Finances & Cashflow for Exercise Physiology Businesses

Starting and running an exercise physiology business is exciting, but financial management can feel overwhelming, especially if you don’t have a background in business. One simple yet powerful framework to help you stay financially stable and plan for growth is the 40:40:20 rule. This method ensures that your income is allocated wisely, covering essential costs, reinvesting for growth, and securing personal financial stability.

What Is the 40:40:20 Rule?

The 40:40:20 rule is a straightforward way to divide your revenue into three essential categories:

  1. 40% for Business Expenses

  2. 40% for Owner’s Pay

  3. 20% for Taxes & Savings

By structuring your finances this way, you ensure your business runs smoothly, you pay yourself appropriately, and you’re prepared for tax obligations and future growth.

40% - Business Expenses

This portion covers all operational costs, ensuring your business functions efficiently. Common expenses include:

  • Rent (clinic space or gym hire)

  • Equipment (rehab tools, software, office supplies)

  • Insurance (professional indemnity, public liability)

  • Marketing & advertising (website, social media, flyers)

  • Professional development (courses, workshops, certifications)

  • Admin support (virtual assistants, reception services)

Keeping this allocation in check ensures that your business operates without financial strain while allowing for necessary investments in growth and service quality.

40% - Owner’s Pay

Many business owners neglect their own paycheck, often reinvesting everything back into the business. However, paying yourself properly is crucial for long-term sustainability and financial security.

Your owner’s pay should cover:

  • Your personal salary/wages

  • Superannuation contributions

  • Health insurance or personal financial needs

Consistently paying yourself also builds a sustainable habit of viewing your business as a viable long-term career, rather than just a side hustle.

20% - Taxes & Savings

It’s easy to overlook tax obligations until the end of the financial year, but setting aside a dedicated portion of income prevents last-minute stress and financial strain.

This 20% allocation should go toward:

  • Tax Savings: Covering GST, income tax, and any other liabilities.

  • Emergency Fund: Ensuring you have a buffer for unexpected expenses.

  • Future Investments: Whether it’s expanding to a second location, hiring staff, or upgrading equipment, this savings pool can help fund future growth.

Pro Tip: Open a separate bank account for taxes and business savings to prevent accidental spending.

How to Implement the 40:40:20 Rule in Your Business

  1. Track Your Income & Expenses: Use accounting software like Xero or QuickBooks to monitor cash flow.

  2. Set Up Automatic Transfers: Allocate revenue to different accounts as soon as payments come in.

  3. Adjust as Needed: If expenses are creeping higher than 40%, reassess where you can cut costs.

  4. Regularly Review & Plan: Check your finances monthly to ensure you're staying on track.

Final Thoughts

Mastering your finances doesn’t have to be complicated. By following the 40:40:20 rule, you ensure a balanced approach to business expenses, personal income, and future financial security. A well-managed financial system allows you to focus on what you do best—helping clients improve their health and well-being—while maintaining a profitable and stress-free business.

Are you using a financial system in your business? If not, start implementing the 40:40:20 rule today and set yourself up for long-term success!