Managing an irregular income and planning for less predictable expenses is a big challenge for many business owners, especially massage therapists. Business or Pressure host Allissa Haines discusses the process of preparing for leaner times without sacrificing your paycheck.
Author links:
Website: www.deepbreathdigital.com/community
Resources:
Sarah Cheney, LMT
Bloomington Athletic Massage: http://www.bloomingtonathleticmassage.com
Allissa’s money coaching: https://www.deepbreathdigital.com/money
0:00:00.2 Allissa Haines: Welcome to Business or Pressure Taking the Pain out of Massage Business with me, Allissa Haines. This is your no nonsense guide to managing your business Money. It is our mission to make sure that every massage therapist and bodyworker has the tools to make a living wage in a thriving business. Let's jump in. We are talking about managing an irregular income. There are certainly massage therapists and bodyworkers with a really full schedule and a robust wait list protocol. And good for you if you are one of them. Those practitioners tend to have a more regular income because their schedules usually pretty full and they can usually fill gaps. But for the rest of us, we probably experience busy weeks and slower weeks and busier months and slower months. The fluctuation here could be more dramatic if you adjust your schedule for kids school vacations or if you work in an area with seasonal shifts in population or tourism. Or these fluctuations could just be small and minor if you have a more consistent schedule but occasionally have a slow week or have to wait for a big check from some contract chair gigs or other jobs you do.
0:01:28.4 AH: But managing an organized and structured budget and being able to pay yourself a consistent and regular wage can get really tricky when you have an irregular gross income. Oftentimes we will pay our immediate bills and then we will start forecasting. We'll start thinking through what we expect to earn in the next few weeks or the next few months. And we'll be anticipating what bills are coming in and what we can cover with those anticipated earnings. And then we cross our fingers and hope that there will be enough left to pay ourselves. But our brains were not made to hold all of that information and to keep it straight. We tend to forget that the annual renewal that happens in May or the CE class in September is going to require travel and lodging costs and those have to be paid in July. So we may have set aside a hundred dollars for that license renewal and then accidentally spent it a few weeks before when there was a sale on massage lotion and we placed an extra big order. So then, oops, how am I going to pay for that license renewal? And who gets shorted when we are surprised, and I'm air quoting that surprised by these less regular expenses.
0:02:48.7 AH: Typically we end up paying ourselves less or we end up lowering our retirement contribution and we've just disorganized ourselves out of a consistent regular wage. So what's the solution here? The solution is getting super organized about your expenses and the big picture of expenses. We're talking about sorting out the predictable monthly expenses and then really dialing in to the non monthly and less predictable expenses of running a massage business. And you start with the last 12 months of bank statements. And that doesn't mean you have to like shuffle through all of those papers. You can probably log into your bank website and download a spreadsheet type of file with the last 12 months of transactions. And you want to do that with every account that you spend from in your business. So if you've got a checking, you've got a savings, you got a credit card, whatever you got, you want as much history, at least 12 months if you can do it, or whatever you have if it's less than that. And you're going to scroll through those transactions, you don't need to spend a ton of time on this. You're literally just scrolling through and you're going to make a list on a separate sheet of paper, you're going to make a list of all of your monthly, fairly regular expenses like rent and utilities and any monthly subscriptions of online services, things like that.
0:04:20.1 AH: And one of your regular monthly expenses is paying yourself. So rent, utilities, paying yourself, subscriptions, online services, all of those monthly bills and include paying yourself. And then you're going to make a list of non monthly and sometimes less predictable expenses. So annual things like your licensure and your permits and your membership and insurance. If you have online subscriptions to things where you can do an annual subscription, oftentimes you can save a little bit of money. But then when that renews, and it usually renews automatically, it surprises you. So if you can look through the last year or so and see where you spent your money, you can more accurately predict when you're going to have to spend that money again. So more of these non monthly, less predictable expenses, office supplies, massage supplies, tax preparation fees, your website and domain fees. But with a 10 or 15 minute scroll through your last year or whatever you have of your business expenses, you can usually make a really accurate list of monthly expenses and non monthly expenses. And in our very small businesses, most of these expenses, once you have that history of a year, become fairly predictable.
