The phone is continuously ringing with requests for appointments, forcing you to create a waiting list. However, your waiting list is growing faster by the day, and you are booked out for three weeks. In essence, you are turning away clients.
You are also getting overwhelmed with the demands of your massage business and wearing multiple hats because it is only you. This overwhelming feeling can be bittersweet—you want your business to grow, but are you ready to hire a massage therapist as an employee?
Hiring a massage therapist as an employee can be both scary and exciting. Questions that may come to mind include: Can I afford it? Will there always be a waiting list? Do I start with a part-time employee or a full-time employee? Will there be a struggle meeting payroll—as an employee shouldn’t have to wait to cash their paycheck? These are all valid questions that all business owners should ask when increasing payroll costs. Nonetheless, you can’t continue to run your massage business alone—if your business goals include growth.
Your massage business has the potential to grow at its total capacity, hence the extensive waiting list. The business cannot grow and scale up with just one person—which is why “teamwork makes the dream work.” Before you, as a business owner, hire a massage therapist as an employee, let’s review a few financial and non-financial elements. These elements are crucial to ensuring you are comfortable with your decision.
Financial Elements of Hiring Massage Therapists
1. Payroll Cost
Hiring a full-time or part-time employee comes with additional payroll costs. Payroll cost includes more than paying the industry wage. As a business owner, you are also responsible for paying for:
• Social security and Medicare tax—mandated payroll taxes regulated by the federal government. Both the employee and employers pay these taxes, which funds social security benefits.
• State unemployment taxes—each state has a different calculated percentage rate based on your employee’s earnings. This tax supports unemployment insurance benefits for employees that meet specific state requirements and are no longer working.
• Worker compensation insurance—insurance that provides coverage to your massage business if your new employee gets an injury on the job. This insurance is essential and provides financial security if your new employee sues your business for their work injuries.
• Payroll fee—fee administering payroll services. Many different tax forms need to be submitted monthly, quarterly, and annually to the appropriate government agencies. These forms need to be submitted by the respective deadline, or a hefty fine can be brought upon you. Paying for payroll services will provide you with peace of mind—knowing all the deadlines are met, the correct payroll taxes are paid, and your employee is on a scheduled pay cycle. A payroll service also keeps track of all the employees’ documents, such as W-2 forms and employment benefits selection.
• Additional employee benefits such as health insurance, retirement plans, paid time off, and disability insurance should not be overlooked. These benefits can increase your total payroll cost by 20-30%. They are not mandatory components of a compensation package. However, they will make your compensation package more attractive for the right employee to help grow your massage business. Make sure the competitive package is comparable to industry standards.
2. Other Costs May Include:
• Recruiting fFees (including background check): Although short-term, there will be costs associated with advertising the position on recruiting platforms.
• Professional liability insurance: If you choose to absorb this cost, be prepared to see an increase in your insurance bill. Professional liability insurance protects your massage business in the event of a client’s lawsuit, or a client is accidentally injured on your property or while getting a massage.
• Continuous education, training and professional association dues: You want your new employee to be in the know and keep up with the latest massage techniques and modalities. Staying abreast of trends can increase growth in revenue within your massage business.
• Massage table, supplies, and additional overhead: Your new employee will need their own room, including a massage table, lotions, oils, and linens.
You may be wondering how do you keep track of this long list of cost/expenses? Before you begin the hiring process—create a projected budget—think of it as a what-if budget. The goal is to calculate the total cost of hiring your new employee with different scenarios.
For example, budget what it will look like if you start the health insurance and benefit plan three months after the new employee starts working. What is the financial impact of a part-time employee versus a full-time employee? What is the financial impact if the new employee performed four to five 60-minute massages per day? What is the financial result of a part-time employee vs. a full-time employee?
Non-Financial Elements of Hiring Massage Therapists
Non-financial elements of hiring massage therapists are just as essential as financial elements. They may not be reported on any financial statements. Still, if they are not taken seriously, they can and will jeopardize cash flow.
By taking the proactive approach in meeting all the governmental requirements and being very specific in your massage business needs, you will be able to capitalize on your time without losing time with clients. Remember—you are only one person.
• Obtain an EIN (Federal Tax Identification Number) from the IRS. This is how the federal government identifies your massage business. Think of this number as your social security number for your business.
• Decide on a salary—look at salary ranges within your area. Don’t go cheap, as cheap can be expensive in the long run.
• Create a job description that is clear and precise—think about what you need from the candidate to continue the success of your massage business. This will include the days and hours required to work, personality type, communication skills, comfortable working with a diverse group of patients, enthusiasm, cheerful demeanor, etc…
• List all additional requirements- Does the candidate need to have a massage therapy license before they start? Do they need to be credentialed with an insurance panel? Does the potential employee need to be skilled in a specific type of massage therapy such as hot stones, cupping (glass/ silicone), or sports and medical massage?
• Review resumes—it is crucial to set aside time to read each submitted resume. This task should not be taken lightly; both you and the candidate’s time is valuable. Interviews should only be conducted for candidates who fit your job requirements on paper. Consider having a phone interview first before an in-person interview.
• Schedule interviews and be ready to hire—be prepared with legal questions, as some questions are illegal to ask. Make sure the potential candidates fit the job requirements and share your massage business values. In addition, they are willing to uphold the business mission while caring for clients. Trust your gut in the hiring process.
• Do your due diligence—perform a background check before offering the position to the candidate. The background check ensures the candidate has a massage therapy license (if required), skills, and experiences listed on their resume.
• Create an employee handbook—a living document that lists your massage business policies and procedure. Think of the employee handbooks as a reference for your employee that includes policies relating to health and safety, code of conduct, paid time off, and attendance rules.
As a business owner, think of these costs—both financial and non-financial—as investments. These investments are the cornerstone to growing your massage business to the next level of profitability and building a team, so you no longer have to operate your massage business alone.
Fulfill Your Clients’ Needs
Wouldn’t it feel wonderful for the phone to ring and know you can book an appointment within a couple of days instead of up to three weeks out? Knowing you are fulfilling the health and wellness needs of both your current clients and potential clients should lessen the overwhelming feeling of being a business owner.
Massage treatments are a huge part of people’s well-being; therefore, they may not be willing to wait three weeks for an appointment. Hiring the right massage therapist employee will not only increase your cash flow; it will also allow your massage business to be a part of someone’s health regimen.
About the Author
Lozelle Mathai, MBA, CFEI, is a financial accountant with over 18 years of experience in the field of financial management and accounting. She is the owner of Healthy Bodies of Finance, a division of Closing Your Books LLC. The Body of Accounting is an accounting consultancy firm that educates massage and bodywork business owners on how to manage, maintain and understand their business finances, including how to determine the best structure for their business. Her articles for this publication include “Can I Afford to Buy That? Here’s How to Finance a CE Class, New Table or Equipment.”