Every quarter, I close the books and sit with three categories: what worked, what didn’t and what is outside my control.

Q2 had something in all three.

The good

Going into Q2, we had a specific goal: convert five package clients to 12-month contracts before June 30. We hit it. Overall package client count dropped by ten, but five of those ten converted to contracts. The other five represent genuine attrition: clients who stepped away for summer or a move, and one who ghosted.

The contract conversions matter more than the raw number suggests. Package clients pay when they buy. Contract clients pay every month. Five clients moving from one model to the other is a structural improvement, not just a retention win.

The bad

Leads held steady from Q1. Intros sold dropped by 50%.

Before making assumptions, I had to ask a few other questions first. Are we capturing leads that are actually spam? Are our automations stale? Is it even easy to purchase an intro from us?

That gap between Q1 and Q2: the same number of people expressed interest, but only half as many purchased an intro. This tells me the problem is in the transition from lead to new client, not in how we are finding people. A lead who does not convert is not a lost client (yet.) She is still a lead, ideally one conversation away from coming onboard.

Intro-to-long-term conversion was also down sharply. Upon learning this, I leaned into a specific adjustment I had been considering for a while.

At Somaspace, we moved client management and sales to a front desk role in late 2023. So our front desk has been closely associated with the sales process since that time: following up on leads, presenting packages, closing and scheduling.

But our front desk does not teach and is not present on the floor where the actual experience happens. An initial sales conversation coming from someone other than the teacher can land as abrupt, no matter how well-scripted.

The new model shifts those intro-period sales interactions toward the teachers. Connection before commerce. A teacher who is aware of a new client, who asks how the first session felt, what they are hoping to work on, whether they have questions, is having a different conversation than a post-session sales pitch from the desk. The relationship starts first. The pricing conversation follows.

It is too early to know if it is working. I will report back in Q3.

The ugly

Gross revenue was down approximately 14% compared to the same quarter last year.

Despite the immediate anxiety it produced, that number deserves context.

Consumer sentiment in the United States fell to its lowest point on record in April 2026, according to the University of Michigan Consumer Sentiment Index. That’s below the levels recorded during the 2008 financial crisis.

Boutique fitness is being squeezed from both ends: budget gyms are picking up price-sensitive clients while high-end clubs are capturing the clients who want to spend. The middle, where most independent studios operate, is feeling it.

According to Bain and Company’s spring 2026 luxury market study, bookings for dining, leisure and entertainment are up over 30% this year. People aren’t spending less. They are spending differently, and this quarter they spent it on vacation rather than their standing Tuesday session.

A 14% revenue drop is not a small number. It is also not the same story as losing 14% of your clients. Our active roster is largely intact. The revenue drop is a combination of slower new client conversion, seasonal attrition and an external spending environment that is genuinely difficult for premium service businesses.

I chose to not panic. I looked at the data, compared it to Q1 and asked what was mine to solve and what was not.

What I actually pull for a quarterly review

• Gross revenue, month by month, compared to the same quarter last year

• Total active clients by the definition I described in the last issue (How Many Clients Do You Actually Have?)

• Package holders versus contract clients

• Leads in, intros sold, conversions to a long-term option

• Payroll as a percentage of revenue

• Operating expenses as a percentage of revenue

Those six numbers tell most of the story. The rest is context. You can build a simple version of this in a spreadsheet or pull it from your scheduling software reports. It does not need to be complicated to be useful.

My takeaway

Q2 was instructive. The numbers confirmed some things I have been watching for a while about where this industry is heading and what that means for studios like mine. That is a longer conversation, and I am already having it with myself. More on that later.

If something here was useful, send it to a studio owner who could use it.

More on the question I am sitting with soon.

-Amanda

Most studio owners know how many sessions are on the schedule, and we generally have an accurate idea of utilization. But active clients? That’s a nebulous, changeable number depending on how you define it.

Three ways to count

Attendance is the easiest number to pull from most scheduling software: unique clients who showed up in a given period. Unfiltered, this will include intro clients, a client’s sister visiting from Vermont, and prospects whose relationship with the studio is one conversation away from being over. Attendance is a useful marketing metric. But it’s not a reliable picture of your client base.

Subscribers or members is the next easiest report; essentially, clients on autopay. This is a cleaner number for predicting cash flow, but it excludes a meaningful category of clients who simply prefer packages over contracts. A client on her third consecutive 10-pack, booking the same Tuesday and Thursday slots for two years, is not in your membership count. But she is absolutely an active client.

