Resilience is an aspect of businesses that many people forget to address. Or they don’t address is well, at least. It’s a business's ability to last through shifting markets and unpredictable factors that can rough up operations. One of the best ways to build resilience for your business is to have multiple revenue streams.
We are consistently seeing shared characteristics among successful micro-gyms. They have at least three major revenue streams to support their business.
A major revenue stream is defined as:
- something that covers all associated costs while pushing a profit margin above 25%
- makes up more than 15% of your annual sales.
Are your service offerings diverse and balanced?
The first revenue stream is obvious because it’s your core business: Membership Dues. The majority of micro-gyms will generate the bulk of their revenue from membership dues. If you are running an open gym model or a group class model, this makes sense. But, if membership dues make up more than 80% of your annual revenue…you are leaving money on the table. Worse, your business is vulnerable.
Membership dues generally have modest profit margins and is entirely a game of volume. You will only be profitable if your business can maintain “xx” amount of members. When you factor in rent, insurance, equipment, software, and taxes, that might be a large number.
The second revenue stream you’ll want to build centers around is Personal Training. This provides benefits on many levels beyond added income. You can expect tighter relationships between staff and clients, quicker results for clients, better-paid trainers, and appeal to a different segment of the fitness demographic.
Some examples of personal training offerings:
Small Group Sessions
60-minute blocks of full training
30-minute 'Skill Sessions' of focused work
Online, individualized programming
Personal training generally has a higher profit margin, will give you more opportunity to pay your trainers higher wages, and often provides better results for your clients.
The most profitable gyms we’ve seen are generating 20-30% of their annual revenue from Personal Training. This allows them to appeal to clients who might not want group training AND it allows their staff to make more money.
Workshops / Challenges
A third revenue stream is a revolving program of some kind. This can be a short-term challenge or workshop that specializes on developing specific skills. Think “60-Day Nutrition Challenge” to kick off a new healthy eating program or nutrition coaching membership. Or a 4-week Snatch Clinic to hone skills specific to that lift. An option could be to poll your members for what they’d like to see and build off of that. This gives you an advantage in meeting a demand and setting urgency! You’ll be able to price the program at a premium. You will ensure your clients get a top-notch service and they will want to buy again the next time you produce one.
Well-balanced gyms run these revolving programs at least four to six times per year, capturing an average 10-20% of their gym membership as sign-ups each time. Priced correctly, this could add 25% to their annual revenue!
Do you have revenue streams like these? Are they tweaked to provide consistent sales and profit? If not, it’s time to get started! The majority of business owners are overly reliant on membership revenue, without putting effort into other revenue streams . Make it a point to develop a new revenue streams by the end of this quarter!
In the end, the goal is to diversify what your business offers to provide more value to current and future customers. The benefit to the business is a robust revenue model that can survive harsh times and support growth!