Thursday, 11 April 2019

Why should you consider a Consultant for your Fitness Club Pre-Sale?

They could just be the missing piece!

As a fitness professional, investor or entrepreneur you have invested in a new business venture to open your own fitness facility.  First of all, CONGRATULATIONS!  You have an adventure ahead of you that you will never forget.  Fitness is an exciting and hugely rewarding industry to be part of and to be a business leader in our industry can not be beaten.

For many, this investment is no pocket change and so whilst the end product is exciting when fully operational and paying back its investment, getting there can be filled with many ups and downs.  What I want to try and do with this article is ensure you have the relevant skills, resources  and support to deliver your project on time, on budget and with the maximum success.  

So what should you consider:

1) Are you going alone or have you bought a Franchise model.

There are benefits to both models and I have covered this in previous articles (Is buying a Fitness franchise right for me?).  What is important to understand is what level of support do you have access too?  

As an independent club you will rely on your own knowledge as well as that of colleagues you have connected with over the years.  As a Franchise you will get support from the Franchisor.  Be mindful that this support may not be as much as you require and some are better than others at providing on the ground support.  

I have worked with many Franchised clubs over the years as they still believed that having access to a third party with their interest and not the franchise business interest at the forefront was important.

2) What are your own skills?

Its rare to find a fitness business owner or in fact any business owner who is a professional at all the elements of business they need to run a profitable business from the start on their own.  Just for consideration these include:
  • Business planning, modelling, funding and finance
  • Target setting, pricing decisions, yield management
  • Project management 
  • Club design, equipment decisions and supplier management
  • Sales and Marketing
  • Fitness service delivery
  • Client Journeys and customer service planning and delivery
  • Staff recruitment
  • How well do you know the industry, your competitors, and how you fit in 
It is not a weakness to not be an expert in every field.  The strength is being able to identify what are your skills and ensuring you have access to someone with the skill sets that you need.  If this is through the staff you hire, people you know or hiring a specialist for the short term, its important you know where to look.

3) The workload is always greater than you initially expect.

Building a club as well as setting up and selling a new business can be a full time job for not one person but for a whole team.  Its important not to underestimate the effort that is required to get a new fitness club of the ground.

Unwise investment or lack of investment in a strong team or support network can have a massive impact on your success

4) Your pre-sale is the first and only time your club will be brand new

If there is one stage of business you don't want to take a risk on and that’s your pre-sale.  You get one chance to be brand new.  You get one chance to set the tone and your initial impression on the community your about to serve.  Making mistakes at this early stage can be the death nail to a new club. 

That may sound dramatic but having a successful presale not only makes you feel great about your project and gives you a busy, bustling club but it also has massive implications on the clubs financial position

For example:

A club opening on 200 members with an average yield of £50 would provide you with £10,000 in monthly revenues.  If you missed your target by 50 you would lose £2,500 per month until you reached your target.  However, it is not just the 50 members you have to find but also the next months budget too.  So chances are it could take 2-3 months to claw back the deficit.  For every month you are short you are losing money against your revenue forecast.

Not only does this shortfall impact your monthly subscriptions but it will also impact your secondary revenue such as personal training, retail items as well as the possibility of referrals and thus easier membership sales.

A club that opens short of members also runs the risk of not being able to create an inviting atmosphere that again impacts your ability to sell more memberships and again impacts your financials.

On the flip side, a club that opens ahead of target is clearly more likely to be in a better financial position both short and long term.  With an average membership length of  say 12 months, being 50 members ahead of target is not only £2,500 but in fact potentially £30,000 better off in year one just on membership revenues.  add the additional secondary revenues, referrals, personal training and that figure could be far higher.

Being a new club in the community only lasts for so long.  After a while you will become the brand that you have created, whatever this.  By being the new, exciting, shiny club is great to attract new clients and so its at this stage you need to maximise this affect.

5) Its important you enjoy the process

I won't lie to you.  Presale is hard work, long hours, plenty of stressful evenings but they are always FUN.

It will be up to you to create that fun for you and your teams but ultimately that’s what will keep you going through the hard work, the days spent handing out flyers, making hundreds of telephone calls.  Your project should be exciting so if its not then why are you doing it.  
Even as an owner/investor the project are fun and I have not met and owner yet who has not got more involved than they planned.

So Why Hire Someone to Help?

1) First of all the cost of having support is never as expensive as you may first think.  For instance Black Raccoon has packages from remote support from just £349/month to a full service pre-sale package for £3999.

2) A consultant has the experience to advise on or will know an expert who can advise on all the points in point 2 above.  Any good consultant will harness your skills and add value to the areas you need additional support.

3) A consultant is often and expert in Pre-sale.  they will have seen what has worked elsewhere, what pitfalls to avoid and how to set up your club for success.  By avoiding mistakes that others have made you to achieve success without the same level of pain.