Then there is the category most scheduling software cannot surface for you at all.

The clients your software misses

We have a couple of drop-in class clients at Somaspace who hold standing reservations, average 4 sessions per month and have been with us for over a decade. They do not hold contracts. They do not buy packages. They are not in the subscriber count. They appear in reports as drop-in clients, which sounds transient.

They are anything but.

When I calculate our active client count, I include them. That means a small amount of manual work, cross-referencing attendance patterns with what I actually know about how these clients interact with the studio. It is not complicated, but it requires looking past the report.

How the client interacts, not just how they pay

What most owners miss when they count clients is the behavioral dimension. A steady 10-pack client who renews consistently, holds a standing time and has been coming for three years is as embedded in your business as any contract holder. A drop-in client with a decade of consistent attendance is more stable than a new member who signed a 12-month contract last month.

The question is not which pricing option they prefer. The question is whether this client has a genuine, recurring relationship with your studio.

That question requires knowing your clients well enough to answer it. The studios where owners (or their managers) can do that tend to be the ones where clients stay for ten+ years.

Pull your active client count this week, however your software defines it. Then ask whether that definition captures how those clients actually interact with your business.

The number might be smaller than you expected. Or it might include people your software would never have flagged.

Would love to hear what you find.

-Amanda

It’s July. If you’re a studio owner, you know what that means.

Your schedule likely has gaps that were not there in April. The same clients who waitlisted in January are in Italy, on the coast, at the lake, or wherever people go for the month when they have that option. The studio is quieter. The energy is different. And somewhere in the back of your mind, anxiety is building.

Over the years, I have experimented with closures, rate adjustments and scheduling changes to minimize the impact of a slow season. Since COVID, summers in my studio have become increasingly quiet. In Texas, it’s hot as blazes, and many of our clients have second homes or family in cooler parts of the country. So they leave for a month or two, returning in late August or after Labor Day.

Last year, we experimented with closing for two weeks: the week of Christmas and the week of July 4th. In both instances, payroll was significantly reduced, but hard costs like rent, software and insurance remained. The July closure in particular was confusing for clients. So we nixed that this year.

Approximately 65% of our revenue comes from 12-month contracts. In the months leading up to mid-summer, this source of recurring revenue is the very definition of financial stability. But come July, it falters. Steady clients clear their schedules to leave town.

I built freeze provisions into my 12-month contracts because I know what to expect. A client who has to pay through a monthlong vacation will resent doing so. A client who can pause while traveling and come back to their usual schedule and fees typically comes back. Freezes are still the right call in my book.

But the right call does not make July’s numbers look better. The freeze stops the client’s payment. But it doesn’t stop those hard costs. My teachers are on flat hourly rates, and my front desk is salaried. Payroll lightens slightly when sessions thin out, but not enough to offset what the fixed costs keep taking.

The takeaway is not that closing is wrong. The takeaway is that the bulk of your costs are not variable, and they continue to stack up in July in a way that feels like a downward trend even though it’s just seasonal.

This July, we didn’t close. Our teachers are thoughtfully staggering their vacations. Clients are out in the world enjoying their families. This is the part of studio ownership that requires a plan and the patience to see it through. So I’m experimenting with new ideas to ease the pinch of our summer slowdown.

Here’s what I’m doing:

• I’m refining rates and rethinking our offer suite:

  • We don’t discount for summer, as I believe it trains clients to wait for one. It also opens the door to the upside-down payroll ratio I covered in-depth in Issue #5, About That Payroll Ratio….

  • But I do refine our rates based on financials from Q1 and Q2. And in our case, it looks like this:

    • Slight reduction for our semi-private group classes

    • Slight increase for our private appointments

• We’re starting our win-back outreach now, not in September:

  • The window where a lapsed client is still thinking about returning closes faster than you realize. For us, late July/early August is the right moment to prebook them for a post-summer return.

  • I’ve organized multiple segments of lapsed clients based on method, service and lifetime value, each set to receive a unique message and return offer.

• I filled the downtime with actual downtime and vision planning:

  • I took a few days off and celebrated my 50th birthday on Grand Cayman.

  • I revised existing job descriptions and posted them. I’m anticipating needing one or two new teachers this fall.

  • I’m organizing my teacher training calendar. I like to draft it a year out.

