Saturday, February 21, 2015

Massage Therapy Career Components : The Real World.



Based on lots of experience
 

What follows is the content from my two most recent blogs and recommendations for education in the massage therapy world for the next five years.   The world of massage therapy is changing and that is OK.

Based on the increased growth of the massage franchise business model, an increase use of massage in health care settings, increased regulation of Independent Contractor job status it is likely that massage therapist especially at entry level will be employees.  Education must respond to these changes.  

Here is a list for schools and teachers to support entry level massage practice in the employee setting.

       Clearly define entry level education based on state licensing requirements

       Use the ELAP to develop entry level education - content and contact hour.

       Teach an entry level program that focuses on therapeutic massage.

       Do not inflate the program hours to qualify the program for financial aid.

       Differentiate between entry level expectations and advanced level expectations based on experience and ongoing education.

       Make sure the curriculum is up to date.

       Make sure all teachers are teaching to the curriculum.

       Make sure all teachers are teaching correct information.

       Make sure the students can perform a full body massage with the outcome of relaxation in 50 minutes.

       Make sure students can perform 5-6  50 minute massage sessions a day.

       Make sure the students understand biologically plausible outcomes for massage benefit.

       Teach students to adapt general massage for each individual client

       Support the importance of general nonspecific massage

       Realize the economy has changed, the market for massage has changed and students will be entering a career different from 10 years ago.

       Educators stop instilling unrealistic earnings expectations.  This backfires. Graduates need to begin their career and they will be discourages when the reality sets in if you tell them they are going to make $40K right out of school.  That first year of work is the graduate’s best learning opportunity. It is OK if the graduate begins working at a lower income.  

And ---Keep tuition reasonable --less than $10,000. Again, independent small school owners I suggest we avoid federal financial aid.  We can offer lower tuition and provide an extraordinary education.

Educators you need to understand the content in that follows from the two blogs reprinted here.


Attention Massage Therapy Employers and Contractors: What you need to know!


There are many environments where massage therapist are employees.  The most common employment environments are spas, franchises and independent massage therapy clinics.  Chiropractors are also employers of massage therapist but also tend to provide independent contractor relationships with massage therapist.  Traditional health care environments such as pain clinics, hospitals and so forth also employ massage therapists.

Business relationships structure as independent contractors are not employer/employee relationship.  These are essentially rental agreements for use of space and services.  This is a HUGE difference.

There is a lot of confusion in the massage community about pay rates.  Independent contractors are often confused with employees. There is a huge different between these two career pathways that is related more to structure rather than function. 

Structure: Employees- Employees must, at the very least, receive minimum wage for hours scheduled to work. Employers must withhold a variety of income based taxes and pay portions of the taxes for the employee.  Employers must follow federal and state laws related to employee relations mandated by the Department of Labor and safety related to the mandates of the federal agency of Occupational Safety and Health (OSHA). 

Structure: Independent Contractors- Independent contractors are self-employed. Instead of having an independent office setting independent contractors will essentially rent space from another professional (like a chiropractor or spa owner) and provide massage services as a cooperative system of care for shared clients.  Independent contractors typically pay the facility /business a percentage of the massage fee charged in exchange for massage room and other shared services such as the receptionist. Other than this relationship there are no other financial obligations. It is more like a rental agreement. 

Function:  Employers --- Employers are responsible for all facility liability, costs (overhead) marketing and general business operations.  The massage therapist employee is only responsible for job description duties such as providing massage services, maintaining workplace policies.  Employees are provided all supplies and are held accountable for professional behavior and job performance. Employees can be paid an hourly wage, hourly plus commission, by the service provided but the hours worked divided by the wages received must never be less than minimum wage and at year end the employer must provide the employee a tax related form called a W-2

Function: Independent Contractor----There is absolutely no obligation on the part of the business owner to pay any sort of minimum wage, guarantee any income, and withhold any taxes.  The independent contractor cannot be told what hours to work, what to wear, how to behave. The massage therapist function as an independent contractor must pay all taxes and the percentage paid to the business owner is handled as a business expense.

