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Author Topic: Owning a dance studio for profit  (Read 1292 times)
MrsMoose
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« on: March 26, 2010, 08:08:55 AM »

Hi,

I was wondering if anyone here had any thoughts on owning a dance studio. Specifically a franchise as a good business investment.

Obviously from what we pay for dance lessons, judging by the number of students there are, what do y'all think of this.

Is it a good investment.  A good franchise is what I'm thinking Here are my thoughts.

You can own a studio with a partner, one half does the business end, one half teaches and does that half.  There is no inventory, your overhead is your staff and a computer or two and music and a music play and the studio. Hard to be ripped off unless your partner is giving away the lessons

After the business is established, you can be somewhat semi retired and still derive an income?Huh It's a business that can be owned at any age and it's a business that appeals to people of all ages and more and more I find. The studio I go to brings in a nice piece of $$$ and two owners could certainly live off the income easily. So what do you'all think. Forget that we love dancing, I'm asking from a business point of view, once the business is really established you can hire someone to do the business end if you want. It's no inventory so to speak to go bad or outdate. I really would appreciate feedback to this question.
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elisedance
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ee


« Reply #1 on: March 26, 2010, 08:16:21 AM »

The thought had passed my mind - but not a franchise I have too many ideas of my own.  Its not easy for a non-champion you basically have to solicit the same to give yourself 'cred' or settle for introductory dance.  Perhaps the thing to do is to enter into a contract with an actively competing couple so that they get the benefit of a home studio where they are the stars while you get the reflected cred.
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MrsMoose
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Posts: 271


« Reply #2 on: March 26, 2010, 08:35:06 AM »

Well my thought was to find a PRO that is established.

The next thought of course is something you mentioned, chain vs independent.

What do you think, do chains make more money??

My personal thought is that it depends on the teacher. I find that people will go where the best Pro is, for example there are 2 top pros that I know of. One is with a chain, the other is independent.  And I think the chain one has more students than the indpendent one.

So
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QPO
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« Reply #3 on: March 26, 2010, 09:13:07 AM »

I am not sure how it is in  Canada, but here is Australia it just depends on location location location!. You need to have a good reputation, I think any business would take time to build and any profit s would come in time and not straight away unless you are a high profile person. I would definatley do number crunching
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MrsMoose
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« Reply #4 on: March 26, 2010, 09:21:07 AM »

Not in Canada, sorry to have confused you

But you are quite right with all you said
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cornutt
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« Reply #5 on: March 26, 2010, 10:06:03 AM »

Hmm.  My DW and I are good friends with the couple who owns the studio that we dance at, and they've shown us quite a bit of the business end of their operation.  He is the senior instructor, and she both instructs and runs the business.  Here is some free association based on what they have told and shown us.

They used to be FA franchise owners.  They had franchises in seven or eight different cities.  They made pretty good money doing this.  But to hear them tell it, they were miserable.  They were both spending all of their time running the businesses, training other instructors, and driving back and forth to the different locations for various business purposes.  So back around fifteen years ago they decided that their sanity, and having time to dance for themselves, was more important than making big money.  So they chucked all the franchises and started one independent studio, which is what they've done ever since. 

At the time they owned the FA studios, they were competing as a pro couple.  But I don't know how much they really traded on that fact.  I have the perception that, in the U.S. at least, being a high-level competitor doesn't really help market your studio all that much.  People point at Cheryl Burke a lot, but her public rep is based far more on her DWTS exposure than on her competitive career.  The people who are impressed by comp achievements are mainly other competitors, and in the U.S those are far outnumbered by the social dancers. 

As I understand it from talking to them, the main reason they went independent was because they felt that the FA system was becoming old-fashioned and was not evolving to keep up with the modern trends in ballroom dancing.  However, I'm sure that the fact that they don't have to pay franchise fees helps with the bottom line.  For what it's worth: there are four studios in this area, serving a population of about 350,000.  All four are independent. 

I know that this couple has had some very lean years.  I won't embarrass them by repeating any numbers, but they aren't getting rich doing this.  They do it because they love it.  They've developed a lot of strategies for saving money and time.  For example, when they have visiting coaches in, they put them up in a spare bedroom in their house instead of paying for a hotel.  A big thing they did three years ago was to get an SBA loan and use it to buy a small office building.  Half of the building now houses the studio.  The other half has eight office suites, five of which they lease out.  The rent payments cover the mortgage and some of the utilities.  Last year, they converted all of their instructors to independent contractors.  The savings for this is mainly in time, as they no longer have to do all of the tax paperwork for them. 
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dlgodud
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« Reply #6 on: March 26, 2010, 10:43:57 AM »

I guess it all depend on.

