Club Management

Club Management

AMERICAN MUSCLE & FITNESS

HEALTH CLUB MANAGEMENT CERTIFICATION PROGRAM

HOW TO OPEN OR MANAGE A GYM OR TRAINING SALON

by Gregory Ladd

1988 AAU MR. INTERNATIONAL 1987 AAU MR. NORTH AMERICA


Copyright 2002-2009

Legal Disclaimer

The Author accepts no liability for actions influenced or taken by anyone that reads this manual or receives a certificate of satisfactory completion of the American Muscle and Fitness (AMFPT) Health Club Management Certification Program. This manual is meant to inform, entertain and educate the reader. The reader should independently verify any errors or omissions. The reader accepts sole responsibility for any use or misuse of the information contained herein. This text may not be reproduced except where noted within, or by written permission of the Author.

INTRODUCTION

Welcome to the American Muscle and Fitness Health Club Management Certification Program. Perhaps you have enrolled in this program because youíve dreamed of turning your avocation into your vocation, or you may already be a gym owner or manager who wants to give club sales a boost and maximize profits. Whatever your motivation for enrolling, you are on the right track by understanding that management plays a one hundred-percent role in the success or failure of any business, and even more so in the competitive health club industry. Every business decision you make will have repercussions both short and long term. Most of the management themes and topics covered in this manual apply to both smaller training salons and large health club operations.

The average weight lifter or fitness enthusiast who opens a gym may not start out with much management experience, but they do possess the energy and enthusiasm that it takes to become successful in the health club business. After completing this program, you will be equipped to make informed business choices so that you can manage any type of training facility or retail business.

A manager is the person that directs policy; selects, trains and oversees personnel; and allocates business resources to maintain positive cash flow and profitability. As a health club facility manager you will be responsible for making decisions about where to locate your club(s), who to hire, what equipment, furniture and inventory to purchase, employee and appointment schedules, and how to pay the bills each month. It is up to the manager to negotiate leases and vendor contracts, while concerning him or herself with local zoning laws and ordinances about things as mundane as sign placement and size. You will be dealing with sales calls continually, but the most important duty a manager performs is keeping precise track of income, inventory and cash flow. You must know how every penny earned is spent, while keeping a tight reign on extraneous or frivolous expenditures.

Many people who jump into the health club business donít realize the time, space, amount of equipment, or money required to get (and stay) open. A small 2000 square foot personal training salon can be set up for ten to fifteen thousand dollars. A 50,000 square foot commercial health club can cost $250,000-$1,000,000 before it ever opens, and there are no guarantees that the club will be profitable. This manual will provide some tools to help you profit and succeed in the gym business and teach you just about everything youíll need to know about equipping, staffing and opening a health club or personal training salon.

Small gyms or training salons make great family owned and run businesses. Profits in a well-run business can usually support the family after expenses, and everyone pitches in to work at the club. A general rule in the industry is that when there are two or more partners in a small gym operation, no one earns enough money to justify the hours-spent working. If the amount of hours put in at the club by each partner is not specified in an agreement, profits will still be split equally no matter how many hours each partner toils. Hourly compensation has to be specified in the partnership agreement. Every possible situation must be covered by the document and your business attorney must ratify it. With money and investments at stake, disagreements between partners can become intense. Very few friends entering into a business together remain friends, no matter how close they were when they started or how well intentioned. Even families are not immune to the divisions that running a business can cause.

When you get too busy, youíll need to develop a young trainer to pick up appointments and start taking your overload while you sell training packages. Find a fit young guy or gal, and introduce him or her to your current clients. Tell them that he or she is your assistant, and they'll be training with the assistant regularly. Pay your new staff trainer half the regular fee you charge. By doing this you can leverage your time and earn money even when you're on vacation! Eventually you should groom two or three helpers so you don't have to train anyone yourself. Try to sell your trainer management services to a larger local health club at that point, especially a new club. They'll welcome your help with their staffing problems and youíll be expertly able to put a profitable PT program in place for them. The topics covered here may give you a new way to look at your business potential.

LEGAL BUSINESS ENTITIES

During the planning stage of your new business you will have to decide what legal form will suit your business. Common legal business entities are; Sole Proprietorship, Partnership, Limited Liability Company (LLC) or a type of corporation. There are advantages and disadvantages to each. Consult your accountant or lawyer for the most suitable fit for your application.

Sole Proprietor

If you register as a sole proprietor, the IRS considers income that flows through your business as personal income. Sole proprietors can set up their business as a DBA, or "doing business as" name. If you do business as a DBA, you spend the money you make as you go and only pay income taxes on what is left over, deducting legitimate business expenses.

Expenses are any costs you incur in the daily running of the business. These include rent, utilities, phone, payroll, advertising, entertainment, supplies, maintenance expenses, vehicle, travel expenses, insurance, fees, and miscellaneous costs that arise constantly. Bankruptcy filings would flow through to the individual and be assessed against his income and credit rating.

Partnership

Partnerships are similar to sole proprietorships except two or more partners comprise the legal entity. The profits and losses are distributed evenly to each partner. A separate partnership income tax form must be submitted by March 15. If you decide to create a partnership form of business, you can spread out the every day duties equally between the partners. If you go into a partnership, you must create a partnership agreement outlining the duties and expectations of each partner, including issues like hours worked, pay, profit sharing, debt sharing and exit strategies. If a partner decides to leave, or if you ever decide to sell the business you will know exactly what the process is. Have a lawyer look over the agreement and then all partners should sign it. If there is a disagreement, you can all go back to the partnership agreement for clarity. It is also legally binding if the partnerís dispute makes it to civil court for any reason. In case of bankruptcy, filings would flow through to each of the individual partners and be assessed against each of their incomes and credit ratings.

Corporation

There are several types of corporations, S-Corp, C-Corp and General Corporation. Corporations are like creating a legal imaginary person to act on behalf of a business. There are rules that must be followed by all corporations such as having a board of directors and board meetings, keeping records of the minutes, and passing by-laws that the officers must abide by. Officers of the corporation are protected from personal bankruptcy filings, unlike partnerships and sole proprietorships. Bankruptcy would not flow through to the individual founders or be assessed against their income or credit rating.

As founder, you become an employee of a corporation and you may draw a salary, which is taxed like a traditional paycheck. At the end of the fiscal year, if the business turns a profit, you will receive a dividend or profit sharing check that does not require you to pay employment or social security tax.

Limited Liability Company

A Limited Liability Company (LLC) is designed to limit the amount or exposure that an individual business founder has to law suits or bankruptcy proceedings. Many law firms are LLCís. Check with your tax advisor to determine if a LLC would be a good fit for your business. LLCís may have the liability advantages of corporations, while being taxed as sole proprietorships.

Financing Your Dream or Expansion

The way that many health clubs and salons get seed money to open or capital for expansion is through savings, friends or relatives, or existing lines of credit. Bank financing is seldom a source for new health club start-ups because of the high failure rate in the industry and reputation for poor management. Most often, a combination of family and friend investors, personal savings and credit cards get the operation up and running.

Occasionally "Angels," (investors-generally silent partners) will loan money to entrepreneurs for a share of the business ownership, usually the largest voting share. That is especially true if your business is a going concern and you wish to upgrade. It may be worth your while to give up some ownership to establish your dream business. It also means that someone else will be looking closely over your shoulder at the operations and management.

The Internet has made it easy to shop for angel investment partners by searching on investors. They will require you to submit a business plan and some market research for the area you will be servicing. You can usually post your need for an investor for a small fee and let investors find you. Believe it or not, there are many wealthy business people in your area that need an investment that loses money so that they can take a charge against their taxes while retaining equity in the business. If you use an angel, your lawyer will have to OK the investment documents and partnership agreement outlining the obligations of each party. Make sure you know all of the strings attached to the money.

Profit Centers

Personal training salons and bigger health clubs need to develop as many profit centers as possible. Profit centers are satellite businesses that add to the overall income of the club. Examples are memberships, personal training, nutrition and weight loss centers, daycare, supplements, sports drinks, snack bar, tanning, squash, handball, aerobics classes, training gear and sportswear. Some clubs also offer massage, chiropractors, and hair salons. The more profit centers you can develop, the greater the odds of success.

Some main issues that need to be addressed when setting up a health club are: rates, equipment, policy, employees, sauna, locker rooms, showers aerobics, massage, chiropractic, tanning tennis, squash, insurance, Jacuzzi, steam bath, liability laws, daycare, maintenance and profit centers.

Salon or Club Design

The layout and design of your salon or club must be striking and state of the art. Cosmetic appearance and flashy new equipment is all that the potential customer will see when visiting your facility, so it must be top notch. Appearance is usually the easiest thing to fix in a gym and the least expensive. Paint, increased lighting, new upholstery and cleaning products go a long way in creating a glamorous image for your club or salon.

