Ep 4 - The Three Most Important Numbers to Know in Your Business with Nathan Barr
Numbers have a funny way of making people behave! But it goes without saying that knowing your numbers is a VITAL part of being successful in your business. Knowing your numbers helps you make smart decisions in your business without worrying or being driven by emotion.
Today’s episode is all about helping you start to love the numbers in your business 😁 ❤️ Amanda’s first podcast guest, Nathan, talks about the 3 key numbers for Children’s Activity Business owners to know!
In this episode, you will learn:
- The 3 most important numbers to know in your Biz
- How to quickly and easily calculate those numbers
- How these numbers help you make better business decisions

Show Notes:
Connect with Nathan here:
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Visit website: www.raisethebarr.com.au
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Show Transcription:
Amanda Barr
Well, hello, and welcome to Episode Four of the enroll more students podcast. I'm so excited for you to be joining me today. And I'm pretty excited to have my first guest here with me on the podcast today. Now, the first guest is someone I know pretty well and have been married to for an awfully long time already. So that is my amazing husband, Nathan. Hi, how are you?
Nathan Barr
Well, Hi, thanks for having me on all the way from the other end of the house. It's very nice to let me into your office to do the podcast with you...
Amanda Barr
and driving me up the wall because he wants to drive the podcast machine thing and it's already killing me.
Nathan Barr
For those of you that don't know, Amanda very well, she is a massive control freak. So me just sitting here driving driving the podcast machine that we record on is like a big thing for her to let go of but you know, she doesn't do it. Right. So to do it, realistically,
Amanda Barr
oh my gosh, okay. Yeah, sure. Whatever, let's get into the bio. I don't even know if I'm gonna give you a good bio. So Nathan is been part of our business since the very beginning all of our businesses, he has a background in mathematics and finance, super nerd kind of style stuff, what he's done a master's in those things. He has worked in the past as an accountant, as a financial software analysis analyst, a financial analyst, sorry, I really need to get these bios up, and now works full time in my business, in our business, I should say in our business, and has for a really long time. So nice. Why don't you tell everyone what you kind of do in our businesses on a day to day basis?
Nathan Barr
Yeah, absolutely. So like Amanda said, I'm a massive maths and numbers nerd, one of those weird people that just love all things numbers. And I think I really bring that analytical, right brain sort of thing into our business, our children's activity business, obviously, being a dance studio, a lot of creatives within our business. So it is good to have that sort of other way of thinking and bring that that other. Like I said level of analysis, I guess to the business side of things is really important. Like Maddy said, we've while she's insane, but we've been together since we were 16 years old.
Amanda Barr
Oh my gosh, don't tell me.
Nathan Barr
So I've been around. And that's when Amanda started. Dance Sensations, our business when she was 16. So I've actually been there since the start. I remember going in on the first day they opened. That's how long I've been around. So I've always understood how worked really well. And I came to work full time in it about seven years ago. And just as we were expecting our second daughter, Gigi, when we made that the big leap to buy out the premises we're currently in and go all in on our business, which is when I moved into it. And yeah, it's one of those things. So I know, while I bring that financial, logical maths brain analysis to it, I do know exactly how children's activity businesses operate, and work. We know that they're unique businesses that, you know, when we talk and over the years, we have tried talking to other sorts of financial analyst type people. And while they provide great insights a lot of the time because we are such unique businesses, a lot of the nuances they sort of Miss and that's where sort of what my strength is understanding all everything that encompasses going into a successful children's activity business and the numbers around it.
Amanda Barr
Crazy it's been that long. Oh my god. So nice. Does eat the day to day you would call yourself a business manager I guess at our businesses. Yeah,
Nathan Barr
Absolutely. So I like I said do Look what a lot of people think is all the boring stuff. But that's what's why it's good to have different people in around your businesses, because that's all the stuff that I love. So like Amanda said, probably the business manager is the best way to describe it. I do for us, I do all of our accounts and bookkeeping, on top of all those things that need to happen in the background to get the business ticking along all of our sort of financial forecasting and crunching our numbers to be able to give because yeah, at the end of the day, maybe Kabir is medic, she is the boss like as much as you know. So making sure that she has all the numbers Those that she needs to be able to make the big decisions about our business. She's the creative direction, or sort of the creative vision of our business and making sure that I'm giving her the information she needs and getting all the extra bits of it so that she can make the best decisions for us moving forward.
