Now that nearly a full financial quarter is nearing an end, I'd like to express my honest opinion about my conversion to a World Gym 1440 All Axcess operation. I'd like to start by stating that my club was not performing to my expectations. Although the club was only a year and a half old, I had underestimated the level of competition in the area where I located the club right from the start. For this reason, I had to make some major changes, whether that meant converting to a franchise or not.
With that being said, I felt like we needed to do something that really made a splash. Since we hadn't moved into the space all that long ago, the old standard remodeling, adding new equipment, and having a grand reopening was not a viable option. For those reasons alone, I felt like it was marketing and branding that we were lacking.
Enter World Gym. In this industry, who hasn't heard of World Gym? I knew that if I did decide to go with a franchise operator, I wanted it to be one that was quickly recognized as a real fitness center chain, and not here today gone tomorrow operator. After talking with Ben and Chris at World Gym, I realized that they were taking this 24/7 club concept very seriously. I feel strongly that these guys are going to be making some very big waves in this category, especially with the backing of parent company and industry phenom Planet Fitness.
In the next 5-10 years, the two companies are going to be making huge inroads into this industry, and I don't think I'm alone in my thinking that they are going to be putting the squeeze on the independently owned clubs. I may be wrong, but if I'm right, then I want to be in on the ground floor.
In summary, depending on the circumstances of your club, I think converting to a World Gym All Axcess may make very good sense for you. I would especially consider something like this if your club isn't performing to your expectations. Chances are, if your numbers aren't good, you probably need to make some changes anyways, and the branding that comes from affiliating with a franchise could be just the shot in the arm your club needs - I know it was for me.
On a side note, if you are thinking about opening a new club, I highly recommend a franchise. Opening a business (any business) is difficult. There are so many places that mistakes can be made, and so many decisions to be made, that having the marketing programs, operational guidelines, and purchasing power that a franchise offers can make the process immensely easier.
Good luck and please feel free to post your comments.
My 24/7 fitness center underwent a big transformation - I converted to a World Gym franchise operation. In my blog, I give details about costs; corporate support; and even bottom-line results after the conversion, such as membership sales. Here's a chance to get an inside look at exactly how an independently owned club morphs into a franchised operation.
Monday, March 24, 2008
Friday, February 22, 2008
A warning about equipment leasing
As part of our conversion, we decided to add some equipment, such as a tanning booth, some cardio, and some Body Masters freeweight equipment. For the first time ever, we chose to lease rather than purchase. We opted to use our on hand cash for our marketing efforts instead of using it to buy equipment. On the plus side, leasing allows you to keep more of your money for other purposes such as this. In addition, from a tax standpoint, equipment lease payments can be expensed immediately. If you purchase your equipment, you will likely be required to depreciate it over its useful life, leaving you with less of an expense to apply against revenue.
On the negative side, you will never own the equipment, so you will be faced with either purchasing it at the end of the lease, or turning it back in towards a new equipment lease. If your club gets the kind of usage we all hope for, your cardio equipment will probably be at the end of its life within 3-5 years anyways, and replacing it makes sense. Strength equipment lasts much longer, maybe 5-7 years. (It will actually last much longer, but advances in technology make it somewhat obsolete by that time).
Here's a unique instance that occurred with us that I would like to warn you about. We are leasing equipment from 4 different vendors. One of the vendors is Body Masters, and we have ordered two pieces from them. Back when we first entered into the lease, we were required to make our first payment immediately, and to set up the lease to automatically pull money from our checking account for monthly payments. So in effect, the lease began instantly, even though we had not received the equipment. The reason for this is that vendors typically are not willing to ship product until they have money in hand.
Normally, this would not be a problem, and for 3 of the 4 vendors we purchased equipment from, it wasn't - since we received their products within 2-3 weeks. Not so with Body Masters. It has been over 6 weeks and we still have not received our equipment from them. Apparently they had a problem at their factory. Unfortunately, we have now made two lease payments and we're coming up on payment #3 - and still no equipment from Body Masters. Had I have known it would take this long, I would have cancelled the order and ordered from Life Fitness or Cybex. We're told we are now within a week or so of receiving the equipment - finally!
