We recently made a guest appearance over on a popular fitness podcast, The Fitness Business Podcast. If you haven’t tuned in yet, The Fitness Business Podcast discusses professional development for fitness business owners & managers, such as marketing, brand development, retention, customer service and more.
You can check out their podcast series here & the full podcast interview with The Fitness CPA, here.
I thought many of you would find the questions and answers useful so I’ve summarized the six best questions and recommendations in this post.
You can skip ahead to a particular question here:
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· Actionable tips for 2021 – How to budget after a down year
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· Biggest financial mistakes that businessares are making going into 2021
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· Biggest “wins” that fitness business owners can make going into the new year
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· What to look for when hiring an accountant
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· What makes some fitness businesses successful and others not
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· 3 Action items to boost profitability now
Let’s dive in.
What are actionable tips listeners can use to boost profitability going into 2021?
It’s a great question. This time of year I always take the time to sit down and think about my plans for the business next year. Rather than waiting until the New Year, I use November and December to make a plan that will act as a loose guide to get where I want the business to go next year.
What do I mean by plan? Essentially, we’re talking about making a budget. Look at how you’ve performed this year and figure out where you want to be in the future. From there, you can put bite-sized goals in place to reach those metrics.
With an abnormal year such as 2020, we recommend going back to 2019 and using that year as your baseline. If you have an accountant, they will be able to help with a baseline as well. Typically in the fitness industry, you might plan for a busy New Year but expect a lull after that. For 2021, most of us will be planning for a strong second half of the year and beyond.
A few questions to ask yourself include:
- · Do we need more cash?
- · Do we have excess cash?
- · What are we going to do with our loans?
- · Can we pivot if necessary?
- · What is Plan A?
- · What is Plan B?
It may seem nerdy but the crux of it is sitting down and asking yourself, “what do we think is going to happen?”
Hypothetically, if sales drop off in March and April next year, you’ll be able to look back at your budget and analyze whether the drop is in line with your budget, or whether you’re falling even farther behind. Consistently staying on track of your projections vs. actual results will see greater success in the long run.
And remember, we have to be flexible with budgets. They are simply an idea or projection of what you think might happen. It’s a starting point, not a manual. Use it the same way you would use a GPS in your car. Without a GPS, it may take a lot longer to get to your destination. Without a budget, you may find yourself in a sticky situation mid-way through next year.
What are some of the big mistakes fitness business owners are making?
Here are a few easy wins that I’ve seen fitness business owners pass up.
Firstly, there are programs out there that offer grant money or government money during this difficult time – take this help! If you’re struggling to pay rent, use our Rent Abatement Guide to negotiate abatement with your landlord. If you’re short on cash, seek out a loan from the SBA’s EIDL program and look for local and state grants to help businesses in need. Dig in deep to make it work.
Secondly, don’t cancel memberships without being asked. This is an easy one.
Lastly, don’t make big decisions without consulting an advisor. We’ve had a lot of new clients come to us who have made decisions that are difficult to reverse.
For instance, one client sent a letter to their landlord asking for help on rent with the ultimatum that they would need to close their business, even though they were never going to close the business. An advisor could’ve helped this client frame things in a context that would’ve played to their advantage, rather than strain the relationship further. Remember, we don’t want to mislead our stakeholders, landlords or members, during COVID-19 or otherwise.
What are the biggest wins a fitness business owner can make going into 2021?
Decide if you’re in or if you’re out.
The fitness industry is a tough industry and we don’t want people to be half in on their fitness business. It won’t end well.
If you’re on the fence, it may be a good time to reconsider whether the business is working. Is this business model for you? Is there an exit strategy?
We’ve spoken to a lot of owners lately who are unsure, and we’ve encouraged them to think about their options. We still have a long road ahead to get through and thrive post COVID-19 and there will be more bumps ahead.
On the other hand, if you’re in, you’re in. You need to work your rear end off and double down to make it work.
Be flexible and willing to pivot. What worked in the past for your fitness business may not work for you now. Ask yourself how you are going to make it work.