A huge issue in the massage community is that business owners who engage in independent contractor relationships with massage therapist treat the massage therapist as an employee and to add to the confusion, the massage therapist thinks they work for you.  They do not. 

Massage therapist functioning as independent contractors often report earning by what they charge for massage. This is the foundation of the confusion between independent contractor earnings and employee earnings.   Massage therapist functioning as employees earn an hourly wage and/or a commission and are not in a business for themselves. An hourly wage is paid regardless if massage is performed.  Independent contractors only earn money when doing a massage and then that income is gross income from which business expenses are deducted such as the percentage paid to the contractor of the massage therapist.

First I will address those who contract with massage therapists.

       Please be clear about the relationship with the massage therapist.  Many think you are hiring them.

       Please be ethical in the relationship and do not treat the independent massage therapist as an employee.

       Please be clear with the massage therapist about what type of professional relationship you want to have.  Clearly define the expectations you have for behavior, skills, scheduling, cleaning duties for the rented area, responsibilities for shared services such as receptionist and advertising. 

       Please be clear with the massage therapist about what type of interactive networking you expect such as interoffice referrals.

       Do not indicate in any way that you are paying the massage therapist a wage.  Even if the receptionist collects the money for services rendered remember the check written back to the massage therapist is what they earned as an independent contractor with the fees deducted for facility use and shared services.

       Do not treat independent contractors as employees

Now Employers:

       Be patient and diligent about explaining the wage pay structure.  It is confusing when there is a wage baseline and then a commission for services provided. A sales commission is a sum of money paid to an employee upon completion of a task, usually selling a certain amount of goods or services.

       Employers sometimes use sales commissions as incentives to increase worker productivity. Some employees work on commission, either in addition to a salary or hourly wage, or instead of a fixed salary or wage.

       Please be very clear when explaining to massage therapist employees how pay is figured. Is it base wage plus commission, base wage or commission whatever is higher, commission only so long as it meets or exceeds minimum wage.

       If the employment environment is conducive to gratuities than make sure massage therapy employees understand how the tip system works. And yes is would be appropriate to have either a lower base wage or lower commission than in a non-tipping environment.

 

Employers please consider paying wages as follows: Hourly base of minimum wage+ commission per massage performed and add-on provided.

Massage therapist employee AT ENTRY LEVEL paid hourly +commission. 

Example: $8. 00  per hour + $12.00 for every massage given + $3.00 or every add-on (i.e. essential oils, paraffin dip) + an expected 15% gratuity per massage provided.  Base salary 40 hour workweek $16320.00 +commissions based on 5 massage sessions per day $15000 =  32,000 + tips $2500 = $34,200 before taxes. Cost to employer $42,000.

This is a fair and viable wage. This pay schedule allows for pay increase for additional training, experience and loyalty.   For example commission can incrementally be increase to as high as $16.

Also employers, it is reasonable to expect, using this type of pay schedule that employees perform other tasks if not performing massage.  These tasks include housekeeping, laundry, some types of marketing based activities and so forth.  It is not necessary to pay people to only sit.

OR--- Pay as follows:

Employee pay based on straight hourly wage:

Massage employee in a pain clinic would likely receive an hourly wage of $12 (entry level) -$15 ( experience) per hour plus some benefits such as sick days or access to health care insurance. No commission on massage sessions provided.  No gratuities.   Yearly income before taxes for full time 40 hour work week = $ 28,000-30,000 per year plus $3500.00 benefit package.  Cost to employer $42,000.

 
Please DO NOT pay based on hourly rate or commission whichever is higher.  This removes the incentive to work because it appears as if the commission gets lost and it does. 

For Example:

Massage therapist employee AT ENTRY LEVEL paid hourly or commission whichever is higher. 

Example: $8.00 hourly =minimum base of $16,320.  Commission $15 per massage at 5 massage sessions per day, 5 days a week = $18 750.00 +  15% gratuity $2500.00 tips =$22,000.  Cost to employer $26000.00 ----Does not generate a viable wage.  This is where the problem occurs

 

Make sure than employee understand that they can contact the Wage and Hour Division of the U.S. Department of Labor in order to file a complaint against his or her current or former employer. The Wage and Hour Division is responsible for monitoring employers’ compliance with the FLSA and related laws in terms of employee compensation.

