Looking for some business advice Please
Discussion
Hi all,
This is not related to my business, I am purely a member of a great wee gym which is looking like it is close to the brink of closure. Here is a jackanory overview:
This gym is situated close to a city centre surrounded by streets of flats in an area which used to be deprived 15 years ago, but has since been getting more and more gentrified and the neighbourhood is now considered to be an 'up and coming' desirable residence. The gym is a paid membership arm of a charity ran company which has two managers... they do tremendous work with young asylum seekers, refugees, families from impoverished surrounding neighbourhoods... they get some government funding and schools pay them for after school programs.
The gym has the following services: spin classes, 'box-fit' boxing fitness classes, HIIT and 'fitcon' style cardio classes, three group PT classes held in their weights gym (consists of 10 or so members and two PT's with a set program where each member has an app to submit weights/reps), spin classes, zumba and yoga in some evenings I think too.
All of these classes are available to members as much or as little as they like for £40 per month. £35/person for a couples membership, £25 for under 18s.
Because they are a charity, the gym is not profit-goal orientated- they just want to make it sustainable, to pay the 2 staff members (the PT's) and want to have a buffer to cover the increasing cost of electricity and repairs to equipment etc.
Yesterday there was a members meeting, essentially the two managers said that they are at breaking point and need to shut the gym unless there are drastic changes to the membership cost. It is true, surrounding gyms offer 2 group PT sessions a week only, charge £150 per month. A spin class only gym which charges £100 per month... so the gym is too cheap.
Their proposal is change the pricing which will see most members (who go to the group PT classes) have to pay £80 per month, if you want the group PT, spin and cardio classes it will be £120 per month, if you want just cardio classes it will remain £40.
They are going to invest £20,000 into Pilates machines and will include access to these classes in the £120/month membership.
They have 80 members at present, they said they would like a revenue of £5k per month to keep afloat, they do not use any of the charity/gov funding for anything gym related- so it is all dependent on gym memberships increasing, and any investment in gym equipment recently has come from the earnings from the school-related programs that schools have paid for.
The two guys that manage the charity/gym are not businessmen, and they work tirelessly to keep the stuff going for young kids, and obviously don't want to close the gym... but for me I think they need an external business analyst resource, someone with gym related business experience to come in, look at the incomings and outgoings, have an understanding of human natures as to what membership increases should be made and what changes should be made from a marketing perspective.
In my opinion, £20k spent on Pilates is not the solution. The PT's are not social media fans, and like it or not, social media is what is going to get your gym known, and that will get you more members. At the moment it is barely utilised, the website is also sub par,
So I guess I am looking for any feedback from anyone about what an approach would be to improve things... my 2p is: Get an external resource to do a Gap analysis, increase the price for members 25% and ask for a 6 month commitment/contract (at the moment its monthly membership only), then with that buffer, use a marketing company to do some acute business marketing for the gym, Google ads, Edge ads, FB ads, Instagram ads the whole lot, and then hopefully with more members the gym can survive.
If you read this far, thank you.
This is not related to my business, I am purely a member of a great wee gym which is looking like it is close to the brink of closure. Here is a jackanory overview:
This gym is situated close to a city centre surrounded by streets of flats in an area which used to be deprived 15 years ago, but has since been getting more and more gentrified and the neighbourhood is now considered to be an 'up and coming' desirable residence. The gym is a paid membership arm of a charity ran company which has two managers... they do tremendous work with young asylum seekers, refugees, families from impoverished surrounding neighbourhoods... they get some government funding and schools pay them for after school programs.
The gym has the following services: spin classes, 'box-fit' boxing fitness classes, HIIT and 'fitcon' style cardio classes, three group PT classes held in their weights gym (consists of 10 or so members and two PT's with a set program where each member has an app to submit weights/reps), spin classes, zumba and yoga in some evenings I think too.
All of these classes are available to members as much or as little as they like for £40 per month. £35/person for a couples membership, £25 for under 18s.
Because they are a charity, the gym is not profit-goal orientated- they just want to make it sustainable, to pay the 2 staff members (the PT's) and want to have a buffer to cover the increasing cost of electricity and repairs to equipment etc.
Yesterday there was a members meeting, essentially the two managers said that they are at breaking point and need to shut the gym unless there are drastic changes to the membership cost. It is true, surrounding gyms offer 2 group PT sessions a week only, charge £150 per month. A spin class only gym which charges £100 per month... so the gym is too cheap.
Their proposal is change the pricing which will see most members (who go to the group PT classes) have to pay £80 per month, if you want the group PT, spin and cardio classes it will be £120 per month, if you want just cardio classes it will remain £40.
They are going to invest £20,000 into Pilates machines and will include access to these classes in the £120/month membership.
They have 80 members at present, they said they would like a revenue of £5k per month to keep afloat, they do not use any of the charity/gov funding for anything gym related- so it is all dependent on gym memberships increasing, and any investment in gym equipment recently has come from the earnings from the school-related programs that schools have paid for.
