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Have you ever been in a situation where you had no visibility on the profitability of your center? Been there done that 🙋‍♂️.

Profitability is what determines whether your center generates profits (or losses)

This is one of the most important criteria in assessing the value of your business; For example, for investors (to accelerate your growth), creditors (to finance acquisitions, equipment, purchase of a building), buyers or employees (your exit strategy). 

Until recently, I had to wait for interim financial statements (every 3 months) to know the situation of my center. And even worse, it was often a few months after the end of my fiscal year that I learned whether I was making a profit or a loss. 

The owner’s focus should be on maximizing the cash flow into the business. All efforts should be aligned with this focus. 

The real problem: not having this information in time will stop you from making the right decisions (such as purchasing equipment that will allow you to avoid paying too much tax), but also from correcting the situation or accelerating your marketing budget to improve the growth of your center.

Obviously, with the level of cash flow (the $ amount in your account) in the checking account, it can be relatively easy to see trends. However, with quarterly tax returns, payroll deductions (DAS) the situation can easily become very difficult to understand and also to predict, especially if you don’t have a budget forecast.

To grow your business, you need to have visibility on profitability indicators, as much as possible in the very short term.

Mon objectif: connaître la rentabilité du mois dernier, 15 jours max suivant sa fin.

What can this visibility look like?

Revenues by department* :

  • Functional training: 10 000 $
  • Private or semi-private training: 4 500 $
  • Fitness: 8 500 $
  • Boxing: 6 000 $
  • Yoga: 3 500 $
  • Health Bar (equipments, supplements, etc): 3 000 $

Total sales** : 35 500 $

* Having my revenues divided by department allows me to see how they are really performing. If I simply look at overall profitability, I could easily miss a large loss in one department that would be hidden by a small growth in all other departments. 

** To properly categorize my revenues by department, I use the FLiiP function which allows me to separate my income by department (By General Ledger account, in your settings / payments).

Spending by department* (Rent, salaries, other spending) :

  • Functional training: 7 000 $
  • Private or semi-private training: 2 500 $
  • Fitness: 6 500 $
  • Boxing: 4 000 $
  • Yoga: 4 500 $
  • Health Bar (equipments, supplements, etc): 2 300 $

Total spending** : 26 800 $

* To properly separate my revenues, I not only include salaries by department, but I also separate the Overhead. (Overhead refers to the ongoing costs of running a business, but excludes the direct costs associated with creating a product or service. In the case of a gym, the direct costs are the salaries of the employees who operate the group classes for example).

** To have the best proportion of cost per department, I assign a ratio proportional to the revenues. For example, if the sum of my non-variable expenses (rent, insurance, electricity, internet, telephone) totals $10,000/month and, for example, one department generates 30% of the company’s total revenues, it will therefore assume 30% of the overhead.

In short, a department that generates more revenue will assume more overhead

Profitability by department + total :

  • Functional training: + 3 000 $ (+5%) *
  • Private or semi-private training: + 2 000 $ (+X%) *
  • Fitness: + 2 000 $ (+X%) *
  • Boxing: + 2 000 $ (+X%) *
  • Yoga: – 1 000 $ (-7%) *
  • Health Bar (equipments, supplements, etc): + 700 $ (+X%) *

Total profits/loss: + 9 700 $ (+6%)

* In a perfect world, you have this dashboard built into your accounting solution (XERO for example, my favorite). You will be able to see the variations month after month, for example, +5% compared to last month. 

How can it help me in my daily life?

By knowing how each aspect is performing, I can first investigate the loss or underperformance. Being at a loss, I can try to figure out what caused the loss, then make a quick adjustment. 

For example, reduce my costs: maybe my classes are less busy? I could then readjust the number of classes offered, or plan marketing efforts to increase the number of clients, create introductory offers, etc.

Like mentioned earlier, the owner’s focus should be on what brings the most cash flow into the business. Why? Simply because, this is what allows you to reinvest in equipment, employee conditions (salaries, benefits) or simply to build a war chest for future projects.