Working Conditions:

       The massage treatment rooms need to be at minimum 9’ x10’.

       Do not expect the massage therapist to perform more than 7 actual massage hours in an 8 hour work period.

       Schedule massage sessions 15 minutes apart.

       Provide 60 minutes of breaks during an 8 hour work period- such as two 15 min. breaks and a 30 minute meal break. Note: depending on state law employers may not have to pay hourly wage for meal break—but a good employer will.

       Do not expect massage therapists to up-sale for products or services. Use specific sales staff or receptionist to do this.

       Make sure the receptionist is fully trained and can explain massage services.

       Make sure the receptionist does not exert favoritism during scheduling.

       Make sure that front office staff is respectful and service oriented.

       Make sure that the facility is safe.

       Do not allow gossip, drama, workplace relationships and other detrimental group dynamics.

       Do not allow a difficult person to disrupt the work place- client or employee.

       Make sure you have a for real massage expert on staff that is committed to being current with massage research, the political environment and trends in massage.

       Expect that you will have to provide in house training for new hires. Education around the country is too uneven to expect consistency.  You can pay less during this training period.

       Use recorded training DVD's to set expectations about what massage draping, protocols and add-ons should be like and gage performance against this standard.  Otherwise there is too much opinion involved.

       Do not expect massage therapist to perform like robots.  Each will have some individual skills but you can expect the each massage therapist provides a massage session that reflects the integrity of the business model.

       Make sure that employee concerns are addressed.  Communicate openly with employees and have at least a monthly staff meeting.

       Have a suggestion / complaint box and pay attention to each issue.

       Do not hire more employees that demand requires. Make sure each massage therapist  is booked  before adding staff.

       Expect that a massage therapist should have retention clients after 6 months. If they do not then something is lacking in their performance.  You do not have to retain an underperforming employee.

       Be more patient with client retention for male massage therapist. There is a gender bias in the massage profession.  Make sure male massage therapists are supported.

       Make sure that all information about massage dispensed is accurate. Do not perpetuate myths.

       Make sure massage therapists are working smart by offering support for ergonomics and biomechanics.

       Managers must be present and a positive link between employees and owners.

       Reward excellent employees. Provide support for ongoing education.

What is a Massage Franchise?

This blog is advocating for the massage therapist working in a massage franchise business even though it might not appear that way in the beginning.

There are frequent mentions on social media about franchises that provide massage therapy services and most not supportive.  Recently I have begun to wonder how many individuals understand the franchise business model.  Let’s explore this topic like a massage session: General –Specific-General.

GENERAL

A franchise is a way to do business. Franchising is a business opportunity that's somewhere between buying an existing business and developing a business from scratch.

The franchisor is the person or persons who did all the work from scratch to develop a successful business operations model. 

The model is the franchise when the originator then sells the model to others who want to do business the same way.

The person(s) who buy the business model is call the franchisee.   In exchange for an initial set-up fee and a monthly payment, the franchisor provides the franchisee a business model, marketing supplies, staff-training assistance, managerial consulting and brand awareness.

A short way to restate this information is:

A franchisee buys a license from a franchisor to be a dealer of that business model (franchise). The owner of the franchise sells a product or service through its franchisees.

There are many advantages to the franchise business model. Franchising is a strategic alliance between groups of people who have specific relationships and responsibilities with a common goal. A network of interdependent business relationships is formed that allows a number of people to share:

       A brand identification

       A successful method of doing business

       A proven marketing and distribution system

There are downsides to franchising as well.  It costs money to buy and set up the franchise business.   There is a onetime fee paid by the franchisee to the franchisor to "buy into" the franchise. The initial fees typically range from $35,000- $45,000. That is a lot of money. Generally, the fee reimburses the franchisor for the costs of initial training and support for new franchisees. Next the location must be rented or purchased and then remodeled, equipped and supplied to fit the franchise facility design. For example: we all recognize how a McDonalds building is designed. This part of the upfront money is really a lot ranging from $100,000 to over a million dollars.  Then about a year of operating costs must be available. That is expensive too.  The point is that the franchisee has to invest A LOT of money to get the business up and running. Here are a few massage therapy examples of how much it can cost to buy, build, and open.

