[eBook]
The ECOFIT Guide to:
Maximizing Profit of
Your Health Club
Floor Space
Written by: ECOFIT Networks Inc.
www.ecofitnetworks.com
The profitability of your health club
will be made or lost in the details.
There are a lot of factors that go into determining the profitability of your
health club. Members retained month over month is a metric you’re
probably already watching closely. The cost of acquiring a new member
may be another.
But in the health club industry, every square foot counts. We know new
trends will emerge. Some will stay and some will fade away. Functional
fitness. Group cycling classes. Saturday morning outdoor running clubs.
But what remains constant throughout these market trends is the need
to maximize the ROI of your floor space. Odds are you have a fixed
amount of space in your club. Maximizing its use and profitability has to
be a top priority for you.
Maximizing floor space ROI isn’t just about improving efficiency a little
bit. It’s not going to instantaneously put thousands more in profit into
your pocket. The savings adds up over time. Depending on how you
track that efficiency, you’ll be equipped to move with the market, or be
passed by the club down the street.
This eBook guide will walk you through a step-by-step process for the
inputs you need to be examining to achieve the output of more profit at
the end of each month and year.
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What goes into calculating ROI?
Here’s what you need to know:
1.
The floor space you have to work with.
2.
The expenditure of the equipment that currently
occupies your floor space.
3.
The amount of floor space your equipment
is currently using.
4.
The usage patterns of your equipment
as currently configured.
5.
The session types offered with the available
equipment, and the revenue they each generate.
6.
The ROI of each session type relative to the physical
space it takes up in your facility.
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Step 1: How much square footage do
you have to work with?
If you don’t know the square footage of your facility’s available floorspace, find out
exactly. Don’t guess. Running a profitable health club isn’t going to happen if you eyeball
things, make assumptions or are otherwise not into the details.
It’s been said that “the devil is in the details.” Well, so is the profitability of your health
club. Understanding the floor space of your unique facility is the first start.
How to determine the square footage?
Get the blueprint from the architect. If you have to ask your boss, explain to him that
you’re coming up with a recommendation for how the club can be more profitable. Most
employers will be impressed and pleased if you’re taking the initiative on your own.
Once you have the blueprint for the facility, you should have exact numbers.
40’
20’
Desk
If your space is 20 feet wide by 40 feet long,
you have 800 square feet to work with, not
including space lost from an immovable
object like a desk or pillar.
It’s important to remember to deduct space that’s not entirely moveable. For example, if
you have a island desk in the middle where members go to grab towels, programming
cards or to check in for a personal training session. You may need to use a tape measure
to determine the size of this space. Then, deduct it from the total available space you got
from the blueprint.
Editor’s Note: Diagrams and numbers are for illustrative purposes only. Not based on an existing facility.
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Step 2: Find out the cost of equipment
currently occupying your floor space.
A critical variable in your ROI equation is:
“What did all that equipment cost?”
The best way to figure this out is to create a table:
Equipment Type
Quantity
Per Unit Cost
Total Cost:
Treadmills
12
$3,500
$42,000
Ellipticals
6
$2,700
$16,200
Spinner Bikes
15
$1,500
$22,500
Strength Equipment
14
$2,000
$28,000
Total:
47
$108,742
Recommendation: Don’t use a cocktail napkin, and don’t use pencil
and paper. Use a spreadsheet in Google Docs (it’s free) and type this
information in. You can use some simple formulas to do the math for
you. In the long run, you will be more organized and will be less likely
to make a mistake in your computation.
There’s a lot of money to be made and lost in this exercise. Eliminate
as many opportunities as possible to make a mistake.
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Step 3: Calculate the amount of floor
space your equipment currently uses.
Before you can decide on a better, more lucrative floor plan, you
have to know what you’re improving against.
Here’s what you should consider as you figure this out:
1. There’s the size on the spec sheet, and there’s the actual
space one piece of equipment needs.
Get out your tape measure and take exact measurements of the
distance between machines in a single pod - like treadmills, and
machines in the strength section of your floorplan. Do your treadmills
require a bit of buffer space? Remember, every inch matters.
2. Once you know the actual size, make that your default
space usage measurement.
Don’t forget that if you need 6 inches between each treadmill, you
may only need to account for 3 inch buffer on each side, and a full 6
inch buffer on the treadmills that bookend a row.
3. Get feedback from your members.
How do members feel about the spacing of your machines? Talk to
your customers, or have someone put together a brief survey to get
more feedback. This entire exercise has to account for overall
member satisfaction, so be sure to collect feedback in a professional
and organized manner.
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Step 3: To calculate, list your
information in a table.
Lay out the information in a table:
Equipment Type
Quantity
Per Unit Floor Space Used:
Total Floor Space Used:
Treadmills
12
3.5’x6’ =
21 sq ft per treadmill
12 x 21’ =
252 sq ft for treadmills
Ellipticals
6
2.5’x6’=
15 sq ft per elliptical
6 x 15 =
90 sq ft for ellipticals
Spinner Bikes
15
2’x5’ =
10 sq ft per bike
15 x 10 =
150 sq ft for bikes
14
3.5’x3.5’ =
12.25 sq ft per strength
14 x 12.25 =
171.5 sq ft for strength
equipment
Strength Equipment
Total square footage used:
Editor’s Note: Numbers are for illustrative purposes only. Not based on an existing facility.
www.ECOFITnetworks.com
663.5 sq ft
Step 4: Determine your equipment’s
current usage patterns.
