When it comes to running a gym, getting or retaining members comes second. The first is always to balance your expenses. Managing cash flow in a way that you have enough capital to get the operations running.
And this is a bothering thought, not only for you but for every gym owner. Maintaining a smooth gym cash flow is challenging among the seasonal fluctuations. A slight miscalculation can halt the operations, putting the gym at risk. No gym business owner wants to risk their position in the red ocean.
So, here are some practical tips to improve money management that you should know.
The fundamentals of cash flow
Before you get into boosting the cash flow of a gym, know where your cash comes from and goes. Creating a balance sheet to track the flow of revenue and expenses would be of great help. This way, you can have clear eyes to optimize your financial management strategy by:
- Increasing sales and incoming revenue
- Reducing expenses and overhead cost
- Efficient time and cash management
Incoming revenue includes cash pouring in from members, merchandise, and services. While the outgoing expenses include utilities, maintenance costs and payroll. If your incoming revenue is more than expenses, your gym cash flow will be profitable.
10 ways to boost cash flow for a gym
Every gym owner’s concern is how to increase gym cash flow, which doesn’t mean they’re being voracious. Instead, it is about investing in growth while dealing with financial fluctuations.
So, here are 10 financial strategies for gyms to improve healthy money movement:
Increase gym revenue
By implementing the following ways, you can increase your incoming revenue and sales:
1. Create membership promotions
Having membership promotions or referrals doesn’t need cutting your profit margin. Instead, it is giving your members and prospects more value by offering what suits them best. So, the more you offer, the more they pay and stay.
Give your members the freedom of tiered memberships. They can decide the type and frequency of classes and the membership budget that suits them best. With the confidence of their perfect membership, they can stay loyal to your gym. Additionally, the revenue from tiered and referral memberships is more predictable.
2. Up-sell and cross-sell your services
Up-selling and cross-selling don’t have to sound pushy. It’s about presenting the right value at the right time. Offer service upgrades to interested members. An example of up-selling is a gym staff member pitching its members to try a premium training class. It could also be a membership upgrade or trying a new fitness program.
Cross-selling involves bundling irresistible 2-in-1 offers, such as fitness training and yoga classes. This way, you double your sales while selling more to interested members.
3. Offer multi-mode membership (physical and hybrid)
People love more options in fitness memberships. Where FItness freaks are everywhere, there are also people who are too lazy to make it to the gym. A hybrid membership is a great way to expand your reach and multiply your revenue at the same time.
The good thing about multi-mode memberships is cutting operating costs and electricity consumption. You can entice prospects beyond geographical constraints. So, they are still contributing to your bottom line without adding to wear and tear on your equipment.
4. Sell branded merchandise
Sell merchandise, gym gear, protein bars, and supplements. It is a profitable idea driving revenue. Consider the needs of your members, and sell branded merchandise and stuff they need. It not only build trust but also garner loyalty and more revenue. Members will appreciate the ease of buying from a place they know, while you enjoy some extra cash flow.
5. Space rentals in off-peak hours
Your gym does not have to be empty during the off-peak hours. Turn your empty spaces into profitable ones by renting out. Rent it to personal trainers for small events or birthday celebrations.
The idea behind space rental is to earn easy money even when you are away. Moreover, managing facility rentals is not a big deal. You can manage your facility rental with all-inclusive gym management software.
Reduce gym expenses
Next thing is to cut down expenses and resources to improve your gym’s financial health.
6. Install energy-efficient equipment
Energy bills are a major overhead expense. But you can reduce them by installing energy-efficient equipment and an HVAC system.
With a few adjustments and installations, you can reduce your expenses by up to 20%. Moreover, encourage staff and members to be mindful of electricity usage. By adopting a smarter approach, you can free yourself from the pain of hefty bills.
7. Negotiate with vendors
Negotiating is not that hard; you need a little courage to ask for discounts. When making contracts with vendors, ask for a little more discount. It can help you maintain long-term contracts without spending above the budget threshold.
Or you can set terms and conditions with equipment suppliers to get the latest equipment. This can save you up to 10% of operating expenses.
8. Strip off the overhead cost
Payroll, marketing, and day-to-day operations add up. Do you have the right staff-to-member ratios? One trainer for every 8-12 members is a good rule of thumb.
To strip off the extra cost, shift your focus from a more traditional to an advanced and smarter approach. Instead of adopting expansive marketing techniques, you can use gym marketing software. You can fulfill your gym marketing needs while managing your operation and finances. It saves a good bunch of dollars from spending on overhead expenses.
On-time financial management
Streamlining your financial management can boost your cash flow and upfront cash predictability.
9. Automated billing systems
Since you can’t chase every member to pay, an automated system makes it easy for you.
Receiving payment from members reduces friction, keeping your administrative operations going. Additionally, owners and gym staff can focus on operations other than finances. An automated billing system in your management software can make the process pain-free.
10. Financial management software for gyms
You can not manage what you can not see. But financial management software gives real-time insights into your money movement.
You can track your revenue and expenses in a clear dashboard and check spending patterns. This will keep your books aligned while regulating smooth cash flow.
Final Notes
Managing your gym’s cash flow is not about getting by but about setting it up for long-term success. These strategies boost your gym’s cash flow by controlling costs and increasing revenue. So, keep your gym ready for what comes next.