1. Better Information = Better Management
Financial Data
Statistical Data
The
Balancing Act
SWAR
P&L
Better Information = Better Management

2. Prepaid Report – One Measure of Cash Flow
Basic Sample of the Actual Report –
As of March 31, 2008
Customer
No. Pvts
Amount
Total
Balance Due
Prepaid
Doe, J. 20
75.00
$1,500.00
1,000.00
500.00
Smith, Mary 10
76.80
768.00
Tripp, S. 5
64.80
324.00
300.00
24.00
Totals
35.00
$2,592.00
1,300.00
$1,292.00
Sweepstakes
$1,300.00
Divided by
3 months to next festival
Monthly
Rev $433.33
Managing the balance due the studio and setting the target of having the existing lessons exhausted, you can then anticipate per month. Since this report should have many more dollars in prepaid than this illustration, the monthly cash in the door can be then factored into monthly cash needed to cover expenses.’
Setting a weekly cash goal for new business and understanding what cash is needed for expenses.
Understanding the sources of cash exisiting enrollments versus new business. Setting goals now becomes a realistic target.
The Calculation of course would entail more than just 3 students! Once the report is completed and submitted, it can then be modified for studio use.

3. SWAR Versus Profit/Loss Statements
Swar Reports
Profit / Loss Statements
Statistical Information
Numbers Taught
Earned Income Achieved
Enrollment Information
Anticipated Earned Income
Actual Earned Income
Staff Performances
Cash in
Lessons Taught Out
Line of Business
Lessons
Merchandise
Competition
Other
Cash Basis
Accounting
Cash In the Door
Monthly Expenses
Expenditure Trends
Revenue Trends
Analysis
Cost Per Lesson
Income Per Lesson
Average lesson Rate
Projected Cash Flows
How many people here review their SWAR Information on a regular Basis
How many people here review their Financial Statement Information on a Monthly Basis.
How many people keep their SWAR information in the same place as they keep their financial information?

4. Statistical Information Actual Earned Income
Staff Person
Earned Income
Lessons Taught
Average
Powell, Steven
$36,699.39
498.00
$73.69
Aliev,
Sergh
$25,689.39
433.00
$59.33
Total
Studio
$62,388.78
931.00
$67.01
What would cause the variances of each teacher.
– New Students who are being taught at a reduced rate.
-- Group Class Participation by instructor --
Understanding the difference in Rates
Examples:
Group Class Participation
Intro Special Lessons will reduce an instructors rate
Buddy System Participation / Student Sharing

5. Accounting with 4 Businesses - 1 Studio
Lessons
Tuitions
Coaching's
Special Groups
Competitions
Regional
National
Merchandise
FADS
Co-Companies
Other
Trips
Studio Rentals
Etc
Profit Centers

6. Setting Up Income Accounts
Revenue
Amount
Tuitions
Lesson Income
236,124.00
Coaching
5,435.00
Sponsorships
350.00
Competitions
Regional
31,500.00
National
24,655.00
Merchandise
Shoes
1,250.00
Music
975.00
Other
Interest on Escrow
236.10
Studio Rental
150.00
Trips
13,100.93
Less Cost of Goods
875.00
497.00

7. Separate those Expenses for the studio from those for Resale
Tracking Expenses
Competitions
Regional
National
Others
Payroll
Package Prices
Travel Expense
Additional Expenses?
Merchandise
Cost of Merchandise
& Shipping
Separate those Expenses for the studio from those for Resale
Additional Expenses?
Other
Actual Expenses.
The cost of doing business which includes:
Rent
Utilities
Office Supplies
Telephone
Etc,
These costs should be absorbed into the actual purpose of our DANCE studios; We teach people to dance, and the cost of doing that should not exceed the income we make.
While being profitable is of course the end goal of any business, the additional profit centers should not carry the burden of our ordinary business practices.

8. Competition Expenses (example)
Amount
Payroll
Instructor
Regular
500.00
Competition
750.00
Star Lite
100.00
Total Payroll
$1,350.00
Travel
Meetings & Conferences
236.00
Regional Competitions
438.76
National Competitions
812.00
Total Travel
$1,486.76
Note: This is only an example
Use Sub-Accounts –
Contact your payroll company and ask them to set up earnings codes which will allow you to track your payroll according to each line of business if they apply.
Be consistent in setting up these sub-accounts so that you can break out the necessary information to control the profitability of each product line.

9. Profit Center Accounting How Far is too Far!
Unallocated Expenses:
- Credit Card Fees
Associated with All Lines of Business
Can be allocated by percentage of income
If 10% of your business is merchandise then allocate 10% of the total as credit card fee.
Payroll Taxes
While also a direct cost of each line of business these taxes are a fixed percentage.
FICA 7.65%
Unemployment – Federal and State – Refer to your payroll Companies returns.
** The actual cost accounting for each product line can actually cause problems when recording payroll checks or deposits into the system.
There are solutions – such as using class reporting in Quickbooks and cutting separate checks for competitions for example, or a second check for “Trips and Other” Income. This brings additional costs, time in entering and payroll company charges. Determine what level of detail is important for you, and work from there.

10. Am I charging enough? Coaching @$125.00 Coaching Coaching Rate $85.00
Earned Income paid to teacher
Assume Maximum E.I. Percentage
$12.50
Franchise 7%
$8.75
Escrow
$3.75
Payroll Taxes on Earned Income
.96
Credit Card 1.98%
$2.48
Total without Travel Expenses paid to the coach
$113.44
Project Profit per lesson
$11.56
Will the $11.56 cover the travel expenses when multiplied by the number of coaching's taken.
To answer that verify the travel expense and budget accordingly.
What other factors could affect this profitability
– Am I going to offer a coaching session to my instructors at a reduced cost.
-- Will we charge the students a cancelation fee if they back out at the last minute.
-- What is the coaches minimum number of coaching’s guarantee.
-- What effect will the added earned income have on the teachers overall lesson income for the week.
Will it push the lesson rate for the teacher into the next break point – ie: 9% to 10% then the earned income and taxes will be effected to make this scenario non-profitable.
Now by separating the cost of travel, the coaches fee and franchise fee we can then determine if we are charging enough and if it has been as profitable as we assumed it would be.

11. 4 Business – 1 Studio P & L SWAR Management Allocate Revenue
Allocate Expenses
P & L
Use Averages
Understand the Meaning
SWAR
Make informed decisions
Impact your Outcomes
Management -