Know Your Numbers - A Gym Owners Guide To Guaranteed Growth
Opening and operating a fitness business can feel like a gamble, as a lot of risk is involved.
Some weeks, your gym will grow; some weeks, it won't.
Being a gym owner can feel like a rollercoaster ride filled with many ups and downs, especially when we need more certainty about the business's growth.
So, how do we make successful gym ownership feel less like a gamble and more of a certainty?
Know your Numbers
Strategic Planning
Data Based Decision Making
As Personal Trainers, we expect our clients to track their calories, training volume and habits to help transform their bodies.
However, in my experience, most gym owners are guilty of not tracking their business metrics to help transform their gym.
Here are some of the numbers I teach my mentoring clients to track and the same numbers I would track, which helped me scale from 1 to 6 x private gym locations.
Current Revenue - Total Expenses + Profit Goal = Goal Revenue
How much money are you currently debiting each month?
What are your total monthly expenses?
How much profit would you like to be making?
This equation gives us a revenue goal to aim for when growing the business.
Gym owners want to grow but need to understand their current profit and loss or how much they would need to grow to reach their goals.
I start here with my mentoring clients, so we have a Starting Point and Dream Destination when working together.
Goal Revenue / Average Weekly Transaction = Member Goal
Now that we know how much money we want to generate in our gym, we need to calculate the number of members we need to attract to achieve that goal.
To help us understand this number, we need to know one crucial figure:
Average Weekly Transaction
That is the average weekly spend per customer in your gym. This is quickly calculated by dividing your revenue by your member number.
We can then divide our goal revenue by our average weekly transaction to set our member goal.
Churn Rate
We must understand a critical number before rushing out to find more clients to help achieve our goals.
How many members are leaving our gym each month?
This number may change as our gym grows, but it's good to understand the current figure to help plan our marketing spend.
Average Lifetime Value
By knowing how much a customer in our gym spends each week and how long they stay, we also know how much a new customer is worth to the business in total, which will also help us understand our total ROI on ad spend.
Marketing Spend
Now that we have a starting point, a goal, and the current number of members, we can set marketing KPIs to help us transform our gym.
Cost per lead = How much it costs us to get someone to enquire about joining our gym
Conversion Rate = How many leads we can turn into paying customers
= Cost Per Aquisition
For example
Let's say we are running Facebook ads to grow our gym and spending $1200 per month:
We generate 40 leads = $30 cost per lead
Of those leads, we close 15 sales = 37.5% conversion rate
Our cost to acquire a new customer will be = $80
For every $80 we spend, we get a new client
This figure can be improved by improving our lead cost or conversion rate…
Now Let's Grow Our Gym (Working Example)
Let's say we have 50 x members, and our goal is to get to 100, which will help us hit our profit goal of $100,000 annually.
We are losing, on average, 8 x members per month…
We want to hit our goal in the next 5 x months…
This means we must sign up 40 x members to cover our churn + another 50 x members
= 90 x total members to achieve our goal.
We break down our sign-up goal to 5 new members each week.
Our conversion rate is 25%, which means we need to generate 20 x leads each week through paid marketing.
Our budget is $30 per lead, so our weekly ad spend is $600.
We follow this plan for 20 x weeks, stick to our KPI's, tweak and pivot where required and mix with a dash of patience and...
We achieve our goal.
If I were working with a mentoring client, we would also work to improve these numbers to stack the odds in our favour:
Reduce client churn
Improve average weekly transaction
Increase client lifetime value
Improve conversion rate
Reduce lead cost
We would achieve the goal faster and save money.
Think of each metric as a volume dial that we can turn. If we crank each dial up or down, it impacts all the other numbers and the growth of our gym in a positive or negative fashion.
But to start with, we would use current numbers for a realistic overview.
As you can see, developing a plan - based on data to grow your gym eliminates guesswork and makes success more of a certainty and less of a gamble.
If you want to help to understand the numbers in your gym and develop a strategy to help you achieve your goals, reach out via the button below for a free Growth Session with me: