10 Hazardous Mistakes Massage Therapists Make with Money
Most of us that give massages just want to focus on our craft and stick the money that we get form our clients in our pocket. Unfortunately, as with many other things in our life, this is not the reality of owning your own business. In order to increase your chances of growing a successful practice that meets your goals it’s important to avoid the common mistakes massage therapists make with money that can severely damage your financial health. This article addresses these pitfalls and gives you the steps to take to avoid them.
10 Hazardous Mistakes Massage Therapists Make with Money
Mistake #1: Not knowing what success looks like for you.
There are many ways to measure success. It’s different for everyone. This is not a one size fits all type of proposition. Each one of you may have a different picture of what you’re ideal massage practice will be. Without a clear focus on what this will look like, you run the risk of working very hard and ending up in a place that you don’t want to be.
Success Key
What does success look like?
- You are making the money that you want to make.
- You are working the number of hours that you want to work.
- You feel secure in that your income will be steady and dependable.
Knowing what your ideal practice will look like ahead of time will give you the ability to work towards. Creating a map to guide you on this journey. This is accomplished by creating a list of goals that will get you to your ultimate destination: A successful and fulfilling massage practice. For example one of these goals would be to Set your correct prices based on an overall pricing strategy.
Mistake #2: Setting the wrong pricing for your services
When setting your service pricing, it’s very important to know what success looks like for you. Many therapists set their prices based on what they see around them whether it’s their peers or what the corporate franchises are offering. One of the big mistakes massage therapists make with money is setting prices in this manner. This doesn’t take into consideration the long-term goals of you and your business. It also doesn’t consider what your expenses are which can have a big effect on how much money you put in your pocket.
Success Key
Working Backwards By knowing what you need to put in your pocket and by figuring out what your expenses will be, it’s a simple process of working backwards to determine what you should charge. This is a much better way of setting your prices and will give you a better chance of ending up where you want to be as your business grows. Related Article:
Mistake #3: You don’t have a pricing strategy
Determining what your goals are is a good first step but if you don’t set up a pricing strategy to reach these goals there is not much of a chance you’ll get there. One of the mistakes massage therapists make with money is they may find themselves creating a business that they don’t even want! Working too many hours or not making enough money to survive are a couple of big ones. Understanding your long-term goals (how often you want to work and how much money you need to put in your pocket), you can then work backwards to determine a price per massage. This number is what I call the ‘minimum discounted price’. By always staying at or above this price with your regular clients (new customer pricing is a different strategy), you will have a much better chance of reaching your goals.
Success Key
Stay above your minimum discounted price An example of using this pricing strategy is when you are booking standing (reoccurring) appointments. Let’s say that to meet your long term financial goals you have set your ‘Minimum Discounted Price’ (MDP) at $65 for a 1-hour appointment. Let’s say you offer your clients a $10 discount if they come in once a month, a $15 discount if they come in every two weeks and a $20 discount if they come in every week. If you set your published price at $89, then you can offer these discounts and still stay above your set MDP. Your clients that come in every week will get their massage for $69 ($20 off). Well above your MDP of $65. In my opinion, this should be the only time that you discount your published price with your regular clients. If you give them additional discounts, you run the risk of devaluing your services and damaging your chances of getting them to commit to a standing appointment.
Mistake #4: Damaging Your value
One of the big mistakes massage therapists make with money is they damage the value of their services by offering pricing that is too low, by not using discounting in a correct manner or by not doing a good job of conveying to their clients what the true value of the services are. This can be a real stumbling block when it comes to creating a successful massage practice.
Keys To Maintaining Your Value When Setting Your Prices
Published Prices
Set your published prices high By setting your published prices high you will automatically produce value in your services and your business. It’s human nature for people to think of something is priced higher it must be better. Having a high published price also gives you the opportunity to give larger discounts which is an additional way to convey value to your client.
Published Prices Everywhere
Make sure your published prices are everywhere You can’t produce value with your pricing if people don’t know what your prices are. Make sure you put your published prices everywhere so people know what you normally charge for your services.
Discounts
Your published price should always accompany your discounted price Whether it’s your first visit deal for new clients, your online booking pricing or your standing appointment pricing, you should always have your regular published price right next to it so your customer will know what they would’ve paid without the discount.
No Multiple Discounts
Do not offer multiple discounts it’s human nature that when people get something for a specific price that they want to get it again for the same price. For example if one of your regular clients pays $50 for their standing appointment every two weeks and then you post a 20% off coupon they will get their next massage for $40. From then on they will always wonder why they can’t get there massages for $40.
Why This Price?
Always be clear on why the discounted price is given Explain your discounts to your customers. Anytime that you are quoting a price you should mention your regular price what the discount is and why they are getting it. This is especially important when you’re giving your client a verbal price quote.
