14 July 2022

If it was easy, everyone would own an SGPT gym

It isn't easy, is it?

This phrase (or a variant of it) is one that I hear on a weekly basis from at least one small group training gym owner.

Of course, they're not wrong... If owning and operating a business were easy, everyone would be doing it.  Instead, just over 10% of individuals in the UK of working age are "self-employed".  Of these, approximately 75% are sole traders.  This means that only approximately 2.5% of the UK population operate a business with one or more employees. This is just over 1-in-50 people.

With COVID having dominated the last couple of years, this has made life for many even tougher.

Number of self-employed workers in the United Kingdom from May 1992 to April 2022

Self-employment grew from 3.2 million in December 2000, to a peak of over 5 million at the start of 2020.  However, in the wake of COVID, self-employment has fallen to levels not seen since the middle of 2015.

Ironically, it was COVID that extended the life of some training facilities that were starting to fail prior to the pandemic. Preferential loans and grants kept them alive during the lockdown. Then, as the lockdown came to an end, gym goers emerged to find as many as 30% fewer gyms available for them to select from. Pretty much any facility was therefore able to attract new members.

A Perfect Storm

We're now at the stage where a "perfect storm" sits on the horizon, and it looks like it's going to be a doozie!

As we stand today (a good few months after the general relaxation of lockdown rules), gym goers are beginning to return to the trends that were forming prior to COVID. The types of facility and service that is of interest to them has evolved, and the scarcity that provided a number of facilities a "reprieve" is now lifting.

The cost of supply is rising sharply for gyms, particularly with energy costs going through-the-roof. Many facilities artificially keep their prices down, preaching the death mantra "my members won't pay that". [Note: If you aren't covering your costs, you don't have a business.]

For us as consumers, the cost of living has similarly become stratospheric. Whilst we all know fitness & wellbeing is important, I would defy anyone to argue that it's more important than being able to feed & clothe your children.  In that context, a gym membership is very much a 'luxury' item and, thus, one of the first things that will be shed by those seeking/needing to cut costs.

Finally, and the biggest hitter, is the impact of a looming recession. The last UK recession occurred in 2008-2009. This was prior to many gyms of the country's current gym owners even starting their businesses.  Whilst COVID-19 triggered a technical recession in 2020, the impact was offset due to the special circumstances.

How often have you heard the luminaries of today's industry talking about how they've "owned their facilities for n years"?  Well,[spoiler alert] if that number is less than 14-years they HAVE NOT experienced running a business under the worst possible economic conditions. We can all make hay while the sun shines!

The Stockdale Paradox

Admiral James Stockdale was a prisoner of war in Vietnam for 7½ years - a horrendous period of suffering and turmoil, which Stockdale describes in his memoir.

When asked "how did you survive?", Stockdale replied, "I never lost faith in the end of the story. I never doubted not only that I would get out, but also that I would prevail in the end and turn the experience into the defining event of my life, which, in retrospect, I would not trade."

Pressed further about the personal characteristics of the prisoners who did not make it out of the camps, Stockdale replied, "The optimists. Oh, they were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come, and Christmas would go. Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. And they died of a broken heart … This is a very important lesson. You must never confuse faith that you will prevail in the end — which you can never afford to lose — with the discipline to confront the most brutal facts of your current reality, whatever they might be."

As business owners enter a period of turmoil, we are at a point where we need the faith to prevail, but we must proceed with the discipline to confront the brutal facts of our current reality.

Get battle ready

Now is the time to get battle ready. Now is the time to prepare for the challenging period ahead and to take the steps necessary to emerge victorious.

I often quote one of my favourite business research authors, Jim Collins.  To paraphrase his book 'Good to Great', you "need to have the right people on your bus, and to have them in the right seats."

Look around you. Who do you have on your bus?

In all likelihood, the fitness industry is about to undergo another purge.

The big box gyms know that they need to change their model to survive. They know that the £20 per month-ers are going to go down first, and most have identified that they need a foothold in the SGPT arena. Be in no doubt that they are coming after your lunch, and on top of everything else, you need to be positioned to compete against companies with far more funding that you could accumulate in a lifetime.

Whilst there is a need for a firm reality check, this needn't be "doomsday".  Prepare and right-size your business with the necessary processes, products, and offerings - and you will weather-the-storm (ideally without taking a doom-to-the-head!).

As an SGPT gym owner you are well placed, with the potential to deliver the products and services that will remain in demand during a downturn. The calibre of members willing to pay £250-300 per month for personal training will not be materially impacted during a period of recession.

Servicing premium ticket memberships is not something that every facility can achieve. It takes the right mindset; a solid set of processes and procedures; the right team members; and everyone understanding & delivering the very best in member service.

If anything, more of being successful in delivering premium services is about the time the member spends away from your gym versus the time they spend in it. Facilities operating a box ticking exercise simply will not make the final cut. 

It is time to take a breath; take a look around; and step up. Do it today, because tomorrow never comes.

Find out how we can help you become recession proof...

Written by Chris Windram.


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