Amanda Barr
So appreciate that. He's always helping me out and giving me all these numbers all the time, graphs, pretty, pretty graphs. And so since we've been working as coaches, for children's activity, businesses, Nate's been helping so many other business owners understand the numbers in their business better, which for so many of them has been absolute, like lightbulb moments, as they start to learn about the numbers that they need to know, and how to work those out really simply. So you're going to be helping us today with some three top tips of numbers that you should always know and be on top of in your business. Is that right? Yeah, absolutely.
Nathan Barr
And look what I just want to start this by saying, Yeah, like I said, I love all things, numbers. But one thing that I hate about numbers, is there's so much sort of negative connotations around it, and people are really quick to put up, I guess, put up the barriers around themselves. And there's all these labels. Yeah, they think that they're bad at math, I'm doing air quotes. Yeah, I don't know why I'm doing air quotes, because only you can see me, or there's that thing sort of, for a lot of people think it's left over from school, that they weren't a math type of person, or they're not good at numbers, and things like that. But we know for a lot of people and a lot of the amazing people we work with, both privately and in, in our, in our dance principals united group is that if you've been running a business for 12 months or more, you probably are good with numbers, right? We know that one in one in five small businesses fail within their first year. And if you've been running your business for over five years, then yes, you are good at numbers, you just you just don't know it a lot of the time, because we know that 50% of small businesses fail in the first five years. So you obviously are good at numbers. And they obviously do swirl around in your head that you are good at analyzing and making decisions of those numbers. But what is really important is really being able to focus and get the the most important numbers, if it's something that you feel like you do need to work on. What I like to do and I work with people is you know, same with everything. If you jump into the deep end of anything, you're probably going to overwhelm yourself. So making sure that we break when we're if you're just starting out your journey and making sure and wanting to know the numbers better. Making sure that we start and get simplified, we start simple, and then we can grow from there.
Amanda Barr
I love that. So you often teach people about financial Fridays. Tell me about financial Fridays?
Nathan Barr
Absolutely. So like everything? Yeah, this is one thing that I personally had to work very hard on. I'm the type of person that likes to have multiple things on the go. And as Amanda will probably tell you, do you get distracted? Sometimes you do. Like, one thing will come in, I'm like, oh, I've got to go a million miles an hour that now. And then halfway through, somebody else will tell me something else, or they'll go 4 million miles an hour at that now. But what really made a big shift for me was financial Fridays. So making sure that every Friday, first thing I'm doing when I get in, is jumping straight into zero and doing actioning everything I need in there for the week. And yeah, sometimes that might take me the whole day. And sometimes some Fridays, it only takes me an hour. But knowing that that is my day set aside to tackle what I need to do with the numbers in our business. And depending on the time of the month, the time of the year we're in, that's where those different sort of lengths of time can come in for financial Fridays, but just blocking out that one set amount of time to really attack the numbers makes it so much better.
Amanda Barr
I love that. So maybe if you're starting out looking at the numbers in your business, you know, making that financial Fridays commitment that maybe it's even just an hour on a Friday morning that you spend starting to work out these numbers and look at them might be a really great tip for you. So let's get stuck in that. Are you ready?
Nathan Barr
Absolutely. So
Amanda Barr
you've talked about we have three key numbers that you must know in your business, are we going to get stuck into tip number one? Absolutely.
Nathan Barr
So number one is what is your fixed cost per class or depending on how you set it up? We know that a lot of gymnastic places might do per hour or things like that. But whatever unit you sell your classes or your instruction in how much does that one class cost you
Amanda Barr
say fixed cost per class so amazing. Tell me about it.
Nathan Barr
What that is is every cost that you need in your business to pay to open the doors and all the advertising around it before a student or teacher even sets foot in your building. Okay. And before the pandemic that was a bit of an abstract thing for a lot of people to to visualize but you know one thing That the last sort of 18 months has helped is that I feel like a lot of people have got a lot more understanding of their numbers, because we've had to sit in and look at a cost we've had to cut and things like that. But this this fixed cost per class. So things that we're including in there is your rent, you know, you've got to pay your rent, whether anybody turns up or not, definitely, you have to have the lights on, you have to have the internet connected. So all you have your electricity, your phones, your internet, any non teaching wages that we have. So for us, I'm in our business, we have quite a few admin staff that we pay. So that's a cost that we have to pay, regardless of whether anybody comes in for classes or not.
