As a gym owner it feels like requests are always coming in: specifically, requests for you to spend more money.
Your clients’ wish list includes a yolk, a fleet of bikes, sandbags, a pegboard, and new rowing machines. Plus, two (very persistent) clients keep asking for a new 9am class. Meanwhile, coaches are putting the pressure on to be paid more, your landlord is threatening to raise your rent, and your silent partner wants you to buy him out for an unreasonable price.
It becomes difficult to know which requests to take seriously: Where should you spend and where should you be more frugal?
We spoke to experienced gym owners to discover the most wasteful expenditures, as well as the most beneficial.
1. Equipment, Equipment, Equipment
People like the idea of shiny, new equipment, so they’re always going to be on your case to buy the newest (often impractical) piece of equipment. Gym owners agree, don’t get suckered in!
If you’re predominantly a group class facility, it’s probably a waste to buy equipment you can’t use in those big classes, such as a glute ham developer (GHD). You’ll likely only buy one GHD and then it takes up space as a spot for water bottles anyway.
Other unnecessary equipment purchases include:
- Slam balls (medicine balls can usually be used instead)
- Jerk blocks
Learn more about purchasing equipment and planning your inventory here.
2. Classes and Payroll
If you pay your coaches by the hour, more classes means a bigger payroll. Both of these areas are places gyms overspend, owners say.
And even if having too many classes doesn’t cost you more money directly, it does cost you time—and as the saying goes: Time is money! And that saved time could be better spent working on other areas of the business.
To avoid spending too much time and money on coaching classes, gym owners suggest the following:
- Establish rules for adding or eliminating a class, such as reserving the right to cancel a class if the average attendance doesn’t have at least eight participants. Or, if you add a class, trial it out for one month, and if the first month doesn’t average eight people per class, discontinue it.
- Don’t add a class just because one person asks for it. Instead, wait until you receive consistent requests for a time slot before changing your schedule.
- Know that if people are showing up regularly, it means the schedule works for them. Just because a different time might work better for one member doesn’t mean you need to make a change.
Get more tips on planning a class schedule here.
3. Partnership Agreements Gone Bad
Too many gym owners admit they have lost money by buying out a partner.
There’s nothing wrong with having business partners. In fact, they may be necessary. However, it’s important to do your due diligence, both in selecting the right partners and having an airtight partnership agreement in place. Get legal assistance, and even a business coach, to help you draft the agreement.
Obviously rent is inevitable and largely depends on your market rates, which you have no control over. However, many gym owners make the mistake of setting up in a facility that’s way too big for their current and even future membership base.
On the other hand, as you expand you want to avoid moving three times in five years because moving is expensive, too. The key is finding the middle ground.
Best case scenario: you find a space where you have some room to grow, but not necessarily 10 years worth of growth.
We’ve covered the areas where you may be spending too much—now, let’s look at the areas where you should consider spending more money (or time).
5. Coach Development
Chances are you don’t want to be a one-man show forever, working 60-plus hours a week, and wearing all the hats. Ideally, you have full-time coaches you can trust—not just so the place doesn’t burn down if you go on vacation for two weeks. You’ll want to hire coaches who are revenue generators for the business and can earn a professional wage so they stick around long-term.
Training these types of coaches requires you to invest in them. This can be through your own mentorship and other times it might mean paying for or subsidizing relevant education programs, personal development courses, and sales training.
Business owners say this: When it comes to properly developing a coach, the saying “spend money to make money” rings true. Hiring the right people to work for your business will not be for nothing.
6. Business Education
If you don’t have a business background, it’s especially important to do your research and properly educate yourself on the ins and outs of running a business. For example, how else will you know if it’s better to become a C-Corp or an S-Corp?
Learning about business best practices will help you avoid costly mistakes down the road.
7. Client Retention
Clients are the lifeblood of your business. Retain them and the business is more profitable. Period.
But how exactly do you spend money on client retention?
Here’s a personal example: I have never had a client who has been to my place for dinner, quit on me via text. The point? Relationships matter when it comes to client retention, and this often means going above just teaching them movements in the gym.
Taking the time to invite a client for coffee or host a small dinner party for a handful of members goes a long way in relationship-building. These are also opportunities to head off any problems your clients may be having. For example, if a client’s commitment is waning, often you can get them back on track with a conversation over drinks rather than just sending them a text to come to your next 6am class.
Cost-free way to increase client retention: Formal consults with clients are another way to improve client experience and retention. Whether it’s monthly or quarterly, check in and see where your clients are at. In turn, you can actually build formal consults into memberships and charge more for the upgraded membership. Win win.
When all is said and done, it comes down to this: Investing in people is generally more valuable than investing in things (e.g. equipment). You can often make do with less, and what will really drive the business are your relationships with your clients and coaches. Put your money there.