  • I’m scrutinizing my KPIs and our expenses. The privates-based studio world is changing rapidly, and I’m in the early stages of making foundational changes to my business.

  • And on that note, I’m nit-picking my studio’s revised business plan. We have a major evolution planned at the start of 2027.

July is slow, but it’s usually not the start of a downward trend. It’s a seasonal slump. But it’s also an invitation to breathe, to catch up on what's been neglected and to plan for what comes next.

So if you have some extra time, enjoy a few personal days, then do some planning. The efforts we make in the next three weeks can help determine how September feels.

Amanda

You signed a lease. Bought equipment. Sold your first package. Made a few rent payments.

Somewhere in that sequence, you stopped being just a teacher and became a business owner. But you probably didn’t feel it happen because you were too busy.

Most teachers-turned-owners run their studios from the wrong seat for years. I know I did. Not because we are careless, but because we come to this role through a deep passion for our vocation.

In my earliest years, charging what I needed felt dirty and incongruent with being “of service.” That mindset eventually came back to bite me and inspired a complete overhaul of my studio.

Yet, I still see a resistance to the business side of teaching.

A teacher who worked with me for years once told me, not long before she left, that the studio had become too “well-oiled.” It wasn’t intended as a compliment. And even though I knew better, it stung.

But business isn’t personal. To serve a community of clients over the long term, the math has to math. The systems have to provide structure and boundaries. What would really sting is closing a failing business.

The job that came with the lease

Teaching is our first role. It’s our technical work. We’re well trained for it and, over time, we build a loyal clientele. Opening a studio is a natural next step.

But business ownership is a distinct job from running a studio. Most of us don’t have a business degree. And for a while, that’s quite alright.

Once we open our own space, our secondary role becomes everything else. Pricing decisions. Scheduling decisions. Financial decisions. The systems that make the studio run while you’re teaching or living your life. The reporting that tells you whether the business is working well enough to pay the overhead and keep you employed.

Most new studio owners do the teaching part very well and avoid the business part as long as possible.

And often, from the outside, the business part looks easy. Just sell a 10-pack and keep clients scheduled. Rent gets paid. Income is protected. No well-oiled systems needed here.

If only.

Feel versus formula

As teachers, we often make decisions based on gut instinct. What seems fair. What the client can afford. What will keep things running smoothly.

Business owners make decisions based on math. What the business needs to charge to cover costs and earn an income. What the numbers require, regardless of what feels comfortable.

Neither is wrong. But when you make owner decisions from the teacher seat, the math suffers quietly. Until it doesn’t.

You’ve been in the teacher seat when you priced a package based on what felt reasonable rather than what the studio needed to bring in. When you kept a client at an old rate because the conversation felt too hard. When you added a service to the schedule because you love teaching it, not because the revenue justified it. When you hired someone because they were available and you needed help, then paid whatever they asked for because you were grateful they said yes.

These are not failures. They are what happens when a skilled practitioner opens a business without switching seats.

Where to start, regardless of where you are

You don’t need to stop teaching. I still teach, and most studio owners I work with continue to teach. Working with clients keeps you credible and connected to what you are selling.

But what you must do is carve out protected time to work on the business rather than in it. Even one hour a week spent in the owner seat changes the decisions you make.

Pick one day and one hour of that day, block your calendar.

Make a cup of tea and pull a report from your scheduling software.

Look at attendance. Utilization. Unearned revenue. Retention. Sit with it and let it tell you something. If you don’t know what to look for, ask a colleague or message me.

The issues that will come up are specific to your stage of business. In the earliest days, the biggest question is: what does the studio need to earn from day one? Down the road, the questions become more complex and often involve the livelihood of other teachers.

All the more reason to begin sharpening your business lens from the start.

Wherever you are in the arc, it’s never too early to see your studio as a business. Because well-oiled is not a corporate thing. It’s a solvency thing.

I’d love to hear from you if any of this landed. Or please share with someone who could use some direction.

-Amanda

Two weeks ago I defined what my ideal payroll ceiling for a studio business: 40% of gross revenue. I gave you a quick description on how to run the math on your own business. Below, I’m linking a payroll diagnostic calculator that I use with my studio owner clients.

If you would rather work through your numbers with me directly, a free discovery call is the place to start.

Read more

A new client quit on us last month.

She emailed us with a list of reasons and requested a refund on her unused sessions.

Her complaints were specific.