0:05:48.0 AH: So with a little forethought, you can work them into the budget so you're never caught by surprise. I do this using a software called YNAB. You need a budget. There is no secret there. I am a YNAB budget coach. This software does it for you. It's awesome. However, if software is not your jam, a written list is just fine. And you can check your bank because they might have a program to do this. Banks have gotten really hip with this form of bucket or envelope budgeting. And sometimes they have a feature where you can log in and see your balance and assign portions of that balance to certain expenses or wish lists. And it just becomes a reference point for where you're thinking your money needs to go. So you've got this list of each expense, write the amount that it typically is and when it's due, and then you're going to reorganize that list by its due date. So again, you're going to have a list of your monthly expenses and when they're due each month and how much they are, and a list of non monthly, less predictable expenses. And you're going to organize that by its due date.
0:06:56.2 AH: And then you look at that and you look at how much money you have in your bank account and you start setting aside, assigning the money that you have to those expenses. You can do this with a spreadsheet, you can do this with paper and pen. If you actually write down where you need that money to go, it becomes far less likely that you'll accidentally spend it on something else. So you keep an actual list, paper or virtual, you make note of what you need that money to do, and you reference that resource when you're paying your bills, when you're making the decision to make a purchase that is less regular especially. And if you want to really prepare for these annual expenses and these less regular expenses, you can do a little bit of division. So it's February. I know my scheduling software is going to renew in October, and I know that it costs $250 a year. So I have eight months to save up at that $250. I can get really nitty gritty about this and make sure that I'm saving $32 a month for the next eight months so that come October, I have that 250 waiting in the bank to pay that bill.
0:08:09.0 AH: I can keep track of that on paper, or I could use software like YNAB or a feature in my online banking that does this for me. So on a regular basis, you're totaling up the income that you made since the last time you did this. You make a note of what it needs to pay for for the monthly and non monthly bills you pay yourself. You pay your bills and you know with whatever's left, what it needs to be spent on. You know that if there's $500 sitting in your checking account after you've paid your bills, you know that 100 of it is set aside for your license renewal. That happens in a few months. You know that 200 is set aside for the CE class you're going to take. You know the remaining couple hundred are set aside to renew your LLC. So the point here is that good budgeting makes irregular income more regular during the more lucrative months, you're saving for future expenses to cover the leaner months. You're using your feast to prepare for famine. And the best part here is that good budgeting allows you to pay yourself a regular, consistent wage.
0:09:19.6 AH: And I think that this is huge because you're factoring that regular consistent wage into that list of monthly expenses. Paying yourself is a bill that you need to pay, and paying yourself a consistent amount I think is huge. And I'm going to have a whole other episode on that. Paying yourself a regular paycheck, and that includes regularly contributing to your own retirement and your own savings is a key part of having a successful and sustainable business. So to wrap that up and cover the key points, you make a list of your monthly expenses and you include paying yourself. You make a list of your non monthly and less predictable expenses and you start making note of the money that you have and what it needs to pay for over the long term, not just the short term. And once again, the best part, when you get good at this, you can pay yourself a regular paycheck that includes regular contributions to your own retirement. Let's move into today's chat with a colleague. Today's chat with a therapist. I am here with Sarah Chaney, licensed massage therapist and owner of Bloomington Athletic Massage. And that can be found @bloomingtonathleticmassage.comand Bloomington, Indiana. Is that right, Sarah?
0:10:38.5 Sarah Chaney: That's correct.
0:10:39.6 AH: Thank you so much for being here. Tell me a little bit about your massage practice.
0:10:44.6 SC: So I kind of have two sides of my practice. I work with recreational athletes in the Bloomington Athletic Massage portion of it. And then kind of at the other end of the spectrum, I specialize in craniosacral therapy and light touch therapy. And so those are my two halves of the whole of my practice.
0:11:06.2 AH: I like that you've diversified, that it must keep your days a little more interesting.
