Giving your fitness business regular ‘performance reviews’ is the key to taking your success to the next level.
In part two of our DIY audit series I outline four quick sales and finance tips that can help to tell if you are hitting the mark or if there is room for improvement.
- Success Check 1:
- Do you know your numbers?
- It is a simple, but crucial rule of being money-savvy: know your income and your expenses, so you know exactly how much is coming in, and going out.
- You can use accounting software, but if you want to start off simply, have an Excel spreadsheet with your income and expenses, and look at how many clients you need, to have as a minimum, to cover your expenses.
- For example, your expenses are $500 a week, and you charge $20 per group training session with 10 clients.
- You would need at least three of those sessions to cover your expenses, and you will have $100 left over to cover any cash flow shortfalls.
- Success Check 2:
- Do you have a cash reserve?
- It is one thing ensuring your expenses are covered, but you also need ‘spare’ money set aside, in the event of any unexpected costs or cash flow shortfalls.
- It is advisable to have a separate account for ‘excess income’ which you do not touch; ideally a cash reserve of 10-20% of your annual turnover.
- This way, if you run short in your income vs expenses due to client cancellations or a quiet period, or say your treadmill breaks down and needs to be replaced, you have money to cover it.
- Success Check 3:
- Are you tracking your financial progress over time?
- As well as looking at your short-term progress (whether it be weekly, fortnightly, monthly, or all three), you want to analyse your long-term financial trajectory.
- If you compare your profits in say April 2018 with April 2017, you want to see an increase of at least 10%, every year.
- Over time, you may notice trends in your income; for example, sales of outdoor sessions may dip in winter.
- You can then work out a backup plan; for example, renting the local community hall (for indoor sessions) and/or selling online training programmes.
- Success Check 4:
- Are you selling with a long-term mindset?
- 10-class packs and the like are popular in the fitness industry, but ultimately, you want to shift clients on to a long-term membership model.
- For example, you might want to offer clients VIP one-on-one packages that run for 6/12 months, and bill them on a regular basis such as monthly.
- You may also want to offer them the option of a reduced rate if they pay for 6/12 month’s worth of sessions upfront.
- Not only does a direct debit or long-term membership model ensure regular, ongoing cash flow, it also means you are not having to continually resell 10-packs or chase clients for payment.
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