Sandy Fritz: ALL IN ONE SPOT.

This is a long blog post because it combines recent posts about the structure of various massage therapy business options from sole proprietor to large franchise chain employment. These posts broadly cover the topic using real work experience, professional organization statistics and business trends. I am combining the content because there needs to be one link to the information.

My personal stance is that massage therapy is an important and viable career and as a community we are in a point of delivery shift. Massage therapy has three distinct sectors which all over lap- wellness and health maintenance, performance and recovery and medical care and rehabilitation. The following outcomes can be addressed in all sectors: wellbeing and relaxation, stress management, pain management and mobility. Massage therapy approaches to care include comfort (palliative) condition management and active therapeutic change.

Until a few years ago massage therapy was primarily practiced as a self-employed sole practitioner in a variety of environments such as private office, home office and onsite in other's location. This type practice remains viable IF the individual is capable and willing to put forth the energy and time to work both as a massage therapist and business owner. Nothing in the blogs I have written indicates otherwise. However in order for those entering the massage field to make informed decisions about career pathways, somehow accurate practice and income information must be available. It is not. The self-employed income reports are typically based on gross income and do not reflect realistically the cost of doing business and the time spent performing tasks that are non-massage related but essential to business operations. The wellness sector now has many employee based positions available but new graduates and those struggling as sole practitioners are discouraged by some who believe that franchises are the corporate enemy and only out to make money on the backs of massage therapists. This just is not true. Also positions available in the medical sector for massage therapist are most like going to evolve as employee positions. Based on current educational standards for massage therapy as a community we are going to have to face some hard facts.

Another point of contention is how much a massage session should cost. You can charge whatever you want. However, huge populations of people who make less than $50,000 a year are not receiving massage therapy because of the cost. Maybe in some situations prevention based health insurance will someday pay for massage therapy related to health maintenance. Health insurance pays for medical based massage now especially if the massage therapist is an employee of a medical professional that can bill insurance. Still more people pay out- of –pocket for massage therapy in the non-medical sector.

There are issues with education as well. For profit corporate based schools using financial aid are being increasingly scrutinized. The small massage only school is struggling and community college education, where there is a viable option to the corporate based schools, are not providing as many massage education programs as I thought might occur. I really thought 10 years ago the community college would be the primary delivery for massage education but this has not materialized and it seems that the small private massage school is making a comeback. I do not know why but doesn’t matter –it is what it is.

So read, do your own research, be logical and know change is inevitable.

This blog begins with a call to action to the massage therapy organization and then I call out employers as well.

CALL TO ACTION DIRECTED TO THE MASSAGE THERAPY LEADERSHIP GROUP DURING THIS TIME OF TRANSITION IN THE MASSAGE COMMUNITY.

The AMTA can accurately report income. The way it has been done is very misleading. I have spoken with them for years about this.
Massage therapists need to be able to provide more sessions without hurting themselves. We desperately need a independent ergonomics and biomechanics analysis funded.
The organizations can live stream conferences and conventions at a much lower fee and place content into an archive for future viewing.
The organizations can collectively market massage therapy as a career using realistic income and work data. There is no excuse for all this controversy over fees, employment vs self-employed. We need a demographics analysis of what various income levels can afford for retention massage services. Currently AMTA reports that income above $75.000 is the tipping point for paying for massage. Those making less are not receiving massage especially those making less than$40,000 per years.
Fund a consumer market survey to determine what the market can bare for massage fees based on need, demographics and disposable income.
Describe clearly the practice differences between massage business in the wellness sector and pay for services and how massage is being implemented in the medical setting such as hospitals and medical clinics including wage classification and employment structure.
Collect and distribute accurate industry standards which would go a long way toward supporting realistic education for those entering the field.
Emphasis in entry level education about being.an employee and how to maximize income in that sector would be valuable.
Support independent massage schools which as a sector provide the most reliable education yet are struggling to survive.
Support community college program development as an alternative to expensive corporate financial aid based schools.
Provide grants to those schools and programs wishing to participate in COMTA curriculum endorsement or programmatic accreditation. I specifically call out the Federation of State Massage Boards for this funding.
Promote affordable tuition fees. Federal financial aid appears to max out at about $8000. To me this means that a foundational education that meets educational standards for entry into the profession is worth about $8000 total cost---maybe $10,000 total cost on the outside---not $12,000- $15,000 or more.
Create and fund a tuition loan program administered by the massage therapy leadership organizations where schools that do not participate in financial aid can direct potential students. This loan program would actually make money for the leadership coalition through reasonable interest and application fees.
Combined dialog with all the organizations, educators and employers i.e. the various franchises as well as other employer groups to educate both the massage therapists and the business owners about successful practices would improve income as well as understanding of work environments.
Surveying the medical sector including chiropractic to determine realistic compensation for massage therapistsand types of business models used.
Teaching massage therapist about different business models for self-employment such as co-ops is needed.
Aggressive education regarding misclassification of IC and the development of a resource where both employees and employers can have access to reliable information.
Access to labor attorneys and business professionals actually trained in business development.
I could go on and on. The professional organizations primarily AMTA need to step it up big time. Also the Federation of massage therapy boards is sitting on lots of money and could help fund many of these projects

