Opening a Box - Part 10: Treat it Like a Business
This week we switch things up a bit and take a break from The Business Plan series of How to Open a Affiliate Gym to cover the importance of treating your affiliate as a real business. A common mistake many new affiliate and private gym owners make is that they treat their operations as a favorite pastime or hobby vs. a business. We all love WODs, but the money you will use to open your gym was either saved from many hours of hard work, borrowed from friends or family, or taken as a bank loan. Here are a few ways to treat your new gym like a business.
Think like an Entrepreneur: Dictionary.com has a great definition of the word: “a person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.”
Opening this gym probably means you have given up your day job and decided to become an entrepreneur. Congratulations! Becoming an entrepreneur means you have taken the leap toward success, but also understand the risks involved. The obvious risks are quitting your day job, using your savings/borrowing money and committing to a lease. So how do you think like an entrepreneur? An entrepreneur is always looking to achieve greatness and innovate. They are constantly looking for ways to improve their product, even if the business is already succeeding. They never become complacent. They are always looking for new ways to grow their business through: new marketing techniques, programming, customer service, retention, community & sales. If systems currently in place are not working, they come up with new ones until they find systems that work. It's always great to take a step back from your business and think of ideas. I assure you that your members will notice and appreciate the efforts.
Sales: Follow your business plan and setup a strategy beforehand. With a solid and well thought-out strategy you will be able to hit your membership and financial goals. Realize that your profit margin can be between 20% and 40%. Be aware of how deals can negatively impact your margins, and how every deal you cut (even as little as a $25 discount off monthly membership dues) could be cutting your profit margin in almost half. For every free patron you let train for free, you are taking floor from space for a potential paying member (we will talk later about free memberships). Consider other types of income streams such as retail, seminars, or competitions to increase sales. Realize that every t-shirt or drink that goes unaccounted for costs your money. Think outside the box and come up with ways to increase your sales.
Expenses: Expenses management is as important, if not more important than sales. You could have amazing sales, but if you don't keep a watchful eye on expenses, running your box could just be an expensive exercise.Keep track of your monthly expenses in either QuickBooks or using Excel. Look for ways to constantly decrease your expenses to increase your profit margin. One common mistake many owners make is that they attempt to teach all of the classes to save money. There needs to be a balance of teaching, building community, greeting, and selling potential members as they come in. A simple theory we follow is that for every dollar spent, there should be a financial gain. So if you spent a $1, the benefit should be at least equal to or greater than the dollar you spent. Don't waste money on items that will not grow or give back to your business. A few things we never hesitated to spend money on were: assistant coaches for our larger classes, community BBQ's, gym maintenance and new equipment. You are the CEO of your business, think before you spend.
Reports: Later in the series of blogs we will cover what reports are important to review. Treating your gym like a business requires you to actively look at reports. Create some basic dashboards and update them daily. These reports will bring awareness to areas where you’re doing well and areas that need improvement. Managers of any successful business review reports on a daily basis, so should you.
Treating your gym as a business is as important as executing your business plan. In doing so, you and your members will benefit. is about community and helping your members achieve goals that they once thought were impossible. You may see that careful attention to small details and enforcement of important personal rules will lead to you growing your own business bigger than you ever thought possible. Take the time to reflect upon your business and come up with strategies for improvement that will benefit your business to ensure longevity.