If you have an existing gym or have picked out a building, start by taking a look at it from the parking lot as you come in. If the facade of the building is run down, dark or forbidding, you will have to change it. The entrance has to be inviting, not a labyrinth of corridors leading to a basement somewhere that customers must first traverse. Entering a new training facility is traumatic enough for new clients and members without frightening them off with personal safety concerns.

To get a good idea of how to decorate and equip your facility, stop in at the best-known clubs in your city and look at their layouts. You will find that they promote sales through membership drivesómember contests for exercise equipment, TVs or bicycles. The prizes are usually displayed prominently in the entranceway or lobby of the club. Promotions to draw in new customers from current members are an essential component of health club success.

As you walk farther in, youíll usually see a comfortable, elegant sitting area with couches and coffee tables. Nearby, the sports gear and clothing should be displayed on racks with bright sale signs prominently displayed. Finally the front desk comes into view. The front counter sets the tone for the rest of the facility. It is usually placed so that staff can watch the front entrance and the training floor or area. Supplements and sports bars are set conspicuously on the counter. The sports drink cooler should be next to the front counter with easy access by staff or members.

The exercise equipment is grouped by machine type. Free weights are often given their own room. Cardio pieces like treadmills tend to be on the perimeter of the exercise machines or in a separate cardio space. Immaculately clean locker rooms containing Jacuzzis and saunas should be placed toward the back of the club or on a lower level. Squash, tennis and basketball courts are placed to the back of the facility so that potential customers who express an interest in joining have to walk through and view the main area on their tour.

Even though wide-open expansive clubs are the norm, when designing a club while on a tight budget, you must utilize every inch of space. You pay rent on it even if it sits empty, so do your best to develop each area with full utilization. If your aerobics floor is empty most of the day, consider renting it to an aerobics or martial arts organization. Empty offices can be rented to chiropractors, masseuses, or hair stylists. Members love new equipment and change. Make equipment upgrades and cosmetic rearranging a staple ongoing policy.

Business Insurance

If you lease space from a landlord in a plaza or strip mall, you will be required to carry a minimum of $1,000,000 in liability insurance that limits landlord liability if someone becomes injured while using your facility. Expect to pay about $1500-$2500 for a good annual million dollar policy, including mandatory business fire insurance. Many lessors now require at least a $3,000,000 liability policy. Your insurance underwriter will probably require the entire amount in full when you purchase the policy.

The agent will ask about tanning, showers, saunas, and any other activity that might cause injury and make a tour of the facility. Make sure that they have a copy of the waiver and health questionnaire that your clients or members fill out. If you know other club owners in your city, ask them who they use as an insurer to find the most affordable rate with the most coverage.

Business Forms

The following forms are crucial to the success of your salon or health club.

They are easy to use and will give you an exact accounting of sales and track of inventory, memberships, personal training and individual workouts. At the end of each shift, check remaining inventory against sales marked on the sales sheet. Inventory must be taken at the beginning and end of each shift as different employees take over. For tax purposes, youíll need to keep detailed sales and expense records for at least seven years before discarding. To be safe, tax records from business activity should never be thrown out.

In addition to these forms, you need to have a custom membership card printed and card laminator. The card should have the club name, address and phone number, the memberís name and the renewal date. It also needs a place for the authorization signature of the staff member who issued it. Each member must sign in when they train for insurance purposes with the date and their membership renewal date.

Inventory Control Sheet

Write amount in the correct column

 

Date

                   
 

Time

                   

Item

Initial

                   
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       

Sales Control Sheet

Write item sold, initials time, date and notes in the correct column

Item Sold

Date

Time

Initials

Price

Notes

           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           

 

MEMBERSHIP CARD

NAME:__________________________________________________________

ADDRESS:_______________________________________________________

CITY________________________STATE______________ZIP_____________

PHONE________________________WORK PHONE_____________________

RELATIVE PHONE NUMBER ________________________________________

 

Date

Membership Type

Renewal date

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

 

TRAINING PACKAGE CARD

NAME:__________________________________________________________

ADDRESS:_______________________________________________________

CITY________________________STATE______________ZIP_____________

PHONE________________________WORK PHONE_____________________

RELATIVE PHONE NUMBER ________________________________________

 

Date

Number of Sessions Purchased

Renewal date

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     

 

Personal Training Tracking Sheet for:

Name___________________________

Write date client trains in the correct column

Date

Date

Date

Date

Date

Date

Date

Date

Date

Date

Date

Date

                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       
                       

Notes:

DAILY TRAINING LOG

Name: Date: Start Time: Finish Time:

Exercise

weight

reps

weight

reps

weight

reps

weight

reps

weight

reps

                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     

Cardio Component:__________________Time:__________________________

 

Notes:

 

 

 

 

 

 

 

Diet:

 

 

 

 

 

 

 

Supplements:

 

DAILY SIGN IN SHEET

MEMBERS AND GUESTS PLEASE SIGN IN

DATE:

Name & Time

Renewal Date

Name & Time

Renewal Date

       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       
       

Setting Club or Salon Policy

Your club rules should be posted in plain sight somewhere near the front counter so that people can see them plainly when they come in. Each new member must sign a copy (along with the health questionnaire and waiver), that you can keep on file with his or her contract, health questionnaire and liability waiver. Given them copies to take home.

Common gym rules are:

Sign in when you come in

No children in the gym training areas

Put your weights away

Towel off the equipment when you finish

No foul language

No drinks except water on the gym floor (eating areas only)

30 minute time limit on the cardio equipment

Donít drop your weights

Donít make excessive noise while training

Shirts must be kept on while training

Your employees must set an example. Each employee should be issued an employee handbook outlining their duties up front and setting rules for them to follow. They are your representatives to the public, so their behavior reflects on you.

Employee rules that must be adhered to are:

No foul language

No dirty jokes

No sexual statements or harassment to members or employees

No loud or raucous conversation

The front counter person should smile and address each member by name as they enter the club

The front counter person should smile and address members by name, thanking them as they leave the club

Trainers continuously scan the training area to check for problems or hazards

Stealing is grounds for immediate dismissal

When you see a mess of any kind, clean it

Make sure the weights are picked up

Check training area, locker rooms and bathrooms every half-hour for cleanliness, dry up water spots

Marketing Your PT or Health Club Business

If you are a small operation without an advertising budget, you must employ alternative, low cost methods of advertising. Run a small-classified ad in your local penny saver and run it every week until you start to generate some business for your facility. People need to see your ad regularly before they feel compelled to call you. Go to affluent looking neighborhoods and stick your cards or flyers in doors. Don't use mailboxes, the post office frowns on it.

Have business cards made up and distribute them to everyone you know or meet. Ask them if they need a trainer or know someone who might be looking for personal training. Leave some cards in hair salons. Pin cards on bulletin boards at laundromats, groceries stores, in phone booths and drop them on the floor in gyms you visit. Anyplace is a good place to drop a card.

Increase advertising to local daily newspapers, the Internet, and fitness magazines as your budget increases to develop a wider client base. They can be a little bit more expensive methods for developing a customer base. When you get a new customer, ask for referrals right off the bat. Hairdressers, hospital workers or restaurant employees always come into contact with a lot of chatty people who like to gossip. They will be your best references. If you can get a client who works in any of those fields, your business will really take off!

A bigger health club operation will be using mailers, print, TV and radio to get the message out. When there are no monetary restrictions, consider the advantages of a franchise. The names Goldís Gym, Bally Total Fitness, World Gym, and 24 Hour Fitness are well known and will sell memberships with no effort once the word gets out you are open.

OPENING AND RUNNING A PERSONAL TRAINING SALON

This section will show you how to open a salon or manage the training services your club offers to create a profit center.

A training salon is an excellent one-man operation because the overhead and initial costs are so affordable. You schedule your own appointments, so no one is there unless theyíre in for a training appointment. It gives you flexibility of hours and requires only a fraction of the weights and machines necessary to equip a commercial gym. You can probably purchase all of the items on the equipment list below for $10,000 to $20,000, depending on whether you choose new or used. You will have everything necessary to open a full service-training salon of 1500-4000 square feet.

If you decide to go into business for yourself or with partners, you will need to go to the County Clerkís office and file a "Doing Business As" certificate (DBA) as described above. You will be asked to select a name for your business. Try choosing a name that describes your business like, "Personal Fitness Training," or, "Personal Training Salon," so that when people read your business card or ad they know exactly what service you offer.

Find a good accountant and talk to him or her about setting up your business while you are in the early planning stage. Your business will be assigned a tax identification number, which allows you to write off your business expenses against your income at tax time. You may be required to file quarterly tax statements if you are making a lot of money, because the government doesnít want you to have their money for any longer than you are entitled. Start keeping a record of all of all training fees received and expenses. Make sure you hang on to all of your sales receipts.

PT Operating and Scheduling Procedure

Most personal training studios employ a scheduling system where clients come in at designated times and warm up on cardio equipment for 15 minutes. The trainer is actually training them for only 30 minutes. This allows you to stagger appointments so that you or your staff can train someone new every 30 minutes. The next client will be in the studio 15 minutes early waiting for you, instead of you waiting for them to arrive.

