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Ep 484 – Exploring Cash Flow in Your Massage Business: “Business or Pressure” with Allissa Haines

01/31/2025
Image of a person holding money in their hands.

Money moves in and out of your business. Are you tracking it? Allissa walks through the what and how of cash flow, and how to get a grip on it.

Resources

Tara Eidse, Terra Massage & Wellness https://terrawellnessaz.com/

 

Author links:

 

Website: www.deepbreathdigital.com/community

Author Images
image of Allissa Haines.
Author Bio

 

Allissa Haines is a practicing massage therapist and business owner and columnist for Massage & Bodywork magazine. You can find her building a community of massage therapists at deepbreathdigital.com/community.

 

Full Transcript

0:00:12.9 Allissa Haines: Welcome to Business or Pressure, taking the pain out of massage business, with me, Allissa Haines. This is your no-nonsense guide to managing your business money. It is our mission to make sure every massage therapist has the tools to make a living wage in a thriving business. We are diving into money topics this year and today we are looking at cash flow. Cash flow is the movement of money in and out of your business. Money comes in when you sell your products and services. Money goes out when you pay your expenses and yourself. As a general rule, you wanna know what your cash flow looks like in your business. You wanna have a general idea most of the time of where your money is coming from and where it's going. And to know what your cash flow looks like, you've got to have some kind of system in place. This could mean an actual bookkeeping system like QuickBooks or FreshBooks or Wave or any number of the software-based or online-based bookkeeping systems. This could mean a spreadsheet on your desktop or in Google Drive. This could mean a paper ledger where you make note of your income and expenses, and at the end of every month you can total it up into specific categories.

 

0:01:27.6 AH: And no, I made this much money doing massage, I spent this much money on utilities, et cetera, et cetera. Managing your cash flow, tracking what's coming in, paying your bills, paying yourself, is kind of a twin sister to budgeting, but like a fraternal sister, not identical. Budgeting is deciding in advance how you will spend your money. Cash flow is the actual earning and spending of it. We don't need to get pedantic about the definitions. Just know that there's a lot of overlap and we'll get more granular and deep dive into budgeting itself in a future episode. Right now we're just talking about the flow of money in and out of our business. Managing cash flow and good budgeting along with that means that you know what's happening and you are mindful about directing spending and savings in alignment with your goals and values. And typically in a very small service business like ours that looks like paying yourself a living wage with regards to the amount of time you work, if you're part-time or full-time or something in between or that varies, setting aside money to pay your taxes, paying your expenses in the order of necessity and in alignment with your values, saving for time off, whether that be unexpected time off or planned, and saving for bigger things, larger purchases, expansion, retirement.

 

0:02:48.7 AH: And typically when I start talking to people about the money in their business, they fall into one of two camps. And it's really polarized. You'll have people who feel like they don't have any idea what's going on with the money in their business. They just feel like they're always struggling to pay themselves after they pay their bills. And there's people who feel like they don't know what's going on with their money in their business, but they're so nervous about money that they've actually put a ton of that money into savings, but aren't paying themselves a regular wage or considering what their financial future could look like in their business. And then, on the other end of that spectrum are people who know at any given moment exactly how much is in their business checking and business savings. And they are really good about recording and bookkeeping and totaling up categories. And one would think that this category of business owner is really good at handling money, but really it just means they're very disciplined about bookkeeping. And both of these camps, even though they're really polarized, can have red flags that indicate perhaps cash flow management and budgeting is not entirely under control. So here are some red flags. Every expense feels like a surprise. Taxes catch you off guard.

