Episode Transcription

 

Kirsty Gibbs:

All right, in today's episode, we're going to look at something that might be a little bit uncomfortable. So many times I hear people say, I'm fully booked and I'm so busy and my business is going really well. However, are you actually profitable? So today we're going to talk about the topic, is your tutoring business actually profitable or just fully booked?

 

So if your calendar is full, but your bank account feels tight, then this is probably a really good episode for you to listen into. Being busy doesn't automatically mean that you are building a sustainable business. It's not always a good thing to be super busy, but I wanted to talk about this today because if this is you, you're not alone. And it's actually really, really common.

 

So I've worked with many tutors, myself included, who were really busy or who are really busy with back-to-back students, fully booked in the sense that we can't take on any more clients, but we're barely paying ourselves. And that is where my business was a very, very long time ago. And unfortunately that's where a lot of businesses stay stuck. And I don't want you to stay stuck.

 

because I can almost guarantee that that is not why you started your tutoring business. So there's this illusion of how amazing it is to be fully booked. Now I'm not taking away from the fact that being fully booked is, it's an achievement. It's a milestone that a lot of us aim to hit. But what I want you to know or remember is it's not where we stop. Okay.

 

There's all of these things that are happening often when people hit this fully booked phase. And I wanted to highlight some of those things because they're bubbling under the surface. And if we don't bring them to the surface, then maybe we're not aware of them and we don't know what things to focus on to fix. So the first one I talk about all the time is undercharging. So if you're undercharging,

 

then you're not really taking your business seriously. You're not charging your worth. You're not showing people what you are capable of and the value of your services. Often people are not profitable but fully booked and they're exhausted from the prep and the admin. They're so much in their business. They're taking up all of this time in their business.

 

that they're potentially working more now than they ever did in the classroom. There's no room or time off for growth. Now, if you have been watching me for the last few months, you'll see that I just launched our brand new program, Profit Pathway. I am, you know, got this small intimate group of amazing people in there who have got tutoring businesses, all different stages.

 

you know, all different earnings and profits and sizes of teams and different ways that they're running their businesses. But everyone has the same goal to make an impact, to make profits, to feel more organized and to get more time back. Now, there's this little thing though that often we don't do. And it's like a, it's not even a secret because I talk about it all the time.

 

but it must be a secret because nobody knows about it. It's called working on your business. Okay. If you don't have room to work on your business, you cannot possibly create growth. So many people come to me and they want to work with me. And I mean, that sounded a little bit full of myself, but my point is they want to grow. They come to me because they want to grow and they say, we really want to work with you, but it's kind of forward you.

 

I'm like, okay, well, you haven't been able to afford to invest in coaching up until this point. If you don't do anything differently now, what's going to change? What makes you think that you will feel any differently in six months or 12 months time about your financial situation. If you don't do anything, you need to make room in your weeks every week to work on your business.

 

to look at the growth of your business, to be reviewing your business, to be understanding your profit and loss, all of those sorts of things. Often under the surface, these people who are fully booked but not making the money are, like I said, spending too many hours on prepping and the admin, there's no room for growth. They can't afford to take time off because basically everything revolves around them and they have to keep making this money.

 

And potentially they're either paying themselves a very small amount or they're not paying themselves at all. Now I want to say that when we start out in business, a lot of this is probably normal and it's okay. We are hustling hard. You know, we're doing all of the things because we've got two things to trade in time and money. And if you've got time, you will generally

 

Do those things yourself. So you'll make the social media posts. You'll create the flyers. You'll, you know, do the website yourself. Side note, if, you know, if you're going to make a rubbish website, just don't make a website at all. Okay. Cause that is the shop front of your business. You want that to be amazing. That's a different podcast episode, but if you've got time, you do those things. If you've got money, you invest in somebody else to do those things because they are going to do.

 

a better job at it, and they're going to do it in a quicker timeframe. And it allows you, it frees up time for you to work on the other things in your business that only you can do. So for example, it might be the tutoring or it might be the helicopter view type activities working on your business to look at growth. So you've got to do those things. You've got to take those risks. You've got to invest in yourself.

 

so that you are not staying where you are now and hardly paying yourself at all. Being fully booked can feel like success. And like I said, it's a milestone that a lot of us aim for, but you realize then you are just like on a hamster wheel. It's what I call the side hustle cycle, when you are just going and going and going, you're doing all of the things.

 

You're working late nights, you're working weekends. Your phone is attached to you. mean, most people's phones are anyway, but not in a good way because it's all about work. You are stressing about following up emails. You're doing all of the things you're trying to, you know, follow up invoices and payments. It doesn't feel, and it doesn't look like success from a business point of view. So just because you're fully booked doesn't mean you're profitable.