One-Time Discounts
Using one-time discounts One time discounts can be effective in building your business without damaging your value if you use them correctly. Make sure you publish a disclaimer that says, “Cannot be used with any other discount. Another technique is to only use special services when giving one time discounts. If most of your clients get relaxation or deep tissue massages you might offer a one-time discount for your hot stone massage. It’s very important though that this hot stone massage is priced higher (with the discount) than the regular massages that you give to your client. This will maintain the value of your regular massages while at the same time boosting the value of your specialty massages.
Mistake #5: Not making it easy for your client to pay you
It is reality today that people expect convenience. In fact in most cases they demand it. One of the mistakes massage therapists make with money is they don’t offer an easy way for clients to pay for services. Clients should have access to all forms of payment and it should be effortless or you risk damaging their overall experience.
What should be the goal when you are setting up your payment system?
- Choice: during your client the opportunity to pay the way that they want should be your first priority. Whether it’s cash, check, debit card, credit card or even invoice, choices important for your clients satisfaction.
- Convenience: Creating an experience that is fast and easy will make pain for your services and afterthought. You don’t want to create a situation where the hassle of paying you is what they remember about the experience.
Success Key
Make Paying You Easy
No Surprises: be clear about your pricing and make sure your client knows what they’re going to pay before the appointment. You don’t want to argue over price after you’ve just given them a great massage.
Choices: With the abundance of software and mobile apps today there is no excuse to not offer every payment option to your client. With the invention of card readers like square and others using your smart phone to process payments is effortless.
Apps: New software and apps are now available that allow you to have your client pay with a push of a button.
- Booking software like ‘MassageBook” allow you to connect with a ‘Stripe’ account giving you the ability to accept credit cards without the hassle of a third party processor. Other software programs may use PayPal to do the same thing.
- Apps like ‘PocketSuite’ allow you to send an invoice via text or email that will allow your client to pay for their service by pushing a button on their smart phone.
Reoccurring Payments: one of the reasons why the membership programs have been so successful with the franchised massage businesses is that the customer basically can set it and forget it. This takes the process of paying for the service and separates it from the actual act of getting a massage. This can be a powerful thing and shouldn’t be excluded as a possible option for your customers.
- Reoccurring payments: many scheduling software programs and apps allow you to set up reoccurring payments for your clients. This is usually a simple set up process that when finished will automatically take a payment out of your client’s bank account every month.
- Even if you don’t set up your own membership program you can use the reoccurring payment option to have your clients pay automatically for their standing appointments. Not everyone will want to do this the ones that do will make the whole payment taking step after the massage a thing of the past.
Copyright: 10 Hazardous Mistakes Massage Therapists Make with Money
Mistake #6: You Don’t Keep Track of Your Business Finances
One of the most serious mistakes massage therapists make with money is not keeping track of business finances. Not only can ignoring your business income and expenses get you in trouble come tax time but also this practice can end up costing you lots of money.
Success Key
Keep Track Of Your Business Finances
Reasons for keeping track of your business finances:
- Keeping Uncle Sam Happy: You have a responsibility as a business owner to keep track of your business income and expenses so you can meet your tax obligation in a timely manner. Since you are self-employed you are required to pay self-employment taxes. These taxes are usually paid quarterly and are separate from the income tax that you normally pay.
- Keeping your accountant happy: keeping track of your business finances will make it easier for your accountant which may mean paying them less money. Even if you do your own taxes (not recommended), but having everything organized in one place will give you the opportunity to save time and reduce your stress.
- Know how your business is doing: by keeping track of your business expenses you are able to get a snapshot of the health of your business. Understanding your income and expenses will help you determine whether you are charging enough based on what it’s costing you to run your business. This makes it much easier to make changes in a timely manner that will guarantee the health and success of your business.
- You will make more money: The best thing about keeping good books on your business is that by doing so you have the opportunity to make more money. Here are just a few ways that you can save money by keeping track of your business finances.
- Understanding where your money is coming from enables you to identify your avatar (your ideal customer). Knowing your avatar gives you the ability to market to similar people and grow your business.
- Knowing what is working and what is not working so you can focus on the positive and not waste your time.
- Having a clear picture of where you are spending money to run your business which gives you the ability to keep your costs down.
- Using your expenses to keep your tax obligation down.
Copyright: 10 Hazardous Mistakes Massage Therapists Make with Money
Mistake #7: You Don’t’ Keep Track of All Your Expenses
Nothing can have a greater effect on the overall health of your business then making the common mistake of not keeping track of all of your expenses. Understanding what these expenses are and then keeping track of them in an organized efficient manner can have a dramatic effect on how much profit you make. Therefore, concerning how it affects the amount of money you put in your pocket, I consider this to be one of the most common mistakes massage therapists make with money.
Success Key
Keep Track Of Your Expenses
- Taking notes: even though it’s good that you are writing things down (this is more than many people do), this is not the most efficient way to keep track of your finances.
- Excel or Google Doc: Using a spreadsheet is a step up from just taking notes and is a good way to keep track of your numbers but again there are more efficient ways that are better solutions.