Amanda Barr
And what about your own personal wage? Is that in there as well,
Nathan Barr
because it's a wage for the business, it's a cost for the business. That, yeah, that goes towards Yeah, the classes wouldn't run, if we went there to drive the business forward and run the business. So most definitely, it includes the owners wage, like it can get a little bit tricky. If the owner is teaching or things like that, what I recommend with the clients we work with there is you just stick to one or the other. So if you are a business owner that is doing a lot of instructing as well just pick one way or the other, you either include yourself as a teacher, or you're include your wage in the fixed costs, just make sure you don't double up.
Amanda Barr
Okay, so fixed costs are everything except teachers wages, basically. So advertising, marketing stuff, you know, things like the balloons that we give out at school fates, that kind of thing,
Nathan Barr
exactly. Anything that needs to go in, one thing that I do is our retail side, the retail branch, any of the costs go into our retail side isn't included as well.
Amanda Barr
And like costumes, or uniforms, or anything like that, as well, I guess
Nathan Barr
Exactly. But anything that goes into the actual physical space that we're providing the classes, and the advertising, and marketing and all of our software subscriptions, and things like that as well, anything that goes into running the business, to help us get people into the classes and run the classes.
Amanda Barr
Awesome. So how do we actually work out the fixed cost per class?
Nathan Barr
Yeah, perfect. So it's one of those things, yeah, with any numbers. And this is something that I again, another thing that I've had to really work on, is to not get caught in the weeds with it. Yeah, it's one of those things that sometimes we can, we can go down a bit of a rabbit hole and start to, you know, look through all of these, you know, dive into zero or whatever accounting package you use. And yeah, try and get it down to the exact set. But one of the good things about this number is, because we do it over the whole year, as long as we get you know, especially if you're starting from nothing, just by doing a basic calculation on this number, you're going to be so far ahead of where you were before. So making sure was a really great place to start is just your last p&l. So look this we're recording this in September now. So I know a lot of businesses will have already had their financials from last year, already done or about to get them. So what we what I do is we sit down with our most recent set of financials, and we take just the p&l, the profit and loss statement from that. And then you just get a highlighter, and you go through and we just highlight all of those line items in there, like the rent, like the electricity, all of those line items that we think yes, that is one of our fixed costs.
Amanda Barr
So you have all of those Exactly. for the whole year, I guess. Yeah,
Nathan Barr
the whole year is generally the easiest way to do it. And then yeah, let's say our just really basically our rent was $100,000. We had $10,000 in electricity and $5,000 in phones and internet. And wouldn't it be nice if they were the only three, but let's just pretend. So what we do is we have that number, and we add them all together. And it ends up with 115,000. Now for us, we run classes during 40 weeks of the year. So I take that $115,000 and I divide it by the 40 weeks of the year. And then I've got the fixed cost per week. And for us, we run about 160 classes per week. So I typed that number again, and I divide it by 160. And that gives me our fixed cost per class in our business.
Amanda Barr
Awesome. So you said you could do that per hour as well. So you would do that, for example, on how many hours of instruction you awake. So the total amount for the whole year of all your fixed costs divided by how many weeks a year you operate, especially if you're in the kind of operate those like 40 weeks or something like that on the school terms divided by how many classes or how many hours of group instruction?
Nathan Barr
Exactly. Yeah, I was doing it was one of our one of our amazing private clients who is run to gymnastics club and what gymnastics business. And yeah, there's a little bit different, but we divided it by we took it as the hours of instruction that they were doing.
Amanda Barr
Yeah, that's right. Yeah. Shout out to Sarah. Yeah.
Nathan Barr
And it's one of those things as well. It's, yeah, basically everybody I do this with it's a massive eye opener for them. Yeah, I've had people. I've had tears I've had laughs I've had joy. It's it's It's not something that we want to be reactive to, is really important. Any of these numbers that we're talking about today is just to help us make better, more informed decisions around our business and the things that we can do in our classes. So it's one of those things that can be a little bit scary to dive into. But it's a really important number to know. And it helps us make better, I guess, less emotional decisions around our classes in our offerings a lot of the time.
