Pratt, KS, looks like a typical small American town. Brick-paved streets line the downtown area, and two large water towers stand as sentinels over town. Two-story homes with wide front porches grace the neighborhoods. But walk downtown, and you're likely to hear the grunts of a karate class emanating through the windows of a building on Third Street or the sounds of the latest hit song wafting from the second floor windows. Keith and Elaine Ray own the Star Martial Arts Health and Fitness Center on the first floor of the building, while Leon and Kristina Kaufman operate Bodies Elite Gym and Fitness upstairs.
Business is booming in Pratt, which has a population of 6,570 and is located in the south central part of Kansas. Pratt is the kind of small town where Kaufman is comfortable asking a member to watch his 11,000-square-foot club while he runs an errand.
“I trust them with it,” he says, noting that members even take phone messages for him. “I don't think you could do that in a larger community.”
Small towns, often derided as being behind the times in fashion, fads and fitness, have joined the rest of America in one trend they may wish they had left behind — obesity. In fact, rural America has surpassed the rest of the country when it comes to expanding waistlines and increasing obesity-related health risks.
It wasn't always so. Prior to 1980, obesity was more prevalent in large metropolitan areas than rural communities, according to a literature review titled “Nutrition and Overweight Concerns in Rural Areas.” While few current national studies are available on rural obesity, some state studies show that obesity is a growing problem not only for adults but also for children living in small towns (see sidebar on page 39).
The increasing obesity levels in rural areas means fitness centers are in demand in small-town America. Stepping up to the plate to serve these communities often are locals — some perhaps with little business or fitness background — who know the importance of fitness and who often run their small clubs not to become rich but instead to serve the communities in which they grew up.
Kaufman, who grew up near Kingman, KS, opened his first club in Kingman with an eye on Pratt, 32 miles to the west.
“I kept looking at the town and thinking someone was going to do something big over there, but no one did,” Kaufman says. His 5,000-square-foot Kingman facility had a good reputation and with his background in bodybuilding, he received requests to open a gym in Pratt.
Keith Ray is from Pratt, but his family moved away during high school. As an adult, he returned to the town of his childhood, opening the martial arts facility and working as a technology instructor at the local community college.
Four years ago, David Smith also came home again — at least home to his wife's hometown of Dothan, AL. The two bought an 11,000-square-foot facility, Paradise Fitness for Women, in the farming town of 61,000. They had been managing partners in three fitness facilities in larger towns in Texas and Florida before coming to Dothan to slow the pace of their lives and focus on helping people, Smith says.
Being the Hub
Locals as well as outsiders who open health clubs in a “hub town” — a small town that people from the smaller towns around it come to on a regular basis to do business — often achieve more success than those who start a business in an outlying rural community, says Bruce Carter, owner of Optimal Fitness Design Systems International, a business that has consulted with many small-town club owners. While metropolitan areas may pull members from just a few blocks' radius up to a 5-mile radius, clubs in smaller towns often pull from longer distances. People in small towns may drive 25 to 30 minutes to a health club, says Michael Scott Scudder, owner of MSS FitBiz Connection, an online consulting and training company.
The Rays pull students from as far away as Burlington, OK, a 70-mile drive. Some of the Kaufman's members drive 50 miles to work out at the facility. Energy Fitness in Paducah, KY (a town of 26,000), draws patrons from nearby Metropolis, IL, as well as other nearby communities.
“There are a lot of small towns that aren't well served by health clubs just across the river or down the road,” says Jeff James, who bought a Gold's Gym in 2001 and then dropped the Gold's licensing and opened Energy Fitness in 2003. “We have 20 to 30 percent of our members who are outside of a 10-mile radius.”
The 4,777 residents of New Boston, NH, were faced with a 40-minute drive to the nearest gym before Kim Messa opened the New Boston Health and Wellness Center in a refurnished 4,800-square-foot barn last September. Residents commute to work in the big city of Manchester, NH, and fairly affluent, 40-year-old moms make up most of New Boston Health and Wellness Center's membership.
“Typically, the male goes to work and mom is with the kids, and they don't have time to travel outside of town. They were so excited to be able to exercise and be close,” Messa says.
But whether a hub or not, towns that draw from a population of 5,000 or less often find it difficult to be successful, Carter says.