The lesson you can learn from this (and a mistake that I won't make again) is to nail down the details of delivery from all of your equipment companies. Work with the vendor and the leasing company and make sure that you will not be required to pay for equipment that you do not receive within a reasonable time, say 3 weeks. At the point I'm at, the lease company is collecting the lease payments from me regularly, as though I've received everything, but I guarantee that they haven't released the funds to Body Masters - which means that I'm making payments on money that I haven't used yet. The lease company is the beneficiary of this problem, even though technically, it's Body Masters fault. Make sure to work out issues such as this in advance - and make sure you deal with vendors that are customer oriented ... I would take Body Masters off that list.
On the negative side, you will never own the equipment, so you will be faced with either purchasing it at the end of the lease, or turning it back in towards a new equipment lease. If your club gets the kind of usage we all hope for, your cardio equipment will probably be at the end of its life within 3-5 years anyways, and replacing it makes sense. Strength equipment lasts much longer, maybe 5-7 years. (It will actually last much longer, but advances in technology make it somewhat obsolete by that time).
Here's a unique instance that occurred with us that I would like to warn you about. We are leasing equipment from 4 different vendors. One of the vendors is Body Masters, and we have ordered two pieces from them. Back when we first entered into the lease, we were required to make our first payment immediately, and to set up the lease to automatically pull money from our checking account for monthly payments. So in effect, the lease began instantly, even though we had not received the equipment. The reason for this is that vendors typically are not willing to ship product until they have money in hand.
Normally, this would not be a problem, and for 3 of the 4 vendors we purchased equipment from, it wasn't - since we received their products within 2-3 weeks. Not so with Body Masters. It has been over 6 weeks and we still have not received our equipment from them. Apparently they had a problem at their factory. Unfortunately, we have now made two lease payments and we're coming up on payment #3 - and still no equipment from Body Masters. Had I have known it would take this long, I would have cancelled the order and ordered from Life Fitness or Cybex. We're told we are now within a week or so of receiving the equipment - finally!
The lesson you can learn from this (and a mistake that I won't make again) is to nail down the details of delivery from all of your equipment companies. Work with the vendor and the leasing company and make sure that you will not be required to pay for equipment that you do not receive within a reasonable time, say 3 weeks. At the point I'm at, the lease company is collecting the lease payments from me regularly, as though I've received everything, but I guarantee that they haven't released the funds to Body Masters - which means that I'm making payments on money that I haven't used yet. The lease company is the beneficiary of this problem, even though technically, it's Body Masters fault. Make sure to work out issues such as this in advance - and make sure you deal with vendors that are customer oriented ... I would take Body Masters off that list.
Tuesday, February 12, 2008
February update
As promised, here are some pictures of the freshly painted club. I liked that World Gym gave us the actual Sherwin Williams codes, which will really help standardize the feel of the All Axcess clubs as they start popping up.
One thing I would point out is that since our club is a conversion, we were able to keep our existing equipment. If you were starting a new club, you would be purchasing the newly designed Life Fitness equipment, which is dark blue. I have seen the dark blue equipment in a WG All Axcess club and it is truly a great finishing touch. You'll see that two of our walls are white, which look somewhat plain since our white equipment has no contrast. It'll probably be a few years before we replace our strength equipment, so we'll probably install some additional signs in order to add some more color to our club.
Here are a few more pictures (you can see all of them by visiting us at www.worldgym.com/phoenix):
Wednesday, February 6, 2008
Final numbers for January
Now that our first promotion for our club conversion has ended, and January is behind us, here are the numbers I promised. The first section below posts just the numbers. Following that are my comments about them.
It should be noted that the figures reflect the influx generated primarily from the postcard mailer, and include revenue from new members rather than from our existing EFT members. The figures do not include ancillary revenue from personal training and product sales. So what you see listed is pretty much pure membership revenue.
Numbers:
It should be noted that the figures reflect the influx generated primarily from the postcard mailer, and include revenue from new members rather than from our existing EFT members. The figures do not include ancillary revenue from personal training and product sales. So what you see listed is pretty much pure membership revenue.
Numbers:
- $3735 - Incoming cash from paid-in-fulls
- $635 - Incoming cash from first EFT payments (pro-rated)
- $735 - Income added to our monthly EFT base
Comments:
First, I am very happy with the numbers. The roughly $4500 cash that was brought in more than covered the cost of the mailer.
