How to Outsmart a Tough Market

In a time of sweeping global change and a shifting economic climate, fitness professionals around the world are gauging the potential impact on their careers and businesses and adapting to stay on track. We asked fitness pros to tell us about the extent of the economy’s
effect on them, and what they are doing to meet the challenge.

Optimism and Opportunity

Times are tough. Or are they? For fitness professionals, the answer is mixed. Caution is the prevailing theme as instructors, trainers and business owners focus on cutting costs and adding value for clients. But many fitness pros are also notably optimistic, viewing economic uncertainty as a catalyst for creativity, innovation and positive change.

Having a healthy attitude about the economy is part of the nature of the fitness profession, says IDEA co-founder Peter Davis. “IDEA members are passionate about inspiring health and wellness. They don’t just carry the message—they are the message. They are role models for positive thinking and healthy living, even when times are challenging. That’s the strength of our industry, and that’s why we’re optimistic about the future—we don’t see obstacles; we see opportunity.”

Historically, the fitness industry has weathered economic ups and downs reasonably well. “Fitness clubs have been fairly resilient during recessions” says Joe Moore, president and chief executive officer (CEO) of the International Health, Racquet & Sportsclub Association (IHRSA). “We’ve been tracking that for 25 years, and we do okay. One of the reasons seems to be that people may put off major purchases, such as big vacations, but they look at fitness services as a great value. We’re not hearing about substantial sales drops, but we are seeing cost reduction in general. Club operators are trying to be frugal, particularly in areas that do not impact the services they offer.”

In January, IHRSA reported that the health club industry saw moderate increases of 3.8% in membership dues and 1.5% in total membership accounts from the third quarter of 2007 to the third quarter of 2008. The U.S. Department of Labor has also reported that the fitness industry continues to grow, with employment expected to increase a healthy 27% through 2016.

Although there have not been significant indicators that the industry as a whole is suffering, most fitness professionals report some experience with challenges related to the economy. “When things were tight in the ’80s, the enrollment numbers didn’t change too much, because people exercise when they’re stressed. Maybe we’re a little like the liquor industry that way—we can hold our own even in harder times,” laughs Chuck Wolf, MS, director of Human Motion Associates in Orlando, Florida. “However, some of my clients are very stressed. Some have lost their jobs. In some cases I’ve said, let’s keep working together because I think things will get better—pay what you can and we’ll just keep a tab.”

Presenter and educator Jay Blahnik, 1996 IDEA Fitness Instructor of the Year, BOSU® senior education consultant and program developer, master trainer for Schwinn® indoor cycling and an advisory board member for the Nautilus Institute™, has found that uncertainty about the economy has made clients more budget-conscious. “In my business, it feels like I’ve been busier than ever. But clients are more sensitive about fees and costs. Instead of just accepting bids, they want to negotiate. I try not to lower my fees, but I do more work for the same amount of money so they can save costs by not having to hire someone else.”

Blahnik says that creative ideas can often overcome fiscal limitations. “I’ll show clients how they can do a project in a smaller, more budget-friendly way, and they appreciate that you are interested in keeping costs low. I take Pilates, and my instructor even came up with a creative solution to cut my costs. She suggested I double up my sessions with another student who also travels frequently. She introduced us and masterminded the whole thing. Now we share the appointment time, and it’s very economical for everyone.”

Mindy Terry, founder and president of Creative Spa Concepts in Kennesaw, Georgia, notes that spa development has slowed down, with some expansion timelines extended and the scope of some projects decreased. But Terry doesn’t view this as a negative trend for the future. “I think economic challenges offer a great opportunity for businesses to improve quality and make their services more affordable. We have always believed in the philosophy of ‘underpromise, overdeliver.’ So we give our clients helpful resources, or assist with work outside of the contract—for which we are not compensated. In the long run, the establishment of client loyalty and trust is well worth a few extra hours of work. We’ve also brought on some new consultants and are using this time for comprehensive training and education. You will never go wrong by investing in your team.”

For Helen Vanderburg, recipient of the 2005 IDEA Fitness Instructor and 1996 IDEA Program Director of the Year awards, and founder of Heavens Fitness in Calgary, Alberta, the economy presents a welcome challenge to be more innovative and fiscally responsible. “Crisis forces us to move out of our comfort zone. It’s an opportunity to grow my company. The economic downturn has not affected my business, and I don’t expect it to in the future, because our focus is on providing high-quality service. Our business plan is based on maintaining a smaller group of highly committed individuals rather than on volume sales. Overall we are looking at how we can run every department in our company more efficiently. For example, our personal training department is offering more small-group training programs with Gravity and TRX to decrease the cost of personal training. In group exercise we have decreased our drop-in class schedule slightly and added more paid, registered programs with short-term, 5- to 6-week commitments.”

Nicki Anderson, 2008 IDEA Personal Trainer of the Year and ower and president of Reality Fitness Inc., in Naperville, Illinois, agrees: “I am cautiously optimistic. There is so much doom and gloom on the news, and much of it is real. But I think that you need to remain as positive as you can and realize that what goes up must come down, and vice versa. After the tragedy on September 11, I lost about 60% of my client base—they all worked nearby at a company that was closed after the attack. So I decided to create a weight management program, and that’s what turned my business around. Surviving a tough market just means finding new ways to be competitive, such as offering better customer service, new classes, unique programming or creative pricing.”

A Global Experience

Phillip Mills is co-founder of Les Mills, International, the New Zealand–based fitness club business with 45,000 members in that country and group fitness programs in 12,000 clubs around the world. “I’m hearing similar things from people all over the world. The impact of the economy depends on the circumstances of each business. Some clubs are having a tough time, but it’s often a result of competition as much as the economy. Some companies are getting caught in financing problems, often because they weren’t well prepared. Generally, I’ve found that well-run businesses don’t suffer too much. We have been in business for over 40 years, and we’ve made it through a few economic recessions. In fact, we’ve made some great market-share gains during periods of recession, such as in the late ’80s.”

Mills adds that sound fiscal management is essential for facing economic uncertainty. “Because it’s tough to get financing, we’ve had to run a really efficient business and maximize the return on anything we’ve done, to be sure we could pay for any large expenditures and maintain loan repayment schedules. This has made us focus much harder on innovating.”

He notes that his business has experienced some decline in personal training. “We had 90 full-time personal trainers at our Auckland club a year ago; now we have 80, and we are down about 15% on revenues in that area across all of our New Zealand clubs. However, our group exercise attendance is at record levels. The Auckland club had an all-time-high group exercise attendance level of over 9,000 in 1 week in November, with peak classes of above 200 people. People are gravitating a bit to more affordable activities, but that doesn’t mean we can cut back too much on our personal training services, because it’s an area that is still underdeveloped in many clubs.”

Darren Jacobson is the driving force behind the franchise personal training concept for Virgin Active South Africa. He oversees more than 80 health clubs and over 550 personal trainers. “Feedback from trainers across the board has been that clients are being far more selective in terms of their disposable income. Trainers have noticed a number of clients cutting back on sessions per week or evolving to 30-minute or group sessions as an alternative.”

“The economic downturn has had a limited effect on my business,” says Carrie Ekins, MA, creator of Drums Alive^® and CEO of Global Wellness, a fitness and wellness consulting company in Germany. “I have noticed a decrease in orders, and payments from invoices have sometimes been delayed. But I firmly believe that if you have something someone wants, you will continue to have good business, whether you’re in the fashion, food or fitness industry. You just have to develop that ‘something special’ that makes you unique.”

Cutting Back, Adding Value

While cost management seems to be the most popular response to fiscal uncertainty, slashing budgets too severely is not the solution. “You don’t want to contract your services,” says Mills. “It’s better to work on improvements and make your facility a more fun place to be, because members will appreciate it now more than ever. And for morale, your staff needs to know that they are the last thing you’ll sacrifice. Cutting back on your basic business offering is suicide. It’s a self-fulfilling prophecy.”

Wolf also cautions against making marketing cuts that are too deep. “When things get tight, we think we should cut back on advertising and promotion, but that’s not necessarily the best thing to do.”

Lisa Druxman, MA, 2007 IDEA Program Director of the Year and owner and founder of Stroller Strides^®, says, “We are watching our spending on everything from office supplies to meals at meetings. But we are increasing spending in marketing and advertising to generate more sales. We have also always believed in grass-roots, viral marketing, which luckily doesn’t cost money. We have hired a full-time marketing director, and we’re focusing on online marketing and social media sites.”

Bob Esquerre, MA, an educator and personal trainer who has been named one of the top 10 fitness directors in the United States, encourages increasing value rather than decreasing fees. “Fitness professionals all around me have let the recession control their destiny instead of using it to create diversity in their businesses. Their first response was panic: ‘I’m going to lose my clients because they cannot afford to pay my fees, which are too high!’ Then they cut their prices.”

Esquerrre’s response has been different. “I raised my prices after I reinforced the value proposition for my programs, and then I created other service options that are both different and valuable. For example, instead of offering only 1-hour training
programs, I offer both 30-minute and 60-minute, fee-based small-group training programs.”

Maintaining sufficient operating capital is another essential for surviving economic shifts. “You need to learn the lesson that you must have a financial cushion to keep you intact for at least 6 months,” says business development expert Jeff Bensky, PhD, MA. “It’s a very basic guideline that you hear all the time—but it does really help alleviate stress in times like these.”

Bensky adds that his businesses have been through some “major roller-coaster rides” in the last 30 years. “Each time, I was able to move forward instead of worrying about the future. I focused on building new relationships and maintaining or improving current relationships. Sounds simple, and it is. In fact, two of my best years in business—and personally—took place right in the middle of ‘economic downturns.’”

Mills believes that now more than ever it’s important for fitness and wellness businesses to invest, innovate, and keep services new and fresh. “Our industry is very young, and there are still so many ways we can improve what we do, both at micro and macro levels. We can’t let our businesses get run down because of economic challenges. That will just cause attrition and open us up to competition. Instead, we need to see the healthy, beneficial aspects of challenging economic times. For example, people who have been obsessed with materialistic things get back to more important stuff like their health and their social relationships. That’s not a bad thing. If I were to give clients advice about the economy, it would be that every cloud has a silver lining.”