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Home In Print Features

Lessons in Recessions

Taylor Gabhart by Taylor Gabhart
April 3, 2023
in Features, In Print, Operations
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Shawn Stewart shares lessons he’s learned from previous recessions. 

A recession is a significant and prolonged downturn in economic activity. In recent years, they have become less frequent and don’t last as long. But with the looming economic effects of the COVID-19 pandemic, many fitness facilities are starting to prepare for the possibility of one occurring.

While recessions can be stressful, there are lessons you can learn from them.

Shawn Stewart, the owner of CSS Fitness Holdings and Fuel Fitness, has been in the industry almost 30 years and knows a thing or two about battling recessions. One of the biggest lessons he’s learned from previous hardship is the importance of having your expenses in line prior to one happening. 

“We go through regular audits and the bid process for all major vendors and suppliers,” said Stewart. “A different vendor is reevaluated each month and Fuel Fitness conducts a thorough audit at the end of the year. We’ve reduced our annual expense over the last two years, while improving our level of customer service and remaining true to our values, mission and core purpose.”

Stewart said he also sets up vendors and suppliers as a partnership and lays out clear expectations from the beginning.

“Vendors are responsible for looking for ways to reduce costs and help establish efficiencies,” said Stewart. “I recently had a vendor call me and say they signed on a national club franchise and gave them better pricing than we had, so they would be matching the new pricing for us even though we are not a national account.”

In order to properly prepare for a recession, Stewart said you have to ensure there is efficiency in your operations. 

Areas to check include waste, bureaucracy, bottlenecks, duplicate work, overlapping staff, too many staff with no work, rework, errors, checking and paperwork.

Additionally, Stewart recommended having a “budget team” to regularly discuss ways to not only increase revenue but also to decrease expenses. Offer your team incentives for cost-cutting ideas that, when implemented, don’t compromise quality or culture.

“Train all managers and department heads, in effect, to be the CEO of their department,” explained Stewart. “Perform a yearly review of strategic objectives to set goals and create your budgets. Then meet on a weekly or monthly basis to discuss new ways to improve the company’s bottom line.”

One way you can cut costs is to do a 10%/5%/5% plan. Stewart said all clubs can easily find ways to cut their operating expenses by 10% through an audit. “Once completed, challenge yourself to find another 5%,” he said. “This takes some effort and sacrifice. Once completed, now challenge yourself to cut a final 5%. This takes creativity and investment.”

Areas you have an opportunity to reduce costs include: 

  • Energy
  • Leases
  • Insurance
  • Cleaning
  • Supplies
  • Equipment
  • Health care
  • Credit card transaction charges
  • Bank charges
  • Real estate taxes
  • VoIP vs. landline phone
  • Refinance loans
  • Media audits if you use radio or TV

And while it may be tempting, Stewart advised heavily against cutting the essentials — marketing, proper staffing, cleaning and employee development.

“In order to best support your staff through a potential recession, you need to maintain your investment in team building, trainings, etc.,” said Stewart. “Avoid pay cuts and layoffs if possible.”

Lastly, Stewart emphasized the importance of keeping your membership engaged. When a recession is looming, people start cutting back on their expenses like gym memberships. To combat this, you need to motivate people to use their memberships. Often the first ones to freeze or cancel when economic stress arises are those who haven’t been visiting frequently.

“Keep the value of the membership high,” said Stewart. “Keep members engaged in group fitness and regular social events. Offer seminars and clinics to get more out of their membership. Lastly, partner with local businesses to offer your members special discounts as part of the membership that will allow them to save on regular purchases that can offset the cost of their membership.”

Overall, recessions are a stressful time. However, with a proper plan in place and a cash reserve on hand, you can lessen the economic blow your facility will take on. 

Stay ahead in the fitness industry with exclusive updates!

Tags: April 2023financial planningFuel Fitnessoperationsrecessionrecession planning
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Taylor Gabhart

Taylor Gabhart

Taylor Gabhart is the editor of Club Solutions Magazine. She can be reached at taylor@peakemedia.com.

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