What tools and resources do I use to get there?

A cloud accounting software

I suggest working with partners (accounting, bookkeeping) that work with the latest technology: cloud accounting software like QuickBooks, Xero (our favorite), Sage, Freshbooks.

By working with cloud software, you have all the latitude to go and get your reports autonomously, and you also have the advantage of being able to use tools that significantly facilitate and accelerate your time for bookkeeping.

A software that automatically interprets and integrates data

These softwares are able to interpret the amounts, dates, supplier names, and categorize them in your accounting software for you.

You just have to transfer your PDF invoices for example, to an email address. At FLiiP, we work with DEXT. Hubdoc is also excellent.

In short, the use of these 2 softwares allows you:

  • Autonomy and time saving to see the situation of your company;
  • Save a lot of time interpreting and classifying your invoices, but also by automatically linking them with the transactions in your bank account;
  • Avoid lost invoices (allows you to scan via a mobile app for example).

As these softwares are relatively new on the market, many accounting firms do not work with the latest technologies. I, myself, had to change my accounting partner in order to have access to this information.

The action plan to get there:

  1. Ask your partner if it is possible to migrate to a cloud accounting solution. If not, do some research to find an accountant who will work with this type of solution. I often try to have the most fixed costs possible, that’s why I ask for a fixed monthly billing (and not variable, so paid by the hour)
  2. Automate transfer rules (your invoices received by email are automatically transferred to your accounting system via DEXT or Hubdoc, to name a few)
  3. Organize your revenues and expenses by department so that you can follow the monthly progress. Using FLiiP’s General Ledger Account feature, when you export your sales on a monthly basis, you can easily separate sales by department.  
  4. Require monthly bookkeeping (maximum 1 month after the end of the month) so that you always stay up to date and have the information at the right time.  
  5. The last step is to plan your sales objectives and follow them weekly via your FLiiP Dashboard! 

sales-objectives

It took me 8 years to realize how having access to the information quickly that allowed me to make the best decisions at the right time was essential for the optimal growth of my business. 

It’s definitely a big change, one that takes time and sometimes costs a lot. If I had one piece of advice to give to all owners, but also to all entrepreneurs in 2021, it would be to surround yourself with the tools and resources of your generation. Accessible online, anytime, from anywhere!

The FLiiP business software is constantly evolving. A brand new feature now allows our clients to easily organize events and workshops. Yoga retreat? Weightlifting competition? Nutrition workshop? Anything is possible 🙂

The “Events and Workshops” feature allows you to manage the organization, promotion and marketing of your events within the software in just a few clicks.

Wondering why you should organize events and workshops in your studio or training center?

Here are our top 3 reasons!

 

Generate new revenue

Whether it’s with your current members or potential new clients, organizing events can create excitement and visibility for your studio or training center. People rarely come to an event alone, so encourage your members to invite their friends, and be ready to reap new revenue in record time!

 

Build customer loyalty

Offer your members a selection of events and workshops that will allow them to get together and deepen their practice. By offering your members preferential rates, you will enhance your relationship with them!

 

Save time and money

Organizing an event takes time out of an already busy day. Fortunately, event coordination and promotion has never been so easy and fast thanks to FLiiP! For example, your members will be able to register and pay for their tickets and even the software, add their guests, all without any manual management on your part.

 

Contact us to learn more about this new feature!

In addition to offering “a workout space to regain control of your health”, the Gym Le Vestiaire – Functional Training is committed to maintaining the community spirit that reigns at its two addresses (Boisbriand and Villeray districts in Montreal). With this mission in mind, Karim, its co-founder, had the idea of organizing Jungle Parties with Emmanuelle, the gym’s co-owner.

Through this interview, you’ll discover the benefits of organizing events at your studio or training center and some ideas to inspire your own events.