“At some point you are too small, and there's not enough people,” he says.
Because of that limited population, successful small town clubs tend to be the ones that are something to everybody, meaning they have equipment for the 18-year-old lifter but they are warm and user friendly for the housewife.
However, some clubs in rural communities are challenging the one-for-all notion. Regina Courchine opened TrainerTown Personal Training Center in Wrentham, MA, in January 2004, but two years later moved to a larger space with more visibility in the town of Plainville, MA (population 7,926), and started offering more group training after learning that the cost of one-on-one personal training was a deterrent to many.
While TrainerTown's client list is usually comprised of 40- to 50-year-olds who are more established in their career and lifestyles, she hopes to “niche” into reaching more children.
“For us it's about being a smaller spot, and we're very good at getting people who don't want to belong to a traditional large gym,” she says.
Turning a Profit
Whether niched or not, an important factor in making money in a small town is to locate in one with a median household income of $50,000 or more, says Carter.
Plainville, with a median household income of $57,155 and New Boston, with a median household income of $66,020, fit that theory, but Dothan's median household income is just $35,000. Still, Smith has managed to carve out a living for himself in Dothan, which, admittedly, is on the larger side for a “small town.” He increased his club's revenues from $180,000 the first year of ownership to $567,000 in 2005 with a monthly average of $15,000 in personal training despite competition from six other fitness facilities and four church fitness centers.
However, Doug Mahlum, owner of Montana Athletic Club, has had his financial challenges in Bigfork, MT, where the median household income is $36,116.
In retrospect, Mahlum says he wouldn't have opened the Bigfork facility because of the tremendous effort to build the membership in this summer resort town of 1,400 year-round residents.
“I guess it's been good in one way because it's taught me how clubs run in smaller communities and what has to be done to make clubs successful in small communities,” Mahlum says.
Business smarts are definitely required.
“You have to be a smart business person in this industry or you won't make it,” Mahlum says. “This isn't the oil business or Wal-Mart. There are thin margins. I tell people, ‘If it doesn't make business sense, don't do it.’ If you build a business and it's not financially feasible or stable, you've ruined yourself, the business and created a bad taste in the community towards clubs.”
Building a successful health club in a small town can be capital intensive, Energy Fitness' James says.
“It's fairly challenging because just like any other business, it takes quite a while to build up the sales revenue and membership to start becoming profitable,” James says. “Once you get there, you have to work hard to stay that way.”
Another part of business ownership in a small town is taking care not to overbuild or to overspend on maintenance and salaries, says Scudder. Club owners who overbuild can find it difficult to maintain their facilities, which can cause them to lose members.
Some club owners are fortunate enough to have another revenue source, which helps them to invest in their clubs without getting in the hole. James works for a family-owned marine business, which allows him to raise enough capital to reinvest in his health club.
Cherrel Schwintek, owner of Curves franchises in Eldon, MO, and Versailles, MO, however, depends on her clubs as her only source of income.
“I will never be rich because I give a lot back,” says Schwintek, who applied for a loan from the Small Business Administration to start up the Curves in Missouri.
For many small town club owners who decide to reinvest in their fitness facilities, getting financing for a new club, an expansion or new equipment is as simple as calling their local banker, possibly a friend of theirs, and asking for some money.
“I can make a phone call to the bank and the president will get on the phone and talk to me,” says Smith. “The last loan, the money was in our account before we signed the papers.”
Mahlum recently completed an equipment expansion at the Bigfork club, and his financing came from a member — the president of the local bank.
“That's one of the advantages of being a small town,” Mahlum says. “The banker is probably a member of your facility and knows the operation that you run and will be more willing to take risks if he knows you run a good operation.
However, not all small town banks are so free with their money. It often depends on the history a club owner has with the business and the bank.
“The fitness industry doesn't have the best reputation when talking to bankers and lending institutions,” Kaufman says. “When I first opened my business and met my banker, he said, ‘I can't believe I'm making a loan on a gym. That's about as bad as a restaurant.’ [The industry has] a bit of that reputation.”
The industry in general also has a reputation for staff retention issues, and it's no different in a small town. Unfortunately, small towns have an even harder time filling vacant positions because of the limited number of people from which a rural area can draw.
“You can't just go out on any street corner and hire anybody,” Ray says.
