It’s a brand new year at the dance studio. It’s time to set some new goals and get busy crushing them. To do so effectively, you’re going to need to know your numbers. In order to set measurable and achievable goals, you must first be able to measure where you are currently and understand the costs and benefits changes that you’re considering and goals you’re setting. If you want to make another $1,000 per month, how many more students do you need? If you think it’s time to add a new class, how many students will need to be in it to make it profitable?

Let’s go over some numbers to know, how to find them, and how to use them.

Before we get into our math lesson, I want to define some important terms.

**Gross income**= the total amount of money that you collect before any of your expenses are accounted for.

**Net income**= what is left of your profit after expenses.

**Cash Flow**= is all of the money that is flowing in and out of your business.

**Students**= 1 student no matter how many classes they are enrolled in

**Enrollments**= 1 student can be enrolled in multiple classes. Enrollment refers to each individual class that students are in.

Before setting any goals for the future, you need a realistic picture of your current cash flow situation. You need to know your monthly income and expenses in order to find your most important number; your NET PROFIT. That is your real profit that you get to keep.

If you aren’t tracking your cash flow yet, start now. Here’s a Projected vs Actual Cash Flow Spreadsheet that you can customize to get a clearer picture of your cash flow. Go over past bank and credit card statements to get accurate numbers to fill the spreadsheet. For things that can vary from month to month, an average of several months can be used. These would be categories like repairs, office supplies, and advertising. If you know that there are certain expenses that will occur in certain months, be prepared for them by noting them on the spreadsheet in the column for the month when they will occur. This would include paying for your recital venue, costumes and quarterly tax payments.

Here is a list of other numbers to know and how to find them. Note that I have created simple equations meant to help with goal setting and decision making. There are inevitably details that could change these numbers somewhat, but the formulas below should suffice for our purpose here.

## Class Numbers

Average gross per class hour per month= gross income ÷ class hours per month

Average cost per class hour per month= all expenses for 1 month ÷ the number of class hours in one month

Average net per class hour per month= average gross per class hour – the average cost per class hour

## Student Numbers

Average gross per student per month = gross income ÷ number of students

Average cost per student per month = all expenses for 1 month ÷ total students

Average net per student per month = average gross per student per month – average cost per student per month

## Enrollment Numbers

Average gross per enrollment per month = gross income ÷ number of enrollments

Average cost per enrollment per month = all expenses for 1 month ÷ total enrollments

Average net per enrollment per month = average gross per enrollment per month – average cost per enrollment per month

## Using These Formulas

First, get a clear picture of where you are right now. Look over your statements and reports from the last 12 months and find the averages of the following categories. I have filled them in with some easy round numbers so that I can plug them into some examples below.

- Gross income = $30,000

- Expenses = $20,000

- Net profit (Gross
*minus*Expenses) = $10,000

- Students = 200

- Enrollments = 300

- Class hours per month = 200

Let’s do all of our formulas based on the example numbers above:

## Class Numbers

**Average gross per class hour per month **= (gross income) $30,000 ÷ (class hours per month) 200 = **$150**

**Average cost per class hour per month **= (all expenses for 1 month) $20,000 ÷ (the number of class hours in one month) 200 = **$100**

**Average net per class hour per month **= (average gross per class hour) $150 – (the average cost per class hour) $100 = **$50**

## Student Numbers

**Average gross per student per month** = (gross income) $30,000 ÷ (number of students) 200 = **$150**

**Average cost per student per month** = (all expenses for 1 month) $20,000÷ (total students) 200 = **$100**

**Average net per student per month **= (average gross per student per month) $150- (average cost per student per month) $100 = **$50 **

## Enrollment Numbers

**Average gross per enrollment per month** = (gross income) $30,000 ÷ ( number of enrollments) 300 = **$100**

**Average cost per enrollment per month **= (all expenses for 1 month) $20,000 ÷ (total enrollments) 300 = **$67**

**Average net per enrollment per month** = (average gross per enrollment per month) $100 – (average cost per enrollment per month) $67 = **$33**

Next, set yourself some new goals and use the formulas above to figure out how you can hit your target. Keep in mind, getting more students is not the only answer to improving your bottom line. Let’s do some word problems, and work the problem from a few different angles.

If Ms. Amy wants to take home an additional $1,000 per month, how many more students will she need?

**Average net per student per month = $50. **

**$1000 ÷ $50 = 20 new students**

If Ms. Amy wants to take home an additional $1,000 per month, how many more enrollment will she need?

**Average net per enrollment per month** **=** **$33**

**$1,000 ÷ $33 = 30 new enrollments **

If Ms. Amy wants to take home an additional $1,000 per month, how much will she need to increase her pricing?

**$1,000 ÷ 300 enrollments = $3.33 per enrollment**

If Ms. Amy wants to take home an additional $1,000 per month, how much will she need to reduce her expenses?

**Trick question. It’s $1,000**

Now that Ms. Amy knows some real numbers, she can see some real options. She doesn’t just have to accomplish her goals one way. She can combine several options together. And best of all, now she doesn’t have to be overwhelmed by her goals. She can use the real numbers she has found to set goals that are attainable and she can easily measure her progress as she works toward them.

Get a free spreadsheet from Studio Planner Pro to crunch your dance studio numbers and start crushing your financial goals.