The two guys that manage the charity/gym are not businessmen, and they work tirelessly to keep the stuff going for young kids, and obviously don't want to close the gym... but for me I think they need an external business analyst resource, someone with gym related business experience to come in, look at the incomings and outgoings, have an understanding of human natures as to what membership increases should be made and what changes should be made from a marketing perspective.
In my opinion, £20k spent on Pilates is not the solution. The PT's are not social media fans, and like it or not, social media is what is going to get your gym known, and that will get you more members. At the moment it is barely utilised, the website is also sub par,
So I guess I am looking for any feedback from anyone about what an approach would be to improve things... my 2p is: Get an external resource to do a Gap analysis, increase the price for members 25% and ask for a 6 month commitment/contract (at the moment its monthly membership only), then with that buffer, use a marketing company to do some acute business marketing for the gym, Google ads, Edge ads, FB ads, Instagram ads the whole lot, and then hopefully with more members the gym can survive.
If you read this far, thank you.
Why have they decided to invest £20K of scarce money into a Pilates machine? Is it in response to demand?
You could - and I'm being deliberately negative because you have to consider worst cases - spend £20K on a 'marketing company' and be little further forwards.
I agree about the website/social media, but what capacity is the gym currently running at?
Will a 6-month contract put people off, thereby dong more harm than good?
It sounds like the gym basically works, but could be optimised. If I was a customer I'd rather it was run by PT experts than 'businessmen'.
You could - and I'm being deliberately negative because you have to consider worst cases - spend £20K on a 'marketing company' and be little further forwards.
I agree about the website/social media, but what capacity is the gym currently running at?
Will a 6-month contract put people off, thereby dong more harm than good?
It sounds like the gym basically works, but could be optimised. If I was a customer I'd rather it was run by PT experts than 'businessmen'.
Edited by Simpo Two on Wednesday 1st March 09:38
Simpo Two said:
Why have they decided to invest £20K of scarce money into a Pilates machine? Is it in response to demand?
You could - and I'm being deliberately negative because you have to consider worst cases - spend £20K on a 'marketing company' and be little further forwards.
I agree about the website/social media, but what capacity is the gym currently running at?
Will a 6-month contract put people off, thereby dong more harm than good?
It sounds like the gym basically works, but could be optimised. If I was a customer I'd rather it was run by PT experts than 'businessmen'.
Appreciate the feedback, thanks. You could - and I'm being deliberately negative because you have to consider worst cases - spend £20K on a 'marketing company' and be little further forwards.
I agree about the website/social media, but what capacity is the gym currently running at?
Will a 6-month contract put people off, thereby dong more harm than good?
It sounds like the gym basically works, but could be optimised. If I was a customer I'd rather it was run by PT experts than 'businessmen'.
Edited by Simpo Two on Wednesday 1st March 09:38
Apparently the Pilates will "bring in at least 15 more members", and there is a line of thought that there is a bit of a gap for these types of classes where the gym is situated. I think that is a stretch because the 15 prospective new members are probably thinking - £40 a month yeah I am up for that... they might think otherwise when they hear it is £120.
The 6 month commitment contract I feel at say £50 a month will be less off-putting than £80/£120 per month... give them a buffer to use the money to garner more members, make small changes to improve what is already a great gym.
The gym is well run, and the two PTs are great lads... but whilst I agree I don't want a gym ran by businessmen, I do want someone in there that knows how to keep the place out of the red.
Hammersia said:
80 members? Total?
Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The spin/cardio/group PT classes have around 10 in attendance typically. Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The gym isn't open all day, they have classes 0630-1000 in the morning, and from 1700-2000 in the evening.
Hate to be the bearer of bad news, but to me it isn't viable business.
As we head into recession, luxury items (gym memberships being just one) are the first things to go.
All the big boys are cutting their costs and closing down gyms which don't make enough profit as it is, so it will be particularly hard for a small gym to compete.
As a comparison Bannatynes near me are offering 12 months membership for 49 quid a month, and that includes a pool, steam and sauna rooms.
Can they compete?
As we head into recession, luxury items (gym memberships being just one) are the first things to go.
All the big boys are cutting their costs and closing down gyms which don't make enough profit as it is, so it will be particularly hard for a small gym to compete.
As a comparison Bannatynes near me are offering 12 months membership for 49 quid a month, and that includes a pool, steam and sauna rooms.
Can they compete?
Geoffcapes said:
Hate to be the bearer of bad news, but to me it isn't viable business.
As we head into recession, luxury items (gym memberships being just one) are the first things to go.
All the big boys are cutting their costs and closing down gyms which don't make enough profit as it is, so it will be particularly hard for a small gym to compete.
As a comparison Bannatynes near me are offering 12 months membership for 49 quid a month, and that includes a pool, steam and sauna rooms.
Can they compete?
Where they are, there are no franchise big David Lloyds, but there seems to be surrounding gyms that charge a lot more. You're right tho, heading into a 08 level recession tripling a gym membership is not going to go down well.As we head into recession, luxury items (gym memberships being just one) are the first things to go.
All the big boys are cutting their costs and closing down gyms which don't make enough profit as it is, so it will be particularly hard for a small gym to compete.
As a comparison Bannatynes near me are offering 12 months membership for 49 quid a month, and that includes a pool, steam and sauna rooms.
