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  • #991506
    Matt Hanson
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    Hi folks,

    I am thinking that it couldn’t hurt to be open to ideas and suggestions for what I could do next to expand my business.

    I currently teach drums privately from home and am running at full capacity (essentially no spots for new students). I also perform at nights and weekends in bands. I charge $32/half hour and $55/hour (with the full intention of bringing my fees to $33 and $60 respectively at the start of next year).

    Of both streams of income (teaching and performing), the one that has the most potential to sky rocket my income is -ironically despite common cliche notions- playing in my band. That side of my income is where my heart is at and if I could perform only and not need to teach I would do so. This goal is ongoing.

    Essentially, as far as teaching is concerned I can’t make more money unless I keep raising my fees (which will have its limit as demand slows at the increasing fees), or I start delegating and become a company owner with teachers beneath me in my music school.

    I have thought about starting such a music school and the issues that that would raise. Other ideas that come to mind are providing youtube lessons or digital video lessons, but this is new to me and I do not know the pricing structure etc. and the technology or work-flow required to turn a profit (but I am not against learning).

    Ideally I’d like to turn my business of teaching into more passive income. To work less, and still make money. If I could get another teacher to work for me, I could get a cut and make more money per hour.

    I’m open to ideas. In general terms, I have reached capacity and am in a good position to expand. What would you do in my position?

    Does any one here have other ideas?

    #1181826
    Kelly Exeter FS Editor
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    Hey Matt

    I am not sure if you will find this useful but I just shared this on the FS Facebook page this week and thought it might come in handy for you too :)

    http://www.flyingsolo.com.au/finance/financial-management/profitability-and-cash-flow-checklist

    Let me know if any of the 35 things mentioned hits the mark!

    Also – someone who might be worth looking up is Clint Salter (http://www.clintsalter.com/). It might even be worth asking him what it costs to pick his brain for an hour. Because I believe he went from a similar kind of scenario to you (performing arts related) … to where he is today.

    Kelly x

    #1181827
    Matt Hanson
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    Ask and ye shall receive. Thanks

    And thanks to any more help from others in advance.

    #1181828
    bb1
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    Matt Hanson, post: 212131 wrote:
    Essentially, as far as teaching is concerned I can’t make more money unless I keep raising my fees (which will have its limit as demand slows at the increasing fees), or I start delegating and become a company owner with teachers beneath me in my music school.

    Matt, There is actually a lot to be considered in what you say in this paragraph, you are better to continue to raise you fee’s until you hit equilibrium point (ie. start dropping or not picking up as many). You may find that you can go up another 10, 20, 30% to reach this point. So say just to pick a figure of 20% for our discusion, you than either earn 20% more income from your clients, or drop 20% of your clients but still earn the same income.

    I have done it with a sub section of the clients that I wasnt to fussed if they dropped of, in general I got to 20% price before the natives started to get restless. I dropped a couple, retained some and overall it gave me scope to pick up a few higher paying clients.

    I am chockers at the moment, and just chasing replacement work for properties that sell. But whereas when I was slightly cheaper, I was getting about 95% acceptance of my quotes, now I have put my prices up to a point where I expect to only get around 50% acceptance of quotes, but overall I am earning better $’s.

    Hope that all makes sense

    #1181829
    Matt Hanson
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    It does make sense, thanks.

    My only concern is that my clients are ideally long term (1 year and longer), and if I raise prices I want to do it across the board (for every one) because it creates headaches otherwise when I get to invoicing. Also a key ingredient to my success has been transparency in my delivery and advertising of what I’m all about (including prices).

    When my pries go up I unintentionally punish my good students that always pay on time, practise, enjoy lessons, and make my life a breeze. I don’t want to punish them (in a sense) although I do have my own financial goals that is more important.

    I am okay with putting my prices up for future students and accept less signing up, but it becomes a little more difficult when I have to apply the new fees to existing and ongoing students. This is why I usually go up each 6 months or a year.

    #1181830
    bb1
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    Matt, forgot to mention, once I tried it with my not so good clients I did a similiar increase with all my remaining good/VIP clients and didnt loose any of them. If you are deliverying the product, they will stay. Well thats my theory anyhow.