NOW I AM CALLING OUT EMPLOYERS.

Stop the misclassification of employees by treating them as Independent contractors. If you are afraid of the employment taxes and reporting hire a firm to do this for you.
Stop listing income paid per massage. It is misleading and unethical. Yes you can pay $30 per massage hour BUT—if only one or two sessions are provided in a 7 hour pay period you are only really paying minimum wage. That massage therapist needs to perform 4 sessions during those 7 hours to make about $15 per hour. Pay base wage for every hour scheduled and commission or per session fee additional. Disclose what the actual hourly rate is.
Stop including gratuities in the estimated income—yes in the service sectors tips are common but not mandated.
Do not make employees sign non-compete agreements. They won't stand up in court anyway and it makes employees feel trapped. Instead explain the importance of loyalty and that you want them to disclose where else they are working so everything is transparent.
Business owners: You need to be present and accountable for activities at your business. This includes those who own multiple locations. You cannot rely on managers to be the face of your business. You need to interact with your employees, walk in their shoes, and observe what it is like to be in a small dark room for hours at a time.
Employers you are responsible for a quality work environment. Get rid of those who whine, gossip and are not team players. If you have turn over you need to see what is causing it and fix it.
Employers you are responsible for listening to your employees-and implementing valuable suggestions and explaining why other suggestions are not workable.
Employers: Stop being aloof and snobs. Remember we are all in this together.
Employers: Do not over staff so you have lots of sitting around. Massage therapist only make money when they are performing services so staff accordingly.
Employers: There is nothing wrong with being financially successful –but when your standard of living is many time above your employees then if begins to taste and smell rotten. If you are making a big profit then figure out some sort of profit sharing system.
Employers: If you cannot find quality massage therapy employees then find quality people who will be loyal, are interested in massage therapy as a career and then help them go to school in return for them working for you for a designated period of time.
Employers: If you are barely covering overhead and your profit is less than what your employee make something is wrong as well. You should be making a profit.

Of course there is more but this is enough to get ya thinking

OK HERE COME THE BLOGS

SELF-EMPLOYED SOLO MASSAGE THERAPISTS HAVE MULTIPLE ROLES: WHEN SELF EMPLOYED YOU ARE BOTH EMPLOYER AND YOU EMPLOY YOURSELF

The questions to ask yourself are:

· How effective are you as an employer of yourself?

· What type of an employee I?

A concise description of the two roles is:

Employer: takes care of everything related to the business operations that is not specifically massage therapy related

Employee: provides massage therapy services, attends to lifelong learning to improve skills, maintains excellent client services and attends to client files.

Let’s begin with common complaints from employees about employers.

· Bossy

· Inattentive

· Micromanage everything

· Do not listen to employees

· Do not talked to me directly

· Criticizes

· Yells and are mean

· Lack of appreciation for all I do

· Have favorites and do not teat everybody the same

· Take all the money

· Pay low wages

· Expected to be at work even if no clients

· Expected to clean and do laundry

· Expected to participate in finding and maintaining clients

· Lack understanding about personal problems and need for time off

· Lack of job security

· Do not control other employee’s behavior

· Makes promises and does not follow through

Next is the list of common complaints employers have about employees.

· Late to work

· Asking for favors and special consideration

· Lazy

· Complains about everything

· Gossip and bring drama to work

· Poor attitude and looks and acts miserable.

