The recession that began affecting the fitness industry in 2008 and causing the weakest period in our recent history cost the country more than 7 million jobs, and it is not clear that they will be re-created. Fitness facility owners and managers at for-profits or nonprofits all felt the effects. The real question is whether we learned any lessons from it.
The recession offered 15 lessons worth remembering:
- Focus on the club. Your club needs more attention than ever, and you must give detailed consideration to your plans, reading signals, making mid-course corrections, collecting key performance indicators and analyzing data.
- Differentiate. For what is your club known? Typically, club owners have trouble answering this question, but it is important to do so and to highlight these differences in all communications.
- Know your competition. Senior management needs to get out in the field to visit the competition. Define your competition using the widest terms, from commercial clubs to nonprofits, public facilities, corporate fitness centers, university fitness centers, studios, major residential fitness facilities, member-owned clubs, medical wellness centers, military rec centers, etc.
- Capitalize on your club’s strengths. No facility can serve all segments of the population well simultaneously. Identify your strengths and highlight these to your chosen marketplace.
- Save or cut costs. Embark on a team-wide commitment to save money beginning with the obvious major categories (payroll, utilities, supplies), then fixed costs (rent, loans and leases, business insurance, real estate taxes), behind-the-scenes expenses (EFT processing, alarm service, employee health insurance) and finally, the small items (garbage removal, business dues, medical supplies).
- Re-do your marketing function. Shift to more online search, website selling, outreach events in the community, more targeted member referral techniques to previous referrers and smarter communication to former members rather than just a dollar-deal offer.
- Conduct research. Performing specific market research starts by collecting data on the 100 most recent joiners and doing member surveys conducted by professional research firms.
- Study key club metrics. Do this for the club overall and then study specifics for each department. Make someone responsible for driving these metrics and then reward him or her for achieving the set metrics.
- Firm up third-party relationships. Doing so can help with sales, costs and financing. This involves having communication and alliances with the club’s landlord, bank, Small Business Administration, vendors, various retailers and community associations.
- Plan for tomorrow. Leaders can become too tactical and myopic. You need to construct detailed 12-month operating budgets, but you also need capital budgets, big-picture member service initiatives and commitments to such investment areas as staff development.
- Amass available capital. Plan for your future capital needs and determine how to amass financial resources to further the club’s points of differentiation and compete effectively in the future.
- Review and improve the sales process and key sales results. This may include better systems for training, staff and compensation.
- Increase revenue per member. You may need to create or re-package programs and services, then systematically encourage members to participate.
- Review the physical aspects of the facility. Spaces may need to be shared or converted to achieve greater revenue per square foot. Collect data hour by hour to truly assess the situation.
- Review your staffing system. This means hiring, training and performance reviews. Institute any required systems.
This recessionary period has given fitness facility leaders an opportunity to examine their clubs in all areas and gain some insights. My hope is that they have become lessons for the future.
Rick Caro is president of Management Vision Inc., a consulting company that serves the club industry. The company focuses on market analyses, valuations, member surveys, club finances, expert witness testimony and operational analyses.