0:11:10.9 SC: I really enjoy having a evenly split day.
0:11:15.8 AH: You have chosen the question that no one else has chosen yet. What was your massage school right about or wrong about?
0:11:23.7 SC: Yeah, so I went to a school in Anderson, well outside of Anderson, Indiana. It was in many ways it was very formal. And what they told me at the time, this is going to be kind of an unpopular answer in the end was that they're like, don't trade your services. Like, even if you're trading with someone, still have that cash in hand. And even if you swap it back and forth, have that as the base of that rather than just trading services. And when I went to massage school, I was in my mid-20s and didn't have a lot of money. And I was like, I get free massages for life now because I was just gonna trade everything away. I mean, in my mind, I was like, yeah, trading great. I get a free massage, like, as much as I want, as long as I give a massage. And I know this isn't popular, and I don't begrudge anybody who loves trading. I just came to realize that it actually didn't work for me anymore. I realized I had some trades that I had long going that weren't really working for me anymore as far as the dynamic, because they also, when you trade, I wasn't putting them in my system to, like, hold a credit card, put someone in my book and block out an appointment.
0:12:36.0 SC: And then they would cancel at the last minute. Then I would be like, well, crap, I have nothing covering me. You know, that happened enough that I had some really great trades set up for a while too. So don't get me wrong. But I came to realize with a young child and having a small business, it just wasn't working for me anymore. When I got the confidence to, like, talk to these trade partners, like, look, this isn't working for me anymore. It's kind of opened up for me to take care of myself in the way that I actually need. So I pay now for one massage a month, and then I get acupuncture anytime I need it.
0:13:14.4 AH: This is so great. I love this because I was told we had one massage instructor who said exactly the same thing. She's like, listen, don't get involved in a bunch of trades. And then she described to us how she handled it. So she had one colleague that she would swap off with, but they kept like. And this is at the time 20 years ago when massage was like 65 bucks a massage, tops. So she said they, they put a $50. I think they each put 25 bucks or one of them put 50 bucks in an envelope or something, and they would just hand it back and forth. So she would go get the massage and hand it to the other woman and whoever had the envelope was due for a massage, and they just. And that was a good way to keep track of going back and forth and ultimately like, if someone wanted to stop the trade, they would just keep the 50 bucks and not schedule with the other person again. That's it. And I loved that. And I have had trades go wrong, and I have had a few that go really, really right.
0:14:13.0 AH: There's only one person, like, for the past probably 8 or 10 years that I've traded with regularly, my friend Carlene. And she's just such a responsible, reliable person. We both really respect the trade time, so it's always worked for us. But it's interesting because I moved into a new office a couple years ago and I had this new office mate who was wonderful. And at one point she said, hey, do you want to trade? And I was like, no, I don't want to wreck our relationship by one of us screwing up a schedule or canceling or whatever. And then I was like, let's just pay each other for a massage. And I said, I'll go first so that you have money in hand if you want. And then we realized that our prices are very different. Like, her prices are lower and she takes tips, and my prices are higher and I don't take tips. And I was like, okay, here's what we do. I'm going to pay your price for massage, and when you come to me, I'm actually going to lower my price to meet your price. And that's what we're going to do.
0:15:06.0 AH: We're going to pay whoever has the lower price on any particular service. And it has worked out so well for us, and it works out so that I think she's coming to me. No, I'm going to her next week. And I know as soon as I go to her and get my massage and pay her, I know that, like, within a few days, she's going to schedule her next one with me. And I love that you've shown. I like that it took you a while to get there because it took me two. Well, thank you so much, Sarah Chaney of Bloomington Athletic Massage. I appreciate your time, and I hope that we talk to you again.
0:15:36.2 SC: Okay, sounds great. Thank you so much. Have a good day.
0:15:38.9 AH: If you have a question about running your business or an idea for an episode, reach out via email @businessorpressure@abmp.com you can also find me building websites and coaching massage therapists @deepbreathdigital.com. Make sure you're subscribed to ABMP's podcast so you don't miss a beat. I'll see you right back here for the next episode. I can't wait.