       Massage Envy Spa $413K - 939K

       Elements Massage $212K - 387K

       Massage Heights $258K - 606K

       LaVida Massage $160K - 290K

       MassageLuXe $196K - 397K

       Hand and Stone Massage and Facial Spa $394K - 489K

http://www.entrepreneur.com/franchises/rankings/franchise500-115608/2015,-3.html

In addition to all the overhead costs to operate the business there are additional ongoing fees related just to being a franchise business. For example:

Royalty: A royalty refers to a percentage of gross sales paid to the franchisor monthly. Typically the royalty rages from 5-10 % of GROSS sales.

Advertising Fee: An annual fee paid by the franchisee to the franchisor for corporate advertising expenditures; usually less than three percent of the franchisee’s annual sales and usually paid in addition to the royalty fee.

Staff are employees: This means that the business owner must pay at least minimum wage for every hour worked and all matching taxes as well as other federal and state mandated withholding.

       Social Security and Medicare Taxes  

       Federal Unemployment Taxes

       State Unemployment Taxes

       Workers Compensation Average (varies by industry)

A conservative rule of thumb is to add 30% to an employee's wages to calculate the total cost to the employer. So if someone is paid $10.00 an hour the cost to the employer is $13-$14 per hour and about $550 for a forty hour work week. ( remember-- if self-employed YOU have to pay those taxes)

If there are 10 employees working each shift and the business has two shifts that means that the weekly payroll is about $12,000.00. If the cost of a service is $40.00 then 300 services a week must be sold just to pay payroll.

SPECIFIC

Massage Franchises.

As an employee in a massage franchise business you have to have the whole picture to understand why things are done the way they are done and why the pay rate is the way it is. 

Each of the franchise models is more or less the same. Really does not matter which one.  Some have higher services fees for the massage or maybe an additional service and some a bit lower.  A middle range initial investment of the franchise owner is about $350,000 plus a year of operating costs. $500,000 as a commitment is reasonable.  Before that franchise owner makes any money, the business must earn back $500,000.  Let’s also use an average of $50 as the amount paid for each unit of service—a massage.  The business must sell 10,000 massage sessions. –That is a lot.  Full time massage practice ranges from between 1000-1200 massage sessions a year.  At the same time and for ever after, the business must generate enough gross income to pay all expenses BEFORE the franchise owners get any profits. This amount can range from $ 250,000 a year to $350,000 a year—about 6500 service units ($50 massage sessions).

It is time consuming and expensive to train new employees and turnover in the franchises is huge. There are not just massage therapists to pay, but also receptionists and housekeeping, management, repairs and maintenance staff. In the massage franchises the product is quality massage therapy.  It is hard to find dedicated massage therapists.

What should a massage therapist be paid? 

Based on educational and responsibility similarities when compared EMT(emergency medical technicians), medical assistants, cosmetologists, all of who have more training than massage therapists at the current 500-625 hour standard, $25,000 a year at entry level for a 40 hour work week to $38,000 a year for an experienced massage therapist working a 40 hour work week.

A 40 hour work week is 2040 hours of work per year.   You would need to provide 25 -30 actual hours of massage during the 40 hours or at least 1400 hours of massage per year.  Now remember, the low end pay of $ 25,000 earned per year costs the employer an addition $7500 in taxes you would have to pay yourself if self-employed.  So actual yearly wage is really $32,500.

If the cost of each massage is $50 you have to provide a minimum of 650 massage sessions per year just to pay your wages. In addition, all the other overhead operating expenses must be paid. I typically teach 30-50 percent of gross must be allocated to pay these bills so- $12,000- $14,000 in the mid-range (I used about 40% of $32,500). You have to earn this just to have a place to work- whether self-employed or employee. And as an employee, the operating expense amount is lower because others are sharing costs.  This is another 250 massage sessions at $50 each. So when working at a franchise you have to do 900 massage sessions before the owner makes ANY money off of you IF you want to earn $25,000 a year.

REALITY CHECK--- And this is based off of $50 per massage. Most unit sales will be less than the $50 because of member discounts, coupons, specials, etc.