· Poor hygiene and appearance

· Talk all the time or won’t talk

· Refuse to be part of the team and help others

· Use the excuse “not in my job description” to avoid work

· Unreliable and won’t complete tasks.

· Hiding and fooling with devises: texting, playing games etc.

· Unprofessional

· Not trustworthy

· Passive aggressive behavior

· Refuses to learn new things

· Fights and undermines necessary changes

· Defensive and won’t respond to feedback

· Complains about wages

Using the bullet lists above how do you rate in both the employer and employee role.

I have been self-employed my entire career and honest evaluation of myself reveals that I am actually a better employee of myself than an employer with a few exceptions. My employee self gets paid and my employer self often does not. So since I generate all the income by providing massage therapy services I forget about all the time needed to maintain the business. I may work 15 hours a week providing massage therapy but I also work 15 hours a week doing all the non-massage tasks.

I just posted a blog about PAY STRUCTURES FOR MASSAGE THERAPY EMPLOYEES which got me thinking about the structure of being self-employed.

If you are the business owner-employer you are taking the risk. Bottom line is that if you do not make a profit you will not stay in business and you deserve to be paid at least as much as the employees working spas, clinics, chains and other employment situations. In order to figure out how much to pay yourself as your own employee you have to know what your gross income is, cost of ALL overhead- what you need to keep in reserve for the emergencies and unexpected costs AND you are self-employed so you have to pay all your own taxes including self-employment taxes.

Unless you are willing to work 50 or more hours a week, you cannot be a massage therapist full time because you have to be an employer/business owner some of the time. If you are really effective employer/business owner you may be able to work ¾ time as the massage therapist and ¼ as the employer but that is cutting it tight.

Most massage therapists are only working part time as employees so let’s use a common ¾ time schedule or 25 hours doing 15-18 massage sessions. For math purposes this mean that during your employee role you generated $750 of gross income for yourself as a business owner/employer of yourself in a work period (25 hours 15 massage sessions over 7 days). I expect that during employee time cleaning, laundry and client files are taken care of.

Now put on your employer hat. As the business owner you have to pay all the overhead, respond to unexpected expenses and time demand, perform all business marketing, book keeping. Overhead should not exceed 30% of gross with taxes adding another 15% for a 45% expense rate and 5% profit margin.

Based on this $750 of gross income let’s look at the breakdown. Wages expenses for a service business such as massage therapy should NOT EXCEED 50% OF GROSS. We are going to use 50% of gross to cover all employee expenses including wages, payroll taxes and cost of maintaining payroll. Since you in the employee role generated $750 of gross income you should not take more than $325 for that pay period. You will not see $325 because of the 15% needed to cover payroll taxes and costs and also the withheld income taxes. Your employee self costs $55-$60 for the pay period. $325-$55 (cost)= $270. This $270 is what you can pay yourself for your time employee for the pay period. This works out to about $11 per hour for all 25 hours at work being an employee.

What about the other $325? Well now, as the employer, you have to pay all the other expenses and if everything is smooth that should be no more that 40- 45 % of gross or $300 per week. This works out to about $1200 a month for overhead to include rent, utilities, supplies and so forth since taxes were included in the employee expenses. You should be able to cover overhead with this amount.

What about the profit? As the business owner you should make at least 5% of the gross income as profit. Get ready--- that is just under $40 of profit for the week. If you only spent 10 hours a week being the business owner you made $4 an hour. Truth is a business owner should make a minimum of a 15% of the gross or why bother? That would be more like $112 or about $11 per hour.

To be able to have that level of profit, gross income must increase or expenses must decrease. You will need to ask yourself if you can generate more income during your employee role by increasing the number of massage sessions or increasing the price and not lose any volume. If volume increased to 18 sessions that would help. If fee increased to $55 per session that would help. Overhead cost might be able to be reduced to $1000 per month if very frugal.

Taking these actions could increase profit by $150 a week or about $200 total—if no one cancels and no unexpected expenses happen. Now you are making $20 per hour for being the business owner if you are only spending 10 hours a week but you have to self-employment taxes on this reducing the -in your pocket money- to $170.

Weekly income then for being self-employed:

$270 as the employee + $170 as the employer or about $440 after taxes. Based on a 40 hr. work week that is $11 per hour.

You can do better than this as an employee in a well-managed business.