Another good operating model is to have the trainers float around the club so clients can arrive any time they please. Clients must understand from the start that there may be several clients you or your trainers will attend to training simultaneously. This system works well when you get too many appointments to handle each day. It will be hard to change your operating system mid stream without disgruntling the customers, so think long and hard about the type of service that will best meet your needs and the needs of your customers. Once you decide on a particular scheduling method, stay with it.

A third option is a hybrid of the two. During the busiest hours of the day, approximately 6 AM to 9 AM and 5 PM to 8 PM, trainers float around the studio and appointments arenít necessary. Any other time of the day, one-on-one sessions are offered. This allows you the greatest flexibility in scheduling during the peak business hours without turning away customers that otherwise could not be accommodated without a large increase in staff and overhead.

Equipping a Training Salon

Salons can range from a 1000 square foot office downtown with a few benches, weights and a treadmill, to 4000 square foot weight rooms with elaborate machines and free weights. Since only one or two clients will be training at the same time, facility size is not as important as eye appeal. A bright, high class elegant design and layout will be more important to the affluent type of client you wish to attract than a lot of heavy equipment and machines. A small salon can get by with a multi-station piece, flat bench, treadmill, recumbent bike, and a few chrome dumbbells. You could literally assemble a salon in an office building for less than $5000, including rent and expenses!

Here is a solid starter equipment list for a medium sized personal training salon. The total cost can range from $10,000 to $20,000 depending on whether new or used equipment is selected. Leasing new or used equipment will generate a monthly payment of about $1000-$2000.

2 1/2 LB. PLATES - 8

5 LB. PLATES - 8

10 LB. PLATES - 8

25 LB. PLATES - 8

35 LB. PLATES - 4

45 LB. PLATES - 10

ABDOMINAL MACHINE -1

AB ROLLER -1

CABLE CROSSOVER -1

CABLE ROW -1

CHIN BAR - 1

CURL BARS - 2

BICEPS CURL MACHINE-1

SEATED CALF -1

HYPERTENSION - 1

SELECTORIZED LEG EXTENSION - 1

OLYMPIC BARS - 2

OVERHEAD PRESS BENCH - 1

PEC DEC -1

PREACHER CURL - 1

PULLDOWN MACHINE - 1

SIT UP BOARD -1

SMITH MACHINE -1

STANDING CALF MACHINE -1

SQUAT MACHINE - 1

SQUAT RACK - 1

LEG CURL -1

STATIONARY RECUMBENT BIKE -1

T-BAR ROW - 1

TREADMILL Ė 1

ELIPTICAL TRAINER Ė 1

DESK & CHAIR -1

CASH REGISTER

MIRRORS-20

COLOR TV - 1

SPEAKERS - 2

CD PLAYER -1

AM/FM STEREO -1

Additional Inventory

Training Gear, Sports Drinks and Supplements.

The markup on training gear, sports drinks and supplements averages about 20% over your wholesale cost. Since the margin is not that high, you need to keep track of every drink or vitamin sold. An employee who takes one unauthorized drink per day will eliminate over a case of sports drinks each month. For a small operation, it can mean the difference between profitability and bankruptcy.

One way to combat the problem is to allow employees to buy drinks,

gear and supplements at a discounted rate. The best way to keep track of what is selling and what isnít is to have employees write down each item and the sales price, and check sales against a count of the remaining inventory at the beginning and end of each shift. After comparing the difference between inventory on the shelf and in the cooler to noted sales and cash register totals, you will have an accurate record of the dayís transactions. If there is a discrepancy, the shift manager will have to account for it and pay out of his or her own pocket.

For sport drinks, supplements and training gear choose a company that will provide and drop off a free cooler. If they sell supplements and sports gear, it saves you extra work. Develop relationships with vendors so that you will get insider discounts and special offers. I have used Bob OíLeary Sports Supplements with excellent service in the past. BOSS is headquartered in PA as a supplier for supplements, sports drinks, and gear. Try contacting them online by typing in BOSS.com. You can do a search on supplement companies to find one closer to your town.

Most gym owners try to keep only the supplements and training gear on hand that they can sell in a 30-day period. Sports drinks are generally ordered on a weekly basis. If a product has been on the shelf for more than 30 days put it on the front counter with a sale sign on it.

Personal Training Rates

Set your rates up as a per session fee, for example: $25 per one half-hour session (I know trainers charging $200 per session). Make up some flyers to mail to potential clients. Try to be as consistent as possible with rates so that each client pays the same amount or you may end up in trouble when you invite them all to a party and they start talking. Donít be afraid to raise your rates as you get busier. You are running a business and are entitled to make a profit from your efforts even though you may have developed friendships with your trainees. Since they are friends, they will understand your need to raise prices from time to time.

To project your salonís income potential, if you charge personal training clients a yearly rate of $3000 up front from each of five clients, you'll generate $15000 right off the bat. $5000 per customer is actually a more realistic annual amount when you include supplement and accessory sales. If you can add 20 more clients throughout the year (mainly through word of mouth), you'll gross $75,000 your first year. If your salon rent and expenses equal $1500 per month, you'll net $57,000 the first year. Not bad income for a start-up operation, considering that the second year's business will probably double.

Your greatest income and continuing financial security will be earned by having clients pay for a long-term training contract. By collecting all the fees up front, you gain commitment and start to develop a financial cushion. The greatest advantage of pre-paid training is that if you have already received the money for the missed session, you simply deduct the session as if the individual had trained. If clients miss and you havenít been paid yet for the session, chances are you wonít be. Let clients know that your cancellation policy is at least twelve hours notice or they will be billed for any scheduled workout missed.

A pre-paid package will be more economical for the customer than a daily rate, too. If you charge $25 per 30-minute session, a good package would be $2500 for 110 training sessions. Thatís only ten months of training at the rate of three appointments per week. Most clients will peter out before they ever use all that training up, and you will still hold on to the money, in case they resume working out (let them know in advance about your refund policy). You must always get at least each week (preferably a month) paid ahead of time.

It is in your best interest to give clients a written copy of all your rules so you both know what your obligations are at the initial consultation. You also need everyone you train sign the health questionnaire and waiver. After they sign it keep a copy in your file. This will prevent misunderstandings or hard feelings in the future. Take a look at the fun Personal Trainerís Ten Commandments below. You can use this sheet and print copies to hand out to clients to review. Both of you will be referring back to it from time to time. Always let the customer know the rules up front.

You must stress the need for clients to make it to all their scheduled appointments on time. There will always be cancellations. Expect at least one cancellation per workday. Cancellations are only acceptable if you are being paid for them anyway. You can take a break and go get a cup of coffee.

Here's a technique for you to get more business than you can handle. Go to Anywho.com and do a search based on the most exclusive and prosperous streets in your city. This directory will give you the names and numbers of everyone who lives there. Type ** in the last name box on the Anywho "person" lookup form to get all the names of residents on a particular street. Phone all the individuals whose names appear (see telemarketing script below) and tell him or her that you run a personal training salon in their town and you have some openings available. Try to get them to agree to a no cost, no obligation interview where you can sell them the benefits of having a personal trainer train them and demonstrate the features of your salon. Actually have them try some of the equipment as you walk them through the facility. You're bound to pick up several appointments each week. Have your questionnaires, contracts and waivers ready for them to sign when you close them as new clients.

Credit Card Processing

The best way to make money in the fitness business is to offer personal training packages. The best way to do that is to have credit card processing capability. You can lease a credit card processing machine to handle credit card orders. Your local business banker will rent one to you for about $39 a month. You will own it at the end of the term, which is usually 24 months. The bank does a thorough credit check, so you need an unblemished credit report. A credit card terminal will be the most important piece of equipment in the studio or gym, next to the cash register.

There is another way to process credit card orders over the Internet that is much less expensive and approval is almost guaranteed. Simply do a web search on free credit card processing. Youíll need a web site and business bank account, but you can get a free website quickly by punching in free website on your browser, and have it up and running in about thirty minutes, if youíre computer savvy. Once you set up your virtual terminal, all you have to do is enter the clientís information and credit card number and the money will automatically be deposited in your business account.

PT Telemarketing Script

After the second or third training session with a new client (while theyíre still enthused about training), ask if you can use them as a referral. Call all their neighbors and let them know that you train their neighbor down the street (let the prospects know your clientís name and house number). All youíre trying to do over the phone is get a face to face appointment so that you can close them. Donít try to close them over the phone. See the phone telemarketing script below. This system is a powerful business generator when implemented as written.

This telemarketing phone script for works well when used as a tool for generating face to face appointments. Itís also great for informing old clients about your new specials. Keep in mind that a phone call is always an interruption. Smile while you talk, it comes across on the phone. Keep the conversation short and to the point.

Salesperson: "Hi, is Joe there?"

Customer: "This is Joe."