 

Would you like to share one of your best practices for engaging your members or boosting the growth of your studio or training center? Write to us at [email protected]!

 

Why do you organize events at Gym Le Vestiaire?

Our goal is to allow our members to gather in a safe way. To do so, we have set up an outdoor space where everyone can participate in the events while maintaining social distancing (2 meters apart) and without sharing equipment.

Through these events, we also wanted to rekindle the festive atmosphere that livened up our Gyms before COVID-19.

Finally, the Jungle Parties are a way for us to celebrate our members who are also business owners in different industry sectors.

 

How do you choose the partners you collaborate with for these events?

We most often try to collaborate with local businesses whose owners are members of our gyms. It’s a fun way for us to promote their great businesses and to continue developing strong ties within our community and neighborhood.

At our first Jungle Party, we collaborated with Simon, the owner of Paquebot Coffee and Zab Café Roaster. We celebrated the launch of his new Limo Coffee.

For our second Jungle Party, we worked with Erika, the owner of the cafe Saison Des Pluies, located 2 minutes away from our Villeray location where she is a member. Erika offered lunch boxes during the event.

 

Did the Jungle Parties help you acquire new customers?

These events gave us an opportunity to encourage referrals from gym members. Some guests came with their friends who were members of other gyms in the area. We certainly wouldn’t have had the chance to meet them without our events.

The Jungle Parties are also very beneficial for our Gym’s visibility, since they take place outside, with a nice atmosphere. Some passers-by have come to our Gym a few days later to try it out.

 

How did FLiiP help you save time in organizing events?

The ability to send automated and personalized messages was a huge help for event reminders to members who were registered.

We are now looking forward to testing the new Events and Workshops feature and to saving even more time in organizing our Jungle Parties!

As a studio or training center owner, you know that keeping track of some of your data is essential to driving the growth of your business. However, it’s not always easy to know which metrics (KPI) to focus on, how to understand cause-and-effect relationships between each of them, how often to analyze them, or when to compare them.

Which metrics are crucial to analyze to take your business to new heights?

1. Comparing your sales and your profitability year-over-year (Sales YoY)

Your revenue is probably the metric you track most regularly, but do you go further than just checking your sales total?

 

If you want to be sure that your growth is on track, you need to compare this amount to previous years*. We don’t recommend simply comparing your revenue to the previous year’s figure, because variations over the course of the year are normal and shouldn’t alarm you. On the other hand, if your revenue differs considerably from the same period of the previous year, you should deepen your analysis to understand where this difference comes from. For example, has your average revenue per member dropped significantly? 

You should also keep an eye on your revenue breakdown by department, as you may have strong growth in your memberships, but see a decrease in your professional service offerings, for example. It is therefore advisable to always analyze growth and profitability by department.

Furthermore, by establishing a growth trend in your revenue, you will be able to forecast your turnover for the next few years, and anticipate the investments and recruitments you need to keep your members happy and loyal.

Finally, we advise you to get into the habit of setting sales objectives at the beginning of each year to challenge yourself and your teams to reach revenue goals. Track your revenue to see whether you’re on target, and don’t hesitate to set up additional actions to boost your revenue if you notice that it is stagnating. Organize a friendly competition, offer a workshop, give your most loyal members a guest pass so they can share their experience with a friend…Get creative with your ideas!

2. Average Revenu Per User (ARPU)

Contrary to what you might think, the number of members in your studio or training center is not a metric that will help you determine whether or not your business is growing. Knowing the average amount spent per member will!

 

ARPU or Average Revenue Per User is a common metric used to monitor and compare your growth and success to your competitors. To calculate your Average Revenue Per User, you must first define a time period on which to base your calculation. ARPU is usually calculated on a monthly basis, so you simply divide your total monthly revenue by the number of members in that same period.

