 19 years ago. She graduated from the same school as me about a year or so ahead of me. And then we bumped into each other in town at some community events and turns out our daughters went to school together. Anyhow, I've known Carlene forever and she, in a massage therapist worst nightmare, she broke her wrist and couldn't work for a little while and Carlene was gracious enough to send an email to her client base that said, "Hey, I can't work for a little bit. Here are three massage therapists that I know and trust that you should go to while I'm out." And one of her clients came to me and saw me twice while Carlene was out on leave.

0:18:10.4 AH: But then she actually, on her last appointment with me, she bought a gift certificate to me for her friend who lives around the corner from my office. Carlene and I, our office is like 20 minutes apart, so it made more sense for her to give a gift certificate from me 'cause her friend lives right around the corner. So anyhow, I got two extra appointments and hopefully, a new client through that gift certificate. All because Carlene has a network of massage therapists she trusts, and I am so honored to be one of them. I hope that everyone has a Carlene in their massage business and their massage friends. Everyone deserves one. All right, if you have a question about running your business or an idea for an episode, I love hearing from you.

0:18:52.9 AH: You can email me businessorpressure@abmp.com. You can also find me building websites and playing with my community of massage therapists over at deepbreathdigital.com. Make sure that you are subscribed to ABMP's podcasts, wherever you listen to podcasts, so you don't miss any 'cause they're really good. There is so much to learn about building and maintaining a massage business. We're gonna help you cover the business, the marketing side, the communication skills, all of it to help you be successful. I will meet you right back here for the next episode. I can't wait.