Also, the franchise environment is typically a place where massage therapists receive gratuities/tips which can add $7000-$10,000 to the income per year.

If massage therapists were paid a flat $15 per hour for a 40 hour work week, the yearly income is $30,600 which costs the employer $40,600 in payroll and another $12,000 in operating costs. So the franchise owner has to cover about $53,000 of expenses if they pay $15.00 an hour.  That is 1375 hours of massage per year working 40 hour work weeks and based on figures of actual massage hours of 1400 per year (even though you are getting paid for 2040 hours a year). 

Soooo-the profit to the owner on this model of employment is based on 25 units of service at $50 or $1250 a year.  If that owner has 15 massage therapists working full time, yearly profit margin is about $20.000 and that is less than what each massage therapist makes.  I wouldn't take all the risk for this type of profit. Would you?

Quite a different picture isn’t it. These figures are within a realistic range and based on maximum schedule.  What happens when there are no shows or a bad weather day?

This is a tough cookie to eat.  A lot of people have their fascia in a twist.  The franchise model is miss understood in the massage community. This is unfortunate. What are the solutions? Paying employees less for sitting around when not doing a massage and charging more for the services hoping there is enough volume. The massage franchise membership model was originally based on affordable massage for the masses. The average yearly income is around $35,000 per year. The most a massage can cost to serve this majority of the population is $50 with the tip.  That means the price point cannot be much more than $45 per massage and that only buys one massage a month which in really not enough to gain the health benefits massage can provide.  Volumes will likely decrease as the cost of a massage exceeds $50. $40 per massage is a better price point for client retention, multiple massage session and volume.   So much for raising the price of services.  Owners do better than the $20,000 profit mentioned earlier. They work off of volume and often own multiple businesses.  There are product sales and add on services.  Paying the low rate for sitting helps the profit margin. Still being a franchise owner is not the huge money maker many would think and the intent is not to work massage therapists to the bone and treat then badly.

GENERAL

You will make the most money as self-employed massage therapist going to client’s homes or places of work.  You will have to charge a minimum of $75-$100 for each massage session provided.  This fee is out of range for the majority of people but there are some who can pay.   You will have to gross at least $80,000 to net $50,000 and you have to pay your taxes on the $50,000.  It takes at least 3 hours of time to provide a 60 minute massage on site. With all the driving around and set up and take down time 3- 4 sessions a day or 15 -16 sessions is the max you can do within the 40 hour work week.  You can gross $75,000-$80,000 a year—but you will only make $35,000-$40,000 a year after paying all taxes and operating expenses and with a mobile business there is no facility rental.  You still have to do all the laundry and everything else. You will make-if no one cancels and you are booked full 51 weeks out of the year (I week vacation)- maybe $18 an hour.  Thank goodness most massage therapists are motivated to walk a path of service. In 2014, the average annual income for a massage therapist (including tips) was estimated to be $22,165.6--Released February 13, 2015 © American Massage Therapy Association 2014.

You can do much better than that at a well-managed franchise. Most massage franchises are well managed, but not all. If you are working in the franchise system and the managers and owners are not doing a good job keeping up their side of the business----and if you are a good employee-- meaning appropriate business behavior, good retention rate for clients and want to be part of the solution---then diligently identify the problems as you see them, write them down with potential solutions and respectfully present to the franchise manager.  If that does not work go to the owners and if there is still no improvement to the Franchise corporate offices. 

If you are motivated to complain, gossip and generally contribute the problem then quit, go into business for yourself and get a taste of the real world.  If you do not like all the standardization, rules and pay  then go to work for yourself.  If you are a quality massage therapist dedicated to service then you will have a full schedule and won’t be sitting around making $8ish an hour.  If you are sitting around and not getting retention and client rebooking then take a good look at your professional behavior and skill set.
 
Success is a team effort- It begins with the motivation to be a massage therapist. Then the choices made for education because  the quality of the educational experience will prepare for the career implementation.  Choosing where to provide massage support career satisfaction.  A sincere massage therapist,  teachers that strive for excellence and work settings where all understand the pros and cons and are based on a win-win relationship is the whole package.

 

 

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