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19 January 2022

VAT, pricing, and playing the longer game

Herd Mentality:
"the tendency for people's behaviour or beliefs to conform to those of the group to which they belong."

As human beings we look for comfort from a group. To fit into the group we start to assimilate the ideas and mannerisms of the group.

Perhaps this is why 90%* of personal training gym owners in the UK are male, bald, tattooed, with beards.
* Ok, I don't have a precise metric on that, but it doesn't feel like it's going to be far wrong, does it?!

This behaviour is natural and, in many ways, makes sense.

But, wait... what if you assimilate with the wrong group?

Suddenly you find yourself in an "echo chamber", with those struggling to operate their gyms successfully sharing their suggestions with others similarly struggling.

In many gym owner groups, there is a constant buzz of "little tricks" and "shortcuts". VAT and tax avoidance schemes are one such popular area of theoretical knowledge.

It's important to step back...

What are the goals you have for your business? Are you in a group that reflects those aspirations? Does the 'group leader' represent the type of facility you are trying to operate? Do your fellow group members have the same goals and are they seeing sustained growth in their businesses?

If you're interested or embroiled in VAT and tax avoidance gimmicks, there is a strong chance that you are not taking your business seriously. HMRC are not idiots and highly skilled at spotting tax avoidance attempts.

VAT is value added tax. It is a tax added to (almost) all services and products sold in the UK. It is a fact of life and yet we're an industry (perhaps matched only by sole-trader builders) that is obsessed with avoiding it.

Now think on to the bigger picture..

If you're a small group training gym focussing on high-yield memberships, you should be burning through your pre-registration VAT allowance in just 3-4 months. Moreover, during that time you're unable to reclaim VAT on your expenses (often considerable if you're just setting up a new gym).

On top of this then sits the likelihood that the calibre of your members is such that many will fund their gym memberships through their businesses, and reclaim the VAT element.  If you're not registered and not paying VAT, you look small and cheap. This is not the sort of image that the more-affluent members you are seeking resonate with.

Pricing is another area that many gym operators get completely wrong. Again, often fuelled by what others are charging, they set their own price card based upon that of others - rather than upon what they calculate they need to operate profitably.

The fact is that if you deliver a truly premium service, people of the type you seek will be willing to pay a premium price. In "sucked into the void" I give a number of real-world examples showing how premium products can successfully attract premium prices, in the same location and environment.

In a quest for instant gratification, many gym owners fail to plan for the future.

Opening a new gym is relatively easy. You will naturally get interest from people in your area. However, sustaining a gym through growth and increased profitability is much harder.

It takes hard work and a culture of understanding amongst your team to build a successful business. It also takes time, and is an evolutionary process.  Sorry but, spoiler alert, there is no quick route!

The good news is that SGPT Infinity from Quoox has been created to support small group training gym owners to operate their business efficiently, effectively and, most importantly, profitably - drawing high-ticket memberships and delivering the finest quality service in their area.

SGPT Infinity is a community of successful gym owners looking to improve their fitness business. As a subscriber to SGPT Infinity, we bring you together and share current industry best in practice, trends, what is working right now, and what is coming next in the fitness industry.

Much more than just a community group, our team of business and industry advisors meet with your weekly/monthly to help you plan and achieve your business goals. Our advice is backed by systems, extensive "ready to use" resources, workflows, processes, and automations - all included within our subscription, and all designed specifically for small group training gyms.

Our SGPT Infinity offering is not available to everybody. We work with facilities that understand and adhere to a set of quality principals, and with gym owners that are willing to invest the time and (some) money in achieving their business goals.

Read more about SGPT Infinity for boutique gyms...

SGPT INFINITY
Written by Chris Windram.

Alchemy

Alchemy provides the system, resources, and the practical advice & support that gym owners need to operate a profitable, "high ticket" membership, small-group training gym. Alchemy is the ultimate "SGPT toolkit".
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