I read them, sat with them and called her.

Not emailed. Called.

A complaint sent by email is almost always an invitation to a conversation the person did not know how to start. If you reply in kind, you have accepted the format. You’ll then spend three emails saying what one phone call resolves in five minutes. And you will lose ground in every exchange.

The call went well. She was polite but direct. I listened, and some of what she had to say was fair. None of it was personal. And by the end, I understood one thing clearly: she is not the right client for our studio. Not every client is.

The refund calculation was simple. She had purchased a 10-pack, using four sessions of it. I took our drop-in private rate and multiplied it by the four sessions she had attended. That is what she owed for the time she used. I refunded the difference.

The logic: the discount in a 10-pack is the reward for committing to the volume. If a client exits that commitment early, the sessions already used revert to drop-in pricing. She paid a fair rate for what she received and got the rest back. No one leaves feeling taken advantage of.

But the math wasn’t the hard part. What’s difficult was resisting the urge to hold on to her business.

A client who is not a good fit will cost you more than the refund. She takes a time that belongs to someone who will stay. She could bring friction into the room. And if she stays unhappy, she will eventually leave (and usually not quietly).

Letting her go gracefully, with money back and a warm good-bye, costs less than keeping her.

This understanding does not come easily in the early years. The revenue feels too important to give back, and the complaints feel too personal. But the math is usually wrong. A client who was never going to work out is not revenue. It’s a liability you have not yet recognized.

The next day, I followed up with her, replying to her original email. I expressed my gratitude for giving us a try, and I recommended studios with a different approach and equipment better suited to her preferences. Her reply was immediate, warm and gracious.

And this week, her spot was filled by a promising new client.

Amanda

P.S. Next week, paid subscribers receive the payroll diagnostic calculator referenced in my last article. Subscribe below if you haven’t already.

There is one ratio that will tell you more about your studio’s financial health than almost anything else on your books: your total payroll as a percentage of gross revenue.

This number has a ceiling. For an appointment-based business, that ceiling is 40%. Below it, the business has room to breathe. But above it, you’ll feel the squeeze every time you run payroll.

Three buckets, one number

Most of us miscalculate our payroll expense because we only count what we pay our teachers.

Payroll has three components: teacher pay, front desk pay and owner pay. All three belong in the calculation.

Leaving out owner compensation is the most common mistake. Maybe you can’t afford to pay yourself once all of the other bills are paid (common). Or maybe you don’t need the money (rarer). Either way, it makes the ratio look manageable when it is not. You are still a cost to the business. If you are not counting yourself, you are not reading your own numbers accurately.

The 3x rule

I have a secondary benchmark for payroll health: each teacher on your roster should generate at least three times their own compensation in revenue. If a teacher earns $3,000 a month, the sessions they teach should produce at least $9,000 in monthly revenue. This is true for hourly teachers and especially so if they are on salary.

Most studios have at least one teacher who is not hitting that threshold. Not that she is necessarily underperforming in the room. But the economics are out of alignment, and it compounds over time.

Admin or front desk pay is different. This is a non-revenue earning role so you can’t use the same benchmark, but in many studios of a certain size, it’s indispensable for smooth operations.

Why studios end up over the ceiling

The payroll problem rarely starts with a bad decision. It usually starts with a desperate one.

Here’s a common scenario: new clients are rolling in but you’re short-staffed. A good teacher became available, so you paid what she asked. She’s a dream with your clients, and her schedule is now waitlisted. She asks for a raise. But it’s financially out of reach for you, so she leaves. You attempt to absorb the vacancy among your existing team but end up rehiring at the same (or higher) rate. And the ratio climbs a little higher.

I’ve done it myself at least a dozen times. It feels good to reward someone who thrives in your studio. But it’s not a happy ending. There is a ceiling on what you can pay, no matter how talented and popular that teacher is.

Getting the ratio back under the ceiling is one of the most complex problems I have worked through in my studio. It’s gut-wrenching, borderline humiliating and calls into question every dream I’ve had as a studio owner. It’s also the most grueling-yet-necessary work I provide for my coaching clients. There is no single lever. But there are specific moves, in a specific order, that bring the number back to range without gutting the team.

What’s coming

This is the first of two articles on payroll. In two weeks, paid subscribers will receive a diagnostic calculator that calculates your ratio across all three buckets, benchmarks your number against the thresholds I use with coaching clients and shows you specifically where the pressure is coming from.

