Bigger Isn't Always Better
Most fitness professionals believe that the bigger the business, the more money they’ll make. More clients equals more profits and a bigger staff results in a bigger paycheck.
The reality is more staff, more clients and bigger business might result in more gross revenue – but it doesn’t necessarily equate to more profits.
You might find out that you can gross $30,000 in a month – and still not make any money after all the staff, landlords, advertisers, and insurance bills are paid. If you have a business running nicely with two full-time trainers and you add another full time -
with no other changes - everyone just has 1/3 fewer clients!
If you have a high profit studio running in 1000 square feet - and you add 2000 square feet to ‘grow’ - with no other changes - you know what happens? You have the same number of clients with three times the rent.
Make no mistake - everything else being the same - a higher gross revenue is better than a lower gross revenue - it's just that revenue doesn't equal profits and, size does not equal success.
Anytime you make a decision to increase your square footage, add a trainer, or upgrade your facilities - make sure you have all the steps in place to make sure that these changes effect not only the revenue but also effect the net. In fact, if you figure that bigger facility, more trainers, or new equipment will just add enough to your gross to pay for the extra expenses – don’t do it. Bigger is almost by definition - more complicated, risky, and difficult to manage.
Instead, focus on maximizing every asset you currently have. Try to earn more profit per square foot, per trainer and per client. Look for way to enhance the lifetime value of your clients and leverage you existing resources. Only after you’ve done everything you can with what you currently have should you consider expanding.
The reality is more staff, more clients and bigger business might result in more gross revenue – but it doesn’t necessarily equate to more profits.
You might find out that you can gross $30,000 in a month – and still not make any money after all the staff, landlords, advertisers, and insurance bills are paid. If you have a business running nicely with two full-time trainers and you add another full time -
with no other changes - everyone just has 1/3 fewer clients!
If you have a high profit studio running in 1000 square feet - and you add 2000 square feet to ‘grow’ - with no other changes - you know what happens? You have the same number of clients with three times the rent.
Make no mistake - everything else being the same - a higher gross revenue is better than a lower gross revenue - it's just that revenue doesn't equal profits and, size does not equal success.
Anytime you make a decision to increase your square footage, add a trainer, or upgrade your facilities - make sure you have all the steps in place to make sure that these changes effect not only the revenue but also effect the net. In fact, if you figure that bigger facility, more trainers, or new equipment will just add enough to your gross to pay for the extra expenses – don’t do it. Bigger is almost by definition - more complicated, risky, and difficult to manage.
Instead, focus on maximizing every asset you currently have. Try to earn more profit per square foot, per trainer and per client. Look for way to enhance the lifetime value of your clients and leverage you existing resources. Only after you’ve done everything you can with what you currently have should you consider expanding.
posted by Pat Rigsby at 5:24 AM
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