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Are you maximizing the equity in your member base?
Welcome to the second blog in a series designed to keep you looking forward and creatively during incredibly uncertain times. I hope you are all staying healthy and safe and that your optimism still burns bright.
In today’s blog my aim is to open up your mind to the potential in your business by highlighting some value that just maybe you are missing out on.
“Today I’m going to show you how you can unlock the hidden equity in your gym.”
We ‘nerded’ up on science in my previous blog and we need to do it again. This time with regards to business terminology as we discuss the term, equity.
Equity, as defined by the Oxford English Dictionary is stated as,
“The total value of a business or property.”
We are most familiar with the term equity as it relates to our home. It’s the perceived value of the property, the building, landscaping and the neighborhood.
“Yeah, but I can’t get at it” I hear you say. “It’s locked up. I can’t access it.”
Exactly! Today I’m going to show you how you can unlock the equity in your gym. That equity is hidden exclusively in your members.
Monthly membership fees, admin fees, group classes, session packages, corporate events and one on one tuition. These are just some examples of an almost infinite number of ways that boxing gyms structure their membership options. Back to our definition, this is where your primary equity lies.
We are missing a key descriptive term in our definition though. Our definition clearly states equity as the “total value” of a business. With some small adjustments in your thinking, you now have a magic key that will unlock new-found gains in profitability, increasing the value of your business.
Your member, like you, like me, is a consumer. A consumer is simply someone walking around with identified problems they are looking to be solved. Whoever solves them receives the economic value as a reward. You may not be aware that you have already solved the most important problem for each and every member; their need for a fitness solution.
However, solving this problem presents your members with a whole new set of problems. And trust me when I say that they are eager to transfer their hard-earned cash when the right solution comes along. And when I say right, more often than not I mean convenient.
“If a need has been identified and your value proposition is on point, a transaction will take place. It’s that simple.”
With this new-found knowledge, let’s rewrite an updated definition of equity that when applied can explode your profitability. The equity, or total value of your business, should now be thought of as,
“The total collective economic value that my members would willingly make available to me if I was to solve as many problems as I could as it relates to products and services relevant to them being a member of my gym.” Repeat this a few times to let it sink in while I give the guys at Oxford Dictionary a call!
A Critical Point
Let’s be clear on this right up front.The mindset here is to continually be looking for refreshing ways to offer value to your members. Trying to fleece your members of their equity doesn’t work and will have dire consequences for your business long term. If a need has been identified and your value proposition is on point, a transaction will take place; it’s that simple.
Let’s start with the obvious problem; equipment. Recall from my previous blog the reasons the we are no longer offering rental gloves as an option. With the current situation surrounding COVID-19, it will likely be regulated that community equipment no longer be stationed for member use. Now, more than at any other time will your equipment retail solution be appreciated by your members.
Let’s get some perspective on the equity now readily available to you as a result of COVID-19.
Each member requires at a minimum; boxing gloves, multiple hand wraps or quick wraps and a gym towel. Let’s be super conservative and cap that at $100.00 per person, per year. A gym with just 100 members, not including the Harry Houdini members that magically disappear can generate an additional $5,000.00 of new-found equity every single year. If you struggle to believe that the solution to your member’s equipment problem is less than a $100.00 solution, I’ll offer insight that will help you make a shift in an upcoming blog.
A good strategy is to offer a starter kit containing the above-mentioned products. The number one thing on any consumers mind is convenience so have that solution ready and available at sign-up.
Another cost-effective means of increasing revenue is to retail branded items like t-shirts, activewear or accessories. Sourced correctly there is significant margin in these kinds of items.
Let me be clear. You’re not trying to go into competition with Dick’s Sporting Goods overnight by offering foam rollers, stretch bands or other remedial products. Poor cash flow management is a topic I’ll cover in a future blog, but it is the quickest way to put yourself under financial duress so be responsible with your investment. Start small and let the profits from the success of solving your members’ problems drive your inventory.
Let’s switch gears for a minute.
I am in my early 40’s and believe me when I say that if I wish to stay in as good a shape as I did in my 20’s and 30’s, I simply have to accept that my investment in maintaining my body has to increase. The Ferrari of years gone by has lapsed in warranty and requires more servicing to perform like it used to.
Can you coordinate and leverage together with local businesses that are associated with optimal health; sports massage, chiropractor, physiotherapist, nutritionist, alternative medicine, supplement stores etc where you are all leveraging off of each other’s networks? As Porter Gale put it so adequately,
“Your network is your net worth!”
Or the larger your network, the more equity at your fingertips. And, now more than ever we need to act as though we are equally responsible for each other’s success and what better way to increase your network than by helping other businesses grow?
I hope this has been valuable information but more importantly I hope it has spurred your creative juices into action so that you are primed to succeed when we get through this……
And we WILL get through this.
Stay tuned for more ideas that can have a positive impact on your business.