    #1181831
    James Millar
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    This is an interesting dilemma (having two good income stream choices) and really highlights the importance of analysing the best use of resources being your time in this case.

    I think your intuition is rightly telling you that capitalising on both to a high standard would be a great outcome. Can that be done? That’s probably a question of resource capacity and the common primary resource required at the moment is your time and your skill in drums. Of the two options the band playing is the only one the actually requires you to be present to make it work. On the other hand the teaching model could be setup to run with alternate training resources to expand capacity. Those obvious options being to engage other teachers or processes to better leverage your time (maybe group lessons or expanding onto YouTube etc. but probably switches the model to ad supported revenue rather than pure teaching fees).

    What is the general availability of good quality drummers that would be interested in working for you in a music school model? If they are relatively abundant then it should be a straightforward case of adding human resources. Expanding revenue this way is obviously a different proposition to just increasing prices which is really a short term non leveraged model. That’s not really going to create a business or business asset that can be sold (as opposed to music school which does have a capital value and could be sold). Of course if you create a music school you will end up creating other management responsibilities which will ultimately require time and effort to deal with well. You will be financially rewarded in creating a music school but it will draw you away from your other goal of playing in a band.

    They are ultimately two different risk and return models. It sounds like you are well on your way to establishing a successful music tuition business (and possibly a proper music school). So that path has a high probability of success but a lower potential financial return than say being the next Dave Grohl (which is perhaps a one in a million shot).

    At least you have two good options making money doing something that you enjoy. Many people would be very happy with that. Good luck with it.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1181832
    ThexArm
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    You have answers to your own questions. Looks like you do have a good business mind as well as being a good artist. As you have rightly identified your time and talent are the assets in your business. Since time is limited you need to use it such that it creates multiple opportunities. So far you have identified few opportunities and working on 2 of those opportunities to the maximum capacity.

    Matt Hanson, post: 212131 wrote:
    Essentially, as far as teaching is concerned I can’t make more money unless I keep raising my fees (which will have its limit as demand slows at the increasing fees), or I start delegating and become a company owner with teachers beneath me in my music school.

    Even though if you keep raising fees it is not going to make you mega rich as there is only so much you can do it by yourself. So, you probably need to look into a music school model, but you need to find others who wants to work with you. It would be considerable administration work involved and probably take you away from what you love doing. Group lessons could be one option where you can get more financial reward for your limited time.

    Matt Hanson, post: 212131 wrote:
    I have thought about starting such a music school and the issues that that would raise. Other ideas that come to mind are providing youtube lessons or digital video lessons, but this is new to me and I do not know the pricing structure etc. and the technology or work-flow required to turn a profit (but I am not against learning).
    So, music school may not be a viable option given the issues you would foresee in this model. I would greatly recommend looking at video lessons through youtube, udemy etc. Every sign in the business world is looking towards cloud these days and having video lessons recorded and made it available through would be great for you.

    Matt Hanson, post: 212131 wrote:
    Ideally I’d like to turn my business of teaching into more passive income. To work less, and still make money. If I could get another teacher to work for me, I could get a cut and make more money per hour.

    So, there is your answer. If you want to teach and also have a passive income then recording your lessons is the way to go.

    Focus on looking for people who can do the recording for you. Also, research on what kind of lessons are in demand in your drums world. Meanwhile, visit udemy and see how people are generating passive income through that site. I hope that would give you few good options.

    #1181833
    bluepenguin
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    Taking on employees may or may not be the way to go.

    I reached a similar point a few years ago in my graphic design business; being that I was completely at capacity and felt that employing another designer was the only way forward.

    In my mind it seemed like a no-brainer: Pay a designer a decent hourly rate, add a decent chunk on top and make mountains of free money – and maybe not have to work so hard.

    So I leased an office (I didn’t want anyone working in my home), found a competent, young designer, purchased some extra equipment and furniture and set about building my empire.

    With the margin I was making on top, in theory, my profits were set to soar.
    Instead, over the next 12 months I worked my butt off and made exactly $1,000 less than I had in the previous 12 months without an employee. Weird.

    There’s a lot more to it than just maths.

    #1181834
    bb1
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    bluepenguin, post: 212159 wrote:
    Taking on employees may or may not be the way to go.

