Cash Flow

Cash Flow:  a measure of an organizations liquidity that usually consists of net income after taxes that usually provides solvency.   

Happy Holidays everyone.  Today I want to discuss the lack of cash flow in the fitness industry and how it directly relates the ultimate success of your fitness business, and how the next 7 months will be the most important in the life of your club.

I’m going to go out on a limb and say that for the most part you feel that your business is not doing as well as it could be.  Furthermore, it’s doing worse right now then it has in the past.  And lastly you don’t have a concrete plan in place to offset this pattern.

The fitness industry has for the most part enjoyed uninterrupted growth for the last 10 years.  The number of clubs has quadrupled and our industry went from a million dollar industry to a multibillion dollar goliath almost overnight.  We managed to do all this with almost no growing pains…until now.  Like it or not the industry is changing, there is more competition, consumers are more informed and prices are being compromised by low cost business models.  Yet business owners in some cases are not a wear of the changing climate in our industry.  Why should you be?  You have been eyeball deep in running your business.  It’s our jobs to bring this to your attention.

Cash flow is perhaps the most important factor in creating a profitable business.  The problem is if you don’t have it how do you build it?  That is the million dollar question.  In other words, how do you make money if you have no money to spend? ….remember it takes money to make money.  This is where the dilemma ultimately lies and it is a BIG, BIG problem for 8 out of 10 clubs across the country.  Believe me you’re not the only one in this situation.

Low and no cost methods like the ones outlines in our free book Guerilla Marketing for Health Clubs (visit www.gymmarketing.com/resources.php) is a good starting place but ultimately you will need a comprehensive and sometimes higher dollar value marketing approach to achieve maximum impact. This is when the promotion question must be answered; to promote or not to promote? 

Over the next 7-8 months I predict a shake out of the health club industry.  The clubs who do not stay ahead of the curve and build membership via aggressive marketing and promotions will unfortunately fail.  Incentive and priced based marketing methods are WORKING!  As a business owner you must be open to the idea that the market place is changing and that an overall change in your business model might be necessary for survival.  Restructuring is going to be the magic word.  The businesses who embrace change and exploit will come out of this recession more profitable than ever. 

The approach will be different for every circumstance.  Membership prices and amenities, personal training methods, and other profit centers may need to be adjusted to achieve maximum profitability.  Now Vitality can’t do it for you but we can certainly help.  Fill out our club profile at www.gymmarketing.com and I will evaluate your position for FREE, give you tips and outline possible options, including no cost membership campaigns that might get you started on the right foot and free up your CASH FLOW.  Let’s get focused! 

Until next time…

Chris Batchelor

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