Saturday, March 18, 2006

Twenty-second Class

This class was taught, essentially, by Trevor. With Dave, Trevor was one of the two founders of corepoweryoga as a business. Trevor led a discussion of the "business of yoga."

He began with a short history of CPY. He and Dave worked together at an IT consulting business in San Francisco. They cashed out and decided to do something different. They practiced yoga for a year and opened their first studio in January 2002. One student attended the first class. The business growth curve was very slow at the beginning, but they had capital to get them through the money losses at the beginning. That's a key to succeeding. Over time, the business grew and evolved to what it is today -- 10 studios in four states.

He reviewed market dynamics associated with yoga, based on a recent study (2004). About 7.5% of the US population practices yoga at present. 19.4% identify themselves as former practitioners, and 28.2% are interested, but have not tried it. The total spent on yoga (classes, videos, magazines, props, clothing, retreats, etc.): just under $3B/yr. Far and away the most important reason practitioners give for practicing at a particular studio: the quality of instruction. 71% of those who practice yoga do so at home -- not at a studio. The intial motivation for yoga -- desire for more stretching and flexibility, followed by desire to increase fitness, reduce stress, and to improve mental health.

From Trevor's perspective, the top three considerations from a business perspective: 1. the growth numbers show both significant potential and an increasing pace, 2. the number of people who practice at home on their own, and 3. the percentage of people who try and then leave the practice. Retention of customers is a highly important factor. To retain? Make it fun. Make it dynamic (hot yoga with its same 26-posture sequence bores people after a while -- power yoga with its constant changes to routine helps address this). Add music to the practice. Style counts. It takes a while to get the mix of factors right to begin retaining customers. And once past a particular threshold, retention rate goes way up.

Quality control: each studio has a manager. The manager is responsible for the quality of instruction. Manager takes classes with each of those who teach at the studio. Constant feedback.

Teaching: it is important to get experience teaching first before you decide whether you want to open a studio. The most difficult places to find teaching jobs? Yoga studios. The easiest? health clubs, apartment buildings, workplaces, hospitals. You've spent the money for the training. Get out and teach. Jump into it while the instruction is fresh in your minds. After teaching 30-50 classes, you'll have passed the threshold for comfort in teaching. Don't wait for the opportunity to happen -- go after it. Introduce yourself -- that's what you're selling. Offer to teach free classes. The going rate for yoga instruction is $20-60/class. Prepare a resume that describes your background, your philosophy, and perhaps your class outline.

CPY does not hire yoga teachers as employees -- teachers are independent contractors. Get insurance for yourself -- it's available through various sources, including Yoga Journal, for about $120/year. Also consider corporate form -- either LLC or S-corp. If you go this route, keep a bookkeeping system.0%

Studio elements: Lgst cost: payroll~50%; rent ~30%, then utilities. 60-70% of business comes from word-of-mouth. Then drive-by/walk-by -- so location counts for a great deal. With a studio launch, CPY uses a direct mail approach -- a glossy card send to 15K homes in the area, ranging 3-5 miles from the studio. Key demographic: hh income of $50-60K+, 30-45 yrs old.

Female/male ratio of most CPY classes: 75/25. Seasonality is very, very important -- summers entail very heavy decline -- 30% -- in attendance. So plan to lose money during the summers. Keep financial reserves needed to get through summers.

Read: Tipping Point Malcolm Gladwell, and E-Myth Michael Gerber.

Build out costs for Grant St. studio: $60-75/sq.ft.