At the very beginning of the pandemic, we had fitness business owners jump straight into virtual sessions without hesitation. I don’t mean they threw up a few Zoom sessions. Rather, they set their instructors up with a home gym – professional cameras, audio, etc. – and went all in on a new business model. They worked with what they had and dug in to make it work.
We also had clients arrive early to the gym every morning to move their weights to the parking lot to adjust to COVID-19 health guidelines.
Additionally, we’ve seen gym owners move towards a private or semi-private model to make up for lost revenue. While it will be challenging to pivot entirely from high volume, class-based models, focusing more in the direction of semi-private or 1:1 sessions can help keep revenue steady.
In fact, we believe we will see a shift to smaller training, at a higher price point, across the industry in the near future. It might not make up for pre-COVID-19 revenue, but it will certainly plug a few holes in the bottom of the ship.
The key is to be flexible, be nimble. Don’t stay stuck in your old ways. Our clients who were profitable before COVID-19 have continued to be profitable even through this difficult time. Work with an advisor to cover your blind spots, and don’t be afraid to change direction.
How do fitness business owners go about finding the right accountant or advisor for their business?
I may go a bit over the top with my due diligence but I recommend talking to at least 2-3 references before signing on. Speaking to existing clients may confirm your biases, or give you more information that you weren’t aware of.
If you don’t know anyone who uses their services, Google and Facebook reviews are the second best place to look. They give an honest indication of what to expect.
In terms of what to look for in your first introduction, fit and feel are most important. You are looking for someone who you can have a relationship with for years to come. Can you talk to this person? Do you feel comfortable with them? Are they talking with you or at you? Are they talking over your head?
Look for someone who works with you in a collaborative way. Accountants who don’t work collaboratively are a red flag.
What factors go into a business surviving or surrendering to the pandemic?
We get this question a lot. Why does one franchisee do better than another? Why does one gym down the road bring in twice the revenue every month?
Is it the location? Is it the franchise? My answer is the same every time. It’s the fitness business owner.
The individual owner of each fitness studio has the ability to make the club work, and we’re seeing examples of this now more than ever. Club owners who were thriving before COVID-19 are generally adapting and changing their business model to find success in the current climate.
Gyms who were struggling pre-COVID are struggling even more now. The common denominator is almost always the fitness owner. It really comes down to the founder of the business.
We’ve found it takes two qualities in a fitness business owner to be successful: business acuity and passion. When we combine these two things, we see that owners make the difference time and time again.
Take a look at your strengths and weaknesses. If you’re less business savvy, be willing to bring in advisors who can plug the gaps for you. If you’re less passionate about the industry, bring in a team lead who can run operations on the ground with fresh ideas and vigor.
Work to your strengths and bring in people to complement your weaknesses. That’s what successful fitness business owners would do.
What are 3 action items to be successful in 2021?
1. Decide if you’re in or if you’re out. If you’re in, fight like hell to make it work.
2. Get your books up-to-date now. I’ve seen too many owners that are in need of loans, or wanting to expand who do not have the necessary financials to support those decisions. Organize your books now so you have complete transparency for important decisions in the future.
3. Hire an accountant in your corner to help coach you through difficult decisions. Accountants can also help you with point #2, but more importantly they will walk you through financial decisions and give you the unbiased advice you need.
There you have it – those are the top 6 questions we covered on the most recent episode of The Fitness Business Podcast.
You can listen to the full podcast here. We discuss a few things like transparency with stakeholders and dwindling competition that we didn’t cover here.
If you have a question we didn’t answer, you can submit your own question through our Get in Touch page.
In the meantime, you may find our COVID-19 guide helpful: How to Survive and Thrive Post COVID-19 As a Fitness Business Owner. You can download it for free, here.
Until next time!
Fitness is such a big part of who I am. Maintaining a healthy lifestyle, eating well (mostly paleo), hiking, backpacking, mountaineering, practicing yoga and Crossfit are all important cornerstones of life. But I love ice cream and cookies too much to say no!
I love helping owners make sense of their business and finding ways to grow it. It’s an honor to help you see situations, scenarios and opportunities from all sides so you can make informed decisions.
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