Salesperson: "Joe Shmoe?" Youíve now used their name twice - peopleís names are important to them.

Customer: "Yes"

Salesperson: "How are you today?" (Gives you an idea of their availability.)

Salesperson: "This is (Name) from (company name). "Have you heard of us?"

Customer: "Yes, " or "No."

Make a huge positive statement about your company or special no matter what their answer.

Salesperson: "Who we are is (company) and what we do is (positive statement), and what that means to you is (youíll save money - get great results - lose weight for vacation - say anything that motivates them to come in and look around)."

Ask permission to ask them a question:

Salesperson: Can I ask you a question? They will always say "Yes."

Is (saving money - getting in shape - losing weight) something that would be important to you? They will tell you if it is important or not. If none of your pitches is important to them ask them, " What is most important to you in a personal trainer or fitness routine?"

They will tell you.

If they say, "convenience," reinforce how convenient your scheduling system is. If they say, flexibility," key in on how you can accommodate any schedule. If they say "privacy," tell them how private your facility is.

Once they have told you what is most important to them let them know that their choice is a major benefit of your service.

Give them appointment options by saying, "Is Wednesday at three or Saturday at noon better for you to stop by? Then listen for their response. They will give you an alternate time or hang up. If you can get them to commit to an appointment, you have won the battle. The hardest part of getting clients is having them actually walk in the door.

The action you are trying to get the person to take is to set up an appointment to come look at the salon. You must then employ the sales techniques below to close the client.

PT Sales Script

A salesperson must constantly test close. A test close is an opinion-asking question that provides options like, "In your opinion, would a three month or yearly training membership work better for you if you were going to join today?" A closing question is a decision making question like, "Are you joining for six or twelve months?" Or, "Are you paying by credit card or cash?"

You must frequently use the key words "or" or "because," because those words induce a sales mentality in the customer. Studies have shown that these words can induce a low-level trance in the American consumer, making him or her more receptive to your sales presentation.

A sales person needs to develop a pattern of answers that almost force the individual into purchasing a membership. Getting the customer to commit to a series of minor actions will make them feel compelled to sign up at the end. Avoid yes or no closing questions.

Customer enters the club - Salesperson says hello in a friendly voice and uses a test closing question: "Hi, Iím (name), thanks for stopping by (salon)." "Are you ready to enroll in our three-month or yearly training package special today?"

If the customer says yes, have them fill out the paper work and decide on the type of training plan. They can take a tour after they sign up. Many customers come in ready to join without a tour or sales pitch.

If the customer says, "I just want to check it out." Give them a tour of the salon and start your sales script. Always use the exact script language.

Get them talking by asking, "How did you hear about our salon (unless they were a prospect you telemarketed)?"

Ask them the question: Whatís most important to you in a personal training salon? Listen for their response.

If they say, "convenience," reinforce how convenient your scheduling system is. If they say, flexibility," key in on how you can accommodate any schedule. If they say "privacy," tell them how private your facility is.

Sales personís answer:

Then youíve come to the right place. The benefits to you are (always sell them benefits, never facts) that we have the (most private Ė most convenient Ė most flexible scheduling Ė whatever they say, state back to them as a positive benefit).

While showing them around, have them actually try each piece of equipment.

Hand them a bottle of water as you start the tour. It will induce the reciprocation process. Since you have given them something of value, they will feel compelled to reciprocate by purchasing a personal training package. Walk them to the showcase equipment while pointing out the benefits of your service over other available options.

Escort them to a quiet area or office dedicated to closing sales. All paperwork should be on a clipboard ready for signing.

The salon floor should be uncluttered, bright and exciting with popular, not annoying or blaring music.

Overcoming Objections

There are many methods for overcoming objections. Use the following list in this order until all their objections are overcome.

The first method is to ignore the objection. If they say "That price is too high", ignore it and continue the presentation.

You can dismiss it quickly by saying, "Why donít we go over the rates in a minute."

You can also reflect their objection back to them by restating their objection as a question, "Too high?íí That will prompt them to give you more information about their objection. Finish by asking, "Is there any other reason not mentioned here why you wouldnít start today?" When they tell you their objection, use the system for overcoming objections in this order for each of the new objections. If the client says, "Well, Iíll have to check with my wife/husband," ask them, "What would they say if they were here now?" Then get on with the paperwork.

The third option is to overcome the objection by saying, "The price is 25% or more less than average training rates in this city."

A final resort if you are losing the sale (which only works if you have developed good rapport) is to say, "Iíll have to check and see if you qualify for personal training." It puts them on the defensive and makes them let you know that they are qualified.

When filling out the paperwork and contracts, always ask the questions and fill in the answers yourself. When it comes time to sign contracts, never use the word "sign," instruct new clients to "just write your name by the Xís."

When everything is completed, congratulate them for making a wise choice and talk about how they have taken the first step toward meeting their future fitness goals. Projecting the enjoyment they will get from having a personal trainer into the future will help overcome any buyerís remorse.

First Day Training New Clients

Once you have sold the training package, have the client fill out the health questionnaire, waiver, personal training assessment form and Ten Commandments of Personal Training handout. Itís time to train them. Where do you begin?

First of all, make sure you have taken the AMFPT Personal Trainer Certification Program. The diets and routines in the program are designed to be handouts you can give to your clients. Make sure you load them up with plenty of paper so it will project an image of professionalism, even if they never look at it again.

Some trainer certification programs advocate fitness tests, but the physical activity questionnaire negates the need for a standardized fitness test, if answered honestly. The clientís fitness test should be his or her actual first workout as your client. Youíll know exactly where you need to go with that personís training and how much they can stand if you just pay close attention to their response to the initial training session.

Start out with one set of each exercise with extremely light weights. The session should last no more than 15-20 minutes. Have them perform only ten reps per set of each exercise, even if they can do more. They have the rest of their lives to lift a thousand pounds if they wish to, but let them know that you both need to know their training level today so that you can establish a proper training program for them.

Observe their physiology during the initial session and continually ask for their feedback about how they feel. Ask if they are dizzy, short of breath, etc., especially if they are seniors or severely overweight. You donít want someone to turn pasty, gray or to pass out, which can easily happen to an unconditioned individual. Better to err on the side of caution.

Spotting Clients

It is important that you and your staff know how to correctly spot clients. A ruling in a court case from the Superior Court of New Jersey found that spotters are liable for injuries sustained to weightlifters, even if the injury occurs because of equipment on the floor. In this case, a spotter was sued for negligence after a person was injured by a weight lying next to the bench.

The defendant (spotter) volunteered to spot the plaintiff during weight training activities. When the plaintiff (weightlifters) put his dumbbells on the floor, his left index finger was smashed when the weight in his left hand came into contact with a weight on the floor. The plaintiff provided expert testimony to the court citing various standards of care, including those from the National Strength and Conditioning Association that says:

It is a spotter's obligation to examine the area around the weightlifter to ensure other objects, including other free weights, are not within the area of activity.

The defendant filed a motion for a summary judgment saying that he should not be held liable to the injured lifter. The motion was denied. The court ruled in favor of the plaintiff and decided that, "a reasonable jury could conclude, "The defendant voluntarily assumed a duty by 'spotting' for the plaintiff. Incorporated in that duty of care is the obligation to ensure the area around the weight bench was clear of any hazards." By ruling this way, the court mandated that spotters have an obligation to inspect around the area where weight-training activities occur to determine if there are weights or objects in the area that could cause injury. Even volunteer spotters may have liability under certain circumstances and that a person who assumes a duty to another needs to ensure that duty will be adequately performed. Those who provide spotting activities, even as volunteers should become familiar with the obligations imposed upon spotters by written standards of care and guidelines pertaining to the activities.


The best way to see how to teach correct spotting is to have your trainers watch other trainers in the gym, and to look at exercise photos in books and magazines. Workout videos are also a good source of spotting tips. Make them read this segment of the manual so that they know their spotting responsibilities.

Usually the person training will tell you how they want you to spot them. Your job is to keep them from getting injured by the weight. The general rule for spotting on a specific exercise is that you provide just enough lift to keep the weight moving (don't let it stall). If it gets stuck, provide enough lift to keep it going up smoothly.

Spotting Squatters

When spotting someone doing squats, you may have to put your arms under their arms and around the front to lightly stabilize them and help lift if they stall.

Never spot squatters from the hips or waist because they may bend at the waist and fall forward with the weight bar rolling over their neck and head.

Questionnaires

Here are the questionnaires that your clients should fill out and sign. The first one should be filled out during your initial conversations with the customer. Read each question to the client and make sure they understand it. Have them tell you the answer verbally, then let them check the appropriate box.

The second assessment form should be used as a measuring stick after several weeks of training to determine whether or not you are meeting their expectations. Sometimes people may not feel comfortable telling you that they donít like some aspect of their training because they like you, but you may lose them if the issues are not addressed. And you will be unaware there is a problem until they suddenly stop showing up for training with you. Thatís the hard way to find out they are not happy, so use these assessment sheets and administer them frequently.

