5 min read
Why cash flow is the key to growing your fitness business
Australians love to keep fit, and love all the fitness trends that are popping up all the time. From ballet-barre to CrossFit, the competition is heating up to outplay and outlast your competition.
However, to ensure you stick around in the fitness industry you need to look past trends to critical business performance indicators like cash flow.
Cash flow is your key to growing your fitness business and leaving your competition behind you. We take a deep dive into what ‘cash flow’ really means, and how you can take the right steps to keeping your business safe in the long run - no fads necessary.
What is ‘cash flow’, and why is it important?
We’ve all heard the term before, but what does it really mean? Cash flow refers to the frequency of your incoming payments. Cash flow through your gym is just as critical as the number of dollars you’re turning over.
For example, if you were to receive all of your membership fees on the last day of the year, how would you pay all of the expenses that popped up every day before you got paid?
“Cash flow is just one reason why it’s really impractical for gym owners to collect all of their members’ fees on the same day.”
Cash flow is just one reason why it’s really impractical for gym owners to collect all of their members’ fees on the same day. You need cash to flow into your gym every day that you operate so that you can pay your operating expenses, and outlast your competition.
Take time to plan ahead
With small business, the focus can often be taken up with new sign-ups and increasing profit. It’s just as important, however, to take the time to create cash forecasts - it will give you a greater perspective of what you are likely to earn, and plan what you will need to spend it on.
As a successful fitness professional, you already understand the importance of setting goals and working hard to achieve those goals. Similarly, one of the best ways to strengthen your gym’s cash flow position, and improve your business acumen at the same time, is to conduct regular cash flow forecasts.
“The purpose of your cash flow forecast is to predict how much cash will flow in and out of your gym during the coming month.”
The purpose of your cash flow forecast is to predict how much cash will flow in and out of your gym during the coming month. Your forecast will reveal how much cash you have available for normal operating expenses (such as rent), investments (such as new facilities) and special projects (such as marketing campaigns).
After a few months of forecasting your cash flow you will get better at predicting things like sales peaks and seasonal trends in your industry. This expert knowledge will help you to make quality business decisions, and not find yourself stuck financially.
Find cash flow holes to increase your profits
Getting to know your cash flow performance is a sure way to find gaps and opportunities. One way to consistently outperform your cash flow forecast each month is to create additional opportunities for your members to buy more products and services from you – in addition to their regular membership fee – more often.
“How would the cash flow situation in your gym be improved if you could sell your products and services to your members 24 hours a day, 365 days a year?”
You can do this by creating opportunities for your members to buy from you anytime, anywhere – online. How would the cash flow situation in your gym be improved if you could sell your products and services to your members 24 hours a day, 365 days a year?
Look to software for cash flow support
Founder and national sales director of Queensland-based MAK Fitness, Dylan Karaitana, credits Ezidebit for helping him to process payments in regular timings to control the cash flow into his business.
“Ezidebit proved a positive to cash flow straight away and saved so much time in chasing payments and reconciling payments to registrations.”
“Ezidebit proved a positive to cash flow straight away and saved so much time in chasing payments and reconciling payments to registrations,” Dylan says.
“Having that side of things sorted allowed us time to do many other things that we probably couldn’t have to grow the business. The integrations between Ezidebit and our systems have been impressive, combined with very reasonable fees and the great service.”
Find a system that will control the timings of payments, and ensure you always have healthy cash flow into the business - regardless of performance.
Keep in touch
Another secret to healthy cash flow is regular member contact. Find a software that you can use to send SMS and email communication that’s based on a member’s behaviour – such as automatically reminding them of a booking, thanking them for their loyalty or wishing them happy birthday.
This same software could be used to offer additional relevant products and services to your existing membership base. For example – you could email an exclusive offer of limited edition event merchandise to everyone who attended a special fitness event at your gym. Send a message while the event is still fresh in their minds and they can purchase on the spot, online via credit card or BPAY. Regular add-on offers such as these are a sure strategy to getting more cash in the door, more often.
Memberships will come and go at your gym. You’ll experience the ebbs and flows of small business, just like everyone else - so it’s important to make sure you stay in control of your cash flow. It will cover you in the slow times, and be the extra money needed for growth in the busy times. Follow our hints, and you’ll safeguard your business forever.