But the real success story is the increase in our EFT base. The EFT memberships we sold during this promo were based on a 1-year commitment with auto renew (auto renew means that after the year is up, we continue to draft members' accounts each month until they tell us otherwise).
The potential gross value of the EFT bump over the coming year is $8800! Realizing there are processing fees associated with EFT's, and understanding that some EFT's will go bad, I still think this promotion was a major success! With a few months of this type of growth, we would go a long ways toward covering our overhead and putting some money into the bottom line.
Worthy of note: 35% of the total revenue above came in by way of our website, which was $1500 in cash sales and another $300/month added to the EFT base. That's signigicant! I cannot stress strongly enough the importance of a well-planned web presense for a 24/7 club. You can eliminate a lot of payroll with this type of club, but only if you have an alternate method for collecting money and making new sales. A website provides you with this capability.
For those who are thinking of converting your club, I've got to say that the WG web presence is a huge benefit (and there are many others). Even if you do not plan to convert to a WG, do yourself a favor and hire a web designer who can provide you with the ability to sell online. You can probably accomplish this for $2,000-3,000 dollars. I believe you'll find this is money well spent.
In the upcoming weeks I'll post some pictures of our newly branded club. We think it looks great - stay tuned ...
Tuesday, January 22, 2008
Early numbers are in, and they're good!
We've been waiting for results, and at last I've got some figures for you. But first let me mention a couple of things to provide a frame of reference:
Now, the numbers ...
- Only one full week has passed since the postcard came out advertising our conversion to a World Gym and offering the opportunity to purchase memberships online (last Thursday the 10th - till today, Wednesday the 16th).
- The promotion expires on January 31, so there are still a couple of weeks left. However, I'm not expecting many more online purchases until the final 3-5 days when last-minute shoppers will get in on the deal.
Now, the numbers ...
- $2,065 total incoming cash for the week. Of that, 30% was brought in online and 70% at the club.
- $315 total added to monthly EFT base (40% from the web, 60% from the club).
I think these numbers are pretty strong. I'm especially impressed with two things: 1) the bump in the monthly EFT base, and 2)the fact that over 30% of the sales were generated from the website.
Clearly web sales are the factor to watch - the more comfortable people become with joining online, the less dependent your club will be on staff to generate and process membership sales.
Sunday, January 13, 2008
Notable increases... ongoing changes
As we hoped, there has been a significant increase in phone inquiries, club tours, and new memberships (both face-to-face and online) as a result of the postcard mailing and the buzz about our conversion. Currently, 9 memberships have been sold online, and another 4 or 5 at the club. That's not bad!
The postcards began arriving last Wednesday, with the majority being delivered on Thursday and Friday. Because the second half of the week is generally the slowest time of the week for selling memberships, I'm hoping to see a busy first half of this coming week. Then I suspect there will be a lull, hopefully followed by another surge of activity and sales as we near the 1/31 expiration date.
The foyer, office, and newly-built tanning room are now painted, and they look great. This week I'll order the required signage so we can get more of the WG branded items in the club. It looks like the signage will set me back about $1500 - $2000 (not including the lighted sign that will go on the outside of the building).
As many of you know, I am a newly converted "big believer" in branding. I was convinced after seeing the positive results created by branding in several Planet Fitness clubs owned by a friend. I'm completely confident with the financial commitment required to brand our club. This includes expenditures for things like paint, signs, pens, t-shirts, and other logo items.
We removed all existing banners from the walls, as well as other signs and anything that will be in the painter's way when he returns to paint the gym. Unfortunately, the painter informed us at the end of last week that he's unavailable this week while he finishes another large job. My manager Henry plans to get him to come in a couple of half days just to keep things moving ahead.
Our goal is to get all painting and re-branding completed by the end of January. By then, we should also have all of the new equipment in place, tanning booth installed, and signage displayed. We look to really hit our stride in February as we adapt to our new way of doing things.
The postcards began arriving last Wednesday, with the majority being delivered on Thursday and Friday. Because the second half of the week is generally the slowest time of the week for selling memberships, I'm hoping to see a busy first half of this coming week. Then I suspect there will be a lull, hopefully followed by another surge of activity and sales as we near the 1/31 expiration date.