Mahlum, who wears many hats at the Montana Athletic Club, says he is his own cheapest labor. While revenue has increased every year at the Bigfork club, the facility still doesn't earn enough for Mahlum to hire a manager. He says it's almost impossible to find and keep good employees, although he is happy with his staff.
“This is the Catch 22 — you find a good person and want to pay them, but you don't have enough members to increase their pay, and if you don't keep a good person, you won't be able to keep members,” Mahlum says.
Lack of qualified staff can sometimes hamper expansion. Kaufman has considered opening another club, but lack of qualified staff has prevented him from doing so thus far. He employs one full-time person and one part-time person in Kingman. In Pratt, he has one full-time person and three part-time people.
Word of Mouth
Hiring qualified employees is one of the challenges faced by health clubs in small towns, but marketing to draw in new members can prove to be even more of an obstacle. Newspapers may print only once a week and may go out to a broader area than a club owner wants to market.
While Kaufman has experimented with radio and is considering TV ads, he's concerned the cost is too great when only a small percentage of those listening are in his target area.
Mahlum, whose Bigfork club sits in a 75-mile wide by 60-mile long valley with three bigger towns, has found that radio advertising isn't targeted enough to Bigfork, so he spends most of his money on direct mail.
The Curves franchises in Eldon and Versailles, which were both founded before Curves International mandated that franchises locate in towns with more than 5,000 people, advertise in the town newspapers and print fliers. Curves also airs national ads on TV, which helps Schwintek with her local marketing efforts, she says.
At Energy Fitness, which is located in a 38,000-square-foot building with other tenants like a dermatology clinic, chiropractor and a restaurant, James spends between $5,000 to $8,000 a month for newspaper ads and air time. In a small town, club owners can get more bang for their marketing buck, he says. At the same time, Paducah has experienced minimal population growth, which makes it challenging to pull in new members. Several plant closings in the region have limited some members' disposable income.
“You have to work harder in a small town to get new traffic,” he says. “You're marketing to the same people over and over again.”
Despite the success of other forms of paid advertising, the best advertising is still free — word of mouth. In a small town everyone knows each other, are related or know a family member, Smith says.
“If you take care of someone, your positive word of mouth will travel, but if your service is bad, word of mouth will travel even faster,” he says.
That word of mouth is helped along when a club gets involved in community causes and activities. Mahlum's club participates in the town cleanup, Ray's martial arts school raises money for a charity that helps troubled youth and Smith's facility participates in health fairs.
“In a small town, your community involvement has to be ratcheted up to enormous levels,” Mahlum says. “In a small town, you get the tight-knit group, and if you become a part of that, they will support you.”
While it's not easy to be a small-town club owner, many derive satisfaction from simply being able to help people in their community and do their part to battle the rural obesity epidemic.
“In a larger market, you don't have the time to foster those relationships because it is so fast paced and volume is key,” Smith says. “When a member thanks you outside the club for what you were able to do for their grandmother or parent, it is a true blessing.”
Kaufman says owning the two small-town health clubs in Pratt and Kingman is a labor of love.
“This is something I love to do,” he says. “For the first seven years I put in 90 hours a week because I love doing it.”
That love of their communities and fitness helps rural club owners face the challenges — turning a profit, getting financing, attracting new members, marketing their health clubs, and hiring qualified and experienced employees. And in the end, they see the difference they make in their communities as they help to shape up rural America one town at a time.
A Big Fish in a Small Town
While not all small towns are alike, they often have more similarities that make for certain truisms. To operate in a small town, club owners should consider the following:
Locate your facility in a “hub” town. In many rural areas, several smaller towns feed into a larger town, which is the center of activity with several churches, a grocery store and some fast food restaurants. This is the type of small town a club owner wants to be in, says Bruce Carter, owner of Optimal Fitness Systems International.
Do the demographic homework. Towns of less than 5,000 people generally are not a good bet for a successful club, says Carter. In addition, the median household income should be $50,000.
Offer something for everybody and do not intimidate a part of the market. A facility in a large town can create a niche club, but a small-town club must appeal to everyone because there are fewer people from which to draw members.
Be careful what you spend when building/expanding. If you're operating a club in a small town, you may not have the income to pay for costly renovations or expansions.
Give good service. If you treat members like they're part of a big family and show that everyone cares about each other, it makes for a better atmosphere.
