Gyms have been closed for months now: although the end is in sight, our doors aren’t open yet.
Amidst the difficulties of having our worlds turned upside down over the course of a single week, many of us were given the temporary reprieve of a bounce-back loan to cover the costs of lockdown. Others were lucky enough to receive a one-off grant, no strings attached. With rent, national insurance, and VAT payments deferred, and overheads pared down to a bare minimum, you may just have some cash burning a hole in your pocket as you read this.
But now is not the time to be acting like a child in a sweet shop, snatching at the first shiny thing you see. Rather than feeling flush and splashing out on new kit willy-nilly, now is the time to get granular about your finances and use that extra cash as a powerful lever to push your operation into its next phase of success.
“You’ll need a strong dose of realism.”
We know that gyms can come out of this sticky patch stronger than ever before (many of our member gyms are thriving, even under these bizarre conditions). So how can we put that money to best use?
Here are seven key guidelines to bring structure to your investments.
1. It’s all about the plan
We’ll say here what we say to our member gyms at least once a week: it’s all about your business plan. Your business is a system, with inputs, processes, and outputs. In order to get the output you want, you need to understand in detail the flow of cash through your business. And that doesn’t just mean today – your plan needs to span the coming months and years.
Having a solid business plan takes the guesswork and much of the uncertainty out of the process of managing your gym. Rather than wondering randomly if you can afford a refit now, or whether you should increase your membership prices, you can run those scenarios through the business plan and work out what the result might be in a concrete way.
More often than not, you’ll need some help creating the structure of your plan (get in touch with us if you do). We also have a new budgeting template in our Business Blueprint here which is a solid starting point.
2. Contingency is key
If the last few months have taught us anything, it’s that the best laid plans can always go awry. There will be factors beyond our control or ability to predict that get in the way of our assumptions becoming a reality.
In order to mitigate this risk and still come out on top, you should have more than one financial forecast and operating plan for the coming months – especially as the months after lockdown will be some of the most unpredictable we’ve ever had. This means two (or even three) sets of numbers. You could do one set that assumes that 75% of your members come back onto full membership when doors reopen, for example, and another at 50%.
3. Plan for the worst
Hand in hand with your contingency comes a strong dose of realism. What will you do if gyms reopen for a couple of months then close again in a renewal of the virus? What if your membership numbers drop significantly? What’s your plan if your local economy takes a nose dive? While dwelling on these bleak possibilities is likely to send you to the bottom of a bottle, you still need to appraise them with a practical eye and have a Plan B, C, D etc in place. You can’t be caught napping if you enter this uncertain future with your eyes wide open.
4. What can you do better?
With the financial framework underway, now’s the time to consider where to invest. Lockdown gives us a valuable opportunity to do something we rarely have the time to do in the daily grind: stop, look, and evaluate.
“Look for the catalysts of maximum impact.”
Use your time wisely to undertake a full audit of your gym – financially, physically, and in terms of your product and your customer service. For example: What needs work? Where are you inefficient? What changes has the virus brought about that you can leverage to your advantage? What changes need to happen to make sure you lose as few members as possible when doors reopen? How can you maximise the power of your people to make your gym a truly exceptional place to train?
With your brainstorming results in hand, go back to your business plan and plug in your best ideas (the Cycle of Action is also very helpful here) to help you decide where to invest your money, time, and attention.
5. A new digital baseline
As we explain in detail in our blog post on choosing your digital direction, an online element to your operation is the new baseline for any fitness establishment moving forward. You can’t afford to neglect this one: clients won’t be happy with a coach doing burpees in their front room for long.
6. The catapult effect
Like with any investment, you’re looking for the levers or catalysts for maximum impact. For example, hand sanitiser at key contact points doesn’t cost much, but it’ll make a significant difference to your members’ confidence in your gym as a place to spend time (especially if you share your plans for sterilisation through your marketing channels pre-opening). Take a look at our Impact Doability Matrix for a simple way of plotting input and impact and finding the most effective ways to spend your money.
7. Proceed with caution
One thing is certain: there is no way we can predict what’s going to happen. So while £50k in your bank might feel reassuring now (don’t forget you need to pay at least some of that back!) we are all in the same boat here: an uncertain future that could pull us under. The way to ride out this storm with resilience and stamina is to be overprepared. That doesn’t mean sitting on the money so it doesn’t work for you: it means being focused and intelligent about the how, where, and when of taking risks to develop your business.