Managing growth

[Jean-Paul]

Although I am typically doling out the advice in this forum, I am actually looking for advice on this one.

I just bought out a local gym's memberships. It was a 16,000 square foot facility about 6.5 miles away from mine, and it had about 1,500 members.

My goal is to retain as many of them as possible. Many don't really have a choice as they are in term memberships, and about 400 are in open ended memberships, which they can cancel.

I obviously need to expand my business, but I don't want to leap too quickly and spend the extra money like a drunken sailor (my apologies if that comment offends any drunk sailors... I'll use the past republican congress analogy next time). For a short term I have REALLY increased my monthly draft.

I suspect that I will lose more than half if not more than the open contracts. Those who are paid in full are pretty much stuck with me (and vice versa). The only contracts that have any value are the term contracts.

Here is the problem... I actually tried to buy the gym itself, but the owner never really got back with me, and they closed the doors on the customers (and me) without notice, leaving me no choice but to buy the contracts, which are legally transferrable. There is a great deal of animosity and mistrust surrounding the owner of that business, and many of the people who are locked into terms are steaming mad and want out. I have provided an out for them (a reduced buy-out option). Many are going to stay and stick it out.

Did I mention that my facility is only 8200 square feet, and that I already had a pretty decent membership/clientele? The good news is that we were already profitable, so this is basically gravy.

I need to improve my facilities a bit right now, so I need to buy some equipment (treadmills, ellipticals, bikes, strength equip., etc). I will have the capital to do it, but I want to do it right. I also need to beef up my staff.

I am terribly anxious that I am going to spend all this money to improve the facility only to lose most of them anyway when their terms expire, but if I don't make pretty immediate improvements, the added wear and tear will break down my existing already overburdened equipment.

Should I treat this as a temporary cash cow and simply sock money away for a rainy day, or for my family who has suffered through years of my businesses ups and downs, or should I spend a good portion of it improving facilities?

I also don't want to run off my existing loyal members, so I feel like I need to do something to make them feel special, like new equipment and such.

If I were able to hold on to even 10% of this over the long term it would be well worth it, which I think I can do.

My plan is to kill them with kindness. They are used to staff who doesn't give a crap about them, and I want to build up our staff so that they have someone to help them when they are here.

Many of them are the gymrat type who knows equipment, shops facilities by what kind of equipment gyms have (seem silly to me), and I'm not too sure I want to even try to cater to those guys.

All anxiety aside, I am very excited about this opportunity, and look at it as a gift. I've got some fences to mend, but I'm very good at that. I have never made this kind of money, which is timely since I still haven't financially recovered from the fitness summit yet.

To give you an idea of just how stressed this thing has me though, I took an ambien over and hour ago on an empty stomach, and I cannot get it to calm my mind down.

I think I'm going to go try to lay down finally and see if I can get some rest. That 5am client deserves to have me fresh and alert!

All productive comments are welcome. Managing the growth of a business is huge, and it is the lare part of wy most busnesses go under for mismanaging. Thanks for reading this impossibly long thread.

[RobLL]

Sounds gutsy JP - I am thinking I may have something useful to say, but will wait for tomorrow. I think you will do OK. Rob

[Isaac Wilkins]

I've just witnessed a very similar thing happen here in Charleston, JP. I don't have the time to type it all out right now, but I'll either add it here or pm you the details. It could be interesting, perhaps from a "what not to do" standpoint.

You say that the new gym is mostly a gym rat population. The question is whether or not you want to keep that population. If so, then act accordingly. That type of member doesn't really care about most of your services and will see a lot of them as "foo-foo". Also, they'll distrust your staff right off the bat. Be prepared for that.

If you want a different type of member in there, then make those adjustments. If you have 10% of the total population being the member type you're looking for, then aggressively target those people.

[richarddoughtyfitness]

figure out want they want and use your funds to give it to them

you said they distrust the old owner and are un-happy
you're a good guy , make them happy
i am sure some little things can make a world of difference

[Matthew]

You could offer them each a session with you personally (not the full 1500 hundred, just the ones you want at your gym). Some won't take you up on it but will appreciate the offer, those who do take you up on it will be vulnerable to your charm for a full hour.

Of course, the only business I ever owned was a lemonade stand, so what do I know.

Good luck JP.

[tonymcclellan]

If the equipment needs replacing, I would use this time to do it. This was money not had prior, so utilizing it in the most effective way is key. I am sure not all your equipment needs tossed, so I would focus on the most critical/needed. The most needed is unfortunately probably treadmills and such

The members who feel they were hassled by the old owner may see your opt out option as a kind gesture and you may retain some members on generosity alone.

