Contributor: Billy Hofacker is a financial coach for Gym Owners and Fitness Professionals. Book a free 15-minute call here and download a free copy of his book Fitness Profits here.
Along with legal, most gym owners don’t have a background or interest in finance or accounting. This is partly why a gym owner making 6 figures is more of an exception than the rule. The good news is you don’t need a degree in accounting to make the finances work. I will share 3 steps anyone can implement or improve to grow their gym’s bottom line.
The 3 key financial steps are:
- Optimizing your budget
- Diversifying revenue streams
- Invest in marketing
Step 1: Optimize Your Budget
There are no successful gyms that operate without a working budget.
This is a non-negotiable!
A budget serves as a roadmap for your money. It helps you tell your money where to go without wondering where it went.
Here are some tips when creating your first working budget.
- Track Expenses: Regularly monitor all expenses, including rent, equipment, salaries, and utilities. Keeping a pulse on what’s flowing out is crucial. Things creep up fast!
- Prioritize Spending: Allocate funds to high-impact areas like marketing, coaching, and member retention programs. A budget doesn’t have to be overly restrictive. Its purpose is to help you prioritize what’s most important.
- Cut Unnecessary Costs: Identify and eliminate non-essential expenditures (think subscriptions that aren’t being used). Every dollar spent in one area is a dollar that can’t be spent in another, including your pay!
For example, take Aaron the gym owner. Before working with me he was making good revenue but more money than was needed was slipping through the cracks. Once we created a plan for his dollars, we were able to give him a nice bump and allocate more toward building wealth/retirement.
Step 2: Diversifying Revenue Streams
While we want to be careful having too many moving parts, if all our eggs are in one basket, we might be headed for trouble. We saw this issue with some of the clubs that were only offering large group training when COVID-19 hit. If they weren’t able to pivot hard, they were in trouble.
Other facilities that offered both large and small groups faired better. Some never brought the large group back but did OK because of other revenue streams.
Here are some ideas around multiple revenue streams.
- Membership Tiers: Offer different membership levels with varying benefits. Some may include more frequency, direct attention, and accountability. Price accordingly.
- Classes and Programs: Introduce specialized classes or personal training sessions. You might offer nutrition coaching, a kids’ program, or private training options.
- Merchandise Sales: Sell gym-branded apparel, supplements, and equipment.
- Online Offerings: Provide virtual training sessions or online fitness courses. You could also offer a hybrid. A client might come in twice per month for an update and then perform the program on their own. This way they get the benefit of your knowledge and some accountability at a lower price point.
My club was able to bring in an additional $8,000 at one point for a 6-week group nutrition program! Without a significant increase in running the program, this increased the bottom line significantly.
Step 3: Invest in Marketing
Marketing was touched on in Step 1 but let’s dive deeper here.
A wise business coach recently told me, If you are a gym owner, you are in the business of marketing. Period.
This is something gym owners must embrace. If not, you’ll never reach your potential.
Here are a few areas to consider.
- Social Media: Utilize platforms like Instagram, Facebook, and Twitter to engage with potential and current members.
- Local Advertising: Use local SEO, community events, and partnerships to boost visibility.
- Referral Programs: Encourage existing members to refer friends and family with incentives. Ideas include “Bring a Buddy” week, referral contests, or simply batch-asking clients to introduce you to their friends.
- Content Marketing: Create valuable content such as blogs, videos, and newsletters to establish authority and connect with your audience.
The key here is consistency. None of these strategies will be a home run. They are more like singles and doubles. Over time, they will add up to produce lots of runs.
Sending one email that doesn’t produce new clients is not proof that it doesn’t work.
Mail out consistently for a year and watch what happens! Spending a few hours per week on marketing but doing it consistently trumps massive sprints with breaks in marketing. The marketplace needs to see you regularly so you stay “top of mind.”
One small group facility owner in Ohio named Chad doesn’t do anything fancy but keeps his pipeline full with consistent newsletter content and organic social while periodically sprinkling in FB ads. He’s seen consistent growth over the last 14 years. What’s his secret? He does common things uncommonly well.
The gym business is simple. We make it complicated.
Paying attention to your business budget, diversifying our revenue streams, and prioritizing sales and marketing will put you ahead of 90% of the competition. It takes time but the result will be a solid business that pays you like the professional you are!
Action step: Choose one of these areas and take the next step. It might be preparing your first budget, offering an additional service option, or committing to a regular newsletter.
By mastering these three financial steps, you’ll not only ensure the longevity of your gym but also pave the way for unparalleled growth and success. Take control of your financial future today and watch your gym thrive beyond your wildest dreams. Remember, a financially fit gym is a successful gym.