Include in your club a social area such as a juice bar or cafe. Doug Mahlum's 20,000-square-foot club in Bigfork, MT, has a juice bar that brings in more than just a small amount of extra revenue — it brings in members. “In Bigfork, we have several members who come in at 5 a.m. and drink coffee and talk to members and never work out, but they are members,” says Mahlum.
Rural Areas Show Higher Obesity Rates
Obesity is more common in rural areas than urban areas, according to a national literature review, “Nutrition and Overweight Concerns in Rural America.”
For adult men, the prevalence of obesity steadily increases with declines in population density. Obesity prevalence is lowest in large, central, metropolitan areas and highest in counties with no city greater than 10,000 residents (see chart below right). The highest prevalence of obesity for women is also in rural areas. In fact, rural white men and women are more likely to be overweight than their urban counterparts, even when controlling for demographics and other variables such as energy intake and expenditure.
When it comes to rural children, the research isn't conclusive on a national scale, and few recent studies have been published, but smaller statewide studies suggest that childhood obesity is higher in rural communities. When comparing sixth graders in two rural South Carolina counties to the national average, a researcher found that 49 percent of the sixth graders were obese compared to a national obesity average of 21 percent. Another study compared the obesity levels of 1,000 rural and 1,000 urban children in North Carolina and found that the odds of being obese were 50 percent higher for rural children.
How is this possible? Larry D. Hensley, professor of physical education and the coordinator of the University of Northern Iowa Cedar Falls, IA-based Physical Activity and Nutrition Among Rural Youth project, says that more research points to environmental factors as a significant influence on physical activity behaviors.
“The customary belief of high physical demands of rural life may be a thing of the past as mechanization and technology have significantly changed life in rural areas,” Hensley says. “Despite efforts to promote healthy eating, the traditional ‘meat and potatoes’ diet is still commonplace.”
Name: Pratt, KS
Number of Fitness Facilities: 2
Median Household Income: $33,646
Unemployed Rate: 3 percent
Interesting Fact: Years ago, teenagers spray painted “hot” and “cold” on the city's two water towers. The city council decided the idea was catchy, repainting the words permanently on the towers.
Name: Bigfork, MT
Number of Fitness Facilities: 2
Median Household Income: $36,116
Unemployed Rate: 4.4 percent
Interesting Fact: The summer resort town's population swells to 8,000 or more people during the summer.
Name: Plainville, MA
Population: 7,926 *
Number of Fitness Facilities: 1
Median Household Income: $57,155
Unemployed Rate: 3.6 percent
Interesting Fact: A strong supporter of youth athletics, the town is in the process of building a Field of Dreams complex to enhance recreation sports offerings.
Name: Eldon, MO
Number of Fitness Facilities: 2
Median Household Income: $27,103**
Unemployed Rate: 4.8 percent
Interesting Fact: Eldon, which has a state recreation area, is close to the Lake of the Ozarks, one of Missouri's largest lakes.
Name: Paducah, KY
Population: 25,545 *
Number of Fitness Facilities: 3
Median Household Income: $26,137
Unemployed Rate: 7.7 percent
Interesting Fact: Paducah is know as Quilt City USA for its Museum of American Quilter's Society, which educates visitors about the art, history and heritage of quilt making.
Name: New Boston, NH
Population: 4,777 *
Number of Fitness Facilities: 1 (unless you drive to larger neighboring towns)
Median Household Income: $66,020
Unemployed Rate: 2.5 percent
Interesting Fact: The Great Village Fire of May 11, 1887, destroyed nearly 40 buildings in the town as well as some permanent records, leaving gaps in New Boston's history.
Name: Dothan, Alabama
Population: 61,287 *
Number of Fitness Facilities: 11 (seven for-profits and four church facilities)
Median Household Income: $35,000
Unemployed Rate: 5.8 percent
Interesting Fact: Dothan's already exploding population grew even more when those affected by the hurricanes relocated there.
Note: *Estimated population from July 2004, based on changes in 2000 census population data
**Based on 2000 census data
Small-town club owners can visit these Web sites for more information.
United States Small Business Administration
Center for Rural Affairs
Internal Revenue Source
USDA Rural Development
Rural Policy Research Institute
Rural Information Center
Rural Assistance Center