The feedback from questionnaires can help guide the direction of your business. When you get a glowing response, always ask the client for a referral. Tell them thereís always room for one of their friends in your schedule. If someone is not satisfied with his or her training, be flexible and let him or her know that the workout is for him or her, so you can make any changes they want. Never be dogmatic or pig headed. What do you care if they like leg presses more than squats? Just give them what they want. Training is customer service, and keeping your customers happy is your number one priority. Your livelihood depends on it.

Personal Training Assessment Form

 

WEIGHT: DESIRED WEIGHT: BY (DATE):

WOULD YOU DESCRIBE YOURSELF AS (CIRCLE ONE): ACTIVE OR SEDENTARY?

HAVE YOU BEEN ABLE TO ACHIEVE GOOD RESULTS WITH TRAINING AND DIET IN THE PAST? (CIRCLE ONE)

YES NO NEVER TRAINED

IS YOUR JOB PHYSICALLY DEMANDING OR DO YOU SPEND A LOT OF TIME SITTING? (CIRCLE ONE) ACTIVE SITTING

WHERE ARE YOU ON THIS SCALE?

LEAN 1 2 3 4 5 6 7 8 9 10 FAT

WHAT DO YOU WANT FROM A FITNESS PROGRAM? (LOSE WEIGHT, TONE UP, ETC.)

HOW MUCH TIME CAN YOU DEVOTE TO TRAINING EACH WEEK (HEALTH EXPERTS RECOMMEND 3-5 HOURS OF EXERCISE PER WEEK FOR OPTIMUM RESULTS)? 1 2 3 4 5 HOURS

ARE YOU WILLING TO FOLLOW ALL INSTRUCTIONS TO THE LETTER, ESPECIALLY REGARDING MENU, FOR 8-12 WEEKS IN ORDER TO ACHIEVE YOUR GOALS?

DID YOU KNOW THAT NUTRITION IS AT LEAST 80% RESPONSIBLE FOR WEIGHT GAIN OR LOSS, EVEN WHEN EXERCISING (BED RIDDEN OPTIFAST PATIENTS ROUTINELY LOSE 100 POUNDS WITHOUT EXERCISING)? YES NO

WHAT SERVICE DO YOU EXPECT FROM A PERSONAL TRAINER?

 

 

 

Personal Training Review Sheet

DO YOU FEEL LIKE YOUíRE GETTING THE RESULTS YOU WANT FROM YOUR TRAINING (ALTHOUGH, THEYíRE NEVER FAST ENOUGH)? YES NO

IF NOT, WHAT DIRECTION DO YOU FEEL WE SHOULD MOVE IN? (EXAMPLE: MORE MOTIVATIONAL TALKS, NEW EXERCISES, ETC.)

WHAT DO YOU LIKE ABOUT YOUR TRAINING PROGRAM (EXAMPLE: PACE, EXERCISES ETC.)?

 

WHAT DO YOU DISLIKE ABOUT YOUR TRAINING?

 

WHAT WOULD YOU LIKE TO CHANGE IN YOUR WORKOUT?

 

WHAT DO YOU WISH TO KEEP THE SAME?

 

WHAT AREAS DO YOU FEEL YOU WOULD LIKE TO FOCUS ON?

 

DO YOU PREFER SPONTANEITY OR A ROUTINE THAT YOU CAN SETTLE INTO?

 

LIST ANY "MUST" OR "MUST NOT" DOíS:

WHAT OTHER SERVICE WOULD YOU LIKE FROM YOUR PERSONAL TRAINER?

SUGGESTIONS:

 

THE TEN COMMANDMENTS OF PERSONAL TRAINING

1.Thou shalt always be ready to train at thy appointed time.

2.Thou shalt call at least twelve hours ahead to cancel or pay full price for thy missed session.

3.Thou shalt do all that the trainer tells thou with no murmuring.

4.Thou shalt eat the way thou are commanded to by thy trainer.

5.Thou shalt not bounce any checks lest thou pay a $25 fee for it.

6.Thou shalt tell all of thy friends about the wonderful things thy trainer has done for thou.

7.Thou shalt not use foul language or take the name of God in vain.

8.Thou shalt cheerfully and joyfully attend thy training sessions, and reflect lovingly upon them.

9.Thou shalt get good results and blessings if thou doest all thy trainer commands thee.

10.Thou shalt have curses (fat and weak) if thou failest to follow any of thy trainerís commands.

Thy mark______________This day________________

 

PERSONAL TRAINING AGREEMENT

THIS AGREEMENT is made and entered into this day of ,20__ by and between ____________________________________and ______________________________________.

(Clientís name and address) (Trainerís name and address)

WHEREAS ____________and ____________ wish to enter into this agreement in order to define their respective rights, duties and obligations.

NOW THEREFORE in consideration of the terms, covenants, conditions and mutual promises contained herein, and other good and valuable consideration, it is hereby stipulated and agreed as follows:

  1. ________________ will provide personal training to ___________________.

  2. For this service rendered by ____________, _____________ will pay $_________, or $___________ for each of ___ training sessions at the rate of ___ training sessions per week.

  3. The training period will begin on / /20__ and end on / /20__.

  4. _________________ provides ________________ with a 24 hours notice of cancellation

or will pay for the training session in full.

5. Sessions may be rescheduled with 24 or more hours notice.

By signing below, the undersigned stipulate and agree that they have completely read this agreement, that the terms are fully understood and voluntarily accepted by both parties and that this agreement is not signed under duress.

$____________ is payment amount received by _________________from _________________.

Payment represents full / partial payment with payment schedule as follows: $______________ due on / /20__ and balance, $______________ due on / /20__.

 

By signing below, the parties hereto have executed this agreement as of the day and year first written above.

 

_________________________________________ X___________________________

(Clientís name) (Clientís signature)

 

_________________________________________ X___________________________

(Trainerís name) (Trainerís signature)

 

 

PHYSICAL ACTIVITY QUESTIONNAIRE FOR_________________________________________

READ CAREFULLY AND CIRCLE YES OR NO IF IT APPLIES TO YOU.

YES NO 1. HAS YOUR DOCTOR EVER TOLD YOU HAVE HEART TROUBLE?

YES NO 2. DO YOU FREQUENTLY HAVE PAINS IN YOUR HEART OR CHEST?

YES NO 3. DO YOU OFTEN FEEL FAINT OR HAVE SPELLS OF DIZZINESS?

YES NO 4. HAS A DR. EVER SAID YOUR BLOOD PRESSURE WAS TOO HIGH?

YES NO 5. HAS YOUR DR. EVER TOLD YOU THAT YOU HAVE A JOINT OR BONE PROBLEM, LIKE ARTHRITIS, THAT CAN BE AGGRAVATED BY EXERCISE?

YES NO 6. DO YOU HAVE BACK OR NECK PROBLEMS?

YES NO 7. IS THERE A GOOD PHYSICAL OR PSYCHOLOGICAL REASON NOT MENTIONED HERE WHY YOU SHOULD NOT FOLLOW AN ACTIVITY PROGRAM IF YOU WANTED TO?

YES NO 8. ARE YOU OVER AGE 65 AND NOT ACCUSTOMED TO PHYSICAL EXERCISE?

IF YOU ANSWERED :

YES TO ONE OR MORE QUESTIONS:

IF YOU HAVENíT RECENTLY DONE SO, CONSULT WITH YOUR DR. BY PHONE OR IN PERSON, BEFORE INCREASING YOUR ACTIVITY LEVEL! TELL HIM WHAT QUESTIONS YOU ANSWERED YES TO ON SURVEY. AFTER MEDICAL EVALUATION, SEEK ADVICE FROM YOUR DR. AS TO YOUR SUITABILITY FOR: UNRESTRICTED PHYSICAL ACTIVITY, PROBABLY ON A GRADUALLY INCREASING BASIS; RESTRICTED OR SUPERVISED ACTIVITY TO SUIT YOUR NEEDS, AT LEAST INITIALLY. IF YOUR DOCTOR IS AWARE OF THE PROBLEM, PUT YOUR INITIALS AND A NOTE NEXT TO THE QUESTION(S) YOU ANSWERED "YES" TO, EXPLAINING WHY IT IS O.K. TO PROCEED WITH CAUTION.

NO TO ALL QUESTIONS:

IF YOU ANSWERED ACCURATELY, YOU HAVE REASONABLE ASSURANCE OF YOUR PRESENT SUITABILITY FOR: A GRADUATED EXERCISE PROGRAM. IF YOU HAVE A TEMPORARY MINOR ILLNESS, LIKE A COLD, POSTPONE INCREASED ACTIVITY.