[trainerty]

I really like what Isaac stated. I would have to disagree with any further discounting or free (eh...that puts a bad taste in my mouth) services for retention purposes.

I'm probably preaching away to the choir, but getting investors to help ease the losses and "plant seeds" for a stable future would be wise.

I also believe mapping out a specific business plan fo this new facility is priority. It will keep you focused on how to build up your new team and who is your client and who is just added bonus.

Also, hire a few "lieutenants" if you haven't already. You have to delegate eventually and it will keep your ambien prescription in check (quit messing with drugs )

[RobLL]

JP - I think I have figured out what I had to say. You are a good salesman. (should anyone think that is a complaint I will submit my 500 page essay on why the world needs salesmen/women). As a proprietor your best sales pitch is often just being seen and being around. People LIKE to see the boss. The problem obviously is how do you be seen as busy as you are. Covering the front desk is not the most effective use of your time, but sometimes might be. Watching a ball game on TV near the work out area - even non sports watcher like me will drop by and ask the score. Your wife is at least a sharp as your 'brags' - incidentally thank her again for the ride at the summit - she and those cute kids covering the desk once in a while, or just being around would likely keep an extra hundred or two customers.

[umass]

I think that the thing to do is figure out short term how much you stand to make from the existing contracts. Then from there I would say you have 3 avenues that money could be used for, savings, equipment and more personel to handle the increase in clientel. So then you need to figure out how to prioritize those 3 areas and how each will lead to both future gains and stability. For savings obviously if business gets slow, this will help ease things, and you can always choose to spend it later. For Equipment it will hopefully last awhile and new stuff does attract clientel and the type it attracts is usually the ones who can afford private training and such, downside if you buy too much stuff you either end up selling it at a loss or with unneeded clutter. For personel the upside is that customer service usually makes/brakes a business, the unfortunate side is that if you invest in more people but then have to let some go down the road because of a decrease in business thats not fun though it's easier to do that then deal with a surplus of equipment.
My 2 cents,
Ned

[Chris Correia]

What was your plan going into this?

[Jean-Paul]

My plan was last minute when I found out I could acquire them, but basically it was to double my revenues. I was profitable before, so by increasing my membership by over 1000 members, the rest was gravy. That doesn't even account for increased over the counter income, like supp sales, tanning, personal training, etc. I am pretty sure that I will do quite well off this deal!

So far it has not proven to be a bad deal. Despite all the people being upset about the abruptness of the deal, when the people come encounter me and my accomodating staff they have all been elated to be treated so well; something that was apparently absent from their previous facility.

[Mike's Girl]

I know which gym you bought out...

2 of my brothers goes there and so does 6 of my friends.

And my friends are fitness freaks..


They just want somewhere to work out. Plus with your kindness you have nothing to worry about.


my question is since they got the letter in the mail saying that you bought them out do they work out now at the TCBY tower? or will you reopen that facility in the kroger shopping center?

I think you will be just fine, its just dealing with the numbers and finding room.

Hmmm what if there are 2 JP's in one state?????? OMG the world will end!

[Erika]

They would go to JP's original location. He tried buying the ********* that closed but the owner wasn't selling that. It was a very last minute thing.

[Mike's Girl]

it is a good location to have one and parking is OPEN considering that there isnt much around it that uses that much parking.

Could there be a second JPF in the future?

[ark]

Originally Posted by richarddoughtyfitness

figure out want they want and use your funds to give it to them

you said they distrust the old owner and are un-happy
you're a good guy , make them happy
i am sure some little things can make a world of difference

I agree... why don't you send out some type of questionnaire and let your members feel important in your decisions.

[Jean-Paul]

Good idea ark. I was toying with that idea all week, trying to figure out if I could do a phone poll.

Does your screen name mean you're from Arkansas?

[Lisa~]

JP, Think long and hard about a survey. You can never please everyone and the desires of each individual can vary tremendously. We've had three different fitness managers at my Y who chose to do surveys asking members what they wanted. All ended up creating more displeasure than helping. There were no definitive trends. Mostly nobody got what they wanted, so they felt ignored. The few places where we did see a clear majority of answers turned out to be decisions the Y didn't want to or could not implement.

So, if you do decide to go this route, take care how you word the survey. Ask yourself if the answers to the survey do not mirror your own training philosophies, will you still implement those choices? Better yet, only offer options you would actually be willing to implement. Leave a space at the bottom for optional comments at your own peril.

I do not run my own gym, so I am not really qualified to give you advice in this thread. I have just seen the survey thing work out very badly before. It seems to me that it's your gym. Make choices that reflect your own training philosophies and you'll retain the clientele you prefer to see in your gym.

[Jean-Paul]

Great advice Lisa! Exactly what I needed to hear. Thank you.