So what is the point of being self-employed? It is a preference and I have done it for 38 years. I am also an employer and as the massage therapy profession moves into the future we need to come to some sort of reality about what income expectations are for being self-employed as well as what employees are paid.

You have to be able to provide at least 20-25 massage sessions to make a sustainable income regardless if employee or self-employed. If massage therapy is going to be primarily a part time occupation then figures need to be adjusted accordingly. If the AMTA figures are accurate, then for ¾ time massage therapist are making about $24,000 a year and adjusted to full time that is about $32,000 a year. We cannot expect the employer to make nothing, right? An employer should make a 15% profit- not 5%. We can complain all day that massage therapists are not paid enough but there is a cap on what people will pay for massage services and volume will decrease if fees exceed $60-$70 as session with $50-$60 being the sweet spot.

I am getting tired of writing this over and over actually, but so much confusion is out there and new graduates are getting inaccurate information. We need ,as a community, to come to grips about this income issue. This level of income does not justify an educational cost of $12000 or more. $7000-$8000 total cost (books and fees included) is more appropriate. The professional organizations need to come to grips with this as well. A massage therapist cannot afford $1000 or more to go a convention. They cannot afford $400 a day for continuing education. We have to get real.

Independent massage school owners are small business owners and we cannot afford to work for nothing either. If tuition costs top at $8000 per student then we need a minimum of 24 students a year to make $30,000 a year. The professional organizations need to help us out during this time of low enrollment and paradoxically increased demand for massage therapy EMPLOYEES. If the demand is for EMPLOYEES then we better be teaching student how to be excellent employees and helping employers create win- win environments.

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MOST MASSAGE THERAPISTS ONLY WORK PART TIME—WHY?

Well, that is interesting.

Also according to the AMTA 2016 Massage Profession Research Report, gross income ( I assume that means prior to income taxes and after overhead is deducted if self-employed) was$24,132 in 2014 and $24,519 in 2015. That sounds terrible until you realize that is PART TIME and about 62% of the typical forty hour work week. 38% of the reported income of $24,519 is about $9500. Therefore , factored out to full time, this means that full time earning for a massage therapist (prior to income tax) is about $ 34,500 per year.

This is a good income for a diploma based education of 625-750 hours and in the vocational sector of health professions.

So why are massage therapists working part time? About 50% are happy with part time. So what about the other half? Why are massage therapist only providing 45 sessions a month—part time instead of 90 massage sessions? This is between 20 and 25 client sessions a week or 5 sessions a day.

Two reasons come to mind. Ergonomics/bodymechanics and lack of client volume. I have been pleading for an independent ergonomics and biomechanical analysis for massage therapy for YEARS. The massage therapy leadership organizations NEED to fund a “for real” independent analysis by objective experts outside the massage profession to get an unbiased perspective and useable recommendations. I do not care who you are or how long you have been doing massage or teaching (including me), all of us are guessing. We do not know for sure and it is time to know!

Client volume is an issue as well. So what are the obstacles preventing more people from receiving massage? Again, according to the AMTA 2016 Massage Profession Research Report, Females without children in the home with incomes over $50,000 are the main massage consumer and 1/3 of all massage consumers had a household income of $100,000 or more in 2015. Only ¼ of those with a household income between $75,000 and $100,000 received a massage in 2015. Seventeen percent of those with incomes between $35,000 and $50,000 got a massage in 2015, down from 22 percent in 2014. And only 7% of those with an income of less than $35,000 got a massage in 2015, down from 8 percent in 2014.

There is a huge potential to increase clients since only a small percentage of people actually receive massage. The largest group of people are those making less than $50,000 a year. Price point of a typical 60 minute massage session will need to be between $40 and $50 for these individuals

How often clients receive a massage is also an issue. Many who get massage only schedule once a month. Research has shown multiple times that that frequency is not enough to generate and sustain benefit. Weekly massage sessions are idea but realistic scheduling for clients is a massage every other week. Increasing the frequency of massage for current clients would double the session hours worked. What are the obstacles for receiving more massage sessions in a month? Cost and time with cost being the biggest deterrent. If the average fee for massage is $ 65 the monthly cost for a client receiving a massage every other week is $1625 a year or $135 per month. For those with incomes less than $40,000 a year that is a real chunk of money. For those with yearly incomes of $ 75,000 or more that is 2% of income but for those making $35,000 a year it is 5% of income. Those earning $35,000 -$40,000 only have $700 (2% of income) to potentially spend on massage. The most they could spend is $30 a massage session if they received 2 massage sessions a month.

