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Small Business Owners Skip Their Own Paycheck.

Overhead Costs Are More Than Just Rent & Utilities 

As a boutique fitness business owner, the many facets of cash flow were always mysterious.  I had underestimated the plethora of overhead costs.  The overhead of a boutique fitness studio is so much more than just rent and utilities.  I hadn’t taken into account:

  • Liability insurance
  • Workman’s comp insurance
  • Payroll taxes 
  • Property taxes
  • Office and studio supplies
  • Loan payments
  • Health insurance
  • Networking memberships
  • Equipment maintenance
  • Oh, and of course, a host of unexpected surprises

It wasn’t until I struggled with my own cash flow that I realized how little I understood about this fundamental aspect of running a business. And while this didn’t take down my business, it was quite a disadvantage in my personal bank account. 

Small Business Owners Skip Their Own Paycheck.

When You Underestimate The Cost It Takes To Run A Business

When I first started my business, I was focused on two things:

  • Providing quality classes and sessions
  • Building a community
Small Business Owners Skip Their Own Paycheck.

But...I didn’t pay enough attention to the financial side of things.

I didn’t understand how much my overhead costs were, but I wanted to show how much I value my employees. I set teacher pay WAY too high which resulted in me not making any money.

Too often I was skipping my own paycheck. For years, I just thought that this was the price I paid for the freedom of owning my own business. I’ve come to realize - this is NOT ok!!

Small Business Owners Skip Their Own Paycheck.

It wasn’t until I realized I was paying my teachers more than I could afford that I knew I had to make a change. But that change was terrifying! I was scared of losing some of my best teachers and risking the future of my business.

Putting The Right Plan In Action

Fortunately, I asked for help and was exposed to the 30-30-30-10 formula. This formula breaks down cash flow into four main categories:

Small Business Owners Skip Their Own Paycheck.
  • 30% for teacher payroll
  • 30% for administrative payroll
  • 30% for operating expenses
  • 10% for profit

When I compared my profit and loss reports to this formula, it became clear that I was paying my teachers more than I could afford, which was the root of my cash flow problems.

Making the necessary changes was scary, but it was also liberating. Yes, I lost some of my teachers, but the new formula allowed me room in my budget to shoot for this balance:

Small Business Owners Skip Their Own Paycheck.
  • Hire a full-time administrative assistant who made all of my teachers' working lives easier.
  • Set aside money to pay for continuing education. 
  • Create a profit-sharing model that incentivized my teachers to work together as a team rather than as individual entities.

Management became easier, and I could once again focus on my true expertise and doing what I loved. When everyone was incentivized to be a part of the solution, the community created by my teachers modeled the community I had dreamed about when first thinking about my business.

It was a valuable lesson to learn that understanding overhead costs and the 30-30-30-10 formula is critical to running a successful business.

Since then, this formula has helped me understand my business in other ways. When the business's profit rose beyond 10%, I knew that I could afford to give my teachers a raise and that the business would be safe. And I got a raise too!

Small Business Owners Skip Their Own Paycheck.

There was one quarter when my operating costs rose more than 30%. This was the catalyst for me to dig deep into an analysis of studio capacity. I was able to ask the question, how can I maximize the use of my brick-and-mortar space? I was paying for it after all. This led to an analysis of marketing tactics and beyond. And yes, this led to a revenue increase and then more profit and then another raise. YIPPEE!

The 30-30-30-10 formula was a lifesaver! It continues to provide guidance in all of my business decisions.


If you’re a business owner struggling with cash flow, I encourage you to closely examine your overhead costs and compare them to the 30-30-30-10 formula. It may be scary to make changes, but it’s worth it in the end when you’re able to create a profitable and sustainable business that allows you to do what you love.

Article of Interest

Two learn more about effective bookkeeping for your fitness business, take a look at the article "3 Reports For Bookkeeping Essential To Running A Business"

About the author 

Mark Firehammer

Co-Creator Fitstreams.club, fitness biz consultant at Fitness Business Pros, a veteran digital marketer and marketing educator. Plus a lover of cats, and he can sing! Just ask Alexa to play songs by him.

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