In the fitness industry we have learned that membership dues alone are not enough to sustain business. So we have turned to developing profit centers-essentially businesses within our business--to increase our bottom lines. By treating each of your profit centers as a serious business venture, your chances of making them successful improves.
Many fitness managers take the time and effort to develop strategic plans for specific departments, such as personal training; however, when it comes to smaller niche programs, they fail to plan specific goals and objectives. This creates risk. Without a plan, a new program is unlikely to bear fruit.
Business Plan Outline
In order to ensure your new profit center idea will not fail, think and act like an entrepreneur by planning your business from the ground up. A good first step is to construct a brief outline listing the product or service you are considering. List your target market--is it athletes, elderly adults or perhaps pregnant women? Who is your competition for this demographic? List a few ideas that show how you plan to differ from your competitor. Is there a niche to the market that you may be able to capitalize on? For example, you may want to develop a program for swim lessons but your competitor already offers one. Why not try focusing on swimming technique lessons? You could take this one step further and offer swimming technique lessons for triathletes, which would target a sport-specific specialty.
Once you’ve outlined your initial ideas, construct the plan in detail. Start by writing a mission statement that identifies the service or product in greater detail than in the outline and clarifies your vision for the program. List the following details in the mission statement:
- The type of program you’re planning as a profit center (sport-specific training).
- How you will execute the mission (offer highly personalized training programs).
- Key success factors that will help you fulfill the mission (market niche, knowledgeable staff, excellent customer service).
- Key personnel involved in the success of the profit center.
When you choose key personnel, ensure that they will have time and energy to devote to the project. Try not to select employees who are already wearing many hats within your organization. Consider cultivating the talent of your junior staff by giving them ownership of the program and compensating them for growth of the new profit center.
Once the mission is laid out, describe the marketplace. Detailing this portion of your plan will help you define a target market. Ask yourself if there have been significant changes or shifts in the market that relate to your product. For example, perhaps you learn that many men at your facility are interested in mind-body workouts, but are intimidated by possibly being the only male member in the program. You may want to plan new “men-only” classes or get even more specific by offering programming such as “Yoga for Athletes” to appeal to this demographic. Identifying market shifts and customers’ needs can help you pursue a strong niche. When doing this type of research, it’s wise to review past customer buying decisions for similar products or services. Did your customers buy on impulse? Did they plan their purchases based on your marketing efforts? List such research reflections in your plan and describe how you will address them.
This is not a task many of us relish researching, but thoroughly describing your competitors and how they do business can provide insight to what your customers want. List your main competitors and their products or services, then explain what their strengths and weaknesses are. Ask three questions: Do your competitors offer frequent promotional pricing? Do your competitors position their products for a certain niche? How do your competitors target their advertising? The answers will give you a better understanding of the type of customer your competitor wants to attract. If you want to attract the same customer base, it’s essential to find a way to differentiate your product.
Let’s say you want to develop a wellness component to your business for adults older than 55. Your research reveals that a competitor is successful with the same type of program mainly due to its program’s low price. You can justify charging a slightly higher price for your program by focusing on delivering superb, highly personalized customer service as part of your standard program. You could deliver better service by including weekly follow-up appointments with a personal trainer as a standard part of the program.
This section of your business plan may be the most crucial. It requires that you think “outside the box” to view yourself, your staff and your service from your customers’ eyes. List your business’ strengths and explain how these give you an edge in the market. Now describe your weaknesses and make a plan to address them so they won’t affect the growth of your new program. Your strategy will set the stage for your profit center by identifying the following:
- What will be the day-to-day operations in relation to this new profit center?
- What will be the roles of the key personnel listed earlier in the plan?
- How are you positioning your product in the marketplace? Will you focus on a niche, personalized service, low pricing or another tactic?
Once you have a solid strategy mapped out, develop a timeline for rolling out the profit center over the next 6 months to 1 year. The timeline is an often overlooked, yet, crucial part of the planning process. Without a plan that emphasizes finishing each stage by a certain deadline, you risk losing your new concept to the demands and priorities of the daily routine.
Sales and Marketing
Before you embark on a marketing strategy, review the section in your plan that describes how you will position your product in the market. For example, if you plan to position your profit center around personalized service, don’t focus marketing efforts on discounted pricing. Instead, describe the image you want to convey for the product and list ways you will focus sales efforts based on that image. What will you emphasize in your advertising and in-house support materials?
Develop an advertising budget for your profit center and plan how the dollars will be distributed among newspaper advertising, your Website, promotional flyers and direct mail campaigns.
Whether or not you have a large advertising budget (or any budget), you will need to think and act creatively to gain free publicity for your business. I once gained publicity for a new Pilates profit center by providing training sessions for a local newspaper reporter who then wrote about her experiences in the program. This single article helped to not only promote the profit center and drive many new customers to our facility, but it also was a great advertisement for the facility itself.
Promotions are another inexpensive way to build excitement about your profit center. A “try before you buy” promotion works best for new or trendy products or services. But try to keep promotional pricing as limited-time offers so customers don’t think they have months to take advantage. The idea is to convey a sense of urgency that gets prospects in the door as soon as possible. A club I once worked for offered a two-for-one Valentine’s Day special for a group class program. A good idea, except there was no expiration date or any other limits on the coupon! Members continued to redeem the coupons for nearly a year.
You might also try tying in your promotion with a charity or other good cause. For example, let’s say you decide to develop the “Yoga for Athletes” program discussed previously. You could help to fill a local food pantry by offering a free coupon for one-time entry into the program to customers who bring in six or more non-perishable items. If you really plan ahead, you could even gain free publicity by sending out press releases in advance about the charitable nature of the promotion. Savvy managers study all the angles and find was to capitalize on them.
In this part of the planning process, determine what your standard of service will be and how this will be executed from the front desk onward. Describe your standards by listing how you envision your staff will perform each step--from the first customer contact to any follow up.
How will you receive feedback and react to customer interest in the new profit center? Once you have the interested customer what is your plan of action? Will you return the phone call within 48 hours? Will you mail a packet of materials to the outside referral customer? If so, what is the time frame that you expect to have those materials sent? Timely pursuit of new customers will ensure success of your profit center; designate these duties to your key personnel and be specific about exactly how they should be carried out.
Next, plan a strategy for customer follow up. Many of us spend a lot of effort getting members into a new program, but then forget to follow up with them. Scheduling follow up for your new program will help ensure that your vision for the program is resonating (or not) with members; it also can help you and your staff to identify and address potential problems before they mushroom. Spell out the details of this duty for all key personnel so they don’t lose sight of the objective.
Don’t Fail to Plan!
This process may seem a lengthy one for adding a new product or service to your facility, but every step will bring you closer to success. Even if you execute an abbreviated version of this plan it will help you to think through each step and force you to lay out a timeline for the stages of program development. The saying “we don’t plan to fail; we fail to plan” holds very true on projects like these.
Marci Clark is an international fitness presenter, CFO of PowerHouse Pilates LLC and co-author of two Pilates manuals. She has written and been interviewed for articles in IDEA publications and others. She regularly presents Pilates workshops and lectures on fitness industry business and management topics. Contact her at email@example.com