    I reached a similar point a few years ago in my graphic design business; being that I was completely at capacity and felt that employing another designer was the only way forward.

    In my mind it seemed like a no-brainer: Pay a designer a decent hourly rate, add a decent chunk on top and make mountains of free money – and maybe not have to work so hard.

    So I leased an office (I didn’t want anyone working in my home), found a competent, young designer, purchased some extra equipment and furniture and set about building my empire.

    With the margin I was making on top, in theory, my profits were set to soar.
    Instead, over the next 12 months I worked my butt off and made exactly $1,000 less than I had in the previous 12 months without an employee. Weird.

    There’s a lot more to it than just maths.

    Glad you mentioned that, when I read james response I was thinking a similiar thing, then blow me down you already had it here.

    My thinking was yes employ someone to give music lessons, but are your client there for your ability at training them. or just to get lessons. Often people come for the specific trainer or service provider. I have employed people some were just hopeless and cost me more, others were good, but I always found the clients still werent always as happy with them, so sometimes you are selling you, rather than the service.

    From that I am not saying don’t employ, but you need to be very careful with who you employ, and then making sure the margins are right. Or that they actually turn up, remember it is your business, not theirs so do they have the same passion for the business and the clients.

    Just an example not related to my business, but my son takes tennis lessons the pro is excellent and we are happy, but if for some reason his offsider takes the lesson, it always finishes 5 minutes early, there is not the same level of training, always clock watching. So if it eer came to the point where the offsider was to premanantly take over the class, it will be bye bye from us.

    You may think an employee is up to scratch looking after your business and clients, but unless you observe, and talk to your clients you will never know. And then will the clients be up front with you as they dont want to rock the boat. I have heard from experience more people say they are going to stop using or going to XYZ business, and when you ask did you complain, ah no we dont want to make a fuss. And from experience I can assure you if a client complains they are than seen as that winging client rather than that person who is looking after my business interests.

    Yes employ, but remember you need to not put the business in remote control, b

    #1181835
    jackib
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    Hi Matt,

    It sounds like your schedule is packed with happy customers – that in itself is an asset that you can leverage.
    In increasing your prices, you need to show you’re still providing value for that money…. could you start building a “buzz” about yourself as a performer and teacher and also your classes – maybe have a friend shoot some quick videos of you teaching or playing something and post on facebook? Along with posts about your methods, what you stand for, etc, and hopefully glowing reviews from your clients.

    You could increase your fee a bit more at the next 6 month interval, and have a loyalty discount for your long standing clients – which also keeps them motivated to continue.

    What about group workshops on specific themes/genres, or for certain age groups or other sub-groups – uses the same amount of your time, but you’re getting paid by multiple people. Also might attract new potential clients.

    When it comes to expanding, employing other teachers or making major changes, I’d make sure I have a clear idea of what current customers value about what you do.

    #1181837
    MJ.Bart
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    Hi Matt,

    just thought I’d make a couple of suggestions:

    1. At http://www.skillshare.com you can teach lessons to thousands of students (once you build a following) without needing to tend to each student individually. Go to http://www.skillshare.com/teach?via=header to learn more about teaching on Skillshare. Also check out this article about a guy who has made a career out of it https://medium.com/teacher-stories/how-jake-made-teaching-on-skillshare-into-a-freelancing-career-18c0b77183ab

    2. https://gumroad.com is a platform for selling digital products such video based lessons (or even your bands music) directly to your fans / followers / students. Go to https://gumroad.com/for/music to learn more about selling music / music lessons directly to your fans / followers / students

    These seem to be great ways to generate revenue from your digital products be it music, videos, or lessons, though I have not tried them myself so if you do try them I would love to know how it works out for you. Good luck!

    #1181838
    Chris H
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    I think bluepenguin made an excellent point.

    Not every business is scalable, in this case you are the product and employing someone may dilute the product more than it increases the reward. Sometimes businesses reach their natural maturity and that’s not a bad thing.

    That being said, in your position I would look a little outside your current income streams.
    At the moment you are trading time for money, which can be profitable, but doesn’t lend itself to passive income.
    I would look for complimentary products to sell: Books, videos, drum kits etc. Start a blog with some basic video lessons given away for free and use this to grow a market for your products. I would think DVD’s etc. would be a natural fit.

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