The single best way to determine your equipment usage is to equip
your machines with usage tracking hardware that will generate
automated reports for you and your staff.
These reports will identify peak usage times and reduce reliance on
“gut instinct” or “It seems busiest when” type of decision making.
“Guesstimation” type of analysis leaves you highly susceptible to
making bad business decisions for your health club.
Think of it like your car. Would you ever just take your car in for an
oil change because “it seems like it’s been awhile since I last took
care of this”. Or would you prefer to have the smallest bit of data on
when you last serviced your vehicle?
If you don’t have this efficiency-saving hardware installed yet, you
should look at your check-in reports to see the traffic flow of
members into your club. How many people are checking in at which
hours of the day? Check-in’s per hour is a metric you would want to
look at until you could get an actual measurement for how often
your equipment is being used.
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Step 5: What session types do you
currently offer with what space?
Start by listing the session types you offer and the corresponding details:
1.
2.
3.
4.
List your your session types.
How many people are in each session, on average?
How much does each person pay to be in each session?
Multiply those numbers to get total income per hour by session type.
Session Type
Participants per
session:
Income per participant
per hour:
Total income per
session:
1-on-1 private training
1
$75
$75
Semi-private training
2
$50
$100
Equipment-based classes
8
$30
$240
Non-equipment, mat classes
12
$20
$240
Next, multiply total income per hour by the number of
sessions your club and staff can handle each week.
Session Type
Sessions / week
Total revenue per
session:
Net revenue per
week:
1-on-1 private training
30
$75
$2,250
Semi-private training
10
$100
$1,000
Equipment-based classes
20
$240
$4,800
Non-equipment, mat classes
10
$240
$2,400
Total:
70
Editor’s Note: Numbers are for illustrative purposes only. Not based on an existing facility.
www.ECOFITnetworks.com
$10,450
Step 6: What is the ROI of the
space used for each session type?
Let’s bring back your floor plan and look at that again. We’ll zoom in, because
we want to be able to look at each piece of floor space.
40’
6’x16’
= 96 sq ft
20’
10’x16’
= 160 sq ft
8’x20’ = 160 sq ft
Desk
Put out different areas to approximate where
certain types of services happen on your floor.
Be sure to leave buffer space. You probably
won’t want people on machines against walls.
8’x10’
= 80 sq ft
Now, take your net revenue per week for each session, and add in a column that
indicates the approximate square footage needed for this type of session:
Session Type
Net revenue / week:
Square footage needed:
Revenue / sq ft
1-on-1 private training
$2,250
96
$23.44
Semi-private training
$1,000
160
$6.25
Equipment-based classes
$4,800
160
$30
Non-equipment, mat classes
$2,400
80
$30
Finally, divide net revenue per week by square footage needed to get your revenue
per square foot.
Editor’s Note: Diagrams and numbers are for illustrative purposes only. Not based on an existing facility.
www.ECOFITnetworks.com
Income per square foot can vary
drastically when you crunch numbers.
Would you have initially realized the difference in income per sq ft for
semi-private training?
Session Type
Income / sq ft
1-on-1 private training
$23.44
Semi-private training
$6.25
Equipment-based classes
$30
Non-equipment, mat classes
$30
The figures used in this eBook are for illustrative purposes. You should
take your own specific measurements and draw your own conclusions
based on the configuration of your club.
www.ECOFITnetworks.com
“What about non-trainer-based session revenue?
What about regular dues paying members?”
The same formula for figuring our revenue per square foot can be used to
determine the return on the placement of your machines for dues-paying
members who don’t purchase training or group training services.
Here’s how you calculate it.
Let’s focus on just the grey, 96 sq ft space in the top right of your gym.
40’
6’x16’
= 96 sq ft
20’
10’x16’
= 160 sq ft
8’x20’ = 160 sq ft
Desk
8’x10’
= 80 sq ft
Let’s say you can get 3 treadmills in this space, comfortably.
Now, you need to know how often those machines are used. With the right hardware
installed on your machines, you should receive a report with the exact average usage
volume per week.
Now, do this computation:
treadmill usage volume
total equipment usage volume
This gives you the percentage of equipment usage of your
treadmills relative to other equipment in your club.
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“Well, I don’t know my
equipment usage volume.”
Total equipment usage is the last piece of
information you’ll need to help you connect
ROI of floor space for dues-paying members
and for trainer-based sessions.
When you know total equipment usage, you
can deduct average equipment usage
related to trainer-based sessions from total
equipment usage.
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“How can my club be more profitable?”
That is literally the million-dollar question.
If you’re curious about the unique ROI of your club’s floor
space, you don’t have to go it alone.
ECOFIT offers 100% free, zero obligation Health Club
Operations Business Coaching Sessions.
On your free, 30 minute call, an ECOFIT team member will
talk through your club configuration with you. Together, you’ll
uncover areas for improvement where you could potentially
save thousands of dollars a year.
Sessions are completely free to book.
So what are you waiting for?
All you have to lose is more profit.
Book Your Free Session
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About ECOFIT
ECOFIT helps club owners run a more
profitable business by tracking fitness
equipment usage.
How does it work?
1. Sensors plug into any brand of equipment.
2. Data is sent wirelessly on ECOFIT’s proprietary network.
3. Data & reports are delivered to you for viewing on any
device.
4. Data helps club owners make more informed decisions on
equipment.
Visit www.ecofitnetworks.com to learn more and
book your free ROI coaching session.
www.ECOFITnetworks.com