/, Gym Owner, How to/Back to Basics: How We Stopped Losing Money in Our 1st Month as Gym Owners

Back to Basics: How We Stopped Losing Money in Our 1st Month as Gym Owners

2018-07-05T18:40:09+00:00 June 1st, 2018|Business, Gym Owner, How to|0 Comments

I’m going to reveal a secret Lee and I haven’t mentioned before.

It has to do with how we became gym owners in the first place, ultimately leading us to create this venture, Almost Elite…

We never in a million years saw either of us becoming gym owners. Sure, we’re a couple of meatheads who like to get their sweat on, but we knew the difference between enjoying fitness and making a living out of it.

When presented with the opportunity to purchase this gym, though, what solidified the deal for us was that it was a steal.

That being said, there was a reason it was so affordable: the business wasn’t turning a profit.

In fact, the gym owner at the time was still shelling out his savings to keep the gym open. The year before we took the business over, there was over $30,000 of capital invested! And up until the month before we took over, he transferred $150 to the business account to make sure the rent check wouldn’t bounce.

That was 2.5 years after the gym opened.

As dismal as the prospect seemed, we figured: opportunities like this don’t happen everyday, but when they do, you have to see them for what can be and jump on them.

We took a leap, trusting that we would be able to turn this dying business into a profitable one (and maybe a personally fulfilling one at that).

Taking the leap on this gym was the best decision we ever made.

Since we purchased the gym, we didn’t have to put a dime of our own money into the gym. Additionally, we increased revenue by 20% in just the first month alone.

How did we do that?

Here’s what we did, starting from day one:

1. We cut expenses (in the right places).

First, we had to understand what was, at the bare minimum, crucial for the gym to run and grow. Recognizing that the most important things to running a gym were the coaches, programming, and keeping our business physically and legally open, we started to ask questions.

Why were we paying for a phone we never used?

Why were we paying one coach over $1000 and the only other coach $0?

Why were we putting tens of thousands of dollars of capital expenditure into the business, only to spend most of that on equipment and facility improvement projects that we didn’t really need?

We then eliminated or reduced our unnecessary expenses. Pretty simple budgeting tactic.

Here is what decreasing the wrong expenses accomplished:

We increased total revenue by 20% in the first month we took over.

We were able to afford the expenses we did deem important, which leads me to my next point…

2. We grew expenses (in the right places).

First, we evaluated what type of expenses would provide the most return, helping the gym to grow immediately.

One of those things was marketing. With a website almost 3 years old, we decided it was time for a revamp, to let the world (and Google) know we were a very current business. We were very careful with this plan, using the website design company’s payment plan option to stretch out these payments to make them affordable for on our tiny budget.

Here is what increasing the right expenses accomplished:

We increased the revenue from recurring memberships by 22% percent in the first two months with the fresh leads we were bringing into the gym.

3. We brought on a coaching staff, immediately.

With Lee and I both having full-time jobs, it was simply not feasible for us to coach any classes during the day. To even consider book-ending our work days by coaching both in the morning and in the evening would have been a recipe for emotional and mental disaster. We didn’t know much back then as far as balance went, but that much we knew not to do.

Lee, now being the default head coach, convinced 5 of our current members to get their certifications and become coaches at our gym.

We couldn’t afford much in the way of labor costs, but through membership bartering and paying anything else on top, we were able to bring on our first group of coaches.

Here is what bringing on coaches accomplished:

We kept the gym open.

We gave 5 other people an opportunity to have a purpose at the gym and an impression on the membership and culture.

We implemented a system (having other coaches) that was a sustainable move in the long run.

4. We stopped giving arbitrary discounts.

From non-military members being on steeply discounted military plans to some athletes working out for free in exchange for services they long stopped providing, the gym was losing so much money from discounts and for absolutely no good reason.

So we stopped giving arbitrary discounts.

We refused to offer discounts to new members as a way to encourage them to join our gym or to even stay.

And we even increased the membership prices for some people to even make their stay at the gym remotely worthwhile for us as new business owners.

I won’t lie, this was an incredibly tough period. Although, surprisingly, many people we had the “talk” with were gracious and understanding, it was uncomfortable and challenging to go against the cultural expectations that were set from the years before. We fortunately did not lose as many people as we anticipated, but we still did because of the change in culture and management we brought to the gym.

Here is what refusing to offer discounts accomplished:

We still made a lot of exceptions for people back then, but our refusal to give deep, arbitrary discounts to most of the membership helped us to keep a lot of the money we were owed month-to-month.

5. We answered all emails and phone calls promptly.

Boy, I love this one.

I remember finding myself amazed when we’d have people come into our gym, and they would tell us why they decided to check out our gym.

“You responded.”

When you’re years into the game, you might get responses such as, “Your reviews are incredible,” or “10 of my friends go here,” but especially when you’re still trying to make a name for yourself, the little things you do go a long way.

Customer service is not incredibly complex.

Consistency is a very underrated trait that will serve you well in life but especially in business. People want consistency and reliability.

Because there are so many misguided “flashes in the pan” in the small business realm, simply being consistent, reliable, and grounded will put you head and shoulders above a lot of your competition. It’s not the be all, end all, but it will absolutely help.

Here is what being prompt and responsive accomplished:

We got more leads to the gym, and we had a better shot at converting them because we made a good first impression on them. This ultimately helped us grow our membership in our earlier days of ownership.

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I run CrossFit Lobo with my boyfriend Lee in San Antonio, TX. Writing about my journey as a gym owner and entrepreneur helps me to: appreciate where I am today, gain objectivity on my past experience and future decisions, and hopefully provide others with some perspective.

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