Wednesday, 24 May 2017

Do you Know your Business

The Importance of understanding your business


I still remember the days as a club manager, the end of the month comes and you spend half the day filling in reports for head office wishing the figures were different.  At the start I found it labourious but the longer I did the reports the more value and more detail I began to delve into the greater my understanding of the importance of the figures I was looking at.  As a leader of a club in a large commercial chain this meant a pat on the back, promotion opportunities and even a bonus.

By the end, I had created reports that’s went above and beyond what was required by head office as I realised it that by knowing the details I could influence the future performance of the business.  Gone was the guess work, the shock or surprise at the end of the month or the amazement as to how we had managed to scrape through another month.

There is a trend that appears to happen outside of the larger club chains.  This is that reports seem to be a burden and time consuming.  Understandable when independent clubs often have small payrolls, the owner is the manager and the personal trainer.  However, this oversight can lead to failure or additional challenges by simple not knowing where your revenue comes from and where the costs are.

There are some key essentials that every club should be reporting on.  Just to clarify, reporting is not always retrospective as any report should include your budget and forecast figures as well as any historical figures from previous years.  Every club is different in its location, its price, its demographics and its potential and so you should not make the mistake of comparing one club directly with another.  Broad comparisons are ok but failing to treat each club on its merit can also be dangerous.

Key elements:
-          The club’s budgets
-          The club’s previous year’s figures
-          Month by month Profit & Loss figures
-          Membership details, member breakdown, attrition and types
-          Membership sales vs targets and last year
-          Membership sales statistics, inquiries, tours, sales and referral figures
-          Sales source report
-          Your direct debit numbers,
-          Average Membership rates
-          Club forecast allowing you to manage your projections 3 months out and changing targets to suit
-          Class usage/studio data
-          Personal Training and other tuition revenue, including swimming lessons, sports massage & boot camps
-          Health & Beauty report
-          Any audit scores

Whilst this seems a significant number of reports, the completion would not take huge amounts of time if the reports are set up and ready.  The hardest part would be if no reporting was currently taking place as all old data, budgets and targets would need to be created first.  The work however, will be well worth it.

It is also advisable at this stage to suggest investing in a membership and club management system such as Club Right.  This type of system allows reports to be created quickly with all the information you require to add to your full club report document.

So, after setting up this report and completing it so it’s up to date, what can you do with it?

-          Analyse you club’s performance to ensure you are on track and you cash flow is safe
-          Identify key sales targets and challenge
-          Enable you to invest marketing spend in areas that show success rather than using a shotgun approach
-          By year end the report will enable you to create next year’s budget with a few simple formula changes in the report
-          You can create your business plan based on real data
-          You can gauge success or failure based on previous years’ actuals rather than intuition
-          You can manage your studio classes by actual numbers and change those classes that do not drive numbers and thus revenue
-          You can analyse revenue streams and identify which membership are more popular, do you need to review pricing
-          Allow you to set targets for your team and change the forecasts to consider any dip in business.
-          Identify costs or payroll challenges
-          Your beauty report will show your occupancy rates, average treatment cost, treatment popularity and retail sales percentages.
-          Allows you to manage your team members based on true figures, especially with the sales teams that should be all about targets and conversions
-           Allow you to prepare the club for sale if that time ever comes

These are just a few of the benefits you get that allow you to run your business like a professional.  By knowing your business, you can make real time change by identifying trends and upcoming challenges and potential wins.   Don’t wait to be hit by a major issue when you could spot it months in advance.  You will also find that by knowing your business, what works and why you will have even more success as you place your efforts into those areas that provide the greatest success.

Some clubs even find their whole business model changes over time.  This can be due to demographics or market conditions.  By knowing how your business is changing or needs to change the business can adapt quickly and allow them to take advantage.

I cannot emphasize enough how important knowing your business is.  Effective reporting is vital to gaining this knowledge.  Charlesworth consulting can help you create a bespoke set of reports for your business.  With access to your membership system and support from the club we can even complete these reports monthly for you.




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