Developing Employees. Part 3

Responding to the market

With competition or the threat of competition, the first thing many owners do is cut membership rates and employee costs and benefits. This directly conflicts with growing your organization and keeping quality employees. Dropping rates is an easy short-term approach, but it will always be the first step to putting a club out of business. As prices drop, more members will join the club. However, the capacity of the facility will stay the same, the potential long-term gross income will decrease, maintenance costs will rise and the net return will diminish. Therefore, the opposite position should be taken. Most members will pay higher rates for a quality facility with a knowledgeable, familiar and mature staff. As you begin to separate yourself from lower-priced clubs, the quality of your clientele will also begin to separate. Clubs with lower rates are more crowded, have higher attrition rates, aggressive sales tactics, higher advertising costs, lower morale and a lower quality of employees with high employee turnover.

Expanding your opportunities

Once an owner has laid the foundation for employee loyalty, there is opportunity for quick market penetration and growth through consolidation, acquisitions and new development. As the fitness industry moves into another cycle, it is important to remember the following:

1. The general public’s (including building and landowners) awareness of health clubs has made them acceptable as a legitimate investment and service business. Space in new developments and the option to lease is now available to well-financed facilities.

2. There is an educated and powerful workforce that is well trained on basic health club management, operations and sales, and that is seeking long-term career opportunities.

3. When presented with an opportunity to purchase, merge, manage or license an existing fitness business with an established membership base, you will need qualified employees to take over operations without leaving your current operation too thin.

Through diligence and research, there are opportunities not only to acquire or convert properties from other owners, but to expand into markets that, until now, have not been penetrable.

As with any business, finding quality, knowledgeable and professional employees is key. One of the most practical ways to support growth from the acquisition of clubs is to retain your current management and staff, implement new consolidated administration systems, and institute accountability for operations, sales and marketing systems. Then through remodeling, equipment addition and modification, regional managerial support, advertising, retail distribution and imaging, you can attempt to establish market penetration and brand loyalty. However, to accomplish such an undertaking, it will be necessary to obtain the existing employees’ support and loyalty.

Thriving in the next 10 years means embracing a new business strategy and mindset for a maturing and fiercely competitive fitness industry. To remain fiscally competitive, a company must continually expand and grow. Quality employees who are familiar with existing operations are needed to open new facilities, and the better you take care of your employees, the more profitable you can become.

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