WAIVER/RELEASE FORM

YOU AGREE TO THE TERMS OF THIS RELEASE FORM. TRAINING AND EXERCISE IS A STRENUOUS ACTIVITY. YOU, THE GUEST/CLIENT/MEMBER, ARE AWARE THAT YOU ARE ENGAGING IN PHYSICAL EXERCISE AND THAT THE USE OF EQUIPMENT, TRAINING AND INSTRUCTION, COULD CAUSE INJURY TO YOU. YOU ARE VOLUNTARILY PARTICIPATING IN THESE ACTIVITIES AND ASSUME ALL RISKS OF INJURY THAT MIGHT RESULT. YOU AGREE TO WAIVE ANY CLAIMS OR RIGHTS YOU MIGHT OTHERWISE HAVE TO SUE _______________________, OR ANY AGENT, EMPLOYEES OR INSTRUCTORS, OR __________________________, FOR INJURY TO YOU AS A RESULT OF THESE ACTIVITIES. IT IS ALWAYS ADVISABLE AND RECOMMENDED TO CONSULT YOUR PHYSICIAN BEFORE UNDERTAKING THIS OR ANY EXERCISE PROGRAM.

SIGNED (PARTICIPANT):___________________________DATE:____________

ADMINISTERED BY:

FULL SERVICE COMMERCIAL GYM

Commercial health clubs are ranked in tiers. A first tier operation has new, state of the art equipment and offers a wide variety of services, from personal training with weights to handball courts, to Olympic swimming pools. They generate $1,000,000 plus annually from beautifully decorated 100,000 square foot facilities boasting 2500 or more members. Membership rates at first tier clubs average $100 per month and $1000 for one year. They can cost $1,000,000 up to several million to build.

Second tier clubs are newer operations that offer exercise equipment and aerobics classes, with mostly new equipment and some older, but well maintained pieces. The floor space averages 10,000-20,000 square feet in scale. Second tier clubs can generate about $100,000-$250,000 yearly. 500-1000 members are possible in a nicely done level two club. Memberships usually cost $150 for three months and $500 for a year. The Start up cost ranges from $100,000-$250,000.

Third tier gyms are smaller 5000 square foot rooms with some good older weightlifting equipment and possibly an aerobic dance area or tanning beds. They are great one-person businesses, but make bad partner businesses. The quality varies from location to location, and some are considered hard core. The annual income from a gym like this can range from $40,000 to $80,000. Rates are usually $ 30 per month or $275 a year. A gym like this can be purchased for $5000-$25000. Never pay more than $25,000 for a marginal third tier gym.

When opening a health club of any kind you must start selling advance discounted memberships as soon as youíve settled on a location. They can be sold at a desk in the facility while crews are equipping and remodeling it, or from a trailer parked out front. This will create a positive cash flow from the very start of the project. Bills will keep piling up whether memberships are being sold or not.

The greatest advantage to buying an existing club is that you automatically start out with members, so you donít have to start from scratch. If you purchase or take over an existing club, unless the former owner pays you the balance pre-paid on the memberships, do not honor the time current members have remaining. They must purchase an equal length (but discounted) membership from you, the new owner. You will be able to generate sales as soon as you take over by implementing this rule, although you are bound to lose some members no matter how great a deal you offer.

At the end of their term with you, the memberís original remaining time will be added onto the back end of their new membership. Upset members may be leery of signing on with you because of the club management change. Thatís where your rapport building and sales skills will come in handy. A letter of recommendation from the former manager or owner will help, if you can get one. You may find that the old owner wants to disappear.

Health Club Membership Rates

Before you even open your doors you have to consider approximately how many memberships youíll have to sell monthly and at what rate you will need to offer them to meet your projected expenses. If you price your rates too high, youíll lose your market share. If you sell memberships for too little, you may not be able to raise them without losing customers in the future. You need to find out what similar clubs are charging in your area. Cost-income ratios should be analyzed in a pro-forma (straw man) business plan during your initial planning stage. Over estimate your expenses by 50% while under estimating income by 50%. Use common sense. If you live in a village of 5000 people and you need 1000 members in good standing just to break even, you had better find a different town for your business. Below is a simple flyer with rates, membership plans, hours of operation and contact information. It conveys important information about your club. It can be mailed or handed out at trade shows, festivals, shopping malls, and in front of your facility to prospective customers.

Many states require health clubs to put up a $50,000 bond that secures the memberships in case the club closes. One way to get around this requirement is to never charge more that $99 as a payment for a membership. Another popular system is to charge a sign up or initiation fee of $99, and then charge a monthly fee of $99 or less at the end of the first month and every month for the duration of the membership contract. With this payment plan the members will always owe you for the previous month they trained instead of you owing them for the next month, which you are obligated by a contract to provide.

Average Health Club Equipment List

As stated, health clubs can range from basic weight rooms with machines and free weights to elaborate hundred thousand square foot complexes with tennis and squash courts, Olympic swimming pools, hot tubs, steam rooms, saunas, food service bars, and running tracks. The free weight and heavy leg training equipment should be segregated from the rest of the club to avoid intimidating members.

Here is a basic minimum equipment list for a small to medium sized weight room type gym with tanning service. The total cost can range from $25000 to $75000 depending on whether new or used equipment is selected. Leasing new or used equipment will generate a monthly payment of about $5000-$10000.

Equipment List

2 1/2 LB. PLATES - 20

5 LB. PLATES - 20

10 LB. PLATES - 20

25 LB. PLATES - 20

35 LB. PLATES - 20

45 LB. PLATES - 30

100 LB. PLATES - 4

ABDOMINAL MACHINE -1

BENCH SEATS - 3

CABLE CROSSOVER -1

CABLE ROW -1

CHIN BARS - 2

CURL BARS Ė 2

DUMBBELL SET 5 LB. TO 120 LB. IN 5 LB INCREMENTS, WITH RACK -1-2 SET

BICEPS CURL MACHINE Ė1

FLAT BENCH WITH UPIGHTS - 2-4

FLAT PORTABLE BENCH Ė 2

INCLINE BECH WITH UPRIGHTS Ė 2

PORTABLE INCLINE BENCH - 1

DECLINE BENCH-1

SEATED CALF MACHINE -1

HYPERTENSION - 1

LEG EXTENSION - 2

OLYMPIC BARS - 7

OVERHEAD PRESS BENCH - 2

PEC DEC -1

POWER LIFTING PLATFORM - 1

POWER RACK - 1

PREACHER CURL - 2

PULLDOWN MACHINE - 3

RUBBER FLOOR MATS - 30-100

SIT UP BOARD Ė1

ROMAN CHAIR-1

SMITH MACHINE -1

SOLID BARS 10 LB. TO 120 LB. IN 5 LB INCREMENTS, WITH RACK -1 SET

STANDING CALF MACHINE -1

SQUAT MACHINE - 1

SQUAT RACK - 1

LEG CURL Ė2

ABDUCTOR-ADDUCTOR MACHINE -1

T-BAR ROW Ė 1

NAUTILUS OR CYBEX CURCUIT - 1

TREADMILLS - 5

ELIPTICAL- CLIMBER -5

STATIONARY RECUMBENT BIKES Ė5

STAIR CLIMBER - 5

MIRRORS-20-50

COOLER-1

CASH REGISTER-1

COMPUTER Ė 1-2

LOCKERS Ė 50-100

SHOWERS Ė8-10

CEILING FANS Ė 2-10

COUNTER-1-3

DESK & CHAIRS Ė2

FILE CABINET-1-2

EATING TABLES Ė 1-4

CHAIRS 4-16

COLOR TV - 5

AM/FM STEREO -1

SPEAKERS Ė 4-10

CD PLAYER -1

BAR CHAIRS Ė 3

TANNING BEDS Ė 4

HOT TUB Ė 1-2 (optional)

SAUNA Ė 1-2 (optional)

Additional Inventory

Juices Accessories, Clothing, and Supplements (see above).

Sales Techniques

The life blood of your health club

All front counter employees should be schooled in sales techniques. This sales script should be followed exactly. They need to learn how to become the customerís best friend. The customer has come in to the club to solve a problem, real or imagined that they have. The sales person has to find out what the problem is and then show how joining will solve the problem. People buy for emotional reasons not logical ones. Thatís why flashy, translucent computers are selling like hot cakes lately. They donít work any better than white or gray boxes, but theyíre pretty.

The most difficult part of signing new members is to have them actually come in and look around. Once they come in any average, but well trained salesperson should be able to close them. The salesperson must make the customer see that both the club and customer are working together in a win-win relationship to help the customer achieve his or her goal. The customer must become fully aware of the potential positive results, fantasy physique, or fun experience that theyíve imagined in their mind. The salesperson must make the image real by projecting forward the pleasurable experience or enhanced self-image in the customerís mind.

The customer must feel pressure to join now. Time pressure is one way to leverage them to join right away. For example, the sales person can offer a ten-percent discount if they join today. The law of supply and demand has produced another technique that works well in selling, scarcity. If the club has only a limited number of memberships at an advertised price, put two or three sets of paperwork on the front counter or closing desk, or tack them on the wall in plain view. Tell the customer that the membership will probably be sold and unavailable to them at the special price if he or she joins later.

