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Are you a victim of false economy?

Dru Hill
Dru Hill
Published on Wed, Nov 30, 2011

A few weeks ago I was sleeping in a tent and fighting off the small, biting insects in a remote mountain pass. I’d just come from a 3-day hike and I was filthy, sore, and dying for a real meal of hot cooked protein. On the way home I stopped at a historic hotel and restaurant just off the main road. I’d been there many years ago, and I remembered it overflowing with rough-round-the-edges locals, road-weary travelers, good food and warmth. When I walked in this time I hardly recognized the place. It was almost deserted. The owner told me how they’d borrowed heavily to buy the business only 9 months ago. They earned the most money from the accommodation side of the business, but spent most of their time working in the restaurant. As a result, the state of the accommodation was declining and bad reviews were springing up online. It seemed that often people couldn’t even find anyone to help them check in (or out) because everyone was working in the restaurant. “Why don’t you hire more staff?” I asked. “Can’t afford it,” she replied. “Sometimes it’s busy, but a lot of the time it’s dead. It’s not worth hiring an extra person just for those times.” I asked why they weren’t out promoting the fantastic views and interesting history of the hotel, and she said they just didn’t have the time or money. So instead they spent all their time in the restaurant, just breaking even, while the business as a whole steadily declined. Sad story, but what does it have to do with running your club? Well, I see the same thing happening at a lot of the clubs I visit.

  • I see club owners spending too much time working IN their business, rather than working ON their business: just treading water instead of trying to move forward.
  • I see club owners not wanting to spend extra money or time on things that could improve their business, increase their revenue, attract more members, save on staff costs, etc. Money and time are in short supply, and they don’t want to take the risk.
  • I see club owners getting bogged down in the parts of their business that are time and labour intensive, but don’t necessarily bring in the money.

  I call this sort of behavior “false economy”, and it’s really, REALLY easy to slip into – particularly when you’re just starting out and you’re still quite small. There’s a huge temptation to do everything yourself, “just until things pick up”. Another problem happens when clubs get bigger and start to outgrow their various systems: Excel spreadsheets, hacked-together Access databases, manila folders and endless sheets of paper… … It’s chaos, and it can take ages to find anything or do anything, but moving to a new system seems like just one more thing to do in an already hectic schedule. Meanwhile you’re paying an administrator to keep on top of things, hiring extra staff to deal with the crush during peak times, and failing to notice trends in member usage that have deeper implications for your business. Seems like a catch-22, doesn’t it? The trick to getting past the “false economy” paralysis is to carefully choose little “investments” you can make to start moving things forward. For example: If you spend a one-off 5 hour session training someone on your staff to do the general administration tasks that you typically spend 10 hours a week doing, then you save yourself 10 hours a week. Then you can reinvest that 10 hours working on a marketing plan that brings in an extra 50 members. Your first instinct to the idea of spending 5 hours training your staff is “I don’t have time!”, but in this case you’ll be reaping the rewards of that initial investment for a long time. Another idea would be to invest in some software that reduces that 10 hours a week down to 2 hours a week. Then you could continue doing it yourself, save on the cost of the staff member, and still have an extra 8 hours per week to grow your business. If you go with the management software option you can spend that extra time you have setting up a system that alerts you when a member’s attendance drops, so your staff can chase them up. Remember that by increasing member retention you save money on sales staff and marketing. This is what I mean when I say “work ON your business, not IN it”. When you work “ON” your business you invest time in developing systems that will continue to improve your business, even when you’re not actively “doing” anything. Whatever you do, don’t just tread water hoping that things will magically improve. Nothing will happen unless you TAKE ACTION, stop procrastinating, and start taking those little steps forward. If you’d like to take one such step now, here’s how a small investment in our Gym Master management system can really pay for itself again and again:

  • Reduced operating costs: You won’t have to hire as many administration staff to keep on top of things. Member information, accounts, billing, are all rolled into the same place, and in most instances can be fully automated – saving you and your staff time. (Save money on staff directly, or reinvest staff hours in customer service, thereby increasing member retention.)
  • Proximity card entry control will free your reception staff from having to manually key in members’ details. This saves them time and prevents bottlenecks (and disgruntled lines) forming at peak times. (Better customer service means better member retention)
  • Easily contact all your members at once through letters, emails, text messages and follow-up call lists that can be assigned to staff. Improved communication means better member retention, and a more efficient sales funnel.
  • An easy booking system for facilities, trainers and equipment. No more whiteboards, booking sheets or Excel spreadsheets to keep track of. Plus you can set up automatic alerts to remind members of classes they’re booked into. (Saves time and increases member involvement, thereby increasing retention.)
  • Free up your own time: You won’t have to spend as much time yourself performing tasks that just keep you afloat, and you’ll be able to invest time in growing your business. (Allows you to spend more time working ON your business!)

  Sound like a good investment? Get in touch today for a chat about how we can help. Just email and tell me a little bit about your situation. I’d love to hear from you!