ARPU = Total revenue / Number of customers 

Calculating your ARPU will allow you to compare the value of your new members to the average of your existing members, but also to compare the value of your members for each of the memberships you offer. Your findings will then allow you to determine the entry-level offer to implement to generate maximum revenue, or help you re-evaluate some of your memberships that decrease your overall ARPU. For example, this calculation often reveals that the entry-level subscription should be abandoned because, although it generates a volume of customers, its ARPU well below the average.

In summary, calculating your ARPU will allow you to understand and monitor your company’s financial health.

Note: Calculating your average LEG, “Length of Engagement” will also help you monitor the health of your business. An increasing average LEG is certainly a guarantee of increasing member satisfaction and loyalty, two key elements for your studio’s growth.

3. Churn rate

Dreaded by all businesses operating on a subscription or monthly payment system, customer churn and non-renewal are inevitable. Keeping track of them, and monitoring your churn rate is a must.

 

Here is the formula to quickly calculate your churn rate, knowing that the industry average for studios and training centers is about 30% accumulated over the year:

Churn rate = (Number of members lost / total number of members before losing them) * 100 

So, a training studio with 300 members that loses 7 members in one month would have a churn rate of 2.3% for that month. If this rate remains stable throughout the year, the cumulative churn rate for the year would be 27.6%.

One of your main goals should be to get your churn rate down every month, and stay below the industry average of 30% cumulative per year, or about 2.5% per month. It is important to understand that if your studio or training center runs at 8% churn rate per month all year long, you will have renewed your entire client base in 1 year! This means that your ability to retain your members is weak or non-existent. However, the retention of your ideal customers is one of the key elements that determine the reduction of your costs and the growth of your company. Since acquiring new customers costs on average 5 times more than retaining your existing ones, lowering your churn rate by a few percent every month will have a real impact on your growth (in addition to the satisfaction of making more of your customers happy).

Example 1: A gym with 150 members and a churn rate of 5% + 10 new members per month = 168 customers at the end of the year, or $1600 in ADDITIONAL revenue every month if your monthly ARPU is $89.

Example 2: A gym with 150 members and a churn rate of 8% + 10 new members per month = 134 customers at the end of the year, or $1400 LESS revenue every month if your monthly ARPU is $89.

To reduce your churn rate as much as possible, you need to understand your members’ interests and goals so that you can offer them the maximum value. If you are concerned about your high churn rate, don’t hesitate to send a satisfaction survey to all of your active customers. It is also a good idea to ask members who have just left your training center why they decided to cancel their membership (you are authorized by law to contact them within 24 months of their cancellation).

 

4. Lifetime Value (LTV) et Acquisition Cost (CaC)

LTV is sometimes confused with ARPU. The difference is that LTV is calculated by dividing your ARPU (Average Revenue Per User) by your churn rate.

LTV = ARPU (Average Revenue Per User) / Churn rate 

Your members with the best LTV are those who consume the most of your services (e.g. an annual membership, sessions with a private coach, massage therapy services, and several event participations, for example), for the longest time (note: when the average lifespan of your clients is 2 years, these subscribers have been loyal to you for 3 years or more), or who have subscribed to your most expensive membership. These customers are ambassadors for your company. Don’t hesitate to offer them consistent companionship, invite them to your events and reward them when new members subscribe thanks to their referral.

In summary, calculating LTV allows you to understand and track the total average value of a particular customer. This information allows you to determine how much you are willing to pay to acquire your customers in general, and by channel, without jeopardizing your profitability.

 

Understanding and monitoring your acquisition cost per channel is a powerful lever to make your growth exponential and limit your losses! For example, calculate the CaC and LTV of clients who registered for an event, took advantage of a trial offer or were referred by other members to find out which channel is the most profitable and to implement strategies to accelerate it.


For example, if your acquisition cost is $100 for one of these channels, but the average LTV of your customers is $500, you are winning by $400 ahead (and even more so if you manage to improve the average LTV over time, for example by decreasing your churn rate).
In this example, your LTV/CAC ratio is 5. As a general rule to keep your acquisition model healthy, try to never go below a ratio of 3.