Like someone mentioned already, being a pro who has name out there does not mean bring $ in the studio. I've seen this numerous times. Being a so-so pro, but someone who has a friendly and nice character brings people in the studio.

I also think if you want to own a dance studio, you have to have some business mind as well. I know a lot of people want to own a studio because they love dancing, but a business is a business. That's what I think.

Finding a nice location is a starting point. For example, in NYC there are so many studios and dance instructors. I doubt it could be profitable if you open a new studio in the city right now. There is a new studio opened recently in the city, but it's a Maxim's studio and he is very well known. Still I doubt the studio could be profitable because it is opened in Soho, which rent expenses are crazily high.

Also, I think you have to have some money that you can survive at least 6 months from beginning of the business. Otherwise, it could be a disaster. You will never know how much revenue you could bring in the studio, but there are always fixed expenses you have to spend every month. So just in case, you need extra money for that reason.

Well, I've been thinking about this myself and don't know if I would do it or not. But, good luck with it and let us know how it goes.  Smiley

« Last Edit: March 26, 2010, 01:31:50 PM by dlgodud » Logged
Graham
Intermediate Bronze

Posts: 38


« Reply #7 on: March 26, 2010, 12:01:18 PM »

Depends on your target audience.
For people never danced before, no name is significant to them, so any name will do. If you promote yourself as having a name, that's enough to satisfy many.
To get current dance enthusiasts in, then you need quality instruction and a good name in the dance world.

I worked briefly in an AM style studio. Only one known dancer (and she was an excellent salesperson) and the rest were basically people off the street.
The main focus was on selling and only a small part on dancing. Several times I was asked by one instructor or another to help them learn a  step only a couple of hours before they gave a lesson.
The owner was very proud that he had had successful studio (and made millions off it) for over 50 years. He eventually started to learn to dance properly - and went to another reputable studio to learn. The studio he owns has a reputation as being one of the worst in Toronto/GTA (and there's quite a bit of competition for that title).
Once people became serious enough to want to improve, they would start looking around and would usually leave.
So, it depends on your principles.

Graham.
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Dancerette
Intermediate Bronze

Posts: 123


« Reply #8 on: March 26, 2010, 12:34:14 PM »

As someone mentioned above, it all depends on why you want to become involved in the dance business world.

The franchise in my city was pretty much zero about teaching dance and almost 100% about emptying wallets.

I know; I started there and had a few head to head battles with instructors who insisted on chatting for 15 minutes of my 45 mintue lesson, who did the hard core "up sell" every chance they had, who told me I was the "chosen one" to go to competition. As soon as they realized I was not a push over, all pretense of dance lessons ended and I was treated as an afterthought. Two elderly lady friends spent 50,000 and 60,000 respectively and could not dance a step without an instructor from the franchise leading them. They simply didin't know the steps, nor really how to execute them. They have since moved on to independent instructors and both are doing quite well now.

I think the franchise as a business made money; the manager drove a beautiful lexus and wore fur and diamonds. The dance instructors on the other hand (one has since become a personal friend and has left the organization) said he felt like an indentured servant.

The independent dance instructors I know do it out of love for dance, not to become rich, that's for sure.
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MusicChica
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« Reply #9 on: March 26, 2010, 03:02:22 PM »

MM, I think you're forgetting about setup costs.  I'll use my own studio as an example, since the owners have been very forthcoming with current students about the status of the business.

Chain studio owners definitely make more money--I started at a FADS back home, and the owners at the time drove Lexuses.  And they weren't exactly top-level coaches, so the money wasn't coming from that. (The teachers, on the other hand, were always broke, FWIW.)  Also keep in mind that owning a chain will probably require you to move around some; the couple that owned the FADS when I started moved on not long after I left for college to open up more new FADS in Washington DC.