I just had this conversation with my students as we were discussing how to provide massage therapy to first responders such as EMT, fire fighters and police.

This is the reality we face right now. People know massage has value and many more people would become clients if they could. If more people could receive massage then more massage therapist could work full time if they want. This is a tricky economic line to walk. As massage therapists we need to make an income sufficient to meet our needs and at full time, like so many, that is $30,000-$35,000 a year and this is the income of the group of people that can be helped so much by massage therapy on a regular basis.

I certainly do not have all the answers but I sure am thinking about it

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PAY STRUCTURES FOR MASSAGE THERAPY EMPLOYEES

I am getting a lot of questions about pay structures for employees. The first person you should consult is an accountant or business attorney. I also suggest that if you have more than a couple employees you use a human resource outsourcing service to set up your accounts and handle payroll and taxes. I am not endorsing this company but if you look at their website you will better understand human resource outsourcing. America’s Back Office –americasbackoffice.com. I am sure there are similar companies in your area. Just search for human resource outsourcing service. These companies take care of all payroll, taxes and labor law compliance issue for you for a fee which is less expensive that doing it yourself or hiring someone. You can also get a lot of information from the US Department of Labor website.

CUTTING TO THE CHASE----------

So here is my recommendation. Pay minimum wage or a bit more—like $9 per hour for all hours worked and then pay a bonus/commission of $5-$10 per session based on massage therapist experience and volume. The potential raises would be in commission amount not the base. Tips in the service industry belong totally to the employee and are not factored into wages costs.

And since employees now realize they are paid for ALL time at work it is expected that the employee work productively all hours including massage, cleaning, stocking, follow-up calls, charting, review of client files and laundry.

NOW FOR THE JUSTIFICATION.

It is clear that the massage therapy delivery in the US is shifting to employees and away from self-employed. This blog IS NOT about if one is better than the other. The focus is for those who are considering hiring employees and or shifting from some sort of group practice model using the very confusing independent contractor model. If you want to create an environment for other massage therapists to work and you want to control how they provide services such as scheduling, pricing etc. then learn about employer/employee set up. Otherwise rent space and let the renters run their own business.

If you are the business owner-employer you are taking the risk. Bottom line is that if you do not make a profit you will not stay in business and you deserve to be paid at least as much as your employees. As the business owner you WILL work more hours than the employees and you WILL have to handle all the non-massage aspects of business and the inevitable unexpected events that will occur such as the plugged toilet or the no show employees. Even if you hire a manager-they are still and employee and ultimately THE OWNER(S) ARE RESPONSIBLE.

Ok--- in order to figure out how much to pay an employee you have to know what your gross income is, cost of ALL overhead-wages being the largest chunk in a service based business- what you need to keep in reserve for the emergencies and unexpected costs AND you are self-employed so you have to pay all your own taxes including self-employment taxes. By the way the various massage franchise business owners are individual small business owners—NOT a big corporation. Those that own a franchise/chain pay for the use of the brand name and support services.

I am going to attempt to make this simple and basic. Sometimes when I do this some information is left out. This blog is only a guide based on a bunch of questions I have been getting. Return to the first paragraph please. What this blog can do is help formulate intelligent questions to ask the experts. Now for some simple math.

For example purposes lets figure out a break even analysis on one employee for one week based on the current typical work schedule for massage therapists. Also I am going to use $50 per 60 minute massage session. If you want to figure this out on a higher massage rate than you can use this example to do the math.

A full time work week for a typical massage therapist is 30-35 hours doing 20-25 massage sessions. Most massage therapist do not work full time- they work part time. I have another blog on that. So let’s use a common ¾ time schedule or 25 hours doing 15-18 massage sessions. For math purposes the common massage employee is going to work 25 hours per week and perform 15 massage sessions at $50 a session. This mean this employee generated $750 of gross income for the business in a work period (25 hours 15 massage sessions over 7 days).

