If you’re like most independent gyms, you’ve seen your revenue decrease during the coronavirus crisis.
That’s why we devoted our webinar last week to the topic of recovering from revenue losses. Without minimizing what’s happened, we are here to tell you that there is hope – and we can help you get started on your process of recovery. Here is an outline of the plan.
First, you need to determine your cash runway. This is a crucial metric to understand your gym’s financial health, and it will inform your plan to recover revenue.
Follow these three steps.
- Gather Your Financial Information:gross revenue; fixed expenses; variable expenses; operating margin; cash on hand; capacity percentage.
- Project Your Runway.This means how many months a business can last before burning through all its cash on hand. With current, accurate numbers, this is the easiest formula to project your runway: Cash on Hand divided by Net Monthly Loss = Cash Runway in Months. Here’s an example. Say you have $20,000 on hand; gross revenue at 60 percent capacity of $36,000; fixed expenses of $40,000; variable expenses of $6,000; operating margin of negative $10,000… You have 2 months of runway.
- Build Your Plan.This will depend on how many months of cash runway you have. For example, if you have a month or less of cash runway, then – among various tactics – you can reactivate campaigns to win back prior contacts, former clients, previous prospects, etc. With up to 3 months of runway, you can focus on moving customers from lower-tier programs to higher-tier programs; upsell a secondary service or product; charge more for services and bundle them together; and more. Gyms with longer cash runways have different options, as well, like selling non-recurring products and services (courses, retail items and more).
There are many tactics and approaches, all depending on your situation. We go into them in greater detail in the webinar. And we are here to talk about it anytime. Let us help you figure out where you are right now and how we can get you started on recovering from those revenue losses. Schedule a time for a free consultation with one of our Success Coaches now.
Fitness Revolution helps fitness business owners build and scale successful businesses they love running. Through Strategic Business Coaching, powerful tools and metrics, and live training events, FR is able to help these studio owners tackle their biggest, most pressing challenge. For more information, visit https://frnation.com/.