5. Your at-risk members (inactives, non-renewed or dissatisfied)

Your at-risk members are those whose attendance frequency is decreasing (inactive for more than 14 days), those who have not renewed their membership, and those who have left a neutral or negative review of your business on one of your networks or on surveys you sent them.

Note: FLiiP will soon offer surveys to send to your members after each of their experiences in your studio or training center.

Once you identify your at-risk members, we recommend that you schedule a call with a customer success resource.

For example, contact the people who have not been coming to your studio for over 2 weeks to find out why, as there could be many reasons! Once you have gathered your members’ feedback, offer them tailored solutions to make them feel special: for example, a session with a private coach for a loss of motivation.

Remember that retaining your existing members will always cost you less than attracting new ones.

In summary, your goal should be to reduce the number and percentage of your at-risk members as much as possible, and to implement winning strategies to communicate with them before it’s too late.

Keeping an eye on these 5 essential metrics will ensure that you have all the right cards in hand to boost your business growth.

Training center owners who use our complete dashboard have let us know how much of a game-changer it has been for their business! Contact us for a peek at the detailed real-time reports that FLiiP provides owners. We would love to accompany you in your daily business management!

 

*Your comparisons with last year could be distorted because of COVID. We advise you to compare your statistics against 2019.

COVID-19 (Coronavirus) – Take a proactive approach!

  1. COMMUNICATION APPROACH: be proactive and state the facts
  2. HYGIENE & HEALTH STRATEGY TO IMPLEMENT
  3. ZERO TOLERANCE POLICY
  4. PRIVATE TRAINING SERVICES
  5. TRADITIONAL GROUP & GYM COURSE SERVICES
  6. COMMUNICATION STRATEGY
  7. MONITORING THE EVOLUTION

In every business, the CEO’s role is to establish a strategic plan and be able to anticipate and prepare for potential threats. Whether it is with the potential arrival of new competitors, a change in the market or to ensure that we are well covered in the face of a potential disaster that could jeopardize our organization.

When you look at the Corona virus trend in the media and around the world, you can see that the phenomenon is growing. The most pragmatic will say that there are much more real problems or threats, but in reality what must be taken into account is the interpretation that our customers make of it, the reaction associated with it and the impact it can have on us. The debate is therefore not whether there is really a potential danger for us or our customers, but what is the perception of our customers, its potential impacts and how we should react.

We have all experienced a cold running at the gym, and we know that one of the places that can be favorable to contamination is in sports halls, daycare, crowds/shows, etc. We are already starting to see cancelled events & shows, sports matches given in front of empty amphitheatres, so we should not be surprised to expect to have an impact on our businesses in the field of health and wellness.

In Italy, it was announced this morning that people were allowed to go out to see their doctor, but they prohibited clients from going to practice their yoga. The risk is there for us, the owners. Should we panic, absolutely not. Not knowing how long the virus might last, we better prepare and have a plan of action.

This is why we have planned for you a high-level plan, recommendations that we can possibly define in more detail, for you, as the need arises.

1. COMMUNICATION APPROACH

The first approach to take is to remain calm and not increase the level of alert, but rather to reassure & inform the population as much as possible. We have an audience, it’s up to us to use it wisely.

We therefore advise you to share information, truthful statistics and to inform the population with facts if the need is felt, but also to inform customers about the measures put in place in order to demonstrate your proactive approach on the situation.

The goal is not to trivialize the threat, but to share facts and make it clear that our customers should not panic at this time, as the risk of infection in Canada remains very low.

  • Health Canada estimates that the risk for the population is LOW, except for people over the age of 65, immunocompromised or people with underlying medical conditions.
  • Number of deaths associated with Coronavirus: 3000 / Number of deaths associated with influenza: 20,000.
  • Coronavirus has killed up to 3,000 people so far, while obesity has killed more than 300,000 people a year.

