When You Decide To Turn A Donkey Into A Stallion - Progress Update 1

mazzle (63)in #life • 7 years ago

Hello Steemians! @mazzle here with another update on my progress in turning my business from mould to gold.

So this past weekend was all about identifying what opportunities I have immediately available to increase revenue in the short to medium term so that I can start generating a profit from my business within the next 3 months. You can read my first post on this topic here where I discuss my realisation that I don't feel that I can call myself a real entrepreneur as yet and why I feel this way. In my second post I discuss what keeps me motivated to work on my business even though my business is struggling to stay alive and, if you're still keen for more, take a look at my last post here where I discuss the key areas I have identified to reduce my business expenses and the work I need to do to fix any issues currently present in my business.

I should highlight that, with the business revenue at its current level, I am having to get incredibly creative to pay rent, wages and bills. I have already sold an investment property to keep the business going. This allowed me to reduce debt significantly however that debt reduction wasn't enough to bring the business into a profitable position. This should give you an idea about what lengths I am willing to go to in order to keep this business alive.

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So on to the task at hand! The job right now is to look at increasing existing revenue streams, introducing new revenue streams and restructuring internally to reduce costs. So what areas can we target for increasing revenue right now? This can be broken down into some key areas:

Boosting membership sales
Increasing revenue from existing clients
Introducing new services into the business to utilise quiet times in the gym
Increasing retail sales
Finding new ways to utilise space available in the gym

Membership Sales
Unsurprisingly, in a fitness centre, increasing membership sales is always the most obvious area to target for increased revenue. The main reason being, is that this is generally recurring revenue that the business can rely on for long term and sustainable growth.

We run promotions for memberships every month, and these follow the seasonal trends that you see in fitness businesses. Membership sales are quite seasonal, and November is a reasonable month for membership sales. So, other than targeting the current pain points (don't know what a pain point is? Read this), not much more can be done here other than making sure our marketing is effective and bringing in fresh leads. I check our marketing effectiveness every 2 - 3 days so I'm generally on top of making sure it's working OK.

The opportunity that I have is to draw more people from our cheap memberships, into our premium memberships.

The strategy I developed is to offer our entire active membership database an opportunity to purchase 6 month or 12 month memberships into our premium membership at a 20% or 30% discount respectively. I made this more enticing to my clients by limiting the offer to only the first 10 people to take it up. This means we could potentially increase our revenue for the month by up to $15,000.

The downside of this strategy is that, because people are buying a block of time in the gym, we won't see reoccurring monthly revenue from those people, and because it's available to clients who already have the premium membership, we'll see less money from those clients. The upside is that we see immediate return, and clients on cheaper memberships will increase their spend in the gym.

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I released this promotion 6 days ago, and so far, we've increased our revenue for the month by $5000. So this is quite positive and I expect we'll see more people take up this offer soon.

We also run regular referral campaigns which reward members for bringing new clients to the business or alternatively give our existing clients an incentive to pass on to their friends and family to encourage them to join the gym. Our existing referral campaign isn't going so well at the moment, and I think this has something to do with the type of reward on offer. I'll end this campaign soon if I don't see any gains here in the next week.

Increasing Revenue From Existing Clients
One strategy that many small fitness centres uses to lower their breakeven point, is to introduce ways that they can increase revenue from their current membership base. This strategy often works well in areas where the population has a high disposable income. Conveniently, this is the case for my gym.

There are a number of opportunities to increase our clients spend in the gym. We already do most of these in some shape or form, however there's a good opportunity to expand or really drive some of these items to make them a large part of what we do:

Weight Loss Challenges

I recently launched a weight loss challenge in the gym, which was quickly taken up by almost 40 clients. These challenges are a great way to get a quick boost in revenue, if run right. The current challenge that we are running will take clients through a closely guided diet and exercise regime over a 6 week period with the ultimate goal of seeing our clients make fantastic improvements in their health and fitness.

A well run weight loss challenge can cost a paying member anywhere from $100 to $500, depending on the level of services provided throughout the 6 week program. These are also great programs to advertise externally to bring in new clients to the business.

The challenge I am running right now won't bring in a large boost to income. I made an error when choosing a service provider, which ended up eating up too much of the profits. The positive side is that the people doing the challenge are very engaged in the program and are getting fantastic results. Which will get us some very positive reviews to use as part of future challenges that we run.