 

0:04:07.9 AH: A large utility bill causes stress. And likewise, every big deposit feels like a windfall. It is exciting, and it is needed when you have two patients in a week buy big packages, or the big gift certificate, sales just before a holiday are needed to keep you solvent. A red flag is carrying a balance on a credit card while you are continuing to use that credit card for new expenses. You're never truly paying off the balance and you're continuing to use that credit card. A red flag is if you pay yourself last and irregularly. If you're not paying yourself very often, is this a hobby or a business? There's no wrong answer, but you should have an answer. And that answer should be reflected in how you pay yourself. And also, paying yourself frequently and in a hurry usually means you have a problem in your personal finances 'cause you're always getting caught without having enough money to pay your personal bills. So you're pulling money out of your business more frequently than you intend. A red flag is if you cannot accurately find pretty quickly and efficiently how much money you have taken in doing massage in any given month or year.

 

0:05:27.6 AH: You can't say how much you pay yourself, and you don't have an idea of your monthly expenses in your business, at least loosely. A green flag is being able to open whatever system you're using, a paper ledger, spreadsheet, bookkeeping system, whatever, being able to open that up and pretty quickly find these numbers. So if you have some of these red flags, the first step is to know your finances, to track it and revisit it often enough so that you're familiar with these numbers, your income, your take home pay, your business expenses. That first step is to start tracking. And the best way to do that is make sure that all of the money in and out of your business goes through a single business bank account. And that bank account is only used for your business. All income gets deposited, even cash. All expenses get paid with a check or a debit card from that business account. Then your bank statement becomes an accurate and full record of your cash flow, of your income and of your expenses. And when you take that data, all of those deposits and expenditures, and you move that into some kind of system, like paper spreadsheet, bookkeeping system, it allows you to categorize those transactions and periodically total up those categories.

 

0:06:53.3 AH: Monthly is ideal, but if you have a lot of transactions, it might be a good idea to total them up weekly so that you don't forget what transaction is what. If you have a lot of expenditures, well, one that's kind of a red flag, but also it becomes easy to forget over the course of a couple of weeks what is what. And the information on your bank statement or on that receipt may not be enough to get you through. You don't wanna make it so granular that it's tedious, but sorting your expenses into categories is pretty basic. The most common expense categories for massage therapists and bodyworkers are really simple. Rent, utilities, massage supplies, office supplies, online services, subscription and software. That tends to be the biggest one nowadays. If you've got like a scheduling system and a graphic design system, and you're paying for email, you're paying for your website, you can group all that together into online services or whatever you wanna call it. But you can group the like things together so you're not ending up with 57 categories that make it really tedious. You might have laundry and linens, you might have CE, but that's it.

 

0:08:03.9 AH: You probably have less than 10 or 12 categories, and tracking those so you can pretty quickly total up your income and your expenses, that is the first step to pulling your business finances together. And that's your mission. That's it. I say that's it. But if you haven't done any of this, it's going to take a little foundational work. But like the bullet point recap here is have all your money come in and out of one account and have all your money go in and out of it. Don't be pocketing your cash and not tracking it. And on a regular basis, take those deposits and expenses and sort them into categories. That really is all I have to say about that. So let's jump into our chat with a colleague. For today's chat with a therapist, I am talking to Tara Eidse, who is owner of Terra Massage and Wellness in Arizona. Hi, Tara.

 

0:08:58.8 Tara Eidse: Hello.

 

0:09:00.6 AH: First of all, thank you for being with me. And I have some little bits of questions to ask you just about your massage work. So first of all, how long have you been a massage therapist? 

 

0:09:10.4 TE: Since 2012.

 

0:09:12.2 AH: Have you been in Arizona that whole time? 

 

0:09:14.5 TE: I have been in Arizona the whole time. I went to school here and started my practice here.

 

0:09:19.5 AH: All right. So we're looking at 12 years. What kind of patients are you seeing? 

 

0:09:24.5 TE: Currently, I'm seeing folks with stress, post-traumatic stress, chronic pain, and anxiety.

 

0:09:32.7 AH: That's a really neat niche. I love hearing that. I really love the way you describe it on the homepage of your website. And it says, "Bodywork and nervous system support in Tucson". And I love that, "Bodywork and nervous system support". So the meat of this quick interview and the question that I love asking massage therapists and bodyworkers all over, especially business owners, what is the thing you would do differently if you could go back in time and start your business again? 

