Dance studio business plan for your own dance school

Executive Summary

Dance Company Summary

Services for customers

Marketing Analysis of dance studio business

Strategy

Personnel plan

Financial Plan

Dance studio business plan for your own dance school

Do you want to start a dance studio business? If you are passionate about learning and teaching dance then it is the perfect venture for you to invest in. Moreover, you can start this business with lower initial investments as compared to other businesses and can make it extremely profitable, provided that you plan and execute it successfully.
If you are wondering how to open up a dance studio, the first step you should take is to develop a comprehensive business plan covering all aspects of your business. The business plan will not only help you in startup but will also form the basis of your company’s future policies. So, for assisting you with writing an effective business plan, here we are providing the business plan for a dance studio business startup named ‘Emmy’s Studio’.

Executive Summary

2.1 The Dance Studio Business

Emmy’s Studio will be located at a ten minutes’ drive from the main residential district of Manhattan. The business will be owned by Emmy Jill, a famous American dance teacher. Emmy served in several dance institutes and has extensive experience in this industry spanning more than 10 years, that’s why she knows everything about how to start a dance studio business.

2.2 Management of Dance Studio

The company will hire a staff comprising of trainers, assistants and sales executives, all of which will be trained for one month prior to onboarding.

2.3 Customers of Dance School

Emmy’s Studio will be a licensed dance studio where people of age-groups will be taught various dances belonging to several parts of the world by the best trainers of the United States.

2.4 Target of the Dance Company

The business targets are to balance the cost of a startup within next 5 years of launch and to become the best dance studio in Manhattan. Our sales and revenue targets for next three years are summarized in the chart below:

Dance Studio Business Plan - 3 Years Profit Forecast

Sample Dance Studio Business Plan 1
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Dance Company Summary

3.1 Company Owner

Emmy’s Studio will be owned by Emmy Jill, an American dance teacher. After completing her Master’s in Theatre and Dance from the University of Colorado, Emily remained associated with several dance institutes across the United States.

3.2 Why the Dance Studio Business is being started

Emmy has devoted her entire life to learning and teaching various dances. Her passion for dance is the ultimate motive behind her starting this business.

3.3 How the Dance School Business will be started

Before opening a dance studio business plan development, you must decide whether you will start everything from scratch or procure an existing facility because it will greatly affect the costs of startup. Emmy’s Studio will be started in an existing dance studio located at a ten minutes’ drive from the main residential district of Manhattan.
The costs for startup are as follows:

Dance Studio Business Plan - Startup cost

The startup requirements are as follows:

Start-up Expenses 
Legal$75,500
Consultants$0
Insurance$62,750
Rent$22,500
Research and Development$42,750
Expensed Equipment$42,750
Signs$1,250
TOTAL START-UP EXPENSES$247,500
Start-up Assets$0
Cash Required$322,500
Start-up Inventory$52,625
Other Current Assets$222,500
Long-term Assets$125,000
TOTAL ASSETS$121,875
Total Requirements$245,000
START-UP FUNDING$0
START-UP FUNDING$273,125
Start-up Expenses to Fund$121,875
Start-up Assets to Fund$195,000
TOTAL FUNDING REQUIRED$0
Assets$203,125
Non-cash Assets from Start-up$118,750
Cash Requirements from Start-up$0
Additional Cash Raised$118,750
Cash Balance on Starting Date$121,875
TOTAL ASSETS$0
Liabilities and Capital$0
Liabilities$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
TOTAL LIABILITIES$0
Capital$0
Planned Investment$0
Investor 1$312,500
Investor 2$0
Other$0
Additional Investment Requirement$0
TOTAL PLANNED INVESTMENT$695,000
Loss at Start-up (Start-up Expenses)$313,125
TOTAL CAPITAL$221,875
TOTAL CAPITAL AND LIABILITIES$221,875
Total Funding$265,000

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Services for customers

The most important thing to decide before you think about how to open a dance studio business is the services you will provide to your customers. It is important because all subsequent components of your business plan depend on your provided services.
Emmy’s Studio will be a licensed dance studio where people of age-groups will be taught various dances belonging to several parts of the world by the best trainers of the United States. We will provide training for the following five types of dance:

  • Ballet
  • Jazz
  • Hip-Hop
  • Salsa
  • Kathak

Marketing Analysis of dance studio business

The most important component of a dance studio business plan is its accurate marketing analysis because it decides whether a startup will become a success or end in failure. That’s why an accurate marketing analysis must be carried out before developing the business plan for a dance studio. If you are starting on a large scale then it is better to seek the help from the marketing experts.

