You’ve put together your class schedule and written your studio policies, but one of the most important tasks still has to be done: deciding how you will process payments. As using cash and checks has fallen by the wayside, credit cards have become the preferred form of payment. Her are some tips for secure credit card processing for your dance studio!
Why you Should Accept Credit Cards
Accepting credit cards helps ensure your studio generates as much revenue as possible. One way it does this is by making it convenient for parents to pay tuition and other fees. Paying with a credit card takes just seconds and, depending on your system, can take place almost anywhere, whether online or from a mobile phone. Parents are already using credit cards for their children’s other activities and expenses, and by accepting credit cards you make sure parents can pay the way they prefer and don’t see your studio as that one difficult business they have to deal with.
As more and more dance studios accept credit cards, it’s important that your business remains competitive. Jon Koerber, software expert for dance studios and gymnastics classes, cited that online credit card transactions increased from $2.8 billion to $4.8 billion between 2006 and 2012, and they are only set to grow even more. Credit card processing is no longer weighed down to a clunky machine – they’ve been released online and in mobile applications. As Koerber wrote in a blog post for Capterra:
“You’ll also be losing business to your competitors if you not are doing business around the clock … And all the more so if [parents] can go ahead and sign up for classes from their living room after dinner. If your competitors have online registration and payment processing but you don’t, guess which dance studio will get the new customer after hours.”
Beyond providing convenience for your clients, accepting credit cards also makes everything easier for you. All the payment information will be stored in one place, which makes it simple to view or print revenue reports and quickly access the payment history of certain customers. All the complicated tasks involved with handling and depositing funds is left to the credit card service, which leaves you more time to run your studio.
What You Need to Get Started
You first need to identify which credit card providers you want to accept. Most business accept Visa and MasterCard, while some choose to also accept American Express. Then, you need to select a merchant account service. DanceExec explained a merchant account as “a kind of bank account designed to enable your business to accept payments by debit cards or credit cards. Your merchant account establishes an agreement between you the merchant and the merchant account bank on how to settle money you receive in the form of payment card transactions.”
Make sure the merchant account service you select enables you to accept credit card payments in multiple ways – ideally in-studio, online, over the phone and via smartphones. This way, parents can have a variety of payment methods available to them and can choose the one that’s most convenient for them, wherever they are.
Once you have chosen a merchant account and bank and have been verified, you can begin accepting credit card payments. While you can track and manage credit card payments on a separate system, most major dance studio management software companies enable credit card transactions in their overall system. This is a great option because the credit card transaction program is already fully integrated into the rest of your studio’s systems, which saves you time and headaches!
If you’re accepting credit card payments, you’re dealing with sensitive financial and personal information. So, you need to make sure you’re following the highest measures for security and privacy. Make sure the merchant account service you select has a strong record of PCI, or the Payment Card Industry Data Security Standard, compliance.
Another security consideration is where the credit card payment information is stored. The information should not be kept on your computer or on servers owned by credit card transaction software that you use – instead, the data should be stored securely on an independent server.
Costs to Be Aware Of
Accepting credit card payments comes with several fees. One is gateway fees, which are the fees that merchant accounts charge each month for verifying that the credit card used in each transaction is in good standing. Other merchant account fees include a monthly fixed management fee and PCI compliance fee.
Additionally, there are small fees placed on every individual credit card transaction. These include an interchange fee, which depends on the type of credit card used, discount fees and per-transaction fees. The specific fee amounts vary from provider to provider, so make sure you compare these figures when choosing a merchant account to get the best value for your money.
Though setting up secure credit card processing requires some initial research, the benefits for your dance studio make it well worth the time.
If you’re considering opening a dance studio, you may have a lot of questions. Well, you’re not alone. There are plenty of other aspiring dance studio owners with the same concerns. Consider a few of these frequently asked questions if you want to start a dance studio.
1. What’s the best place to open a studio?
Picking the right location for your dance studio can have a lot to do with your success rate. Of course, you want it to be in a spot that’s easy for parents and dancers to find and see—it shouldn’t be tucked away out of sight. It should also have adequate parking space—enough for staff, students and parents, Dance Exec stated.
It’s also a good idea to look at a location that has a space for a drop-off lane. That way, it won’t disrupt traffic flow but dancers can come and go as they please. The location should also be safe or else parents will not feel comfortable dropping off their children. Look for a space that is local to a park, a school or another establishment that welcomes children. It shouldn’t be near bars or other areas that are adults-only.
