Maximize Revenue/Profit Per Square Foot

In these less than ideal economic times, how can a club avoid being in a constant state of reduced profits? The old school of thought is to incorporate at least three to five new concepts to your business model each year. However, each year, clubs experience continued financial increases in many different areas of the club. How can a club continue to grow and prosper, even when it’s continually spending more money on indirect costs?

There is a solution. Think about how much revenue you would receive if you had every square foot of your facility at capacity for 24 hours a day, seven days a week. Now, let’s look at some options to increase your club’s capacity from where it is today, to a higher percentage. How are you differentiating your club from the competition? Is your customer service and attention to clients exceptional, are your facilities and equipment clean and never broken, do you communicate with the customers and provide value added tips, expertise and advice as part of the membership?

Group personal training increases your revenue by trainer, and by space — and is a segue to increase individual training. Are your trainers, coaches and class instructors booked to capacity? If you don’t have online booking and scheduling, you are missing an opportunity. Online membership signup is another incremental revenue enhancement, and can be accomplished by simultaneously reducing or redirecting labor costs. Many clubs are using a group exercise on-demand video system to decrease the costs of paying instructors during low usage hours, but still being able to use the studio space.

Another famous adage in business is that you won’t improve what you don’t measure. Are you measuring your revenue by charge code, by member type, retention, your direct and indirect costs, closing percentage on tours and traffic by marketing resource. These measurements will provide brainstorming ideas for improving profit.

Increasing profit per square foot by reducing costs is another area that is vitally important. Have you redirected your marketing resources to a spectacular website and e-mail blasts versus mail and newspaper advertising? What are your merchant rates? Do you receive your ACH/EFT monies immediately or does your processing company hold the money and receive the interest for a period of time. Have you analyzed the most economic means for cleaning, upkeep and repairs? Is in-house or sub contracting better and more cost effective, or maybe a combination of both.

Have you looked at adding additional revenue streams per square foot? Are your group exercise classes full, do you offer children or school age fitness programs? What do you offer in the aerobic studio, what types of group personal training do you offer, what about peak performance training, functional training, Pilates and yoga?

The challenge in owning a business is the ever-changing economic landscape and competitive culture. All new ideas and business improvements are not going to be successful. The key is to identify three to five per year, do a comprehensive plan to implement, evaluate the results, keep the good ones, move on from the ones that don’t fit your demographics and obtain advice/consulting from industry resources. You must be constantly improving to be successful.

David Porter has been a sales consultant at Twin Oaks Software Development for many years. Previously he ran several businesses, including Suburban Athletic Club outside of Boston, which he co-owned and operated for 10 years. He can be reached at 860.829.6000 or dporter@tosd.com.

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