Note

If you are starting on a small scale, you can take help from this dance studio business plan template or other dance studio business plan sample available online.

5.1 Marketing Trends

Strategic/Operational Business Plan

This dance studio sample business plan also presents detailed dance studio business marketing trends which will provide you a clear demonstration of the market potential of this industry. According to IBIS, there are approximately 70,000 dance studios or private dance trainers in the United States as of 2018. The industry is growing at 3.5% per year with annual revenue generation amounting to $3 billion. These stats clearly show that any business in this industry can become extremely profitable provided that you plan it successfully.
Marketing segmentation of the business plan dance studio shows the various segments or groups of our prospective customers. Our target market is the residential community living nearby at the 10 minutes’ drive from our studio. The community consists of all types of people from varying backgrounds.

There are currently more than 738,000 households in Manhattan out of which 17.1% have children under the age of 18 living with them, 25.2% are married couples living together and 10.9% are persons with 65 years of age or older. As per the financial position, nearly half of the community has a monthly income ranging from $40k to $50k while nearly 10% people have incomes even around $100,000. So nearly all of the people are well established and can easily afford our membership fees. Our experts have identified following target groups for our services:

Dance Studio Business Plan - Market Segmentation

The detailed marketing segmentation of our target audience is as follows:

5.2.1 Children (6-18):

The first group of our customers will be the children living in the vicinity of our dance studio. According to a recent census, nearly 70% of children living in Houston participate in dance classes or related activities. One of the significant reason behind parents sending their kids for learning dance is the health benefits associated with this activity that’s why this target group will constitute the bulk of our customers. These children belong to financially stable families who can easily afford our services.

5.2.2 Adults (18+):

The second category includes teens and individuals who themselves want to learn a dance for any reason and are aged above 18. Their dance practice will differ from other groups and they will be subjected to private training along with group classes.

5.2.3 Professionals:

The last category includes those individuals who have a passion for dance and want to pursue a career in it. This group will be trained at a completely different level under the direct supervision of Emmy and notable dance experts from the United States.
The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Children (6-18)48%22,33432,34443,66552,54466,43210.00%
Adults (Above 18)18%11,43313,34416,55318,74520,54513.43%
Professionals34%18,32219,45520,65522,86724,43315.32%
Total100%52,08965,14380,87394,156111,4109.54%
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5.3 Business Target

Our business targets are:

  • To become the best dance studio in Manhattan
  • To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
  • To balance the initial cost of the startup with earned profits by the end of the first year

5.4 Product Pricing

Product pricing is also one of the main deciding factors in the success of a startup. To encourage sales, we have priced our services slightly lower as compared to our competitors. We will basically offer three types of packages to our students to choose from:

  • Monthly membership for $1000 per month
  • Semi-annual membership for $5000 per six months
  • Yearly membership for $8000 per year

This fee includes the compensation for group classes as well as the individual training sessions. For professional dancers, membership fee is 40% more than our normal fee considering the expenses of special trainers arranged for them.

Strategy

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Like marketing analysis, sales strategy is also an important component of any business plan so it must be thought through before starting a dance studio business plan development. In case, you don’t know how to write a business plan for a dance studio with the incorporation of effective sales strategy, you can take help from this template or the dance studio business plan examples available online.

6.1 Competitive Analysis

Our competitive advantage lies in the power and dedication of our team. We have a team with excellent qualifications and experience in professional dance and choreography. Secondly, our prices are very reasonable and comparatively lower than the most of our competitors. Finally, our biggest competitive edge is the training of traditional Indian Kathak dance which is not taught by any dance studio present within 10 km radius of our studio.

6.2 Sales Strategy

  • We will attract our customers towards us by various efforts, such as:
  • We will advertise our studio in magazines, newspapers and social media
  • We will offer discounts on the membership for the first three months of the launch
  • We will arrange seminars and awareness sessions on the importance of dance and the accompanying health benefits
  • We will arrange transportation facilities for our members and students
  • Within 6 months of startup, we will start an online portal by which our members and students can access our dance training sessions and can practice at home

6.3 Sales Forecast

Our sales are forecasted in the following column charts:

Dance Studio Business Plan - Unit Sales

The detailed information about sales forecast is given in the following table:

