This episode is a follow-up to Episode 20, in which we talked all about the Summer(s) We Didn’t Get Paid. Those summers were devastating for us. We were exhausted and knew that if we wanted our business to continue even another year, we would have to make some big changes. We knew that we were going to need a business overhaul in order to make things work.
In Episode 21, we cover one of the biggest areas of change, our billing system. Making this one change allowed us to “rise up from the ashes” and completely revitalize our studio/private practice, so in this episode we’re giving you all the details of exactly what it is, how it works, and why it has been such a game changer.
Before we get too deep into the changes we made, we first need to give you a little information what our old payment plan looked like.
We were operating within a solopreneur mentality, and using old billing principles that worked (mostly) when Rachel and I were still woking on our own. Families would be billed only for the services they attended and at the end of the month. Come the last day of the month, they would receive a bill for only the time that we saw them; all cancellations were left off the bill.
This meant that sometimes we were getting paid only a ¼ of our potential income when clients canceled ¾ of the month because they joined a new sport, went on extended vacations, or got sick. When we took on team members and moved into a new building with higher bills and clients weren’t showing up or simply weren’t paying their bills, we still had to pay our rent or pay our teachers/employees. On top of that, we had no way to budget because we couldn’t predict how many lessons/sessions our clients would actually show up for.
We knew that things had to change, but we didn’t want to rock the boat and ruin the beautiful relationships we had built with all of our incredible families. We were scared, but knew that in order to continue in our business, we HAD TO do something.
Within our business, a new school year is like the start of a brand new year all together. With the start of the new school year comes new commitments, big changes, and a shift in scheduling for everyone. We figured there was no better time to make a change that would affect our families/clients than during a time already packed with changes 😉
We spent months doing research. HOURS upon hours of research trying to find the right solution for our business and figuring out what would be the most sensible and economic answer while still providing a smooth transition. THANKFULLY, we found the perfect solution through our bank! We had overlooked a simple solution available through our bank.
Prior to our billing change, we had collected the majority of our payments through PayPal, which was super simple but also incredibly expensive. Handing over lots of money to a 3rd party was not a mistake we wanted to make again. We found a system through our bank in which we could setup auto-withdrawal from clients’ checking accounts with a minimal set fee per transaction (like $0.30 per transaction).
We made the decision to set a monthly tuition rate as opposed to sending a per-lesson or per-session invoices. That means the families we work with pay a set fee whether they choose to attend or not. We debated the cost and fee structure a great deal, and decided on a fee that was a slightly reduced rate from what a family would pay if they attended every lesson. In fact, we looked at the attendance rates we had been tracking and figured that with holidays, vacations, and illness, families missed approximately 12 lessons per year (one per month). Some canceled more and some less, but we used that average as a way to create a fair monthly fee already in line with what families were paying.
If only deciding a fee structure, rewriting 10 pages of policies, and deciding on a new payment method were the hardest part of the process…
After making those incredibly difficult decisions, we had to actually break the news and ask 100+ families to completely change the way they were used to paying us. Rachel and I were both filled with anxiety throughout the whole process, but nothing was as difficult as drafting the perfect email to inform everyone of the change. We wanted to answer as many questions as possible with that first contact. We wanted to create the perfect path to transition. We knew there would be resistance and push back.
After hitting “send” we both took a deep breath and waited. Email replies started to come in. We were both shocked and overjoyed when the first responses we received included words like “why didn’t you do this sooner” and “thank you”. Of course, there were dozens of emails with questions, but the incredible thing is that we didn’t lose a single client due to the big billing change we were so scared to roll out. NOT A SINGLE CLIENT LEFT!! In fact, people were grateful for the convenience, and the new policies encouraged families to attend more regularly, meaning our teachers got paid more as well!!
We spent a solid month making the transition to the new system. It took weeks to simply gather and input all of the data correctly and to get everyone on board, but we made it through. We have since streamlined the onboarding process for new students and clients. We’ve worked out most (if not all) of the little kinks in our process and made everything more simple and straightforward.
It wasn’t always an easy transition, but since we made our big billing change, Rachel and I have gotten paid EVERY SINGLE MONTH and more than in our previous “good” months. It’s been the most incredible experience and made such a huge difference in our company and in our personal lives. On top of the financial difference we have seen, we have saved so much time and energy moving to an auto-payment system.
We know that our methods won’t work for everyone, but we are so glad that we have found the right solution for us. We are thankful to everyone who listened to us, encouraged us, and helped us along the way.
If you’re in our shoes and need a change, let us know. We’d love to hear from you. What decisions or big changes are you struggling with? Do you have questions we can answer or things we can help you work through?