It should be noted that the best you can do is continue to be as active on social media, share relevant content and ensure that your customers do not experience a drop in traffic in your centre. If they see that you are taking a proactive approach to the situation, it will reduce their fear.

2. HYGIENE & HEALTH STRATEGY TO IMPLEMENT

Knowing that the virus can be transmitted by respiratory droplets produced when an infected person coughs or sneezes, it is essential to implement hygienic procedures before and after each training.

  1. Each client should go through the changing rooms and wash their hands with soap for at least 20 seconds. Also a hand-washing procedure should be there. This should be repeated every time someone sneezes or coughs.
  2. Each client should disinfect all the equipment with which he will be or has been in contact (before and after training) as well as each of the traces of perspiration that he may have left.

* Very important to display this procedure very clearly and precisely as well as to transmit it before and after training by your team of trainers or instructors.

You should therefore immediately make available:

  • Disinfectant / Antiseptic and paper towels available for single use or towels also available for single use for before and after training.
  • Communicate the procedure to your customers.
  • Install posters to remind the procedure on each of the doors and accesses of your centre, as well as in the locker rooms.

3. ZERO TOLERANCE POLICY

One of the approaches you may need to take is to force your customers to stay at home if they have potential signs of contamination:

  • fever
  • cough or breathing difficulties

Your role is not to determine if one of your clients is carrying the virus, but rather to reduce the risk of infections in order to prevent in the interest of all.

Naturally, staying at home when you are sick should not be synonymous with stopping exercising your sport. We recommend that you provide free home workout programs for your customers.

4. PRIVATE TRAINING SERVICES

Although the risk is greatly reduced when you are not surrounded by a crowd, it may very well be that customers choose or see a threat in having to move to your centre.

Our potential solution track: Prepare to travel to offer private training at home to reduce the risk of exposure to your customers. Remember to mention that this is exceptional and will only be done in an emergency.

You could therefore prepare your trainers to plan training sessions with equipment that is easy to transport (elastic, dumbbell, kettlebell, TRX, medical ball, etc.)

Training sessions lasting for example one hour, taking place at home, could be reduced to 40 or 45 minutes in order to make up for the trainer’s travel time.

5. TRADITIONAL GROUP & GYM COURSE SERVICES

The three most interesting options to offer:

  1. Would be to offer group lessons at home. You could therefore prepare body weight training, offered by videoconference. The goal: not to lose contact between the coach and his clients
  2. Reduce the number of places per course so as to always keep a reasonably large distance in order to avoid contact. For example, offering more courses, with fewer people. Besides, you could supervise the training area of each client so as to respect a safe distance for your clients.
    The tools you could use to set up a structure by videoconference:

    • Zoom: Free tool in one-on-one, but paid to get several people simultaneously.
    • Google Hangouts: Free tools offered when you have the Google suite.
    • Anymeeting: Anymeeting is an online video conferencing and screen sharing solution, the free version of which can bring together up to 200 participants (who attend a presentation).
    • Join.me: The advantage of this online screen sharing tool is its ease of use: it is accessible without registration and free of charge, and allows to organize web conferences that can welcome up to 250 participants. The user only has to download an executable file, which allows him to obtain a URL where participants can join the conference.
  3. You could simply record training sessions with your trainers and film them and then make them available online on a private “YouTube” or “vimeo” channel to name only the main ones.

6. COMMUNICATION STRATEGY

Naturally, if we have to limit human contact with our customers, it becomes essential to maintain very close communication with our customers. Nothing better than personalized follow-ups by email, SMS or even via Messenger to ensure that our customers do not lose their good habits during this period.

The idea of creating a private group for your customers on Facebook, if you have not already done so, could certainly be considered.

These are certainly some possible solutions that should be considered. If you ever believe you have other solutions, it would be appropriate to communicate it to us so that we can share it with as many owners as possible.

7. MONITORING THE EVOLUTION

To follow all the news on the evolution of the coronavirus in Canada:

https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection.html

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