Amanda Barr
Awesome. So what does that number normally come out? Like? Is that? Is that a hard question?
Nathan Barr
No. So we've people that we've worked with, I've had it come out as low as about $65 per class, up to about $120 per class. So it's quite a wide range. Generally, I'd say around the average is around sort of that 80 to $85. Mark, but it'll depend on on a lot of things as well, like, you know, whether you have, I guess, yeah, a big massive space, how effective you are at using your space,
Amanda Barr
how many hours you're operating a week, if you're using it to it's more, you know, the amount of hours you can use per week, I guess? Yeah. And if you're including your, you know, owners wage in there as well, I guess. So once you have that number, as you said, it could be you know, there's quite a big range, but somewhere around that sort of 80 $100. Mark, yes. What does having that number mean?
Nathan Barr
Yeah, like it, like I was just saying, it helps us make better more informed decisions. Things like, you know, when because, like I said, that's only one part of what that class costs. And then you add your instructors wage on top of that, to get the true cost of that class. So and then, you know, maybe it's getting a little bit advanced, but we start to look at things like the profit per class, and things like that. So you know, one use of that number, if you think it's a little bit high, it helps you then start to look and identify about maybe some expenses that you can cut, to bring that number down to make yourself more profitable. Or if you look through it, you think no, like this, these are the expenses we made, then, yeah, obviously the fix for that, if you would like to make a bit more money, that means that your prices have to go up, but it just helps to give that baseline awesome.
Amanda Barr
So what I guess you do is you actually look at that number, and then see how many kids you've got in the class. And what the absolute minimum is that they need to be? How many kids like as a minimum need to be in the class before you're even turning a profit?
Nathan Barr
Yeah, absolutely. And that's what that leads into the second number, like the second of the three key numbers, let's go doing so the second key number is knowing exactly how much each student pays per class. I know,
Amanda Barr
each student pays per class like so not just what's actually listed on your price list.
Nathan Barr
Exactly. So we know for a lot of children's activity businesses, that will be a nice easy number. If you don't have any discounting or anything like that, and if you don't have any discounting, kudos to you, we would absolutely love that to be the case. But we know in our little nation dance studios that a lot of people do discounts. As you know, as students take more classes. There, they study classes, and things like that. And some people even offer sibling discounts and things like that. So it's not, it's not as a matter of if you charge $15 for one class, a lot of the time somebody's taking four classes isn't paying $60. So it's making sure that you can use your class management software or something like that, to get in and actually find out how much your students are paying per class. I know that, you know, in the dance studio space, for example, a lot of people that I work with sometimes get their students are paying like four to $5 per class. But these multi student discounts come
Amanda Barr
in, and is that like, for 45 minutes to an hour, it's like nothing.
Nathan Barr
So we got to be really careful because that, like I said, it just gives us a real really a much better overall picture of what's happening for each class. Because you know, your, how many students you need to break even for your preschool class, for example, is going to be very, very different to your your top level elite kids class. I know, for example, in our business, we know that we only need about six or seven preschoolers to break even one of our classes, but by the time we get up to our comfort level kids, we know that number to be at least sort of 12 to 15, depending on what age and what level and
Amanda Barr
that's because they're getting a multiclass discount, and they're paying a lesser amount per class. Is that right? Exactly, exactly. Awesome. So you need to know how much each student is actually paying per class. So most software should be able to work that out for you. Yep, good software should be able to exactly
Nathan Barr
so yeah, any sort of any class management software that's sort of worth it's worth its price should be able to give that for you or at least give you you know, I know the one that we use tells the kids jack rabbit was jack crap. It tells us how many classes each person do. So we can just take the if they're doing the unlimited package, we can take that and divide it by the 13 classes they do.
Amanda Barr
Awesome. So how this works in other activity businesses, it might be how much a student pays per hour. For example, if you're working it out as an hour, rather than a class, or a afternoon, or however that works, but super important to know exactly what they are actually paying. So I guess once you have those two numbers, what your fixed cost per class is, and how much each student is actually paying in that class, you can then start to look at obviously adding the teaching costs on top of that, but how much you're actually making, I guess.
