Business Articles

Every facility follows a business model, which impacts all costs, including salary levels. When looking at these figures, keep in mind how costs are associated with revenue. For example, it is simpler to associate the cost of a personal trainer with the revenue of a session fee than it is to associate the cost of a fitness instructor with the revenue of a membership fee, which allows access to an entire facility. These cost-revenue associations may impact compensation.

Each year business owners and managers in the fitness industry spend millions of dollars promoting their facilities and trying to sell memberships. Every form of media is utilized —television, radio, direct mail and so forth. And yet, when we ask those customers who do end up joining our clubs how they heard about us, the number one answer in my many years of experience remains the same: word of mouth. Here’s what I hear: “My sister is a member.” “My neighbor encouraged me to join.” “My friend at work brought me as a guest.”

In the last “Money” column (January 2001), I addressed what it takes to start a new fitness facility. As you may recall, I introduced “Mark,” a real-life entrepreneur who lives in “Smithville,” a fast-growing suburb on the U.S. East Coast. Despite my warnings, Mark opened a 10,000-square-foot club with $100,000 of his money and additional funds from investors. His competition was a slightly aging YMCA, a licensee of a popular fitness chain, an older racquets-based club and a small “ma and pa” operation.

Remember the last industry convention you attended?

Average hours worked and compensation for the industry were reported in the January 2001 issue of IDEA Health & Fitness Source. These charts break down those results into regions. When looking at the numbers, consider that the region includes big cities and suburban areas, as well as small towns.

There is nothing wrong with competing on price. However, if it’s not a part of your overall marketing strategy, then flirting with price concessions to win short-term business could indicate a dangerous trend for your business. Compete on value, rather than price. Use the following questions as springboards toward action.