Sales Forecast   
Unit SalesYear 1Year 2Year 3
Ballet187,330260,320258,240
Jazz802,370815,430823,540
Hip-Hop539,3207702301,002,310
Kathak265,450322,390393,320
Salsa1,435,3201,250,4301,762,450
TOTAL UNIT SALES3,229,7903,418,8004,239,860
Unit PricesYear 1Year 2Year 3
Ballet$140.00$150.00$160.00
Jazz$600.00$800.00$1,000.00
Hip-Hop$700.00$800.00$900.00
Kathak$650.00$750.00$850.00
Salsa$140.00$120.00$100.00
Sales
Ballet$214,800$274,000$333,200
Jazz$120,050$194,500$268,500
Hip-Hop$50,110$71,600$93,000
Kathak$139,350$194,600$249,850
Salsa$62,350$72,300$82,250
TOTAL SALES
Direct Unit CostsYear 1Year 2Year 3
Ballet$0.70$0.80$0.90
Jazz$0.40$0.45$0.50
Hip-Hop$0.30$0.35$0.40
Kathak$3.00$3.50$4.00
Salsa$0.70$0.75$0.80
Direct Cost of Sales
Ballet$98,300$183,000$267,700
Jazz$66,600$119,900$173,200
Hip-Hop$17,900$35,000$52,100
Kathak$19,400$67,600$115,800
Salsa$27,700$69,200$110,700
Subtotal Direct Cost of Sales$294,100$699,400$1,104,700

6.4 Sales Monthly

Our forecasted monthly sales for the first year of startup are given below:

Dance Studio Business Plan - Sales Monthly

6.5 Sales Yearly

Our forecasted yearly sales for the first three years of startup are given below:

Dance Studio Business Plan - Sales Yearly

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Personnel plan

In case, you don’t have any idea about the staff required for starting a dance studio, you can take help from this sample dance studio business plan.

7.1 Dance Company Staff

The company will initially hire the following staff:

  • 1 General Manager for managing the overall operations
  • 2 Administrators/Accountants for maintaining financial records
  • 4 Sales Executives responsible for marketing and discovering new ventures
  • 7 Trainers for providing dance training to members
  • 10 Assistants for undertaking day-to-day tasks
  • 3 Drivers for providing transportation facility to members
  • 4 Cleaners for cleaning the studio
  • 1 Front Desk Officer for acting as a receptionist

7.2 Average Salary of Employees

The average salary of our staff is summarized in the following table:

 Personnel Plan   
Year 1Year 2Year 3
General Manager$42,000$59,000$76,000
Accountants$85,000$95,000$105,000
Sales Executives$85,000$92,000$109,000
Trainers$135,000$155,000$185,000
Assistants$60,000$63,300$70,000
Drivers$63,300$70,000$76,700
Cleaners$76,000$93,000$110,000
Front Desk Officer$35,000$42,000$59,000
Total Salaries$343,300$380,300$440,700

Financial Plan

The last thing to do before thinking about how to open your own dance studio business is to develop a financial plan outlining the development of company over the next few years. The financial plan of Emmy’s Studio is as follows.

8.1 Important Assumptions

 General Assumptions   
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%11.00%12.00%
Long-term Interest Rate10.00%10.00%10.00%
Tax Rate26.42%27.76%28.12%
Other000

8.2 Brake-even Analysis

Dance Studio Business Plan - Brake-even Analysis

 Brake-Even Analysis 
Monthly Units Break-even5530
Monthly Revenue Break-even$159,740
Assumptions:
Average Per-Unit Revenue$260.87
Average Per-Unit Variable Cost$0.89
Estimated Monthly Fixed Cost$196,410

8.3 Projected Profit and Loss

 Pro Forma Profit And Loss   
Year 1Year 2Year 3
Sales$309,069$385,934$462,799
Direct Cost of Sales$15,100$19,153$23,206
Other$0$0$0
TOTAL COST OF SALES$15,100 $19,153 $23,206
Gross Margin$293,969$366,781$439,593
Gross Margin %94.98%94.72%94.46%
Expenses
Payroll$138,036$162,898$187,760
Sales and Marketing and Other Expenses$1,850$2,000$2,150
Depreciation$2,070$2,070$2,070
Leased Equipment$0$0$0
Utilities$4,000$4,250$4,500
Insurance$1,800$1,800$1,800
Rent$6,500$7,000$7,500
Payroll Taxes$34,510$40,726$46,942
Other$0$0$0
Total Operating Expenses$188,766$220,744$252,722
Profit Before Interest and Taxes$105,205$146,040$186,875
EBITDA$107,275$148,110$188,945
Interest Expense$0$0$0
Taxes Incurred$26,838$37,315$47,792
Net Profit$78,367$108,725$139,083
Net Profit/Sales30.00%39.32%48.64%