4) The support will reduce the pressure on you as a business owner and allow you to enjoy the process

5) You will have a sounding board throughout the process allowing you to think big whilst still maintaining focus on what your original goals and vision was.

Having worked with a range of clubs from franchise business to independent clubs and company owned businesses I have really seen the value that a consultant can offer.  Don't see them as a cost, but instead as a resource to achieving success.  If you would hire a builder to build your club, why not hire a professional to help ensure you business is also create on solid foundations

Saturday, 16 March 2019

Is buying a fitness franchise right for me?

So having worked with a number of Franchise brands over the past few years you would expect me to be a completely sold by the Franchise model that is sweeping the UK. Whilst they do have huge benefits for potential new business owners they are not always the right solution for everyone. I will try and cover the benefits of both angles as to to give you a better insight into what could be the best choice for you if you are thinking of setting up your own gym business
So lets start with what the Benefits of the Franchise model. Its important to note that these are the generic benefits and the quality of the service and support delivered can vary massively across the brands. Some for instance will provide you with a pre-sale manager to guide you through the site up process, others with provide you with telephone support. I will cover another time of what you should look for when doing your due diligence on a franchise business

Benefits of Joining a Fitness Franchise:
  • Franchising has been proven to have a higher initial success rate than those businesses setting out on their own. With upwards of 70% of new businesses closing within the first 2 years this can be an important factor
  • The Franchise will have already established a certain percentage of market share
  • You have a brand name to use and promote
  • Often no prior experience is needed
  • You have access to a supplier network with pre-agreed favourable terms
  • Many will provide national marketing initiative to drive the brand and company promotions
  • Techniques, workouts and training methods will have already been created
  • Operational guidelines, staffing structures, cost analysis etc will already be in place
  • Funding channels will be in place to enable you to access leasing options for equipment. Banks and finance companies are more likely to lend to a Franchise supported business than as an individual
  • Dedicated Franchise support
  • Technically you don’t need any fitness experience.
Then disadvantages of a Franchise Model
  • Your upfront investment is often higher than if were to research and find suppliers yourself
  • You are restricted by the franchise model and so are expected to follow the model to the letter
  • You are obliged to maintain the investment protocols they set
  • There will be restrictions on the suppliers you can use and sometimes this actually leads to higher running costs
  • You are restricted to the programs and activities you can perform
  • Less opportunity to add your personality to the facility as the brand will always come first
  • It is harder to create independent relationships with other businesses
  • You may find over time that franchise support/audits become intrusive
  • The inflexibility of a franchise model can restrict your ability tom adapt to local market conditions and changes
  • Your vision for the future direction of the brand or business may differ and as you are not a shareholder in the main business your say is nothing more than just feedback
  • Selling a franchise business does not yield the same returns as you do not own the intellectual property, the brand or ven the members.
The other things to remember:
  • A Franchise will have commercial arrangements with almost all their key suppliers. This means that everyone from the builder to the software supplier is paying the Master franchisee a kick back to provide you a service
  • You have to pay a significant fee upfront to purchase a territory as well as the monthly fee which is often a set fee or a percentage of your revenue
  • Your upfront investments are almost always more expensive than originally quoted. This is not directly the Franchises fault as costs will vary depending on the location you get. However, I can guarantee that they will sell the package based on the lower estimate.
  • Not all franchises have a national coverage and so a franchise business with a predominantly London set up is unlikely to have any brand presence up North. This being the case are you benefiting from being part of their brand? In fact the Franchise is probably gaining more out of the bargain than you
  • Not all franchises invest in National marketing campaigns and use the franchise network growth as the way of growing their brand presence
  • Don’t go into the process believing they are the best value for money. A successful independent club has the potential of making higher profits.
  • Franchising is definitely not risk free and success is not guaranteed. Whilst the risk is lessened there are certainly may examples of Franchise businesses failing in all of the major Fitness Franchise chains.. Don’t convince yourself the Franchise will save you if you run into trouble as they simply wont as that is not their role
  • While no experience in the chosen industry is essential it is recommended
I have worked with some amazingly successful franchise clubs who are incredibly happy with their decision to do so. I would also recommend anyone that does not have a fitness business background to open up communications with the variety of Franchise businesses to ascertain one that suits you best.
What I would say though is that you do your research, not only on the brand but on their future growth plans, what support you will receive and how much they invest on growing the brand themselves.
Franchises definitely have their place in the market and for many are great investments for the right people. However, if you want control on the brand, style of service you deliver and you have the business acumen and the experience in Fitness they may in fact not be the right choice for you..

Final thought is, if you have the confidence and desire to own your own fitness business then why be part of someone else’s success when you could create your own. I would strongly advise running your plan past a fitness business consultant who would happily advise on what they though was the best route for you and your experience.