|Originally Posted 08/03/10
you see in the fitness business are all misleading about success in this
business. Look at the national magazines and other blogs and people are ranting
about how so many clubs just arenít making money.
what industry do all the businesses that comprise that industry make money? Are
we special in that we are entitled to be profitable because we are in the
fitness business? If there are a 1000 drycleaners in Chicago, are they all
entitled to make money and be top performers? As in any field, talent and hard
work separates the weak from the strong and our industry is no exception.
In life and
business, the best rise to the top of their fields and everyone else settles
lower on the scale. For example:
ē About 20%
of any category of small businesses exceeds the average profit and this profit
is what separates this group from the other 80%
ē About 60% hit the average for that type of business
ē About 20% fall into the lowest performers for that group
This is true
of almost any small business concept you can identify. Look at pizza places,
small retail stores, drycleaners, restaurants and most any other business
concept and you can break them down into these groupings. The best make money,
most people do just enough to stay in business and the bottom 20% are wasting money
when they should have jobs working for the city and leaning on a shovel.
would go broke in a year or two no matter how much money they started with and
no matter where they opened. They are in the bottom 20% because they deserve to
be there, no because they are unlucky or surrounded by gifted competitors.
businesses fall into this same breakdown. For example, if half the clubs in a
survey reported flat sales from last year, or declining numbers, is this really
unusual or is this report just a verification that the averages are holding.
The top 20% will make money in good and bad times and the rest will fall into
their respective categories.
fitness business does not entitle you to make money. This is a fallacy that
most new owners have beaten out of them quickly. "I have my life in this club
and it is unfair that a new club is moving in and taking my business.Ē
the money to open got you into the game, much like an ante into a poker game.
It does not, however, entitle you to make money or even survive. That will be
up to how hard and smart you work.
The same is
also true of individuals. Only 5% of the population in this company makes over
$205,000 a year. It is a very sharp point at the top and gets sharper faster when
you move up in salaries beyond this number. The best excel and everyone else
works for someone else. You are seldom in that group due to luck and you
survive there because of many other skills in your life.
The best may
get slapped around for a few moments but they always rise again. The talented
few that reach the top 5% are hard to kill no matter what they are doing or
selling. Your goal, of course, is to prepare your self to be one of the
talented folks who figure out money and how to make it in almost any economy or
There is a
lot of discussion this year on the economy and how it has affected clubs but
the theory holds true. The owners who adapted to change, broke away from the
1995 business model and fought back hard by working their collective asses off
made money. And lots of money. The good players had a great year.
60% took a harsh beating and many failed. But the capitalistic system is hard.
Adapt, change, grow or die and the market will bear out your decisions. Failure
is an option if you refuse to change how you operate because the universe will
correct bad business decisions quickly and painfully.
If you set on
your ass failing to react to everything and wasting your life and business by
complaining about the cheap competitor down the street, you probably didnít
make much last year. You could have beaten him if you would have just shut up
and gone to work. He didnít take your business; you gave it to him by not being
aggressive in your own business.
20% disappeared in the club market to be replaced by another generation that
feels they are guaranteed success because they are great trainers or passionate
people who will change the world. Only the market will tell if they have the
passion, and the knowledge and work ethic, to succeed.
This is an
extremely difficult business to be in, especially now, but you can make money
if you are willing to let go of what worked in the 90ís and embrace new ideas.
The smaller clubs, which are more agile and more able to change, will lead this
charge of new prosperity while the chains will slowly fail because they are not
willing to admit that their business models are 30 years or more out of date.
Build the big
boxes and stock them full of 1995 circuit stuff and the market will judge you
brutally, as it has most of those chains during the last several years. You
simply donít want to be the last guy trying to sell a product that is 20 years
out of date. They sell just enough to give themselves hope but the overall
picture is grim and getting darker for the membership mills.
So who made
money last year and this year? Most of the same people who made money in the
good times; they just have to work harder to get it done. Good owners are good
owners and will adjust, as needed, buying the tools and education needed to
keep moving and growing.
kicked last year? The marginal owners who rode the good times but never really
learned how to make money. There are a lot of owners who have been lucky rather
than good and the economy and full onslaught of new clubs saturating the market
have edited this group down in size. Weak owners are weak owners and while they
complain that their numbers are down are we surprised?
Be the best
and work it like you never had before and there is still money to be made in