How can gyms make a profit, besides membership?
Over the past year gyms and fitness centres have been looking at different ways to add profit to their business, with covid meaning bricks and mortar businesses have been closed, many have “pivoted” to online.
An online and offline gym offering are not the only options available to add important profit to your business and having other “revenue streams” can make your business less risky and more profitable. The most successful businesses diversify into different revenue streams alongside raising revenue through core memberships. This will protect your business in the future and make you less vulnerable to economic changes.
The first major revenue stream is monthly memberships, these are the core of the business and the most obvious if you run an open gym or class model. These generally provide modest profit margins and are completely based on volume, how many members can you get signed up and keep loyal. Once at maximum capacity the only way would be to get a bigger venue, more equipment, pay higher rates and do the same again.
The second major revenue stream is personal training, this is where the gym can build closer relationships with the members, help them feel confident and see results. This could include 1-on-1, small groups, skills sessions, online programs etc. These generally provide a higher profit margin and can bring in clients willing to pay more.
What other profit making options are there?
Selling branded merchandise with your business logo on
Not only will you make money but you will get free advertisement, what is not to like? It also creates a feeling of inclusion, a “family” feel and shows loyalty to your brand.
Selling drinks/meals either branded to your business or not
This could include items to be taken home/away and consumed or you could even branch into having a cafe area and having items consumed on the premises. This would be a much bigger undertaking and you could start with take away meals as an easier/quicker start.
Consider selling merchandise/products online through your website or via social media. Your members will be buying from a trusted source and you can reach non-members too. With platforms such as Instagram now offering an easy way to sell in the app, there are much lower barriers to entry (lower costs and less time).
A 3D scan experience
You could offer the first one for free and then charge a monthly amount for a repeat. Once someone knows their body composition (which is far more informative than weight alone), they can track their stats and this could increase their motivation and time at your gym
Offering advertising space in your gym for local businesses which match your ethos.
These could be displayed on screens around the gym, not really costing you anything but providing extra revenue.
Parent and children classes
This is something I have personally been looking for, I like the idea of taking part in something with my son. They have been popping up more and more lately and are a great way for parents to exercise/learn something new whilst their child is occupied.
Referral programs are a great way to acquire new members at a minimal cost, the only cost you will need to cover is whatever you are offering the referrer.
A referral program will not only bring in the initial member but could increase the likelihood of the current member staying as people are more likely to attend if they know someone.
It is a win-win for all concerned and is a very cost-effective channel for marketing your business.
Events generally have a more relaxed feel and can be opened to non-members too. For current members it will enhance their experience and improve retention.
Offering a hybrid membership for online and offline
Combine offline and online services to offer your members more, and strengthen their subscription value.
Offering a wellness package to corporates
Could you visit the corporate clients once a month to offer an update/provide a class/or provide an online scheme. With home working increasing and more businesses becoming aware of mental health, there is an opportunity to also offer virtual boot camps or educational videos. This could be to increase movement at their desks or to provide advice on how to switch off at home.
Partner with local businesses which compliment your offering
Are there any businesses in the local area which compliment your offering without being competition? There could be a cross business referral such as with a healthy food shop, a juice bar or fitness clothing brand.
Rent space to businesses which compliment your offering
This could include businesses such as hair dressers/barbers, chiropractors, physiotherapists.
Workshops/courses/challenges which can either be short term or specialist
Courses such as 6-12 week flexibility course, strong course, nutrition course.
Workshops/challenges which can either be short term or specialise on developing a certain skill. Maybe a 4 week-snatch clinic to hone skills specific to that lift or a 60-day nutritional challenge. You could maybe run a poll with your members to see what they would like and go from there.
What are the benefits of having upsales or more than one revenue stream?
It is easier to sell to people who already know and trust you, than to convince new members to join and either leave their current gym or start going.
It will not only be easier but much cheaper as new member acquisition is always pricey, there is advertisements, getting them onboard, completing the paperwork/checks and making the new member feel welcome
Having more than one source of income reduces the risk of your business not having any income.
What are the disadvantages of having more than one revenue stream?
It takes time to manage all these different tasks/projects and make sure you are giving each the right amount of your attention.
You will need to measure them separately to ensure that they are all profitable.
It can be time consuming at the start to implement the processes needed and get the projects off the ground.
Create a mind map, so you see what options are potentially open to you
In the middle put your main product/service and then create four spokes out the side: products, services, advertisement/affiliate and other
Off of these create further spokes which are how you will make money from these areas such as: online courses, merchandise, coaching, training, selling advertising.
What ways could you passively make income? So create an online course which you roll out.
Avoid starting all your income streams at once
This would most likely end in disaster, each income stream takes time to develop and launch and then will take time to draw in customers. Make sure you have the processes in place that automate as much as you can and help you not become overwhelmed.
Adding income streams takes time but adding them within your current business is faster and easier than starting completely new ones from scratch. It helps to generate income and reduces your businesses risk.
The majority of business owners are overly reliant on membership revenue and therefore not reaching their profit potentials. I challenge you to start creating another revenue stream in the next quarter. What will you pick? Let me know on Facebook/Instagram/LinkedIn on what stream you decide to start now!
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