 

0:10:02.1 TE: I would charge a flat fee for my services and I wouldn't accept gratuities. That's the... Yeah, that's what I would do differently.

 

0:10:12.5 AH: So tell me how... So I know that you've moved to that model now. What was your services pricing and what did the tipping feel like before you made that move? 

 

0:10:23.2 TE: So for me, it always felt, I felt like I just kind of defaulted into accepting gratuities when I first started 'cause it kind of just seemed like it was the model and what everybody was doing. And I don't think I felt confident in myself to charge the going rate, but most practitioners were charging at that time. So I thought, "Okay, I'll charge less and I'll accept tips if people wanna give me a tip". And I just continued on with that, even though it didn't really feel great for me. It always felt clunky and awkward, and I never liked handing my phone to people after a session. It just felt super awkward, and I didn't wanna give that kind of hand, that burden over to the client. So this has felt Uncomfortable for me for a long time. And it was only recently, actually two months ago, that I made the switch. And it's just been life changing. I feel so much relief since having made the change.

 

0:11:24.5 AH: So I didn't realize it was that recent. So this is really exciting. How did that switch go? How did you announce it and what's the reception been? 

 

0:11:33.4 TE: The reception has been across the board, amazing. All my clients have been so supportive, and it just... Everybody is like, this just makes so much sense. And I think a lot of things have shifted in the last few years around tipping culture in the US in particular. And I think people have kind of shifted with how they feel about it. And everybody... I kept hearing the word, like, "It feels like you're making this choice out of integrity. And it feels like a very professional thing to do, to just have a flat fee and to not ask for more money above the published service fees".

 

0:12:10.3 AH: How did you roll it out? Did you just start verbally telling clients about it when they were booking their next appointment, or did you email? How'd you deal with that? 

 

0:12:18.9 TE: I sent out an email, and then I would ask each individual client, "Hey, did you see my email? You know, just you wanna make sure you saw that changes coming up". And everybody saw it, and everyone was like, there are a few people who I had to have, or who wanted to have conversation about it, were curious about it, wondering why I was doing that, and people who still wanted to continue to tip me, and it felt awkward for them to not continue to tip me, and they wondered why and just wanted to... So I shared a little bit about why I made the change.

 

0:12:51.8 AH: Did you raise your prices at the same time I did? 

 

0:12:54.7 TE: Yes, I did. I raised my rates $15. So it was a big jump for me because usually I would only shift like $5 or $10 for a rate increase.

 

0:13:05.7 AH: I'm so glad that it's going well for you. Thank you for... I think we get so nervous. Like, I think there's a lot of people who wanna make a change like that or some other change, especially in pricing in their business. And the concept of, like, how to announce it and the reception you'll get just hard stops us and creates this, like, obstacle in our heads and we just procrastinate until it's like a much bigger thing than it really is. I'm really glad to hear that it went well for you. And I agree. You know, obviously, I've always been a big proponent of going with no tips, but mostly because I like to take the ambiguity out of every part of the situation. Maybe it's because we both work with people with anxiety. I really try to like pre-think what are the things I would be most nervous and awkward about, which maybe it shouldn't come from that perspective of what I want. But whatever, it's my massage practice, so I'm gonna build it in the way I would want to interact with massage practice. Right. And I just try to take all the ambiguity and all of the decisions out of it 'cause people are so tired of making decisions and not knowing how to make a decision and this just, it takes it out of their hands like you said.

 

0:14:09.5 AH: Thank you, Tara, for giving us a little insight into your business experience with that. I love these little tidbits and I really appreciate you sharing that with us. Thank you.

 

0:14:20.0 TE: You're welcome. Thanks so much for having me.

 

0:14:22.5 AH: That's everything, folks. If you have a question about running your business or an idea for an episode, reach out via email at businessorpressure@abmp.com. You can also find me building websites and coaching massage therapists at deepbreathdigital.com. And make sure you subscribe to ABMP's podcast so you don't miss a beat. I'll see you back here for the next episode. I can't wait.