Health Club Financial Management
Reposted from www.abcfinancial.com
Create a Health Club Business Plan
As a health club operator, it is important to take the time create and continually update your health club business plan to guide your operation and to communicate value to your members and staff. Defining processes to support the successful implementation of the plan is also important.
How to Measure Health Club Success
Owning a successful health club gym requires a certain level of focus and dedication to the underlying statistics which drive revenue-focused business decisions. These metrics provide owners valuable insights to understand and identify trends, gauge satisfaction rates, and highlight problems as they emerge in order to enact swift resolution. Below are the crucial metrics and every club owner must understand:
1. Health Club Membership Retention
It costs on average 10 times more to gain a new member than to retain an existing one; this makes your current group of members the most important audience to please. You can track overall retention by measuring:
- Churn rate — the percentage of members who cancel their membership
- Average tenure of members — how long members stay members of your gym
- Estimated lifetime value of a member — how long that tenure is worth in dollar value
It can also be helpful for owners to track metrics which can help forecast retention, like a member satisfaction score. The most common way to measure member satisfaction is the “Net Promoter Score,” a metric which scores how likely your members are to refer friends to the facility. Tracking this metric over time can help you identify member churn events before they occur. For example, let’s say your facility had multiple equipment malfunctions and significant delays in getting repairs. You would likely see a significant drop in your Net Promoter Score which can indicate that members are at risk of cancelling.
2. Health Club Sales, Prospects & Pipeline
Prospects are the people who have called, emailed, filled out a form on your website, or entered into your gym to gather more information regarding membership. In order to forecast revenue correctly, it’s critical to have a keen eye focused on how many prospects make up your gym’s sales pipeline month-over-month, the dollar value of said pipeline, and what your average close rate is. Be sure to also track Prospect Status. This metric will tell you the results of your sales efforts by tracking the conversions of those who showed interest in your facility. Are they still a prospect? Have they converted to a Member? Or, did you mark them “Dead?”
Tracking revenue per member, membership usage, member churn, and average membership length will also provide you with valuable data. If you cannot measure If you are using gym management software, it, you cannot improve it. Setting realistic financial goals you can use this tool to manage your and tracking them monthly, weekly, and even daily will pipeline and set up automated email help you achieve a level of granularity that will expose outreach to increase membership sales. leaks in your revenue generation efforts.
Other Health Club Revenue Sources
- Personal Training — Personal training is often the second largest source of revenue for many health clubs and, in the case of many of today’s fitness concepts, it’s their primary source of revenue. Many club owners find it difficult to make personal training a priority or just don’t know exactly how to increase personal training revenue by getting more people to pay for one on one personal training services.
An Outsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully to overcome obscurity, improve sales, build teamwork and market fitness programs and products. In addition, his company will buy gym equipment from gyms liquidating or closing. Visit his Web site at:www.fmconsulting.netorwww.jimthomasondemand.com.
