Sign up for Funding Circle newsletter!
Get our latest news and information on business finance, management and growth.
Updated: Mar 2, 2016
The fitness space is growing as rapidly as your quad muscles, thanks to that kickboxing class you’ve been taking lately. So how can a small fitness studio like yours stand out from the crowd? We spoke with Jen Burke, East Coast Director at ClassPass, to get the protein powder scoop on her five best tips for succeeding in the fitness and wellness world.
The #1 challenge facing small fitness studio owners today is getting your name out there and attracting new clients. The boutique fitness space has boomed, with the number of studios growing by more than 400 percent in the U.S. since 2010—creating a ton of new competition and noise in the market.
In Manhattan alone there are probably over 500 places to get your sweat on. If you’re a new business constrained for cash, it can be tough to know the best channels to market yourself. And in metro areas, where you might need to build out on the 2nd or 3rd floor of a building to save on rent, you can’t rely on pedestrian traffic and eyeballs to build your brand. Knowing where and how to promote yourself those first few months in business is crucial.
Managing cash flow, particularly as a new studio, can be extremely challenging. It can take studios a few months to get to cash flow positive, and it’s critical that studio owners get the capital they need upfront to prepare for this scenario.
One mistake owners make when considering financing a new studio is taking all the upfront and fixed costs of the business into consideration—but ignoring the impending variable and operating costs needed within those first few months. They will have the money to do the build out, buy the equipment, pay for their first few months of rent, but they may not be prepared to finance their payroll or for any of the other inevitable (but less foreseeable) operating costs that come up in the first few months.
As a fitness studio owner, you may not always be able to accurately predict revenue until you open your doors. You can (and should!) run pre-launch sales to try and build up your cash stocks ahead of time—but expect to still be playing around with your price point, schedule, class format, and marketing strategy to get to full revenue potential the first few weeks or even months. Until then, make sure you have adequate financing to cover any unforeseen costs during this period.
Additionally, be cautious of how many classes you offer when you first launch. It can take some time to build up your user base, and you don’t want to find yourself in a situation where you’re hosting classes for 4 or 5 members and the costs of operating that class actually exceed the revenue you take in. Keep it simple the first few weeks. Start with a few classes a day at peak times when you know the classes will be full and profitable. Then you can build up buzz and users, and add new classes as you add more demand.
Cash flow management is still crucial even on an ongoing basis. Fitness is a very seasonal business and the operating margin your studio experiences in January may be very different come August—so you need to account for this in your ongoing finances. My advice for any studio owner is to try and operate your business assuming steady state August financials—not January!
There are inherent regulatory risks with any business, and the fitness world is no exception—so make sure you understand everything about the business you’re getting into. Have a qualified attorney and accountant on hand to help you fully understand all the terms and conditions in contracts or other legal documents, the various tax laws, and even best practices for managing your books and ensuring you have proper commercial insurance coverage. Know the various business processes you may need and be sure to evaluate the ROI on implementing the right solutions before you invest long-term.
Life is always easier when you have a partner you can count on to inspire you, keep you honest to your goals, and help you grow. At ClassPass, our goal is to grow the overall fitness industry by making it easier for fitness studio owners like you to get started and succeed. We empowered fitness business owners to land nearly 100 million reservations in 2015 by helping them market their brand and connect with more customers than they are reaching on their own—for no cost whatsoever. Learn more about how you could save precious funds on marketing and promotional activities by partnering with ClassPass.
Cross training or HIIT classes! I like the mix of cardio and strength and how every class is different. I feel incredibly present in those classes; they move so quickly that it doesn’t allow you to think about anything else. I always leave feeling incredibly accomplished—and very sweaty!
Jennifer is the East Coast Director at ClassPass, where she is responsible for helping develop the strategy and growth trajectory for the ClassPass Partnerships organization. She oversees the sales and account management teams on the East Coast, and led the launch of new ClassPass markets in the early days. Previously, she held a number of marketing and consulting roles at companies including Bain & Company, The Walt Disney Company, PepsiCo and McCann Erickson. She holds a B.A. from Brown University and an MBA from Stanford Business School.
ClassPass is the leading fitness program that grants users access to thousands of classes and wellness experiences around the world with one membership. With more than 7,500 studio partner relationships in 36 markets across three continents, ClassPass inspires thousands of people every month to move. Learn more at www.classpass.com/partners.