.jpeg)
In any gym, there are areas or departments that are traditionally seen as cost centers—areas that incur expenses without directly generating revenue. These departments, such as the front desk, child care, and group exercise programs, are vital for the gym’s operations but often weigh down profitability. However, with the right strategy and approach, these cost centers can be transformed into revenue-generating engines, helping to not only offset their operating expenses but also create new streams of profit.
This shift in mindset from seeing certain areas as mere support functions to viewing them as potential profit centers can revolutionize the way a gym operates. In this article, we will explore how independent gym owners can turn these cost centers into profit centers, with examples of specific strategies for each department.
The Concept: From Cost to Profit
Typically, these departments require a monthly budget to cover operating expenses such as staff wages, supplies, and overhead. For example:
- Front Desk: $4,000 per month
- Child Care: $4,000 per month
- Group Exercise Program: $4,000 per month
Rather than relying solely on membership sales to cover these expenses, gym owners can empower department managers to generate revenue beyond their costs. If a department costs $4,000 a month to run and brings in $6,000, that’s a $2,000 profit. You can incentivize the managers by offering them a bonus—such as 50% of the profit over their cost—ensuring that the more revenue they generate, the more they benefit.
By shifting the focus from cost management to revenue generation, you not only reduce the burden on membership sales to fund the entire gym but also provide greater opportunities for your staff to stay motivated, improve performance, and remain loyal to the business.
Turning the Front Desk Into a Profit Center
The front desk is often viewed as a necessity—welcoming members, answering questions, and handling administrative tasks. However, with a strategic approach, the front desk can become much more than that. Here are some ways to generate additional revenue through the front desk:
1. Retail Sales
- Opportunity: Utilize the front desk as a hub for retail sales. Sell branded merchandise such as gym apparel, water bottles, and fitness accessories (e.g., resistance bands, yoga mats). These are impulse buys that members will pick up as they check in or out of the gym.
- Revenue Potential: Margins on retail items can be high, with markups of 100% or more. Train front desk staff to upsell products or create eye-catching displays that encourage purchases.
2. Supplement Sales
- Opportunity: Partner with supplement companies to offer protein powders, pre-workout drinks, and nutrition bars at the front desk. Supplements are a natural fit for gym members looking to enhance their fitness results.
- Revenue Potential: Offering popular supplements can increase revenue, particularly if you negotiate wholesale prices and earn a markup on sales. Front desk staff can be trained to make personalized recommendations based on member fitness goals.
3. Membership Upgrades and Add-Ons
- Opportunity: Equip front desk staff to actively sell membership upgrades, such as access to premium amenities (towel service, locker rental, VIP classes) or personal training packages.
- Revenue Potential: Many members may not be aware of these additional services unless prompted. If the front desk team is knowledgeable and enthusiastic about offering these add-ons, they can significantly increase the gym’s average revenue per member (ARPM).
4. Referral Program Incentives
- Opportunity: Implement a member referral program, where current members receive rewards for bringing in new members. The front desk can manage this program, promoting it to members when they check in or out.
- Revenue Potential: A well-executed referral program can bring in consistent new business with little advertising cost. Bonuses can be offered to the front desk staff based on how many referrals convert to memberships.
Turning Child Care Into a Profit Center
Child care is often viewed as an expense to provide convenience for members, but it can become a significant profit center with the right structure. Here are strategies to make it happen:
1. Premium Child Care Services
- Opportunity: Rather than offering basic babysitting, elevate the child care experience by incorporating structured activities such as arts and crafts, fitness games, and educational programs. Charge a premium for these enhanced services.
- Revenue Potential: Parents may be willing to pay extra for engaging and enriching activities for their children while they work out. Offering themed days or special events (e.g., “Kids’ Night Out” with movies and games) can also generate additional revenue.
2. Monthly Child Care Memberships
- Opportunity: Create a child care membership add-on where members pay a flat monthly fee for unlimited child care services.