Nathan Barr
Yeah, absolutely. And that's the key is that we're looking for the profit, the profit per class, and I
Amanda Barr
guess the the actual cost to run a class so we know where the break even point is, and how many students you actually need. I think I love the idea of going okay, so we know that this class needs a minimum of 10 to run otherwise, we're not even breaking even on it, or perhaps at six or 15, or whatever. It is. So, so valuable. Yep. Awesome. All right. So we've got our first two numbers that we need to know the fixed cost per class, and then how much each student is actually paying per class. All right, nice. What's the third key number that we should know in our business? Okay, perfect. So
Nathan Barr
the number that I use all the time is how much one new student brings in in revenue to our business. And so yeah, because we're all about a lot of the stuff we talked about, obviously, is enrolling more students. And we are often looking to bring new people into our business. So what this number is, is how much one new student doing one of our classes per week for the entire year will bring into our business in revenue. And it's a super, super important number. So for example, I sit there and I go, our classes, one class a week is $140 a term. So that ends up being $560. over the entire year, we then add things like our registration fee, we add our costume higher fees for their concerts. By the time we've added in the uniform as well, we know on average that our new students spend just under $100 a year on uniform. So we add that one in as well. We know that they've got tickets for our big concerts, tickets, were interview concerts, and all of our students participate in the concert and pay a concert performer fee as well. So by the time I add all of those numbers together in our business, it ends up being just over $900. So it's like $910, I know is coming into our business in revenue for every new student that we sign up to a class.
Amanda Barr
Awesome. So that's like a minimum, if they're to stick it out for a year, basically, the minimum anyone's gonna spend in our business. Yeah. So when we know that that number for us for examples about the $900. Mark, how does that help you make better decisions?
Nathan Barr
Yeah, absolutely. So one thing that I constantly seeing in our space, is that people aren't willing to spend around spending anywhere near what they should be on marketing, and are balking at the amounts that they need to be spending to advertise and bring in new students into their business. So when I look at that, you know, if I'm spending, you know, 15 $100, on a small Facebook ads campaign, for example, I know that by the time I've got two students from that, that I'm already in front, because those two students are bringing me in 18 $100 for the combined total as a combined for that $900 spent now I know when I'm spending 15 $100 on a Facebook ad set on bringing in way more than two students. So for the last one I did, for example, was costing us about $30 per student to be enrolled.
Amanda Barr
So $30 you're spending for each student you enroll. Yeah, absolutely. So if they're spending $900 for the year, sorry to interrupt you. So if you're spending $30 to get a student in on the advertising, they're spending $900 with you for as a minimum for the year. Yes, that's really good return.
Nathan Barr
That's ridiculous. Yeah. And that's why it's such an important numbers. such an important number to know, sorry, because it helps you put into context, that advertising budget, you think like, Oh, can I can I really afford to spend a bit of $300? Yeah, can I afford to spend that $300? Well, it's that sort of like, how can you afford not to?
Amanda Barr
Definitely. So if you know, that's the absolute minimum. And we also know that, you know, most of our students don't just take one class a week and probably the same in yours. Most of them stay for more than 12 months. So it's actually a bigger number than absolutely, but that's like the absolute sort of minimum most people will send is that $900 in the year and so it does makes it so much easier to think about how much you can spend. So even if you had to spend $300 on advertising per student to get an enrollment in totally worth
Nathan Barr
- Oh, absolutely. Yeah. Without a doubt, not a not an issue at all. Awesome.
Amanda Barr
All right. So we've got our three main numbers, we need to know the fixed costs per class that you got from dividing all of the expenses, basically, besides the teacher's wages, by how many classes you run over the amount of weeks per year. And knowing that, so you know, how much, you know, you need to be, you know, allowing for students to even have those classes operated. I just fumbled over that. But does that make sense? Yeah, absolutely. Yeah. Cool. So how many, how much it's costing you to open the doors before you're even making any profit. Then the second one was how much the students pay per class, because that then goes back and helps us sort of see how many students we need to have enrolled once we've got that fixed cost per class. And then the third one was how much a student brings us over an entire year? Yeah, super. I love it. The three great tips. Hopefully, they help you guys knowing the numbers in your business a little bit better. So before we finish up, is there any other tips any other numbers that you think that we should know? Or have any ideas on?