If you want to run the math now, it is straightforward: add up everything you paid in instructor payroll, admin payroll and your own compensation last month. Divide by last month’s gross revenue. That percentage is where you stand.

Paid subscribers can upgrade below. The calculator goes out June 12.

Amanda

P.S. If you just opened a studio and work solo, this isn’t your math today. But I have something coming for you in Issue 6.

Here is a scenario I have walked through with nearly every studio owner I work with.

Client A holds three sessions per week. In a 50-week year that is 150 sessions on the books. But by the end of the year, the client’s actual attendance averages 1.25 sessions per week, or 62 sessions attended.

The gap is 88 sessions. At $100 per session, that is $8,800 in unrealized revenue. From one client. In one year.

Multiply that across your roster. The schedule is waitlisted on Monday but by Friday, it looks like Swiss cheese. The industry calls this a utilization problem. I call it a cash flow problem that hides in plain sight.

Why packages make it worse

When a client buys a session package, two things happen that feel fine in the moment:

1. Cash comes in up front.

2. The client books out on your schedule.

It feels like revenue and full utilization. But it’s not. That money is unearned revenue, and it’s a liability until the sessions are delivered.

Back to Client A: despite the three-session commitment, the client has a last-minute trip, a personal appointment she forgot about, a sick kid, etc. She cancels. Her three weekly reservations dwindle to a much lower average, and her 10-pack is drawn down over two months. The new package purchase is delayed, creating a financially lumpy month and a source of revenue you really can’t rely on.

Adding to the issue, most studios treat that upfront cash as available income and pay expenses from it. Smart operators put it in a drip account and release it as sessions are earned. The difference shows up at payroll, and that’s where it can get painful.

What a recurring model actually solves

Client B is on a fixed monthly auto-pay and holds the same number of weekly appointments. Life still happens and she misses some sessions, but this time it’s different. She’s on auto-pay, which means the studio’s cash flow is tied to the schedule she committed to rather than her actual attendance. And as a result, she usually reschedules rather than cancels.

Utilization is steady.

Cash flow, even steadier.

It works because you get paid on the same day each month, whether the client keeps their weekly sessions or not. They pay for the reservation. Revenue becomes something you can plan around. The renewal conversation disappears entirely.

This is not about making the studio harder to leave. It is about protecting your income, decoupling it from attendance variance. Attendance will always vary. Life happens. The client who came three times a week in January might come once in March. With a package model, that shift hits your cash flow directly. With a recurring model, it does not.

A note worth making: the recurring model has its own friction points on rollout. Client vacations, extended illness and months with an extra week all create questions a package model never had to answer. But none of them are dealbreakers. A contract with clearly defined freeze terms handles most of them.

Where to start

Pull your active client list. For each recurring client, find two numbers: how many sessions per week they hold and how many they actually attend. The ratio of attended-to-available is your utilization rate. The gap between the two is your unrealized revenue.

That data tells you the revenue you actually made versus the revenue you expected to make. The gap is usually significant. And if I’ve learned anything in my 17 years as a studio owner, your bank account will reflect it long before you know where to look.

Run the numbers first. Then reply and tell me what you find.

Thank you for reading!

Amanda

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I am writing this for boutique studio owners and service-based professionals who charge for their time. Personal trainers, physical therapists, acupuncturists and concierge physicians. If your business runs on your hours, this is for you.

I write about the operational and financial problems that show up in these businesses. The problems you probably didn’t train for.

I opened my boutique studio in Austin in 2009, and I’m still running it today. So the advice here comes from someone who is still on the floor, leads a team of teaching professionals, and oversees the desk.

The studios I work with come to me when they’re doing just okay. They are busy. The schedule is full and the clients are happy. But money is tight. Their team isn’t bought in, and it’s starting to show. Somewhere between a full schedule, the break room, and the bank account, something is off kilter.

It is almost always one of three things:

• a cash flow model that depends on clients showing up at the rate they committed to,

• a team that gets the job done so long as it’s on their terms, or

• a payroll ratio that has quietly climbed past the point where the numbers work.

Often it’s a bit of all three.

None of these are motivation problems. They are structural. And structural problems have specific causes and specific fixes. Mindset may matter, but that’s after the leaks are fixed.

That is what I am writing about. I aim to be here every Thursday. And if you have a specific problem that needs addressing, I’d love to hear from you.

Amanda

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