 

And that doesn't necessarily mean success. What does profit really mean? Revenue doesn't equal profit. I actually get really cranky because I see people talk about this all the time on social media. And I actually despise it when coaches in particular get on and say, I made

 

you know, in my business, I made six, did a six K month or I made 10 K this month. That means nothing. If your expenses were $9,000, if you spent $9,000 on your marketing to get you 10,000, you only made a thousand dollars. And that's, if that's the only expense is probably more than that, that are coming out. So if that's not the only expense, so you have to look at the bottom line profit.

 

If you open your zero account or your QuickBooks, wherever you do your, you know, finances, and if you're not, this is a reminder, you need to be doing your finances, make it Finance Friday like the rest of us do inside of the profit pathway. Dedicate some time to be looking at your finances. And it's that number right down the bottom. So the very top is what's coming in. That's your revenue. That's your income.

 

That's what's coming into the business. So for example, you might charge a hundred dollars for a session. If you've got three students coming in for a week, your revenue is $300. Then that's not the number that matters. That is not the number. That just like that sinking. That is not the number that matters. You don't take that $300 home because you have expenses.

 

So you might be driving to family's homes. So you're paying for fuel. You will have insurance, which comes out of that. And obviously insurance is just a one-off thing at the beginning of the year or whenever you pay it or unless you're doing it monthly, but it is an expense. You will no doubt be buying and creating resources because you're a teacher and that's just what we do, even though we've got enough. You have got...

 

probably some sort of subscriptions to things like maybe Zoom or whatever it is that you're using. These things are all expenses. You might have stuff that you are paying wages to and superannuation to and work cover. You might rent a space so you're paying those things and you've got electricity or whatever. These are all expenses. These get taken out of the revenue.

 

So the revenue is at the top, take away your expenses. What is left over is your profit. That needs to be very seriously considered and do not get fooled by people when they say to you, I can get you to make a, you know, a 10 K month or a hundred K month. Doesn't matter what you make. If all of your expenses eat it all up, you need to be running a smart business.

 

that actually accounts for all of those things. Now, the other thing that I haven't mentioned here, and it's a bit of a tricky one because it's something that I would say nearly a hundred percent of people that I talk to leave off and it is their own time. So if you haven't done this activity with me for this little exercise, grab a piece of paper and a pen. want you to figure out.

 

how much you pay yourself every week. Now, if you're not paying yourself, this is a little reminder to start paying yourself something. Even if it is just a hundred dollars a week, you shouldn't just be taking money willy-nilly from your business bank account. Stop doing that right now. It is a very, very bad and dangerous habit to get into. Don't do it. All right. Yes. Use your business to pay expenses, you know, and it might cover, so it might include your

 

vehicle, your fuel, things like that. If you're working with students, you know, your mobile, it might include some of your rent and electricity. If you have got a home office, things like that, but take all of that then. Sorry, I've just had a small human come in and totally distract my train of thought now and I don't edit my podcast. So you guys have got this.

 

raw uncut version of this podcast episode. Now it's called Holidays, damn it. Okay, where was I? So we've got our expenses.

 

Okay. So you're taking how much time, sorry, how much money you pay yourself a week. And like I said before, I got distracted and went off on a tangent. If you're not paying yourself something now, you need to allocate a certain amount that goes from your business bank account into your personal bank account every single week. Then figure out how many hours you are working every week.

 

Don't just think about how many hours you're tutoring. Think about the tutoring. Think about the planning. Think about the admin, creating invoices, talking on the phone to parents, following up payments, any marketing that you're doing, all of those things. And if you haven't done a time audit, I highly encourage you to do one. Let me know if you need a template for that. I'd be happy to share it. And then from that, you've got these two amounts. The amount that you pay yourself.

 

then divide that by the number of hours that you work every week. That's giving you an hourly rate. So have a look at that and think how happy are you with that? Now, some people look at that and think, no, don't do that. We don't work by hourly rates for all that sort thing. I get that. That's because they're doing really, really well and their hourly rate is extremely high. And they've got something that's slightly more passive and they're not trading time for money. At the end of the day,

 

A tutoring business, the industry that we're in, we are trading time for money. So you need to make sure that your prices are covering those sorts of things. And if you're doing one-on-one, you need to know that that's much harder for you to do. All right. So revenue does not equal profit. All right. You need to think about what's after you've taken out the expenses.

 

which is then your profit. So just wanted to touch on as well, some of the common forgotten expenses. Like I just said, your prep time, software that you've maybe purchased. So say you've got Microsoft, those sorts of things, admin hours, those things are important to consider.

 

Now I want to ask you a question and I want you to think seriously right now. If you stopped tutoring for a week, would your money stop too?