My current studio, on the other hand, is fiercely independent, and here's where the setup costs come in.  You don't have "corporate" paying to renovate whatever building you're going in, install a floor, etc.  All of that is coming out of your own pocket.  The building we're in used to be a warehouse--it had to be totally overhauled when the studio moved in.  Not to mention we have a HUGE floor with VERY high quality flooring, and that's not cheap.  Now, all of the instructors are independent contractors, so the studio charges them floor rent and doesn't have to keep up with taxes for them, but they still have to keep up with lesson hours so they know how much rent to charge.

Overhead costs for a studio include any kind of financing required to set up the studio initially (such as for the floor), electricity (which doesn't come cheap in a large open room that's kept pretty cool for the dancers' sake), computers and internet, phone, a couple TVs/DVD players, furniture, and administrative expenses for keeping up with instructors' lesson hours.  Oh, and if you host socials, don't forget to add in payroll for the person at the door, drinks, and maybe snacks on a weekly basis.  Believe me, it's very easy for all of those overhead costs not to be met if you just don't have the traffic coming in.  And reputation isn't everything--my studio's got the best reputation in the country and we're still having issues getting in enough traffic to pay the bills.  Remember, the only income a studio has is lesson fees, socials, and if it's an independent studio, floor rent from the pros.  That's a lot of fixed expenses that rely on 100% variable income.  If people don't come to dance, the studio doesn't make money.  Period.
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ttd
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Posts: 642


« Reply #10 on: March 26, 2010, 03:21:23 PM »

It also depends on your location, too, if it has enough people to support a studio like this. Our town had a studio which operated under franchise business model - parties and group classes only for people taking privates, etc. It went under shortly after an independent studio with open business model opened up.
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MusicChica
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Posts: 1325


« Reply #11 on: March 26, 2010, 05:09:32 PM »

Well, the right combination of facilities and instructor talent can dominate anywhere--there was a time when my studio had put every single other studio out of business as far as 2 hours away. Shocked
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samina
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« Reply #12 on: March 26, 2010, 05:40:30 PM »

when luca baricchi opened his arthur murray franchise, it raised my eyebrows. i asked a pro whose opinion i respect what he thought... "money... AM has a good business plan. entirely understandable."

personally, the only context in which i'd go to a franchise would be to work with someone of his caliber. but from what i have heard, they are money-makers.

OTOH, another pro i know has an independent studio that is so successful they are expanding, so... maybe at the heart of it, it is most of all about your knowledge base, your professionalism, your attitude, your diligence, your sense of timing... and less about the exact business structure you use.
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MrsMoose
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« Reply #13 on: March 27, 2010, 09:07:43 AM »

WOW, first I want to say THANK YOU

For your time, imput and opinins and for sharing personal stuff too.  Very grateful.

My hubby and myself have a business background so running a business is not a problem for the most part.

I want a bit of both, I want to make money. Enough to live on somewhat comfortably and decent life. I would not go to NYC, the cost of living is over the top.  5k for a small two bedroom apartment and I would guess the market is saturated.

I want to have a good studio, be fair to the teacher(s) and to the students, my DH and I both feel that giving good service and being fair and honest is the only way to run a business.

Basically from what I read here, AMDS is the way to go if you want a chain. They seem to be profitable.

I want to open one for so many different reasons I wouldn't know where to start, but one thing is for sure, I want it to be about dancing as much as about making a living. I don't expect to get rich, but I would like to make enough money to live on decently.  I want it because as we get older I think a business is a good thing.

If health issues prevent working, you can still have a business derive and income and not loose it if you are smart and have good people in place and built it well.  A job is a job and can be lost at anytime.

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phoenix13
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« Reply #14 on: May 22, 2013, 12:45:06 AM »

Great thread! Smiley

I'm going to go with cornutt,here. In the US, the only people who care about competitive dance dance are competitive dancers, who are far outnumbered by social dancers.So I wouldn't' necessarily hold out for a household name, if I were setting up a new studio.  For most people I know, nobody in ballroom is a household name. lol.

I'd also be careful about assuming that a good business model = success.  I know someone (and I'm sure a lot of us do)  I know someone who owned a franchise that went under, even though that studio offered quality instruction.

I also think its important to clarify your own values.  As someone mentioned earlier in the thread, a LOT of franchise studios have a staff comprised mainly of brand new, off the street teachers.  Is that what you want to offer?  Not judging one way or the other. Just posing a question.  IMHO, the franchise model works because of the way it handles staffing,among other things. You can't take the parts of the model you like and  throw away the parts you don't.
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