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Here are three small business financial reports that every massage therapist should use. These reports answer three basic questions: Do I have enough cash to pay the bills?; How much is my practice worth?
How healthy is your massage practice?
Decades ago, I was in a pileup of seven cars (I’m number 3) on the highway. Nothing was broken and I wasn’t bleeding so I thought I was fine. As you can imagine, I didn’t, but since my injuries weren’t obvious to me, I assumed they didn’t exist.
Just as it is important to check the health of our bodies (you shouldn’t have a major car accident), it is also important to check the health of your practice. Likewise, you don’t have to struggle or go bankrupt to do so.
But for many of us, the health of our practice comes down to being able to pay the bills and having my schedule almost full. A health check, but not enough to honestly measure the health of the practice. It’s like saying, “Nothing’s broken, nothing’s bleeding, so it’s okay.”
If you really want to know how healthy your practice is, you need to check your own numbers. Large companies use tons of financial reports to do just that. However, most of these reports either don’t make sense for the kind of business we run, or answer questions we wouldn’t normally ask.
Three financial reports for small businesses
There are three reports: income statement, balance sheet and cash flow report. It is recommended that all massage therapists understand and know how to create.
These reports answer three basic questions
• Is my practice profitable (how much money am I really making)?
• Do you have enough cash to pay the bills?; and
• What is my practice worth?
Small Business Financial Report: Income Statement
This report answers the following questions: Is my practice profitable (how much money am I actually making)?
we need to earn enough money to practice When Self-pay (take home). Do our practices actually support themselves? Can we pay for what we need? Are we making more than we use? than how much?
To answer these questions, you need an income statement (also known as an income statement). List all the money he made in a period of time (usually he is a month, quarter or year) and list all the expenses for the same period.
Hopefully your income will be more than your expenses! It’s called your profit.
You can create this report in your bookkeeping app. If you do your own bookkeeping in Excel or on paper, just add columns.
Once you’ve categorized your expenses for the year, you’re ready to fill out Schedule C for your annual tax as well. In fact, I usually do an income statement to help me fill out my schedule C.
I used the income statement to analyze whether the new setup (practicing in groups versus practicing at home) was more or less profitable over the long term. I was surprised to find that I made more profit with group practice than I did at home. The income statement helped me understand why. Group Practice took care of many of the day-to-day business expenses I normally pay, such as laundry and marketing.
Small Business Financial Reporting: Balance Sheet
This report answers the following questions: How much is my practice worth?
Wondering if you can sell your practice? Worried about having too much debt? Curious if your practice is worth more than when you started? You need a balance sheet.
A balance sheet shows the value of a business on any given day. To create a balance sheet, list all assets and all liabilities. Subtract liabilities from assets. The difference is your practice net worth.
Your assets include anything that can be converted to cash: cash (obviously), money in your business bank account, money for medical care, inventory (heatable pillows, self-care tools, lubricants, etc.) retail goods) and more are what you’ve been waiting for. sold (the value of each item is what you paid for it, not what you sold it for), costs you paid upfront (e.g. rent), reference books, and (probably our largest category) office massage equipment (tables, linens, laptops, printers, etc.).
You may be surprised to find yourself with thousands of dollars in assets.
Debt is money or services that you still owe. Debts can be business loan balances, taxes due this quarter, unpaid bills, and (I learned a lot during the COVID-19 pandemic) unpaid gift certificates or packages.
What about your client list and the reputation of your practice? They are important to you but are not considered part of your assets for balance sheet purposes as they are not easily convertible to cash.
Balance sheets are especially valuable for comparison. In other words, if you create a balance sheet for the last day of 2019 and a balance sheet for the last day of 2021, you can see if net worth increased between 2019 and 2021 (ignoring 2020 is needed).
Small Business Financial Report: Cash Flow Report
This report answers the following questions: Do you have enough money to pay the bill?
You know how much cash you currently have on hand because you pay as you go. However, if you sell a large number of gift certificates or packages, or have a large number of billing customers, cash flow can be a challenge. That means you have to wait for payment as well.
What if most of our clients pay with gift certificates or receive invoices within a week? We don’t bring in much new income that week.
A cash flow report can help you forecast periods of low income or high spending. I use paper and pencil to write mine and transfer it to an electronic spreadsheet. Start with how much cash you have at the beginning of the year. The months of the year follow it.
Be aware of your expected large monthly expenses. (You decide what counts as a high expense.) Common examples include:
• License update
• Meetings (and associated travel expenses)
• Continuing education (and associated travel expenses)
• Quarterly tax
• New office equipment (laptops, mobile phones)
• New massage equipment (especially tables or chairs)
Next, you need to estimate your monthly income. How? Look at your household account book. You can create an income statement for several years, broken down by month. The average monthly income for several years is displayed. Please enter this information each month.
Start with the cash you had at the beginning of the year, add your monthly income, and subtract your expenses. This indicates in which months you may be short of cash.
If you’re the kind of person who regularly feels anxious or anxious about whether you’ll have enough money to pay your upcoming bills, this report can help you manage it. gives you a more specific idea of what you need and when.
Additional financial reporting for small businesses
There are other valuable questions that could be answered in more reports. for example:
• What percentage of available massage time is actually booked each month?
• How effective were the discounts you offered?
• What percentage of gift certificates are redeemed?
• How big is your customer base?
• What percentage of your customer base are repeat customers?
• How long do clients tend to stay with you?
• How often do clients book massages on average?
• How do clients find your practice?
I could go on and on, but these are the kinds of reports that will help you get an honest idea of how healthy your practice is. You will know where you need to take action.
Report check frequency
I do monthly, quarterly and yearly income statements. It’s the real workhorse of the report for me.
We recommend that you review some of these reports monthly, such as booking rates and cash flow.
Whether it’s the effectiveness of your discounts, your repeat customer rate, or the effectiveness of your marketing channels (how customers find you), you need to check quarterly.
Other reports such as gift certificates redeemed, customer base size, repeat customers, customer retention rate and booking frequency should be reviewed annually.
Get notified about financial reporting for small businesses
When you want to know your status For real As a business, these three reports (income statement, balance sheet and cash flow report) provide a wealth of valuable information.
You can’t take care of your own health or the health of your business until you know what it really is.
About the author
Kelly Bowers is the owner of the Healing Arts Business Academy. She is the author of her four books, ‘The Accidental Business Owner’, ‘The Affordable Massage Handbook’ and ‘Can I Deduct That? and “Between Doormats and Diva”. She is a regular presenter for her AMTA, a Professional Training Program Instructor, and an NCBTMB Accredited Continuing Education Provider. You can find her on her Facebook, Instagram and YouTube. She has a practice in Durham, North Carolina (NC License 16669).
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