The reason many gym owners can’t turn a profit is they keep “kicking the profit can down the road.”
Here’s what I mean: Too many gym owners set up shop and start paying bills. Then they work hard to recruit—and keep—enough members to cover their costs. And then, as soon as they hit breakeven, they expand—and their expenses exceed their revenue again.
To deal with it, they enter another stressful marketing cycle as they work to fill their space and cover their bills. They try to outrun their costs by adding more clients.
When they fill their space and their schedule and make a little bit of money, they expand again. Maybe they add more space or equipment, or maybe they commit to paying a coach’s salary.
The headcount at the gym is going up and revenue is going up. But the owner is still broke, she’s getting tired, and her fuse is getting shorter.
Solving the Profit Problem
What’s the answer? Increasing the value of each client. We call this metric ARM—average revenue per member. It’s really the difference between high-revenue gyms that are successful and high-revenue gyms that burn brightly and fade fast.
Watch what happens to the graph as revenue goes up but expenses don’t increase as quickly:
This extra profit doesn’t mean you’re greedy. It means:
- Your family earns a larger return from your hard work.
- Your coaches earn more from the opportunity you’ve created.
- Your clients are more likely to stick around (ARM actually increases length of engagement, or LEG).
- Less of your money goes to the landlord, power company and municipal tax office (I hate working for those guys).
- You can afford to give clients and coaches the little “extras” that you dream about—free shirts, fun parties and excursions.
- You can make a smaller space really great instead of having a big, hollow cave.
Increasing client value is slowly starting to catch on in the fitness business. I’ve been writing about it for over a decade, but I’m still amazed—and thrilled—by its effect on a gym.
Clients come and go, but ARM never goes down.
Want to see how improving ARM will help your gym? Book a call here—and bring your metrics with you!