The foyer, office, and newly-built tanning room are now painted, and they look great. This week I'll order the required signage so we can get more of the WG branded items in the club. It looks like the signage will set me back about $1500 - $2000 (not including the lighted sign that will go on the outside of the building).
As many of you know, I am a newly converted "big believer" in branding. I was convinced after seeing the positive results created by branding in several Planet Fitness clubs owned by a friend. I'm completely confident with the financial commitment required to brand our club. This includes expenditures for things like paint, signs, pens, t-shirts, and other logo items.
We removed all existing banners from the walls, as well as other signs and anything that will be in the painter's way when he returns to paint the gym. Unfortunately, the painter informed us at the end of last week that he's unavailable this week while he finishes another large job. My manager Henry plans to get him to come in a couple of half days just to keep things moving ahead.
Our goal is to get all painting and re-branding completed by the end of January. By then, we should also have all of the new equipment in place, tanning booth installed, and signage displayed. We look to really hit our stride in February as we adapt to our new way of doing things.
Thursday, January 10, 2008
Anticipating an onslaught.
Our postcards will start hitting mailboxes today, according to the account manager at our WG-approved marketing company. That's a few days later than I had hoped, but was told that the holidays slowed things down.
So a week from now, I hope to report a noticeable upturn in traffic and membership sales. The offer runs until the end of January, so as long as it drives in enough traffic (and sales) to cover the expense, I'll consider it a success.
I've been told that it takes a repetition of 3 mailings to ultimately produce the intended results. This means budgeting about $10,000 for marketing over your first 3 or 4 months after converting or opening a club. I'm sure we agree that this is a figure that makes you pause. And yet, marketing your business is a must. Just imagine how much money car dealers spend on advertising!
The new look continues....
The painters began repainting the club yesterday. They should be done with the tanning room, foyer, and office by the end of next week. Then they'll start on the club itself. I plan to have pictures posted by the end of next week. The colors are a change, but very nice. The tones are warmer than those harsh "in-your-face" colors popular in most fitness centers over the past decade.
Possibly you already know that Planet Fitness acquired World Gym over a year ago. Planet Fitness is known for its motto "The judgement free zone." And you may have heard about them in the news when they kicked out a member for grunting too loudly while lifting weights!
In developing the World Gym 1440 All Axcess concept, the company converted one of their smaller, corporately owned Planet Fitness clubs in Manchester, New Hampshire, to a 24/7 club under the World Gym brand. If you visit http://www.worldgym.com, and click on the state of NH, you'll be able to see pictures of the re-branded club.
Watch for pictures of our club, and an update as to the success of the postcard mailing.
So a week from now, I hope to report a noticeable upturn in traffic and membership sales. The offer runs until the end of January, so as long as it drives in enough traffic (and sales) to cover the expense, I'll consider it a success.
I've been told that it takes a repetition of 3 mailings to ultimately produce the intended results. This means budgeting about $10,000 for marketing over your first 3 or 4 months after converting or opening a club. I'm sure we agree that this is a figure that makes you pause. And yet, marketing your business is a must. Just imagine how much money car dealers spend on advertising!
The new look continues....
The painters began repainting the club yesterday. They should be done with the tanning room, foyer, and office by the end of next week. Then they'll start on the club itself. I plan to have pictures posted by the end of next week. The colors are a change, but very nice. The tones are warmer than those harsh "in-your-face" colors popular in most fitness centers over the past decade.
Possibly you already know that Planet Fitness acquired World Gym over a year ago. Planet Fitness is known for its motto "The judgement free zone." And you may have heard about them in the news when they kicked out a member for grunting too loudly while lifting weights!
In developing the World Gym 1440 All Axcess concept, the company converted one of their smaller, corporately owned Planet Fitness clubs in Manchester, New Hampshire, to a 24/7 club under the World Gym brand. If you visit http://www.worldgym.com, and click on the state of NH, you'll be able to see pictures of the re-branded club.
Watch for pictures of our club, and an update as to the success of the postcard mailing.
Sunday, January 6, 2008
Marketing Prep--and Immediate Results!
As expected, the few things we accomplished over the past couple of weeks include the construction of the new tanning room. And we've prepared for the anticipated increase in membership sales that will result from our mailing campaign.
This coming week, the postcards WG helped us design will hit our local market. In addition to the promotion being offered ($29/month membership cost), the postcard will also encourage recipients to visit the website, and even to join online.