- Revenue Potential: This provides a steady stream of income from families who frequently use the service. Offering a discounted rate for monthly subscribers versus pay-per-use can encourage long-term commitment and consistent revenue.
3. Non-Member Child Care
- Opportunity: Open your child care services to non-members, such as parents in the local community who may not be gym members but are looking for short-term care options. This could be particularly useful during peak hours or weekends.
- Revenue Potential: By offering child care to a broader audience, you expand your market beyond gym members, driving additional revenue. You can charge non-members a premium rate for access to these services.
Turning Group Exercise Programs Into a Profit Center
Group exercise classes are often included in the standard gym membership, but there are ways to generate additional revenue outside of regular memberships. Here’s how to turn this department into a thriving profit center:
1. Premium Classes
- Opportunity: Offer premium group exercise classes, such as small group personal training, specialty workshops (e.g., yoga retreats, boot camps), or masterclasses with guest instructors. These classes can be sold at an additional fee.
- Revenue Potential: Members may be willing to pay extra for specialized classes that offer a more personalized experience or unique benefits. These classes can also attract non-members, further expanding revenue opportunities.
2. Online Group Classes
- Opportunity: Create an online platform where members can access live-streamed or pre-recorded group classes. This adds value for members who can’t attend in person and opens the door to a wider, digital audience.
- Revenue Potential: Charge a monthly fee for access to the online platform or offer a pay-per-class model for non-members. Online classes are scalable, meaning you can reach an unlimited number of participants with minimal additional overhead.
3. Corporate Wellness Programs
- Opportunity: Partner with local businesses to offer group exercise classes as part of corporate wellness programs. These classes can be held on-site at the company or offered as a perk for employees who want to participate at your gym.
- Revenue Potential: Corporate partnerships can generate significant recurring revenue, as businesses often allocate budgets for employee wellness programs. You can also incentivize businesses to purchase group class packages or monthly memberships for their employees.
4. Private Group Classes for Special Events
- Opportunity: Offer private group classes for special events, such as birthday parties, bridal boot camps, or corporate team-building sessions. These can be customized and marketed as exclusive experiences.
- Revenue Potential: Special events often command premium pricing, as they offer a unique and personalized service. By offering themed classes or specialized formats, you can capitalize on occasions that require minimal ongoing effort but offer high returns.
Conclusion: Empower Your Staff to Drive Revenue
Transforming cost centers into profit centers is not only about generating additional revenue but also about empowering your staff. When you teach department managers to treat their areas like mini-businesses within your gym, it encourages them to take ownership of their results. By offering incentives like profit-sharing or bonuses based on the revenue they generate, you’ll not only cover operating costs but also improve staff retention and satisfaction.
The more you incentivize your team to take a proactive approach to revenue generation, the less burden there will be on membership sales alone to keep the business afloat. From the front desk to child care to group exercise programs, every department has the potential to contribute meaningfully to the bottom line of your gym. With creative thinking and the right systems in place, cost centers can evolve into thriving, profitable assets for your business. Contact Jim here.
Click here for gym owner or personal trainer insurance options. Custom Apparel with no inventory. Click here. Read this book if you want to grow your gym business.
If your fitness business is in need of a turnaround, a boost in sales, or a fresh marketing approach, we’re here to help. We offer a free initial consultation to discuss your specific situation and explore how our expertise can make a difference. Don’t hesitate to reach out to Jim Thomas at 214-629-7223 or find valuable insights on YouTube. Follow me on LinkedIn
An Outsourced CEO, Turnaround Expert and Author, Jim Thomas is the founder and president of FMC USA Inc., a management consulting, turnaround, financing and brokerage firm specializing in the leisure services industry. With more than 25 years of experience owning, operating and managing facilities of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully overcome obscurity, improve gym sales, build teamwork and market fitness programs and products. Visit his Web site or YouTube Channel.
No comments:
Post a Comment