Another location consideration is your proximity to other studios, and whether you’ve taught or attended at those locations. Most studio owners would take offense at a former teacher or student opening a studio in a location that would place them in direct competition. Even if you were not previously affiliated with nearby studios, you’ll want to consider whether you’re willing to go head-to-head with those already-established businesses.
2. How can I afford to start a dance studio?
Owning a dance studio can certainly come with its expenses. Between leasing or buying a space and utilities and maintenance, costs can quickly add up. All studio owners need have a business plan, which should include an analysis of these and all other costs, before considering opening a studio. Again, it’s important not to skimp on the studio’s location to try and help your budget.
Instead, choose a smaller space at first that you can expand on later. Look into bank loans and see if there’s one you qualify for that’s reasonable for your budget. If you’re incredibly passionate about opening a studio but can’t afford the space, think about opening one in your basement or garage to help build clientele before moving to a bigger spot.
3. Where should I look for potential staff?
As an owner, you may attempt to run the studio on your own at first, and that’s OK. However, as your clientele grows, you’re going to need a little help. Consider posting ads for local college dance students to see if they are willing to take on an unpaid internship, Dance Teacher suggested. That way, you can save money and have an experienced staff.
If you’re impressed by their teaching skills, offer them a job down the road when you’re completely financially stable. If you are ready to hire instructors right away, the administration of those nearby college dance programs may be able to recommend suitable candidates. If there are any semi-professional dance companies in the vicinity, you might also want to send them information on open positions. Whichever route you take, make sure you are hiring staff with the right qualities for the job.
4. How do I come up with a good name for my studio?
If you’ve always wanted to open a dance studio, you may have a few names in mind. However, if this is a recent initiative, it might be more difficult for you to think of something. Picking a name is one of the very early steps in the process of opening a studio. Regardless of what you choose, it should be easy to remember. That means it shouldn’t be a long name, DanceStudioOwner.com noted. It should also be a name that clearly indicates you’re a dance studio, whether it has dance in the name or not. You can choose something simple, like Jenny Smith Dance Studios, or something that has a play on words, like At the Barre.
Finally, make sure that your name is easy to say AND easy to search for on the web. You don’t want a name that you have to constantly spell or explain—those can be hard to remember. On the other hand, you also don’t want to choose a name that’s too generic and risk people being unable to find you in an online search. Find a good balance!
When you’re opening your very own dance studio, there’s a lot of money that needs to be invested in the business. Dance studio owners need a great location, quality floors, all-around mirrors, office supplies, marketing materials and more, not to mention you’ll need to pay teachers and other staff. Chances are that you won’t be able to afford these expenses out-of-pocket, which is where a small business loan comes into play.
You might be overwhelmed when it comes to securing funding, so use this guide to navigate the world of business financing.
Determine Your Financial Needs
Before you ask a bank or other lender for money, you’ll want to take the time to plan out just how much financial assistance you’ll require. The U.S. Small Business Administration has a number of useful resources that can help first-time business owners get their monetary needs straightened out. Start by detailing the different costs you’ll need to successfully start your studio, like the ones outlined above. Be sure to include costs for any construction or renovations, studio equipment and advertising. Lenders will look on your application more favorably if they know exactly where the funds are going.
If possible, it’s also beneficial to anticipate any financial assistance you’ll need in the near future. It’s easier to secure loans when you have plenty of time to prepare applications, so do your best to foresee any expenses that may crop up within your first few months of operation. These might include money for costumes, teachers or studio merchandise.
Find a Mentor
Mentors are often invaluable resources for budding entrepreneurs. They can give you helpful hints on applying for loans, securing interest rates and starting a business in general. If you’re friendly with other studio owners in the area, you may want to reach out and see if they’re willing to offer advice. However, make sure that your new school won’t be in direct competition with the studio owners you’re contacting.
You may also be able to find a resource through SCORE, a website that connects small business owners. Another viable option is to seek advice from a financial consultant or legal professional – though you’ll likely have to pay for these services.
Present Yourself Favorably
When it comes time to meet with a loan officer, you’ll want to be informed and confident. Advanced preparations can help you to present yourself as a favorable borrower, so take time to put together a detailed and thorough business plan. Come to the meeting with hard data on the state of the industry in your area, the benefits of each proposed expense, your plan for repaying the loan and timelines for your expansion.
In addition to researching your strengths, it helps to be aware of the factors that may be working against you. Business News Daily explained that there are a number of common problems that small business owners stumble over when trying to secure financing. Look into your credit report and have rebuttals prepared for any issues that lenders may find. Keep in mind that many banks view dance studios as high-risk borrowers, and be ready to fight for your business!