Based on this $750 of gross income let’s look at the breakdown. Wages expenses for a service business such as massage therapy should NOT EXCEED 50% OF GROSS. We are going to use 50% of gross to cover all employee expenses including wages, payroll taxes and cost of maintaining payroll and human resources services. We are not providing any benefits such as paid vacation or contribution to retirement or health care costs. The employer must match a percentage of employee taxes and withhold for income taxes sending $ to the IRS. The matching tax percentage is 7.5 and typical service cost for maintaining payroll is another 7-10 % so using 15% as a base every $100 paid to an employee cost the employer $115.

The employee generated $750 of gross income so payroll costs for that employee should not exceed $325 for that pay period. The employee will not see $325 because of the 15% needed to cover payroll taxes and costs and also the withheld income taxes. The employee cost $55-$60 for the pay period and you will need to withhold about $25 for income taxes.

$325-$55 (cost)= $270. This $270 is what you can pay the employee for the pay period. Their check will be about $220 after income tax is withheld. This works out to about $11 per hour for all 25 hours at work. This seems like an awful hourly wage but if the person was self-employed they would end up making about the same per hour (but most do not want to admit it). And if that same employee did just 2 more massage sessions during that time frame they would increase hourly by $4 per hour or $15.

Most employers attempt to keep wages costs in check by paying minimum wage (and a bit more) base for all hours worked and a bonus (commission/ per session fee) for each massage session (60 min, –yes more for a 90 minute). So the math for this looks as follows: $9.00 per hour base x

25 hours worked = $225 base wages. The employee grossed for the business $750 and $325 is available to cover wages and employee costs. The $225 in base pay will cost the employer about $30 bringing employer wages cost to $255. $325 (available)-$255=$70 available to pay in bonus/commission. The employee provided 15 sessions. $70 / 15 massage session= about $5 bonus for each massage session. This still sounds terrible so let’s figure it the way most are attempting- paid per massage hour and as long as the employee makes at least minimum wage for the 25 hours at work the employer is legal. Let’s continue to use the $9hr. as the minimum wage. If the massage therapist is paid per massage hour then you could say you are paying them $18 per massage hour which now sounds better but this is really kind of sneaky since that $18 x 15 sessions still ends up being $270.

Sneaky is not very ethical however during this transition period it is essential that employees are thoroughly informed about how the pay structure works.

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WHAT IS A MASSAGE FRANCHISE?

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.

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

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 . If self-employed YOU have to pay those taxes. That means for every $ 10 you make you are only really getting about $7 in your pocket.

If there are 5 employees working each shift and the business has two shifts that means that the weekly payroll is about $6,000.00. If the cost of a service is $50.00 then 120 services a week must be sold just to pay payroll.

SPECIFIC

Massage Franchises.

This is great link to explore.

http://www.massagetherapycanada.com/continuing-education/the-fuss-about-membership-based-massage-2384

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 a facial 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 or facial. The business must sell 10,000 massage or facial sessions. –That is a lot. Full time massage practice ranges from between 1000-1200 massage sessions a year or 20-25 session weekly (based on 50 weeks). 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. Turnover occurs for many reasons but a couple biggies are ergonomics and unrealistic income expectations and those flawed foundations are often laid in the entry level education. Also the employers do not just have 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 that really understand the difference between being self-employed and an employee

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(25-30 massage hours in the 40 hours)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 10 massage therapists working full time, yearly profit margin is about $20.000 and that is less than what each massage therapist makes. 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 misunderstood 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 $-40- $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. Volume will likely decrease as the cost of a massage exceeds $50-$75 unless you are specifically focused on a demographic that earns more than $100,000 per year. $40 -$50 per massage is a better price point for client retention, multiple massage session and volume. So much for raising the price of services.

Owners may 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 them badly.

GENERAL

You will make the most money as self-employed massage therapist going to client’s homes or places of work. BUT THIS IS A LOT 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. This is how I have structured my massage business for over 30 years so I have lived this model. AND I was really busy often seeing 6 clients a day. I have been my own employer and employee and up until a couple years ago maintained a full time practice.

In 2015, the average annual income for a massage therapist (including tips) was estimated to be just under $25,000 per year. BUT most massage therapists are only working 1/2 to 3/4 time and only providing 40-50 sessions a month ( 10-12 sessions a week--1/2 of full time at 25 sessions --60 minute sessions used as base)..You can do much better than that at a well-managed franchise if the number of massage hours is similar.