 

Now this might be true for you and it's not a bad thing. Most tutoring businesses actually start this way and some even continue on this way. But here's the thing, if your income is 100 % tied to showing up live in person or online week after week, then your business is dependent on your time and your energy. And that's fine as long as it's sustainable for you. But if you ever want to take a break,

 

go on a holiday, maybe you get unwell or grow beyond the calendar that you have, it's definitely something to keep in mind.

 

Profit isn't just about money. It's also about sustainability and margin, including your time. So if you're currently just running one-to-ones and trading your time for money in that way, then these are the sorts of things that you need to think about long-term. So even if your tutoring business brings in good revenue, if you're fully booked, you're probably working nights.

 

some of you working weekends, Saturdays, even Sundays, and the income only shows up when you personally show up, then we basically say that your profit margin is very thin. And that's not just financially, but energetically and operationally. Most tutors and people in general,

 

profit is just about charging more and covering your expenses. And yes, that is part of it. And that's definitely part of it that I teach and I want people to understand. But real profit is also about what's left over, not just in your bank account, but in your week, in your energy, in your capacity. So if your business needs you every single day to survive, to do every single task, there's no breathing room. And you don't really have that profit.

 

You've got revenue, but you've got no margin. And that kind of business can't grow. You can't pause it. You can't walk away from it. And it definitely can't get you freedom. Now, again, if this is okay with you, if this is the sort of business you want, that's fine. But if you're looking to something beyond that, more than that, that you can step away from, that you can have a break from, you can have a holiday from.

 

then I want you to take on board everything I've said today and maybe think, well, what can I do differently?

 

And I guess I wanted to talk about this today because it really matters long-term. So burnout is something, and it's a word that probably gets a bit overused and it's thrown around, but it's actually real when there's a lot of hustle for very limited or little return. And what I've seen is I've seen it create resentment in people where

 

They just want to give up and they think, I wish I hadn't have left the classroom. The classroom would have been easier than this. At least I would have had this blah, blah, blah, blah. I also see it creating confusion and overwhelm because people just, they know they've got to do something different, but they don't know what they need to do. And so they just keep doing lots of things, but they don't ever do anything well. And there's no plan. They don't know what they should work on next. And often I see people just,

 

This is, this is probably the one that I see the most and it's probably the hardest. They just say, well, they just say, yeah, it'll get there. yeah. Things are a bit tough at the moment. yeah. You know, and they just are okay with that. Now, again, this is not a judgment thing. If you genuinely are okay with working your backside off for very little return.

 

energy wise and financially wise, freedom wise and all those sorts of things. If you're okay with that, okay, I'll give it to you. But I feel deep down that you're not, or most people are. And I don't want you to think that that's normal to stay there. Yes, it's normal to go through that scenario and be in that situation, but it's not normal to stay there. And you don't need to stay there.

 

You can get out of that, but you've got to do something different. You've got to make some changes. And that doesn't just mean posting more on social media. That's not the change that you need. I've also felt that people get into this situation where when they have a lack of profit, they have a lack of freedom. And I am not one to say that money makes you happy.

 

as such, but obviously when you've got more profits, you can do more with it. Okay. So you can do more with that. And when I'm talking about profits of energy, profits of freedom, profits of time and money. So when you have more of that, you can do more with it. You can take time off. You can bring on staff members. You can open that center that you wanted, you know, so you're not running out of your garage or your

 

you know, spare bedroom or whatever it is that you're doing, or you're driving around to people's houses all over the countryside. You can't grow higher or breathe without profit. Without profit, you can't invest back into your business. You can't take it to the next level. And honestly, like I said before, this is really where I see most people get stuck.

 

Okay, so if you're listening to this, I wanna break it up for a bit. Let's do a quick profit health check. So I've got a few questions here that I want you to ask yourself and be sincere about these, okay? Be honest with yourself. Am I charging enough to pay myself well? Now, inside of the profit pathway, I have a calculator that actually shows you how to do this. I am going to put this on my website and you can grab this

 

for just $47. This helps you to work out how much to charge so that I'm paying myself the amount that I want to pay, how many sessions I need, all of that sort of amazing stuff. This is a tool that you can use over and over in your business as you know, your income revenue. So your income needs change as your business grows, as you go through different.

 

stages of life. So that's the first question. Am I charging myself? So am I charging enough to pay myself well? And if you need help with that, I'll put the link in the show notes to grab this calculator. It will help you so much. Do I need my real income? So I do I know my real income after expenses. So that profit that I'm actually having at the end, do I really know what that is? Or am I just looking at that top number?

 

Is my business sustainable long-term? If I keep going the way that I'm going, am I going to be all right with that? Am I using my time in a way that's aligned with what I want? Maybe I left the classroom because I wanted more time with my kids and now I'm actually working every Saturday and every evening and I don't even get to see my kids. Or maybe I have retired and I have my tutor in business so that I can have some extra cash to go on holidays.