Sales Script

A salesperson must constantly test close. A test close is an opinion-asking question that provides options like, "In your opinion, would a three month or yearly membership work better for you if you were going to join today?" A closing question is a decision making question like, "Are you joining for six or twelve months?" Or, "Are you paying by credit card or cash?"

A sales person needs to develop a pattern of answers that almost force the individual into purchasing a membership. Getting the customer to commit to a series of minor actions will make them feel compelled to sign up at the end. Avoid yes or no closing questions.

Become the Customerís Best Friend

Customer enters the club - Employee says hello in a friendly voice and uses a test closing question: "Hi, Iím (Name), thanks for stopping by (Club)." "Are you ready to enroll in our three-month or yearly special today?"

If the customer says yes, have them fill out the paper work and decide on the type of membership. They can take a tour after they join. Many customers come in ready to join without a tour or sales pitch.

Get them talking by asking, "How did you hear about our club (unless they were a prospect you telemarketed)?"

Ask them the question: Whatís most important to you in a health club? Listen for their response.

Example:

I like the Nautilus machines

I like the squash/tennis courts

I want to use the free weights

I want to use the pool

Sales personís answer:

Then youíve come to the right place. The benefits to you are (always sell them benefits, never facts) that we have the widest assortment of Nautilus machines in the city.

Walk them to the areas that theyíre most interested in pointing out the benefits of this facility over the competition. Hand them a bottle of water as you start the tour. It will induce the reciprocation process. Since you have given them something of value, they will feel compelled to reciprocate by purchasing a membership. Get them to try your showcase pieces of equipment and view the tanning beds, Jacuzzi, sauna, squash courts, basketball courts, locker rooms, pro shop and pool (if available).

You must frequently use the key words "or" or "because," because those words induce a sales mentality in the customer. Studies have shown that these words can induce a low-level trance in the American consumer, making him or her more receptive to your sales presentation.

Ask them the question: Whatís most important to you in a personal training salon? Listen for their response.

If they say, "treadmills," reinforce how many easy to use treadmills you have. If they say, weight loss," key in on how your trainers can accommodate any goal. If they say "muscle building," tell them about your state of the art machines and free weights.

Sales personís answer:

Then youíve come to the right place. The benefits to you are (always sell them benefits, never facts) that we have the (most private Ė most convenient Ė most flexible scheduling Ė whatever they say, state back to them as a positive benefit).

While showing them around, have them actually try each piece of equipment.

Hand them a bottle of water as you start the tour. It will induce the reciprocation process. Since you have given them something of value, they will feel compelled to reciprocate by purchasing a personal training package. Walk them to the showcase equipment while pointing out the benefits of your service over other available options.

Escort them to a quiet area or office dedicated to closing sales where they can look out on the gym floor. All paperwork should be on a clipboard ready for signing. The workout area should be uncluttered, bright and exciting with popular, but not annoying or blaring music.

Overcoming Objections

There are many methods for overcoming objections. Use the following list in this order until all their objections are overcome.

The first method is to ignore the objection. If they say "That price is too high", ignore it and continue the presentation.

You can dismiss it quickly by saying, "Why donít we go over the rates in a minute."

You can also reflect their objection back to them by restating their objection as a question, "Too high?íí That will prompt them to give you more information about their objection. Finish by asking, "Is there any other reason not mentioned here why you wouldnít start today?" When they tell you their objection, use the system for overcoming objections in this order for each of the new objections. If the client says, "Well, Iíll have to check with my wife/husband," ask them, "What would they say if they were here now?" Then get on with the paperwork.

The third option is to overcome the objection by saying, "The price is 25% or more less than average training rates in this city."

A final resort if you are losing the sale (which only works if you have developed good rapport) is to say, "Iíll have to check and see if you qualify for personal training." It puts them on the defensive and makes them let you know that they are qualified.

When filling out the paperwork and contracts, always ask the questions and fill in the answers yourself. When it comes time to sign contracts, never use the word "sign," instruct new clients to "just write your name by the Xís."

When everything is completed, congratulate them for making a wise choice and talk about how they have taken the first step toward meeting their future fitness goals. Projecting the enjoyment they will get from using your club into the future to help overcome any buyerís remorse.

Exit Strategies

Sooner or later you may decide to leave the health club business and retire. Before that day arrives, you should have an exit strategy in place for passing on the business ownership to a new custodian whose dream is to be a gym owner. Ideally, you would like to sell the club or your share of the business at a profit. Generally, used equipment that is sold piecemeal is worth only a disheartening 5-10% of its original cost. It is better to sell all the equipment as a package if you cannot sell the entire business. The worst way to dispose of your fitness business is to have to auction it off piece by piece.

You will have to figure in factors like capital gains tax, assigning a value to the goodwill end of the business, equipment, inventory, and real estate (if any). If for any reason the gym has to close because of flagging sales, you may have to liquidate the assets just to pay off creditors. Your biggest creditor will probably be your landlord. He or she may not let you go for very long without paying rent before you are evicted. In a best case scenario, you may be able to sign the equipment over to the landlord in exchange for any back rent due. A worse situation is that youíll sell the equipment for much less that the outstanding debt on the business and then be held personally liable.

Many small business owners end up filing bankruptcy because they try to hang on far too long to a money losing concern. Pay attention to business trends and the local economy so you can trim the fat in your organization and prepare for possible down cycles. Find a new location, cut staff, offer specials and do cross promotions with local businesses, but do whatever it takes to weather the financial storms that occur during the lifetime of any business.

Selling Your Business

If you decide to sell your club, you can do it alone or hire a broker to help sell it. You will need to get some business sale forms from the local Staples if you intend to handle the sale yourself. Youíll also need a lawyer to finalize the deal. A UCC (Universal Commercial Code) form and Uniform Bulk Sales form from the state to handle equipment and inventory transfer. A UCC form tells the buyer that there are no outstanding liens on your business. A Bulk Sales form makes sure you pay the state proper sales tax on your sale.

Initially you can try running a "for sale" ad in the business section of the local paper, and online to generate some leads. Donít use your name or the club name and number, you donít want to scare the members into leaving. Get a voice mail box and have the callers leave a message. You can screen them that way because most of those who reply will be dreamers and business brokers trying to get you to use their services.

If you are serious about selling your business and have no luck advertising in the classifieds, you may eventually consider using a business broker. The benefit is that he or she may already have pre-qualified buyers lined up looking for a gym business to purchase. The downside is that a brokerís fee can eat up to 30% of the sale price of your business. The broker will go over your business financials to help you come up with a realistic sale price, which is usually lower than the price you have in mind. If you do make a profit on the sale of the club or salon, youíll only have to pay income tax on the portion above your original investment cost, not the entire sale price.

 

Perhaps the only way to sell a share in a partnership is to have the other partners buy you out. Rarely will the other partners approve of someone you want to sell your holding to, or let him in as a new partner. Legally, they donít have to let anyone new into their business unless the business agreement states otherwise. Many disgruntled partners simply sign their share in the business over to the remaining partners and walk away. The tax write off becomes more advantageous that hanging on to a sour business situation.

 

Agreement and Bill of Sale

I, (Your name), have sold my interest in (Gym Name), (Address) (Hereafter called Gym Name), a gym business, for one hundred thousand dollars ($100,000) paid in full, I warrant that there are no known encumbrances or liens on the business or equipment.

The buyer(s), __________________________________________________________

Are purchasing (Your name)ís share of (Gym name) for $______, which includes all equipment, members, and goodwill, except for ________________________.

The buyer(s) will allow all pre-paid (not complimentary) (Gym name) members to continue to train at buyersí new gym for the duration of their (Gym name) memberships, not obligating pre-paid members to pay an additional fee to use the facility. In exchange, (Your name) agrees not to open another health club within a 10-mile radius of the present location of (Gym name) for a period of 5 years.

The new owners can elect not to honor the (Gym name) pre-paid memberships by paying an additional membership buyout fee of $_______ to (Your name) at the time of sale in order to exercise this clause.

The breakdown of (Gym name)ís assets is: equipment - $________; all other assets including, but not limited to, goodwill, membership lists, procedural and maintenance information, management advice, etc.- $___________.

Used equipment and assets are sold as is. No warranty as to the future marketability or profit/loss of business is represented. Refrigerator belongs to _____________________ and soft drink vending machine belongs to PepsiCo. Neither is included in sale. See equipment list attached.

Agreed to this ______day of ___________, 2000.

BUYER(S) SELLER

__________________________ ____________________

__________________________

Attach your equipment list to this contract and have your lawyer review it.

 

Closing the Club

If the landlord does foreclose on your club, you will need to provide an alternative place for your members to train that will honor their membership. Otherwise, you will have to buy back their memberships. If you do have to close, send a copy of the following letter to all your members to help avoid lawsuits. Expect a couple of complaints by unhappy former members to the State Attorney Generalís office. Forward the Attorney General and the customer a copy of this letter and you should be held harmless.

