Should my partner earn money from teaching classes too?

Yoga Discussion General Yoga
#1

I open a studio a few weeks ago. We are 2 partners in the business, my partner who used to own another studio brings her know-how to operate and has the relationship with all the local teachers. Myself, I am an serial entrepreneur and a devotee yoga student.

I always do tons of research before getting into a new business. While doing this for Yoga I read the way to navigate during the start-up phase of the venture is by having the owner (a yoga teacher) covered the initial scheduled classes for the studio. This way you don’t have the fixed cost and as you grow and build critical mass for specific times, you start recruiting other teachers to cover those classes.

Last week we had a discussion and my partner brought the numbers of the first week to make payroll. She included the classes taught by her during the week which made up to 40% of total payroll. I told her about my research and she told me at the previous studio she owned this was the common practice. In her previous business, both partners were yoga instructors and both charged for their classes given.

In our case, I am not a Yoga teacher (and don’t planned to be for now) so I don’t find this fair. Also, we started with an aggressive full weekly schedule (which I support!) since we are capturing an existing yoga students database. This strategy is costing us good money, but adding her class fees to the equation doesn’t add up.

I understand a teacher should get paid of course. But for example, what happens to classes where nobody showed up. Hired teachers get paid for those, but should she? I’m not even sure if she should be paid at all… : (

Our agreement is for her to besides being a partner, she handles the administrative tasks with a salary and I take care of the strategic side of the business, no compensation. I put up front 80% of the money, so from her monthly salary she keeps 25% in cash and 75% is used to make payments until we reach 50/50.

I am working on a partners agreement and whatever we decide will be there. But I’m just wondering if you all have any experience on what’s a common practice in these cases. It has even crossed my mind to take the monthly amount of her classes given and use it as a contribution towards getting to her 50% so we don’t strangle the cash-flow of the business during this phase.

Thank you in advance for your contributions.

#2

Serial entrepreneurs sign partnership agreements BEFORE cutting a funding check, before launch, before giving a “go” to the business plan. A business plan’s purpose is to demonstrate how the agreed upon business model will affect profitability when leveraged against income and expenses. A primary expense for a yoga studio is how payroll is structured for the teaching faculty - be they founders, employees, or contractors.

Teachers need to be paid and founders often make the mistake of not paying themselves first. If the partner is willing to forgo compensation for teaching classes during a start-up phase in order to keep the business solvent, so be it. BUT that is laid out in the BP beforehand, not decided after you open, sorry. Additionally if the partner IS willing to forgo payment for preserve solvency that surely would have an ownership share/price attached to it.