by Rick Caro
No one can control the impact of the recession in a Gold’s Gym local market. It happens and we all feel the effect. In particular, over 7 million jobs were lost from 2007-2009 in the U.S., and they may not return. Even though the economists claim that technically the recession is officially over, most of the club industry does not yet see any uptick.
I believe that we should have learned some hard lessons from this recession and hopefully are now seeing a little of that light at the end of the tunnel. We all realize that new joiners are harder to attract, members are harder to retain, our Gym costs are likely to rise and capital is harder to access. All of this is true unless we do something about it.
The lessons I suggest we start with are a wake-up call for all owners to really focus on the club more than ever. Sideline businesses, hobbies and even non-profit volunteered activities may need to be overlooked or even discontinued. Leadership is the key and the owner simply has to be more involved.
The Gym needs to be more differentiated than ever to be able to justify its pricing and avoid being classified as a commodity susceptible to the incursion of high-volume, low-priced clubs. This also challenges the Gym to more intensively know its competition (as defined by a wide set of criteria) and stay on top of them more regularly.
Remembering the author/speaker, Marcus Buckingham, clubs need to determine their significant strengths and further capitalize on them before necessarily shoring up their weaknesses. Cost cutting needs to be addressed if EBITDA margins are to improve. There has been expense creep as revenue has trickled upwards.
The marketing function has to be re-done and higher marketing expenditures will be called for using those vehicles that are really working. More member and former member research is called for in 2011. Clubs need to identify their key metrics (daily, weekly, monthly) and study them in a timely fashion. Then, actions need to improve or correct them.
Up-dating (and maybe renegotiating) key third-party relationships is urged. This may include the Gym’s landlord, bank, key vendors, SBA, etc. Given the feeling of urgency and the pressure on daily and weekly decision-making, this has often led owners and GMs to ignore the planning process for all of 2011 and beyond. Capital expenditure planning, a “rainy day fund” and long-term thinking has often been a forgotten concept. Accessing needed capital then follows.
The sales process, sales team and results is an obvious target for more scrutiny. If attrition is still an issue, then more focus on increasing the revenue from each existing member is the challenge. Trying to maximize the value of each square foot of the physical area of the Gym is a necessary step for bottomline club improvement.
Finally, a review of staffing and its function (hiring, training, performance assessment) is critical. Answering the questions of the next steps the owners and club leaders will pursue is needed.
Putting the recession into context and then doing something about it proactively is really the definition of management. Overcoming obstacles is the norm. The game of business is winning at the end.
We Thank the Following Suppliers for Sponsoring this Webinar