Equipment Purchasing in a Shaky Economy

As signs of recovery start to show in different sectors of the American economy, fitness facility and studio owners are still taking stock. Faced with tough economic times and an overall sluggish outlook, some owners, directors and managers are still putting off or scaling back on new equipment, leasing rather than buying, or purchasing used or remanufactured equipment instead of new. Here are some of their strategies and suggestions on how to make the most of what you have and what you can afford.

Scaling Back

Martine Dedek, instructor and owner of Studio Evolve, a Pilates and bodywork facility in Seattle, says that before the recession, purchasing decisions were based on need. Through the downturn, however, despite faring well and maintaining her regular clients, she has postponed all purchases and kept inventory stock lower than normal.

“A year and a half ago, I was thinking about adding another Pilates reformer to expand studio capacity,” she says. “However, I have seen a decline in new clients. Although I had hoped to see some growth in 2009, right now I don’t see a need to add more Pilates apparatus because we haven’t seen that growth. If it can wait, it will.”

Dedek’s sentiment was echoed by Amber O’Neal, owner of Café Physique, an Atlanta-based studio specializing in fitness and nutrition. “Historically, I’ve operated as though I’m vying for the ‘fitness dollar’ that potential clients are definitely going to spend,” she says. “Given this, I felt I had a competitive advantage when I introduced new or unique equipment.”

However, with the recent dent in the economy, she no longer believes this is the case. “Now, I’m fighting to convince potential clients that they need our services,” she says. “It’s no longer a matter of having better equipment than the guy next door. That isn’t going to make the difference when the ‘fitness dollar’ is gone.”

The recession forced some operators not only to cut back on equipment but also to delay service launches. Christopher Daly, co-owner of Kinespirit Studios in New York City, admits to scaling back on purchasing new equipment, mainly because he postponed plans to roll out new services. “We did think about replacing two of our older Gyrotonic® towers,” he says. “But as a way to save money, we have made a more concerted effort to service and maintain the two machines in order to keep them working up to our clients’ expectations.”

Adriana Medina, owner and certified personal trainer at Fuerte Fitness in Seattle, says she pulled back on purchasing because it was not a priority. She estimates that she spent approximately $4,300 on new equipment in 2008 and saved about $6,000 by eliminating purchases in 2009. “My personal training has slowed down a bit, so I don’t have as much money. My priority is getting my name out, more than [buying] equipment.”

However, some purchasing practices have not changed. Michele Rinaldi, owner of Rinaldi Pilates in New York City, who purchases an average of one to three pieces of new equipment per year, has not scaled back. “I have a boutique studio specializing in one-on-one private Pilates sessions, so I think it’s important to always have new and reliable equipment,” she says. “Minimizing the wear and tear on springs, mats and straps helps keep the quality of our sessions up.”

Buying Used

When Medina first opened her studio, she purchased 90% of her equipment at an auction. “Because I started this business by myself, I couldn’t afford to get new equipment,” she says. “[A] client told me about the auction a day before and I went. I purchased the majority of what I needed and put it into storage until I found a place to lease and construct my studio and space.”

O’Neal believes her clients don’t derive any additional benefit from having new equipment. “As soon as new equipment is in our studio for a month, it looks used anyway.”

However, purchasing used equipment is not an option for Greg Justice, owner of AYC Health & Fitness in Prairie Village, Kansas. “I’ve been in business nearly 24 years and have purchased used equipment only one time,” he says. “One of my clients bought an elliptical machine and decided she didn’t need it in her home, so I bought it from her. I really don’t have anything against used equipment, but it has never been part of my purchase strategy.”

Rinaldi agrees. “I am sure there are some great deals to be found out there,” she says. “However, in a practice where safety is one of the main priorities of a session, I believe it’s important to know that the equipment is new and reliable and can be serviced by the manufacturer if and when needed.”

A negative aspect about buying used equipment is that there is rarely a warranty or any recourse if it breaks or falls apart. Daly says he wouldn’t purchase used items because Pilates and Gyrotonic equipment needs special attention and care. “There is no CARFAX® for fitness equipment that you can check to set your mind at ease about its history. At the end of the day, you simply can’t have complete confidence.”

For owners of small studios or facilities who are interested in purchasing used equipment, O’Neal suggests looking on Craigslist to find a local seller in order to avoid shipping charges. She also recommends staying in touch with colleagues in the business to find out which gyms and training studios are going out of business.

“When appropriate, I approach management and ask about their plans for selling off their equipment. More often than not, they’re looking for any possible opportunity to unload these items at a great price, because otherwise they have to pay storage or just leave them behind,” she says.

To Lease or Not to Lease

When Daly first opened his studio, he says he investigated leasing equipment through his bank as a way to keep startup costs down. “We decided it was financially better to purchase the equipment outright in order to save on interest over the life of the equipment,” he says. “More recently, when we were considering expanding our Pilates services and offering new services, we looked for leasing options with equipment manufacturers as a way of [‘trying before buying’]. At the end of the day, we decided not to expand.”

While Daly has not yet executed a machine lease, he says he is vigorously investigating leasing options as a way to keep down costs for new equipment.

Some studio owners choose to lease other items. “I’ve never leased workout equipment, but I do lease our metabolic rate tester (BodyGem®),” says O’Neal. “I chose to go that route because purchasing one outright was too expensive. I wasn’t sure how often it would be used or if we’d even like it.”

However, this option is not for everyone. “I know the thinking behind leasing—lower payments and regularly getting new equipment—but it’s just not that important to me,” says Justice. “I would rather own my equipment. The truth is, you can have the newest, latest, shiniest equipment, but if your clients don’t enjoy training with you, they’ll find another trainer.”

“I have never leased equipment,” Rinaldi says. “It is just a personal choice. It’s the same reason why I personally try to never use credit cards. The cost for leased equipment is just higher in the long run.”

However, Dedek is leaving the door open. “I would consider it if it would bring new business to the studio. If it wouldn’t help in bringing new business to the studio, I wouldn’t do it.”

Before fitness facility owners jump into leasing equipment, Daly suggests they look to manufacturers to see if term options are available—specifically leasing that allows you to return the equipment after 6 or 9 months. This way you can test-drive new services without having to fully commit yourself financially.

Overall, when it comes to scaling back on equipment purchases, Justice urges owners to focus on quality and to keep current equipment well-maintained. “Many years ago, one of my clients told me, ‘Old is okay, as long as old is clean and well-maintained.’ That comment resonated with me. Don’t dwell on the economy, because if you do, you’ll start to buy into the mentality that the sky is falling. If you focus on your clients and fulfill their needs, you’ll be fine.”