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Nutrition Consultation

An area that is getting more and more focus these days is utilising gyms for nutrition consultation in addition to purely focusing on exercise.

I have a very good nutritionist working in my business who is very under-utilised at the moment. There is a great opportunity here to market this service within the business as well as externally.

We have already seen a number of members pay for a series of consultations and see excellent results. We simply haven't made this service well known or advertised the service broadly within our local community.

One-on-One, Two-on-One, Three-On-One Personal Training

Personal training sessions have been big revenue earner for most gyms for a long time. Given that my gym is primarily a small group personal training facility, we haven't focused too strongly on growing the one to three-on-one personal training revenue stream in recent years.

One of the perks of driving this aspect of the business is that it not only increases business revenue, it also gives the personal trainers who work for me an opportunity to take home a nice commission on the sales they make as well.

The key issue here is that the trainers need to have enough time to take on personal training clients. Most of them have fairly busy schedules already, so I need to incentivise them to take on clients outside of their normal working hours as well as making sure they fill their normal working hours with as many clients as they can fit in.

Introducing New Services
People who use gyms, use them in very predictable ways. I have personally met almost every person that uses my gym. And of the people that I have met, I know the time of day that most of them use the gym. Gym users generally use the gym at 4 common times. Early morning, late morning, evening, and after 8pm.

This means that there are many hours throughout the day where the gym is incredibly quiet. The goal that I have had for some time now, is to introduce services into the quiet time-slots so that we can start generating revenue during these times. The ultimate goal is to have zero quiet times in the gym.

There are a number of services that can either be introduced or expanded on. For example, we already run programs for seniors (older members upwards of 65 years in age). However there is absolutely no reason why we shouldn't offer more for this demographic.

Services that could be introduced or expanded are:

Seniors sessions (additional time-slots to compliment existing sessions)
Kids sessions (7 - 9 year olds)
Sessions for early teens (and/ or tweens i.e. 10 - 12 year olds)
Midday 30 minute sessions for employees of local businesses (lunch break workouts)
Mums and bubs exercise or Pilates sessions
Recovering from injury - rehabilitation exercise programming

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There's also the potential to lease the gym floor to local fitness professionals to run their own exercise programs during quiet times. I'm not sure how this would work as yet, so this definitely needs further investigation.

As you can see though, there are a lot of opportunities here. Some have more potential than others however all need investigating.

Increasing Retail Sales
Right now, I don't sell much retail in the business. I have merchandise for the gym however I give this away to new members more than anything.

There's potential to sell a lot more than we do. Items like;

good quality gym towels
good quality water bottles
supplements (protein etc.)
exercise tools for use at home or while travelling (resistance bands and foam rollers for example)
wearable fitness tech
etc.

Offering a good selection of retail items has great potential to increase revenue into the business. The profit margin on these items is highly variable and the initial spend to acquire them can be high, however they are well worth getting into the business and branding with our logo and colours where possible.

One of the reasons why I love the retail side of the business is that I could eventually get into manufacturing my own line of fitness products. These items can then be sold on Amazon and to retail stores rather than just limiting my range for sale in my business.

Utilising "Dead" Space on Gym Floor
I met with a supermarket owner a while ago who taught me an incredibly valuable lesson. In retail, revenue is measured per square centimetre of floor space available. What this means is that, where the store owners identify a space that isn't earning a certain level of revenue, they modify how it is used until it reaches that revenue target.

I've recently started applying this concept to time in the gym however also need to apply it to the space in the gym. We definitely have space in the gym that is poorly utilised. The office and change room areas are very poorly utilised, and there is definite scope to demolish these areas and use the space for new and exciting exercise areas.

The entrance to the gym is also very poorly utilised, and new services could be introduced here. There's potential to redesign the entrance to allow for the installation of a juice and coffee bar for example.

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Of course, when you're talking about redesigning the gym lay-out, there's cost involved. So anything in this section is a mid-term plan rather than an immediate action item. There is a huge need for work to be done in this space though, and massive potential to improve our current offering to our members.

What do you think? Do you know of any additional services that I could offer to increase revenue in my business?

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