For the second straight year, we collected data from boutique fitness studios from around the world to help determine what differentiates top performing studios from those struggling to make ends meet each month. We compiled this data in our Boutique Fitness Benchmark Report to provide business owners with insightful data and recommendations to help them run a more financially fit business.
In the report, we feature top performing studios as Thrivers, which are those making over $7,000 a month in net income. On the other end of the spectrum, Stragglers, are studios who are break even, or sometimes even lose money each month. There are several commonalities among Thrivers that have enabled them to build successful businesses. One of the top commonalties is that Thrivers have a strong grasp on their finances (for a deep dive into gym finances check out our 40-page guide to Gym Financial Management). To build a strong financial foundation, Thrivers are doing these three things.
1). Thrivers better manage their expenses
We have a hunch that you opened a fitness business to pursue your passion for health and improve the lives of your members, not because you’re passionate about finances. However, running a successful business, one that will enable you to pursue your passion and serve your members for years to come, requires you to manage a budget and maintain an average monthly profit that will keep your studio thriving. Thrivers generate $20,791 a month in profit while Stragglers have an average monthly loss of $2,437.
The main reason behind this huge difference is that Thrivers better manage their facility costs and payroll. These are two of the biggest costs for small business owners. Thrivers only spend 14% of their monthly revenue on rent/mortgage while Stragglers spend 90%. 30% of Thrivers’ monthly revenue goes towards payroll, while Stragglers put closer to 34% of their revenue towards this. After payroll and rent, Thrivers still are left with 56% of their revenue, while Stragglers are in already in the hole.
2). Thrivers have additional revenue sources beyond memberships
At a fitness business, the main revenue driver will almost always be memberships. Thrivers generate 60% of their monthly revenue directly through memberships. However, this group does a great job generating revenue from additional sources, such as retail sales, events and personal training. By doing this, Thrivers are able to generate $309 in revenue per member each month compared to only $78 for Stragglers.
3). Thrivers charge more for their services
Thrivers provide high-quality training and have created strong communities that warrant their decision to charge more for their services. The median price of an unlimited membership for Thrivers is $163 compared to $130 for Stragglers. In addition to charging more, Thrivers have significantly more members, which causes this $36 difference in membership pricing to add up fast.
Remember, you started this business because you wanted to make a difference in peoples’ lives. You recognized the need for the type of training you provide, and have seen how big box gyms can’t provide this type of service. Be confident in the services and training you provide and let your pricing reflect this.
If you’re interested in learning more about what Thrivers are doing to build successful fitness businesses, get your free copy of our Boutique Fitness Report today!