Massage therapists or practitioners can be loath to agreements. They love the idea of working together, but often despise working out money terms in a long-term working agreement. The unwillingness or inability to work through the financial terms of a contract can cost thousands of dollars to the clinic owner over time if outgoing expenses are greater than incoming revenue, as well as great hassle and expense to the contracting practitioner having to relocate. With such a wonderful symbiotic opportunity, why do so many clinic-owner or contracting-practitioner agreements go sour? I think the foundational presumptions are to blame. This series examines six common presumptions.
Presumption # 1 – “I’m paying too much rent”
Practitioners ask me what stories I hear about practitioners associating in oppressive, draconian clinics that charge them far too much rent. Truth is, I’m approached far more often by clinic owners who bemoan the fact they are paying far more to work from their business than their associates are. It seems many clinic owners may inadequately assess the value of their business to an associate—through lack of financial understanding or the belief that “if I charge them more, they’ll pack up and leave!” The result: the clinic owner undercharges and doesn’t cover operating expenses.
What are the costs of running a business? Lease, office improvements, office furniture, computer and printer, equipment, such as massage table, linen, lubricants, signage and marketing materials, office and cleaning staff, and professional development. Add on fees for professional association dues and regulatory body registration and membership in local business associations. There’s property tax (if building is owned), income tax and, of course, tax on all supplies and services you purchase to run a business. Because it’s not common knowledge, most contracting practitioners don’t know the true costs of running a business.
When I ask clinic owners how they determined their financial terms, the response often is “the number felt right.” Intuition, although essential in providing bodywork, is not a substitute for doing the math.
Last year it cost me $2,500 per month to run my business with two part-time associates. Larger clinics are much more, hiring administrative staff, maintenance staff, lawyers and bookkeepers or accountants. Those are costs borne before the clinic owner takes anything home to live off!
There are intangibles, such as location and reputation, that are highly undervalued. Clinic owners may cry, “If I charge what I should charge for rent, my contracting practitioners will leave!” However, if a massage practitioner opened up next door to the established clinic, they wouldn’t have the same day-to-day cash flow as the established practice experiences because they haven’t developed location and reputation yet. What value are you putting on location and reputation in your financial terms?
In the book Better Business Agreements, I outline a utilization model where a clinic owner can fairly assess the cost of bringing in a contracting practitioner and assure they cover operating costs and a profit margin. I also outline how practitioners can determine if a potential workplace is right for them, or if it’s better financially to go it alone.
The financial terms should allow the clinic owner to cover all operating expenses and a reasonable profit for accepting the risk of operating a business. The contracting practitioner should only agree to terms that cover his or her business expenses and enough to take home for personal expenses.
Don Dillon, R.M.T. is the author of Better Business Agreements and the self-study workbook Charting Skills for Massage Therapists. More than 60 of his articles have been published in industry publications including Massage Therapy Canada, Massage Therapy Today, AMTA Journal, AMTWP Connections, and various massage school and professional association newsletters. Don’s Web site, www.MTCoach.com, provides a variety of resources for massage therapists.
Don has presented to members of the Massage Therapist Association of Alberta (MTAA), the Association of Massage Therapists and Wholistic Practitioners (AMTWP), the Massage Therapist Association of Saskatchewan (MTAS), the Massage Therapist Association of Manitoba (MTAM), the Association of Massage Therapists of New Brunswick (ANBMT), the Massage Therapist Association of Nova Scotia (MTANS) and the Ontario Massage Therapist Association (OMTA). He also presented to the pre-graduating class of 2008 at the Atlantic College of Massage Therapists.