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.