Initially, I was a bit concerned about the timing of that online offer. That's because the price tag on this particular printing and mailing is costly- upwards of $3,000. And as recently as last week, we didn't have a website. But all that has changed with the help of WG's webmaster Todd.
We now have a phenomenal website - check it out at www.worldgym.com/phoenix. Now I can hardly wait for the postcards to drive traffic to the site. In fact, this weekend I went in to the office to go over a few revisions for Todd. Once I logged in to the administrator section of my site, I got a great surprise - we made our first online sale already! It amazed me that someone made their way to our site with virtually no marketing material directing them there. Furthermore, the individual bought a 1-year, paid-in-full membership. This is what I've been waiting for.
If you've been following this blog, you already know my view on the importance of offering membership purchases online. I believe it's going to be at the top of the list of The Most Important Developments for 24/7 Clubs. If you can make membership sales online, you will vastly improve your ability to adjust your club's staffed hours. And that's guaranteed to trim payroll expenses and keep your club running profitably.
In fact, when my manager and I met last week to discuss sales strategy, we both agreed on this: If a prospective member visits the club and does not buy a membership, the next most important thing he can do is to get them to visit our website after they leave. To that end, he makes sure they get his business card and a couple of World Gym logo pens, both of which have our web address on them.
Gone are the days of pressure selling, which is a tactic still being used by many. Instead, we plan to show prospects what we have to offer - a clean, modern facility and the ultimate in convenience. Then, if they don't wish to join immediately, they can leave to think it over. I anticipate that many who leave our club will visit our website and ultimately join online. It's a kinder, gentler approach to sales.
I'm aware of more plans WG has for their website and the online memberships. But I'll honor them as a trade secret until they announce the plans themselves. However, I can say this much: One of the biggest benefits to owning a WG franchise is likely to be their commitment to website development, and their pursuit of innovative technology.
24/7 clubs, by their very nature, depend on technology. As time goes by, you'll notice that what sets successful clubs apart will be their effective integration of technology. And that's not unlike what's true for almost all businesses today!
This coming week, the postcards WG helped us design will hit our local market. In addition to the promotion being offered ($29/month membership cost), the postcard will also encourage recipients to visit the website, and even to join online.
Initially, I was a bit concerned about the timing of that online offer. That's because the price tag on this particular printing and mailing is costly- upwards of $3,000. And as recently as last week, we didn't have a website. But all that has changed with the help of WG's webmaster Todd.
We now have a phenomenal website - check it out at www.worldgym.com/phoenix. Now I can hardly wait for the postcards to drive traffic to the site. In fact, this weekend I went in to the office to go over a few revisions for Todd. Once I logged in to the administrator section of my site, I got a great surprise - we made our first online sale already! It amazed me that someone made their way to our site with virtually no marketing material directing them there. Furthermore, the individual bought a 1-year, paid-in-full membership. This is what I've been waiting for.
If you've been following this blog, you already know my view on the importance of offering membership purchases online. I believe it's going to be at the top of the list of The Most Important Developments for 24/7 Clubs. If you can make membership sales online, you will vastly improve your ability to adjust your club's staffed hours. And that's guaranteed to trim payroll expenses and keep your club running profitably.
In fact, when my manager and I met last week to discuss sales strategy, we both agreed on this: If a prospective member visits the club and does not buy a membership, the next most important thing he can do is to get them to visit our website after they leave. To that end, he makes sure they get his business card and a couple of World Gym logo pens, both of which have our web address on them.
Gone are the days of pressure selling, which is a tactic still being used by many. Instead, we plan to show prospects what we have to offer - a clean, modern facility and the ultimate in convenience. Then, if they don't wish to join immediately, they can leave to think it over. I anticipate that many who leave our club will visit our website and ultimately join online. It's a kinder, gentler approach to sales.
I'm aware of more plans WG has for their website and the online memberships. But I'll honor them as a trade secret until they announce the plans themselves. However, I can say this much: One of the biggest benefits to owning a WG franchise is likely to be their commitment to website development, and their pursuit of innovative technology.
24/7 clubs, by their very nature, depend on technology. As time goes by, you'll notice that what sets successful clubs apart will be their effective integration of technology. And that's not unlike what's true for almost all businesses today!
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