AMTA DATA

PART TIME MASSAGE THERAPISTS.

According to the AMTA the average, massage therapist worked 25.3 hours per week in 2015 and was paid for 19.7 of the 25.3 average hours. Also indicated in the report massage therapists provided massage for an average of 45 clients a month or between 11 and 12 clients a week. Only about 50% of those surveyed by AMTA indicated that they wanted to work more hours. (AMTA-- The 2016 Massage Profession Research Report). Also according to the AMTA 2016 Massage Profession Research Report, gross income ( I assume that means prior to income taxes and after overhead is deducted if self-employed) was$24,132 in 2014 and $24,519 in 2015. That sounds terrible until you realize that is PART TIME and about 62% of the typical forty hour work week. 38% of the reported income of $24,519 is about $9500. Therefore, factored out to full time, this means that full time earning for a massage therapist (prior to income tax) is about $ 34,500 per year.

Ergonomics/bodymechanics and lack of client volume. I have been pleading for an independent ergonomics and biomechanical analysis for massage therapy for YEARS. The massage therapy leadership organizations NEED to fund a “for real” independent analysis by objective experts outside the massage profession to get an unbiased perspective and usable recommendations. I do not care who you are or how long you have been doing massage or teaching (including me), all of us are guessing. We do not know for sure and it is time to know!

There is a huge potential to increase clients since only a small percentage of people actually receive massage. The largest group of people is those making less than $50,000 a year. Price point of a typical 60 minute massage session will need to be between $40 and $50 for these individuals

How often clients receive a massage is also an issue. Many who get massage only schedule once a month. Research has shown multiple times that that frequency is not enough to generate and sustain benefit. Weekly massage sessions are idea but realistic scheduling for clients is a massage every other week. Increasing the frequency of massage for current clients would double the session hours worked. What are the obstacles for receiving more massage sessions in a month? Cost and time with cost being the biggest deterrent. If the average fee for massage is $ 65 the monthly cost for a client receiving a massage every other week is $1625 a year or $135 per month. For those with incomes less than $40,000 a year that is a real chunk of money. For those with yearly incomes of $ 75,000 or more that is 2% of income but for those making $35,000 a year it is 5% of income. Those earning $35,000 -$40,000 only have $700 a year (2% of income) of disposable income to potentially spend on massage. The most they could spend is $30 a massage session if they received 1 massage session a month.

Here is who is getting a massage----

From AMTA :

Average massage consumer is female, has a household income over $50,000 and does not have children under 18 in the household. Household Income – Thirty-one percent of all massage consumers had a household income of $100,000 or more in 2015, and 38 percent of consumers in households with an income of $100,000 or more had a massage in 2015.

 Twenty-four percent of Americans that have a household income between $75,000 and $100,000 received a massage in 2015, up from 16 percent in 2014.

 Twenty-one percent of Americans that have a household income between $50,000 and $75,000 received a massage in 2015, up from 17 percent in 2014.

 Seventeen percent of Americans that have a household income between $35,000 and $50,000 got a massage in 2015, down from 22 percent in 2014.

 Seven percent of Americans that have a household income of less than $35,000 got a massage in 2015, down from 8 percent in 2014.

The 2016 Massage Profession Research Report

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, tending to cleaning and facility management duties 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 go to the Franchise corporate offices. IF STILL NO SUCCESS THEN QUIT. THERE IS A SHORTAGE OF MASSAGE THERAPISTS RIGHT NOW. YOU CAN FIND ANOTHER POSITION.

If you are motivated to complain, gossip and generally contribute the problem then quit, go into business for yourself. 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 you will have a full schedule and won’t be sitting around making a minimum wage base 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.

Employers: If you are good employers you realize that you are in a team relationship with your employees. Do not be aloof and distant. Be part of the team by sharing and communicating and you are not too good to clean the bathroom either! Support your excellent employees and get rid of the employees that are a strain and drain. One bad apple spoils the whole barrel.

Finally: Educators stop instilling unrealistic income expectations. Present the employee model of career development with the same objectivity as you present self-employed. Do not downgrade either career path- present the facts-the real facts.

Disclosure: My family owns a franchise massage clinic. We are excellent employers and ours employees are part of the success team.

Sandy Fritz

Monday, August 29, 2016

ALL IN ONE SPOT.

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