Can they compete?
ayedubya said:
Where they are, there are no franchise big David Lloyds, but there seems to be surrounding gyms that charge a lot more. You're right tho, heading into a 08 level recession tripling a gym membership is not going to go down well.
My local film club tripled its membership fee and still wonders why some people didn't rejoin. Amazing isn't it!Your advantage lies in not needing to make a big profit - so you can undercut the competition. So you need to tell/remind people that they can save 20% by switching from ReallyBigGymCo to your friendly local one.
ayedubya said:
Hammersia said:
80 members? Total?
Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The spin/cardio/group PT classes have around 10 in attendance typically. Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The gym isn't open all day, they have classes 0630-1000 in the morning, and from 1700-2000 in the evening.
Quadruple the membership at least. All those fixed costs don't go away if the doors are shut. Class times are possibly fine but the doors should be open as much as possible or your target market for new customers will be tiny.
Harry H said:
ayedubya said:
Hammersia said:
80 members? Total?
Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The spin/cardio/group PT classes have around 10 in attendance typically. Must be empty the majority of the time?
Get people in, free trial memberships, discounted Christmas rates, get people to sign up for a year upfront then hope quite a few quit... that's what other gyms do.
The gym isn't open all day, they have classes 0630-1000 in the morning, and from 1700-2000 in the evening.
Quadruple the membership at least. All those fixed costs don't go away if the doors are shut. Class times are possibly fine but the doors should be open as much as possible or your target market for new customers will be tiny.
I would invest in a card swipe security system, tiny bit of cctv etc. and sell a load of 30 quid "off peak" memberships for when the PTs aren't there.
Harry H said:
This is the problem without a doubt.
Quadruple the membership at least. All those fixed costs don't go away if the doors are shut. Class times are possibly fine but the doors should be open as much as possible or your target market for new customers will be tiny.
Yes excellent point. With more people doing WFH it makes sense to have an available gym during the day time. Thanks.Quadruple the membership at least. All those fixed costs don't go away if the doors are shut. Class times are possibly fine but the doors should be open as much as possible or your target market for new customers will be tiny.
Government funding is different to Local Authority funding and support. They should look at what the Local Authority may be able to do. If it can be demonstrated as a key social / community asset (which, from your description I would think it does), they would have a wider array of financial and non-financial support that could be tapped into.
The Pilates machine..... seems odd given the situation.....unless there is evidence to suggest that it will result in increase membership. If not, would be wise to bin that.
Has anyone actually asked current members why they joined that Gym or what they'd do if the fees went up? If you find they joined because it was the cheapest gym in the area, you could put the prices up a fair bit but still be the cheapest in town and thus retain members.
Social Media...has to be done. Whether the two guys like Social Media or not is of no consequence. If they're not going to do it, you need to find someone who will - perhaps a member. Offer them free membership for running the Social Media.
The Pilates machine..... seems odd given the situation.....unless there is evidence to suggest that it will result in increase membership. If not, would be wise to bin that.
Has anyone actually asked current members why they joined that Gym or what they'd do if the fees went up? If you find they joined because it was the cheapest gym in the area, you could put the prices up a fair bit but still be the cheapest in town and thus retain members.
Social Media...has to be done. Whether the two guys like Social Media or not is of no consequence. If they're not going to do it, you need to find someone who will - perhaps a member. Offer them free membership for running the Social Media.
StevieBee said:
Government funding is different to Local Authority funding and support. They should look at what the Local Authority may be able to do. If it can be demonstrated as a key social / community asset (which, from your description I would think it does), they would have a wider array of financial and non-financial support that could be tapped into.
The Pilates machine..... seems odd given the situation.....unless there is evidence to suggest that it will result in increase membership. If not, would be wise to bin that.
Has anyone actually asked current members why they joined that Gym or what they'd do if the fees went up? If you find they joined because it was the cheapest gym in the area, you could put the prices up a fair bit but still be the cheapest in town and thus retain members.
Social Media...has to be done. Whether the two guys like Social Media or not is of no consequence. If they're not going to do it, you need to find someone who will - perhaps a member. Offer them free membership for running the Social Media.
Thanks for the suggestion of Local Authority funding, I will suggest that to them.The Pilates machine..... seems odd given the situation.....unless there is evidence to suggest that it will result in increase membership. If not, would be wise to bin that.
Has anyone actually asked current members why they joined that Gym or what they'd do if the fees went up? If you find they joined because it was the cheapest gym in the area, you could put the prices up a fair bit but still be the cheapest in town and thus retain members.
Social Media...has to be done. Whether the two guys like Social Media or not is of no consequence. If they're not going to do it, you need to find someone who will - perhaps a member. Offer them free membership for running the Social Media.
We had the first of two member meetings yesterday, some definitely baulked at the suggestion of going from 40>120... it would put me off.
I asked about members at the gym working in social media, unfortunately none do. It is definitely a necessary evil tho to have that social media presence, and sadly a gym that is 'instagrammable'.
I think the posters above who suggested that the gym is limiting its catchment by limiting access only to class times. I think that is major on reflection.
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