 

but now my business is that busy, can't even go on holidays. Or maybe I've got my tutor in business because I've got a health condition that I wanted to be able to have some more flexibility and freedom, but I'm working that much. It's actually making me feel worse. So is it aligned with what you want actually? Am I spending time on things that bring in money or just am I doing the things because maybe I don't actually know what I'm supposed to be.

 

doing to bring in more money. So seriously consider those five questions. And by the way, if you want to chat to me about these things, you can book in for a free call. We can chat some more. It can give you some directions and pointers, some tips, but be honest with yourself about where your business profit is right now. And instead, because I always like to flip it around, think about your business. Um,

 

So think about building your business as a smart business. Couldn't think of a better word here, but not just a busy one. some other, some practical shifts that you can implement. So charge your value, not just for your time. Don't price your services based only on how long the session is. So for example, think about the transformation and the results that you help your students to achieve.

 

the expertise and the experience that you bring. Think about the support and the prep work that surrounds your sessions because your brain doesn't switch off just when the session ends. And I'm sure you've done some work in preparation for that session to begin. So let's say, you you're charging 60 minutes, sorry, $60 for a 60 minute session, which by the way is very low. It's very, very low. But what if that also came with 20 minutes of prep?

 

and messages to and back with the parent and writing progress notes and then an email that you send out because you like to send out progress notes to all of your families after every single session. Now you've made $60 for 90 minutes of work and that's not even counting the years of experience that you're drawing from.

 

So the...

 

So some key mindset shifts here are time-based pricing says, I'm selling 60 minutes. Value-based pricing says, I'm helping your child to gain confidence, improve their grades and feel secure at school. And this is worth more than just a dollar per minute exchange. If you're only charging for the session time, then you're undercutting all of the unseen work that you do. So prep.

 

admin, expertise, care, all of that is part of the value that you deliver and it's okay. And it's important and you should be charging for those things. So for this, you can consider that and put that into your pricing to increase your pricing, knowing that you're bringing all of that. You might create group offers or semi-private instead of just your one-on-ones.

 

You might also want to create packages. So where you're saying, okay, well, this is the price, but if you like feedback or if you like assessments or whatever, it's this, it's this amount. And that pack includes you costs, sorry, revenue to cover the time that you put into those things. You also want to be tracking your expenses and reviewing your pricing regularly. Automate your admin.

 

wherever possible, because this is something that should be saving you time. And by the way, if admin is a challenge for you, you need to jump on the wait list for Hank. Hank is my, oh my gosh, it's so exciting. It is a software that I have created that it's coming very, very soon for tutoring businesses. And it is going to help you get back some of this admin time. It is going to juggle all of those things for you so that you don't need to spend your time.

 

creating invoices, following up invoices. It's going to smooth out your onboarding process. It's going to take away your scheduling and rebooking, you know, time that you spend or that you waste doing. So jump on the wait list for Hank. So it's kirstiegibbs.com forward slash Hank forward slash wait list. I'll put the link in the show notes as well. And protect your time like a CEO, not just a teacher.

 

You are a business owner now. So say no to the things that don't serve your bigger goals. All right. Where you are now does not need to be where you stay stuck, but you need to do something about it. And I know that's, you know, I'm a broken record. say that all the time, but it's true. If you're in the situation now where you know, something's not right.

 

or want to get to the next stage or you want more time or you actually want more profits, you want to start paying yourself or paying yourself what you're worth, then do something about it.

 

Okay, if this is hit home today, if you feel like, yes, this is me, this, you know, I don't want to keep being busy and paying myself only a few hundred dollars a week. I want to be profitable in my energy and my finances. Then I would absolutely love to support you. There's a few ways that we can work together at the moment. I've got a couple of one-on-one spots available, which I don't always have. I will put the link in the show notes.

 

I'm also running an in-person workshop in Sydney in September, which is a great opportunity for you to come along and just get really deep in your business, pull things apart, create an action plan and know exactly what you do, what to do when you walk away. If you just want to have a chat and you're like, I'm just not sure, Kirsty, I don't know if I should start a business or I don't know how you can help me with my business. Cause I've been in it for years and I'm just not sure what to do.

 

then jump on a free call with me and let's just have a chat. Okay. There's no obligation. It's an opportunity for us to talk about your business, ask to talk about your goals, ask to see where you're going, if you're going in the right direction, and then potentially seeing how I can help you do that. I'll put all of the links in the show notes. but I want you to remember if you are in this situation, you don't need to stay here, but you need to do something about it.

 

Right? You can have a business that is giving you more profits, that is giving you more time and you do not need to work harder for it.