You know that athlete who comes in and workouts but never tracks their progress and doesn’t see results or improvement? They’re working out, but they’re not working towards a goal. They never know where they stand or where they’re going. Their whole training process is random, so success for them comes down to luck.
Unfortunately, the same can be said about a box owner who doesn’t have financial management in place. Without it, success depends on chance and luck. Even if you have a strong community full of successful athletes, your business could end up being one of the many that fail each year.
Here are just five of the many reasons financial management has to be a priority.
1). Mistaking Revenue for Profit
All revenue or money coming in isn’t profit. But without careful financial management, you’ll never know how much you’re making or profiting. One example of how this can become a problem is if you miscalculate and reinvest money in an area of your business that’s not actually profitable. (As opposed to still bringing in money) If that happens, you’re literally throwing money away.
2). Paying too Much in Taxes
Speaking of throwing money away- if you’re not carefully tracking revenue, expenses and deductions, you’re probably paying more than you need to in taxes. If you need help with your taxes, Zen Planner has a report for that.
3). Wasting Money on Worthless Marketing
Without understanding metrics like your cost per lead and close rate, you could be wasting money advertising in the wrong places. Get ideas on where you should be marketing your box.
4). Making Bad Investments
If you don’t have a handle on your finances, you’ll never know when to reinvest in the business. Sure, you might want to buy additional equipment or rent a bigger space, but doing these things too soon could leave you with more money going out than coming in each month. Without having a grasp on your finances, you’re likely to end up guessing on these big decisions when you need to be certain.
5). Coming Up Short on Cash Flow
Even though your box might be making a nice profit, you can still end up short of cash and unable to pay your bills. (Without borrowing money) That’s why cash flow management is critical. Across the board, financial experts say that not managing cash flow is the most common way business owners get into trouble.
Effective financial management is critical to the success of your business. It will give you the information you need to know if you’re making a profit, able to buy more equipment or hire a coach. Financial management will ensure you’re making decisions based on facts, not guesses, so your success isn’t contingent on luck.
With the help of over 400 boxes around the world, Zen Planner was able to develop the most detailed financial performance information available for box owners. Get your copy of our Affiliate Gym Benchmark Report today!