Some massage therapy students may be dreaming of the day they graduate and can open their own practice —or be highly paid to work in another’s practice. These dreams might include vivid images of going home early and vacationing whenever they want—all while making a great salary.
The expectations many massage therapists have don’t account for much of the work, and long hours, needed to become successful. Seeing a flourishing business can sometimes give budding entrepreneurs—and potential employees—the mistaken idea that the owner is wealthy, profiting from the hard work of other massage therapists.
Taxes, payroll and employee benefits are just a few of the issues business owners deal with. Add to this the risk incurred and a healthy dose of added responsibility, and suddenly a more realistic picture begins to take shape. There are a number of components to owning and operating a successful business, most of which occur behind the scenes, away from the eyes of employees. So, whether you are a massage therapist looking for your first opportunity or someone who thinks she might like to open her own business, read on to learn about the things you need to keep in mind.
Before the Doors Open
Felicia Brown, massage therapist and owner of Spalutions! in Greensboro, North Carolina, knows the business from both sides—as an employee and owner. Working as an independent contractor when she first started in the industry, she’s worked for a variety of people. “My perspective was probably like many other independent massage therapists and students,” she says. “I thought that since I did most of the work in relation to the clients, I deserved most of the money. Fifty percent of the service actually seemed low to me back then.”
This attitude followed Brown when she finally decided to go into business for herself, almost costing her the new company. “Unfortunately, when I started my own business, I had no concept of the costs of owning a business,” she admits. “I kept my independent contractor mindset when I set up the compensation for my staff. I was actually losing money by having a business with other therapists working with me. It took me a long time to understand that I had to make some changes to the pay structure in order to save the business.”
Now, as a consultant to others looking to start their own practice, Brown suggests getting a handle on some of these issues before you think about opening a business. “I see countless owners of massage practices that don’t make any profit and are barely able to pay themselves a salary,” Brown says. “Still, they work 80 hours a week, see a full book of clients, spend all of their free time solving problems and thinking about the business, and have nothing to show for it but an empty bank book and a lot of worry lines.”
To avoid this fate, she encourages people to give serious thought to what the business can support in terms of expenses, including compensation, rent, advertising and debt repayment—all before ever thinking of opening the doors. “Determining a pre-opening budget is vital,” she warns. “This process is tedious, but it is a very important step to take and one that can literally save years of headaches, heartbreak and frustration, to say nothing of cash.”
Eugenia Rinaldi, owner of Bodyworks Day Spa and Wellness Center in Temple, Texas, always wanted to own her own business. She loved the holistic approach to health, and so when a healing center came up for sale, she jumped at the chance. At the time of purchase, the massage therapists working at the business were independent contractors. In order to grow and make changes, however, Rinaldi changed the pay structure from independent contractor to employee.
“At first, the therapists wanted the change because they were tired of the responsibilities,” she explains. “But when I raised the rates and they didn’t get a pay raise, they were upset.” She tries to educate them about the inner workings and expense of owning a business, but
Although she hasn’t lost an employee, she is honest in her assessment of how the business is doing. “We are just barely making it because of the cost of growth and change,” she says. “People are coming, but we have a long way to go.”
Rinaldi’s struggles highlight a common thread that runs through the stories of many business owners: employees’ misunderstanding of exactly how much a business owner contributes to the practice. Many employees have an attitude that they are doing the bulk of the work and so deserve the bulk of the pay. What this perspective doesn’t consider, however, is all the behind-the-scenes work the employer does to keep the business thriving. “Employers are the ones with all the risk, and yet they are who make the least,” explains Brown. “Meanwhile, the massage therapists and service providers who work for them are making a great living—or, at the least, a high out-of-balance per session commission or fee.”
Keep in Mind
When considering a fair hourly wage, massage therapists need to remember they can practice in a variety of settings, all of which will pay differently. You may work in a private office, in your own home or in a hospital. Or, you may choose to practice in a spa or rehabilitation clinic. All of these options have different overhead requirements and fee structures that will help determine the hourly wages the business can sustain.
Siouxie Jeter-Koch, director of career services for the Cortiva Institute in Seattle, Washington, helps prepare students for the work force. She works with graduating massage therapists on contract negotiations, developing a business plan, as well as what they might expect from jobs in the industry. “We tell graduates they have the skills they need, but they should not expect top wage,” she explains. “They might expect $12 to $15 per massage at a membership-based business, while a gifted practitioner at a top spa might earn $35.”
There are pros and cons to both sides of the employee-employer coin. Deciding what path you would like to travel down depends heavily on how much responsibility you want to take on, as well as how much risk you can withstand. Whether thinking of starting a business or being employed by one, however, being realistic about what to expect is critical.
Put It In Perspective
Massage therapists just coming out of school may have some unrealistic expectations when it comes to what they can expect in an hourly wage. Knowing what some of the top spas pay can help maintain the myth that all massage therapists earn top dollar.
But those with their sights on a starting wage of $70 to $80 per massage may be in for a big surprise— and in need of a slight adjustment in perspective. According to the U.S. Bureau of Labor Statistics Occupational Outlook Handbook, the median wage, including gratuities, for massage therapists in May 2006 was $16.06. The middle 50 percent earned between $10.98 and $24.22, with the lowest 10 percent earning $7.48 and the highest 10 percent earning $33.83.
The latest data from May 2007 show a slight increase in these numbers, with the middle 50 percent earning between $11.18 and $24.74. The lowest 10 percent earned $7.69 and the highest 10 percent earned $34.06.
My Own Experience
When I graduated from massage school and opened my own practice, I had very little knowledge of running a successful business: I simply hired an accountant and opened my doors. One of the first things my accountant told me was to set aside 30 percent of my income in a separate account so I could pay taxes, which took me aback but wasn't enough to undermine my determination.
Soon, I purchased medical insurance for myself, and set up a savings account and retirement plan. I began to take care of expenses such as rent, supplies, laundry, liability and disability insurance, as well as continuing education costs. My savings account became an expense account, and I began to realize my expectations of earning $70 per hour were a tad unrealistic. My gross income looked wonderful, but my take-home pay was significantly less. When my business started to grow, I made the decision to hire an employee rather than cut back on the number of new clients I could see. Adding someone else to the mix further complicated my finances. I didn't fully understand how renting a larger space, increasing my liability insurance and paying payroll taxes would financially affect my business. I quickly found myself with extended lines of credit just to keep up with the bills.
Because I want to take care of my employees, I pay 100 percent of their medical insurance costs and open a retirement account for each, matching up to 3 percent of their contributions. Both of these benefits are in addition to a base wage, pushing my payroll to 65 percent of my expenses— a figure well beyond the 33 percent my accountant advises me to target.
There are other intangible benefits my employees enjoy. My clinic specializes in injury treatment, so I spent countless hours building relationships with medical doctors in my area and creating a strong referral program. Therapists working for me step into a busy schedule and instant credibility, two things many people just starting out have to work hard to develop.
Although these things don't translate into cash in the massage therapist's pocket, they do go a long way in helping them build a successful— and secure—future. Often, business owners are envied their success and thought to have a lot of money in the bank, when, in reality, they may be tightening their own purse strings and staring at an empty bank account.
I often think how lovely it would be to just walk into the office, do my job and then go home, but, as a business owner, I have to worry about taxes, billing, bookkeeping, payroll, as well as anything else that needs my attention. Over the years, my clinic has evolved, and I know what my limits are and what I can and cannot do for my employees. My practice is successful, and every once in awhile I feel guilty about my success, until I remember all the risk I took, the trials and tribulation I faced and overcame—and that $30,000 line of credit I finally paid off.