Nathan Barr
Yeah, look, I've got here How long? We could do this podcast for seven hours. But I don't think anybody quite wants to do that. Right?
Amanda Barr
A bit too much.
Nathan Barr
But look, one one that I keep saying pop up, and it's a quick one to talk about, is making sure that you know how much of the money that's coming into your account is not yours. Because, you know, there's only two things that are certain in life, death and taxes, right. So we know that as business owners, we have our tax obligations. And too often I see you know, we all get that little thing. You know, you're there thinking, look at all the cash I've got, you know, right and high at the moment, and then bang, your your best comes in, and you have to pay all that tax. And look, this is coming from experience. I know personally, I'm a much better spender than I am a saver and so you manda. Oh, yeah. We all know how many how many online shopping deliveries we get, especially during lockdown at the moment. But I yeah, I need to earn I do understand that. Yeah, there are a lot of the money, not a lot, but a portion of the money in our account isn't mine. It's the government's and I'm just minding it. So for me, it's better out of sight out of mind. Because we know that these tax bills can sneak up on us. So what I make sure that I do in our business is every single Tuesday, I sit down and I send money to a hidden account every week. I certainly
Amanda Barr
can't see it. Yeah, absolutely.
Nathan Barr
So the money comes into our revenue account. And this is another conversation for another day what I do with that, but a part of what I do from that revenue account the money that comes in, I just send 10% straightaway to a tax
Amanda Barr
account. And that's for the GST, Australian friends, Australian friends
Nathan Barr
VAT for our New Zealand friends. But yeah, so I make sure that 10% just go straight away. I know there's a lot more complications to it. But it's just a really simple, easy way to do it. It's really important, especially important after we have sort of big cash injection events, like our concert and things like that, to just send that text straight away, out of sight out of mind. So when the taxman comes calling, that money just goes straight away, no issue. And another one I do is make sure every Friday when I do our pays for our employees, that pa YG tax component, again, it's not mine, it just goes zero gives me a nice, easy number at the top of my pay run, how much tax I've withheld. So that money just goes straight to the tax account as well where you cannot see it.
Amanda Barr
And I can't buy pretty close on why and with that, it's basically what
Nathan Barr
you're telling me is that from our business account,
Amanda Barr
you know what I mean? Okay, so you take out the money pretty much every week so that we don't get excited about it. 10% GST for tax purposes for Australians. And then also the PA YG amount that comes out that you see are from your zero or perhaps your MYOB or whatever.
Nathan Barr
And then to give myself a bit of a buffer, if we had an especially good month, I will send you know, just do an extra little transfer at the end of the month just to make sure
Amanda Barr
awesome and that's always a bonus if you don't need to pay it.
Nathan Barr
Absolutely and look like especially during we're in New South Wales at the moment, so we are in a lockdown. But what we had our March to June quarter, for example, was one of our one of our best quarters ever. And what that meant was that because of that when it's also our biggest best bill ever, but because that money was already set aside, even though it's a bit of a tough time during lockdown. That money was just sitting there ready to go. So when that big bill came in the middle of lockdown It wasn't an issue at all.
Amanda Barr
Yeah, awesome. I love that. Whether in lockdown or not. It's just always great just not ever think about it as yours. I guess it's not get carried away and think about it as yours. Awesome, I love it. Thank you so much for your cubes. You know, I might even learn something as well, like we've got hidden money. I'll start looking for it any day now. So if you need any extra explanations of this, we're going to have a couple of things on the podcast page for this episode of the podcast notes. So podcast notes for this Arranz,
Nathan Barr
raise the bar.com.au slash for just the
Amanda Barr
number four, just the number four. Amazing, and hopefully this has helped you know the numbers in your business a little bit better. Shoot us a DM on Instagram. If you found this helpful. If you have any other questions on how to reach females,
Nathan Barr
I can say to everybody, if you please make sure that you subscribe to the podcast. And if you're feeling especially helpful, we would love Love, love and so appreciate any comments on that because it really helps us out and helps other people find the podcast who we know would find it really helpful. Ah,
Amanda Barr
thanks so much. We would so appreciate that love. Amazing. Have an awesome day. Thank you for joining me all the way in the study today Nathan. Thanks. Awesome. We will chat to you guys again next fortnight has everyone right time bye