- Purchased Software: There are three programs I would recommend depending on how big your business is. Talk to your accountant to know which one is best for you.
- Quicken: Works well for individuals and small businesses
- QuickBooks: This is the software that your accountant will recommend if you are a larger business with employees.
- FreshBooks: My recommendation – A great cloud-based system that works well for all businesses.
- Free software: If you’re just starting out or you are a solo entrepreneur with a small business that I would recommend an online software program called Wave. This software allows you to quickly and easily keep track of your finances by connecting directly with your bank to upload transactions and also allows you to scan in receipts using your smart phone. Best of all- it’s free!
Mistake #8: You Don’t Separate Your Personal & Business Banking
Another of the most serious mistakes massage therapists make with money is not having a seperate business bank account. There are many important reasons why you should have a separate bank account for your business.s. First of all the IRS does not like it when you co-mingle your business and personal expenses. If your business is an LLC you must have a separate bank account. You can set one up for free and it will make your life so much easier.
Success Key
Set Up A Business Bank Account
Why Is It Important?
- Legal Protection: One of the main benefits of setting up your business as an LLC or a corporation is that it will give personal legal protection. If you co-mingle your finances (personal & business), you will jeopardize this protection. Therefore, it is important to have a separate business account.
- Tax Advantages: Using a separate business account makes it much easier come tax time. Your accountant will love you if you take this one simple step. This will also make it less likely for you to miss a business expense that could lower the amount of taxes you will pay.
- Credibility: Having a business bank account makes you more legit, not only in the eyes of your clients but also the IRS.
- Business Card Convenience: When you open up a bank account you will receive a Debit/Credit card. Having this card will make it easy to make purchases for your business and is also a great way to keep track of your expenses.
- Credit Card Processing: If you decide at some point to accept credit cards (you can use your smartphone with companies like ‘Square’), having a business bank account to deposit the funds is essential.
Mistake #9: You Don’t Set Aside Money For Your Taxes
Probably the scariest of the mistakes massage therapists make with money is not setting money aside to pay taxes.
Self-employment taxes: Self-employment taxes are a tax consisting of Social Security and Medicare taxes. When you work for someone, half of these taxes are paid by your employer and the other half are automatically taken out of your check and paid by you. Therefore, for most people who work as an employee, they don’t notice these taxes as much because half are paid by the company they’re working for and the other half are taken out automatically.
Self Employed: When you are self-employed you are responsible for paying all of these taxes yourself and is usually done quarterly (every three months).
Example: In 2015, the self–employment tax rate was 15.3%. The rate consists of two parts: 12.4% for social Security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance)
Success Key
Set Aside Your Tax Money
Self-employment taxes are figured on your total adjusted business income after expenses. This is one reason why it is so important for you to keep track of every business expense. This can have a major effect on how much you pay.
There is nothing worse than going to your accountant for the first time after starting your new business and finding out that you owe a lot of self-employment tax. The best way to avoid this is to set aside a percentage of your income each month. Talk to your accountant to determine the best percentage for you.
One great way to do this is when you are setting up your business bank account, set up an additional savings account at the same time. Use this savings account as a way to set aside your taxes each month. This way when it’s time to pay your self-employment taxes, the money will be there.
Mistake #10: You Don’t have an Accountant
Come tax time, many people do their own personal taxes. With the many inexpensive software programs out there, this can be done in a relatively simple and accurate way. One of the mistakes massage therapists make with money is doing taxes for their business without the advice of an accountant. This can be a costly mistake that may have a long-term negative effect on the success of your business.
Success Key
Use an Accountant for your business
Reasons for using an accountant
- Understand what you can claim as business expenses and deductions to reduce your tax liability.
- Get expert advice on the best way to set up your business from a legal standpoint.
- Understanding what taxes you need to pay and went to pay them.
- Know what percentage of your income you should set aside to pay your taxes.
- Prevent you from receiving hefty tax penalties and fines from not paying your taxes in a timely manner.
- Lower your chances of being audited.
- They can be a great source of advice that will help you develop and grow your successful business.
The main reason many people don’t use an accountant is usually the cost. In reality, having an accountant can save you money and sometimes keep you away from financial mistakes that could derail your business. Tip: Ask your family and friends for recommendations for finding a good accountant. Don’t be afraid to shop around. Most accountants will meet with you for short initial consultations for free. Make sure you like and trust the person before you hire them because you will be working with them hopefully for many years to come.
10 Hazardous Mistakes Massage Therapists Make with Money
Conclusion:
In this article I have covered 10 of the most common mistakes massage therapists make with money that can have a negative effect on your business. By avoiding these mistakes and by following the solutions that I have laid out, you may save money, save yourself some major headaches and at the same time increase the chances of growing a successful massage practice.
I hope you found this article helpful. Please leave a comment below and let me know what you think. If you want to spread the word, please share this article on Facebook and Twitter. I wish you success and prosperity.
10 Hazardous Mistakes Massage Therapists Make with Money