Most of all, be passionate about what you’re doing. If lenders see that you’re really going to give the business your all, it may tip the scales in your favor.
“You have to exude a passion,” Paul Steck, president of an international restaurant franchise, explained to Business News Daily. “I’m going to do this, and I’m going to be the best in the whole wide world. You have to go into it with that sort of mentality, and a lot of presumed business owners don’t do that.”
Other Financing Options
Any studio owner who’s gone through the financing process will tell you that it’s not easy. Many small business owners get rejected the first time they seek a loan, and if this happens, you have two options. You can either keep trying by improving your business plan, ironing out any issues and consulting with other banks, or you can look into other financing options.
On a dance forum, a few studio owners noted that they took out loans from friends, family and business partners to get their schools off the ground. Most were able to repay the money in a matter of years and weren’t hit with the high interest rates that banks would require.
If borrowing from others isn’t an option for you, consider taking out a home equity loan, which are normally accompanied by very affordable rates. You can also look into performing arts grants, crowdfunding or business credit cards. These are all viable options for dance studios, so don’t give up on your dream just because you get rejected by a bank. With the right mindset and a lot of determination, you can likely start the school you’ve always imagined.
When you open your first dance studio, you’re going to face many of the same sources of small business stress as other business owners. It doesn’t matter if it’s a restaurant, retail store or service provider, every company will face one or more of these problems at some point. However, the good news is that there are usually ways to effectively manage your small business stress so you can get back to perfecting pirouettes and picking recital tunes.
1. Huge Workloads
As a small business owner, you’re not only an instructor, but a marketer, accountant, human resources rep and much more. If you’re lucky, you have a spouse or friend who is willing to help out when you’re in a pinch, but there will definitely be times when you’re swamped with all the things you have to do. Unfortunately, your budget might not allow you to hire office help, so you’ll need to get creative. The first step toward solving this problem is to perfect your time management skills. When you have a dozen things to accomplish, it’s critical to have a set schedule. Set aside three hours each week for marketing, three for accounting, one for answering emails or whatever time you need. If you’re still pressed for time, consider falling back on the barter system. You may not have the funds to hire someone, but you have a service you can offer. Trade dance lessons for a marketing campaign or work with a local high school to offer student office training.
2. Tough Clientele
The first rule of business is that the customer is always right, even when they’re wrong. You’ll likely encounter a few hardcore dance moms who are impossible to please. On top of your existing small business stress, tough clients can be a breaking point. To solve this problem, establish firm rules and policies for your studio. You should have these set from the day you open, but feel free to adjust the rules as you go. If you find that parents are dropping their children off late, next season implement a policy dealing with tardiness. If you’re steadfast with your rules, parents will eventually learn not to question your authority in these areas and you’ll have fewer problems overall.
3. Fierce Competition
The Bank of America Small Business Community explained that creating a unique brand is crucial for a small business to stay afloat. To succeed, your dance studio needs to offer something better than your competitors. It can be more one-on-one time, flexible class times, unique genres or even lower prices. Setting your business apart from competition in some way will help you to retain customers and build a stronger brand name.
4. Expedited Growth
You probably want to expand your business, but doing so too soon or too quickly can be detrimental to your studio. A blog post from The New York Times explained that borrowing too much money or expanding into unprofitable markets can backfire and lead to financial ruin. To combat these temptations, establish a detailed business plan, including a timeline for growth. Regularly reevaluate whether you’ve been meeting goals or if you should wait before taking the next step. Get an opinion from a financially savvy friend before making any big expansion plans.
5. Accounting Issues
Finally, a business can fail if the owner isn’t cognizant of finances, even if everything else is functioning smoothly. The New York Times noted that many small business owners expect that a third-party accounting firm will give financial advice, but in reality, most of these firms handle taxes and nothing else. As a studio owner, you’ll need to wear the chief financial officer-hat. This means you’ll need to ensure the business has a cash cushion, is operating efficiently and is charging enough.
Be proactive in this area and head off problems by staying organized and aware of your studio’s finances. You should have allotted time each week when you focus solely on financial issues. Even if you’ve hired an employee to handle bookkeeping for you, make sure you always remain aware of your studio’s financial status, maintain access to all financial records, and ensure that there are checks and balances for anyone handling your studio’s finances. At the end of the day, you the studio owner must make the hard financial decisions required to ensure the success of your business.