8.3.1 Profit Monthly

Dance Studio Business Plan - PROFIT MONTHLY

8.3.2 Profit Yearly

Dance Studio Business Plan - PROFIT YEARLY

8.3.3 Gross Margin Monthly

Dance Studio Business Plan - GROSS MARGIN MONTHLY

8.3.4 Gross Margin Yearly

Dance Studio Business Plan - GROSS MARGIN YEARLY

8.4 Projected Cash Flow

Dance Studio Business Plan - Projected Cash Flow Diagram

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$40,124$45,046$50,068
Cash from Receivables$7,023$8,610$9,297
SUBTOTAL CASH FROM OPERATIONS$47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$47,143 $53,651 $55,359
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$21,647$24,204$26,951
Bill Payments$13,539$15,385$170,631
SUBTOTAL SPENT ON OPERATIONS$35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
Dividends$0$0$0
SUBTOTAL CASH SPENT$35,296 $35,489 $43,882
Net Cash Flow$11,551$13,167$15,683
Cash Balance$21,823$22,381$28,239

8.5 Projected Balance Sheet

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Cash$184,666$218,525$252,384
Accounts Receivable$12,613$14,493$16,373
Inventory$2,980$3,450$3,920
Other Current Assets$1,000$1,000$1,000
TOTAL CURRENT ASSETS$201,259 $237,468 $273,677
Long-term Assets
Long-term Assets$10,000$10,000$10,000
Accumulated Depreciation$12,420$14,490$16,560
TOTAL LONG-TERM ASSETS$980 $610 $240
TOTAL ASSETS$198,839 $232,978 $267,117
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$9,482$10,792$12,102
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
SUBTOTAL CURRENT LIABILITIES$9,482 $10,792 $12,102
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$9,482 $10,792 $12,102
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$48,651$72,636$96,621
Earnings$100,709$119,555$138,401
TOTAL CAPITAL$189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL$198,839 $232,978 $267,117
Net Worth$182,060$226,240$270,420

8.6 Business Ratios

 Ratio Analysis    
Year 1Year 2Year 3Industry Profile
Sales Growth4.35%30.82%63.29%4.00%
Percent of Total Assets
Accounts Receivable5.61%4.71%3.81%9.70%
Inventory1.85%1.82%1.79%9.80%
Other Current Assets1.75%2.02%2.29%27.40%
Total Current Assets138.53%150.99%163.45%54.60%
Long-term Assets-9.47%-21.01%-32.55%58.40%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities4.68%3.04%2.76%27.30%
Long-term Liabilities0.00%0.00%0.00%25.80%
Total Liabilities4.68%3.04%2.76%54.10%
NET WORTH99.32%101.04%102.76%44.90%
Percent of Sales
Sales100.00%100.00%100.00%100.00%
Gross Margin94.18%93.85%93.52%0.00%
Selling, General & Administrative Expenses74.29%71.83%69.37%65.20%
Advertising Expenses2.06%1.11%0.28%1.40%
Profit Before Interest and Taxes26.47%29.30%32.13%2.86%
Main Ratios
Current25.8629.3932.921.63
Quick25.428.8832.360.84
Total Debt to Total Assets2.68%1.04%0.76%67.10%
Pre-tax Return on Net Worth66.83%71.26%75.69%4.40%
Pre-tax Return on Assets64.88%69.75%74.62%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin19.20%21.16%23.12%N.A.
Return on Equity47.79%50.53%53.27%N.A.
Activity Ratios
Accounts Receivable Turnover4.564.564.56N.A.
Collection Days9299106N.A.
Inventory Turnover19.722.5525.4N.A.
Accounts Payable Turnover14.1714.6715.17N.A.
Payment Days272727N.A.
Total Asset Turnover1.841.551.26N.A.
Debt Ratios
Debt to Net Worth0-0.02-0.04N.A.
Current Liab. to Liab.111N.A.
Liquidity Ratios
Net Working Capital$120,943$140,664$160,385N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales0.450.480.51N.A.
Current Debt/Total Assets4%3%2%N.A.
Acid Test23.6627.0130.36N.A.
Sales/Net Worth1.681.290.9N.A.
Dividend Payout000N.A.

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