Closing Letter to Members

Dear Member,

Due to circumstances beyond our control, creditors have seized the assets of (Old Gym Name) and the company is bankrupt. We are therefore offering you an alternative membership at (New Gym) at (Address) so you may benefit from our misfortune. You may have missed the sign posted at (Old Gym) or not yet received a phone call from the (New Gym) staff. We regret any inconvenience that this may have caused you.

Any remaining time left on memberships at (Old Gym) will be honored at (New Gym), (Address). The phone number is (Phone Number). We are sure you will be pleased with the facility, which includes tanning, saunas, thirty cardio machines, and complete lines of hammer strength, nautilus, and free weights. The hours of operation are M-S, 5am to 11pm. (Managerís Name), the manager, has agreed to honor the remaining time on your (Old Gym) membership free of charge. He cannot, however offer you a cash refund.

We hope you will enjoy training at (New Gym)ís as much as you did training at (Old Gym). We didnít plan on closing and not taking care of our members, the assets were seized and we were evicted all in one day. Please accept the (New Gym)ís membership instead of currency.

Sincerely,

(Old Gym Name)

 

BUSINESS PLAN

Fitness Health Club Chain

Business Plan for a Full Service Club

1.0 Executive Summary

Fitness will serve the New York region family health & fitness market, helping customers to meet their overall fitness goals. The objective of Fitness is to aggressively expand our services and become viable within sixty days at each location. Creating a full service health club is a study in logistics management for the management team. Fitness must coordinate and implement human resources, financial management, facilities and risk management and sales & marketing in order to introduce the final product, a health club, to the marketplace.

Fitnessí business is based on the overarching premises that:

  1. The fitness markets are poised for high growth as per capita disposable income by area residents increases. Recent figures show that local populations spend $200 USD per person annually on fitness.
  2. The indigenous populations in local markets have been exposed to increasing amounts of fitness advertising over the last ten years by health clubs and other commercial fitness interests, which has helped to educate consumers about fitness, health clubs and personal training.

1.1 Purpose

Fitnessí purpose is to capitalize on the popular perception that fitness has value and is beneficial, and that belonging to a health club may be a status symbol. Offering services like cardio machines, free weights, personal training and nutritional counseling will serve and positively impact the local community.

The fitness trend analysis is that health clubs, personal training, weightlifting, fitness and exercise is gaining popularity. The health club environment has been equated to the fitness boom in the 1970s in the USA and Europe that spawned the giant, well known fitness club chains that are still a going concern today. Personal training and Pilates (Pilates is no longer a trademark name and can be used in ads and business names) are emerging businesses in the industry. Partnering with hotels in the region and incorporating Fitness clubs inside them is another potential market for Fitness expansion.

1.2 Values

Fitness is dedicated to building long-term relationships with customers through quality training and customer support. An atmosphere that will have positive family oriented actives and child daycare are essential functions of the franchise.


1.3 Facility Design

Each Fitness club will be a 10,000 to 15,000 square foot fitness gym specifically designed with a general training area, an aerobics room, a front desk and menís and womenís locker rooms. Exercise equipment will be a combination of barbells and dumbbells, weight machines, treadmills, stationary bikes, stretching mats, step machines and elliptical machines. The projected size is inherently easier to develop and costs less to operate and maintain than a 50,000 square foot behemoth would be.

In order to enter this market the investment group is positioning itself to open several 10,00 to 15,000 square foot gyms all over the USA, starting with facilities in malls New York. Larger franchises in the past decade have found out that 50,000 square foot clubs were too large for the market in New York and many of them have gone out of business. However, recent newer clubs appear to be thriving. A 10,000 to 15,000 square foot club is approximately the correct size for the New York market at this time. No pools or wet facilities other than showers (i.e. steam rooms or Jacuzzis) should be included in the layout for sanitary reasons and because of space limitations. Offering ultra clean and bright state of the art training facilities is crucial to penetrating the New York marketplace.

1.4 Framework

The investors feel the time is right for the Fitness centers health club chain in and Malaysia. Many mechanisms already point to a mini boom in the region. A big factor that supports this hypothesis is the increasing presence of industry giants like Bally expanding operations in the region. The market is still wide open to any major or minor player emerging as the primary health club chain in New York.

Several years after its publication, the Wellness Revolution is still a best-selling book. It's writer, businessman and motivational speaker Paul Zane Pilzer advised investors and amateur stock market players that "wellness" would be the next trillion-dollar industry. There's a lot of money to be made out of people's desire to feel good and look good, wrote Pilzer, telling investors to sink their money into companies dealing in health food, beauty products and fitness centers.


The investment group is positioning itself to take advantage of this expanding market by entering the small and medium sized health club market niche. The long-term goal is to develop a chain of 50 - 500 fitness facilities throughout the USA with the pilot facility placed in a high visibility New York shopping mall, ultimately creating the dominant medium sized health club chain in the region. By keeping overhead to a minimum with smaller club sizes and creating multiple profit centers, the business plan is sound. The key to success will be entering the market immediately combined with excellent management, marketing and sales training.

 

1.5 Highlights

  1. Provide fitness strategies and programs to customers in the USA.
  2. Create two fully functional clubs by the end of 2006.
  3. Expand Fitness into ten locations by the end of 2007.
1.6 Mission

Fitness is a full service health club that puts members first by providing benefits like fitness, good health, a refined appearance, strength, endurance, and flexibility. Fitness goal is to enhance member quality of life while boosting self-esteem and motivation by enabling dramatic improvements for all its members.


1.7 Keys to Success

Corporate Fitness ' keys to success are:

  • Marketing services to individuals, families, groups and companies.
  • Recruitment of experienced managerial, fitness training and sales talent.
  • Dedication and hard work of the founders.
  • Raising productivity.
  • Lowering overall costs.
2.0 Company Summary

Fitness is founded on the belief that it can service the medium sized health club market while emphasizing personal training and relationship building. Fitness will provide fitness and health strategies and programs to individuals, families and businesses in the town or city where each club is based. Fitness will combine promotion of health and exercise-related activities facilitating positive lifestyle changes in members of the local community.

The company will begin pilot operations in New York, established by the investment group, any of who may hold director positions.

2.1 Company Ownership

Fitness is a privately held corporation. The new health club chain will be created initially as a privately held general corporation with shareholders and officers.

Ownership will be divided among the shareholders:

  • Investment Group - 100 percent.

2.2 Start-up Summary

Start-up will require approximately $300,000 of capital, all of which will be provided by the Investment Group. Approximately $200,000 will be allocated to leasehold improvements and $100,000 to equipment. Each Fitness location will be a full service health club estimated total build out cost of $300,000 USD and expected to generate approximately a minimum of $240,000 USD in revenue per year.

Start-up

   

Requirements

 
   

Start-up Expenses

 

Legal

$1,250

Stationery etc.

$1,000

Brochures

$800

Insurance

$5,000

Rent

$58,000

Expensed equipment

$75,000

Utilities

$6,500

Leasehold improvements

$150,000

Other

$2,450

Other

$0

Total Start-up Expenses

$300,000

   

Start-up Assets Needed

 

Cash Balance on Starting Date

$10,000

Other Current Assets

$0

Total Current Assets

$10,000

   

Long-term Assets

$0

Total Assets

$10,000

Total Requirements

$300,000

   

Funding

 
   

Investment

 

Total Investment

$300,000

   

Current Liabilities

 

Accounts Payable

$0

Current Borrowing

$0

Other Current Liabilities

$0

Current Liabilities

$0

   

Long-term Liabilities

$100,000

Total Liabilities

$100,000

   

Loss at Start-up

($300,000)

Total Capital

($100,000)

Total Capital and Liabilities

$10,000

 

2.3 Start-up

Fitnessí New York pilot club projected start date is summer 2005.

2.4 Company Locations and Facilities

Fitness headquarters are located within the first club located in downtown New York. Upon expansion, offices may be moved to a different location, not within any individual club.

3.0 Services

Business ratios for Fitness indicate strong financial growth and an impressive chance for investment opportunities, putting expansion and further development both within reach.

3.1 Service Description

Fitness provides fitness and wellness strategies & programs to individuals and families in the greater New York city region. A fitness and wellness strategy is a long-term effort, combining both health-promotion and exercise-related activities designed to facilitate positive lifestyle changes in members of the target club location communities.

The health club will offer one on one personal training and nutrition counseling services to members. Fitness will offer a variety of services such as Aerobics, Pilates, Jazzercise, Spinning classes, Yoga, and Martial Arts. The facilities planned are: two aerobics rooms that double as Pilates studios, weight room, cardio area, tanning beds. A swimming pool is not recommended.

The pilot facility will be located in New York in a high traffic area. The expected highest profit will accrue from selling personal training packages to members.

3.2 Personal Training

The pace of construction of new, well-designed, advanced facilities has outstripped the development of talent and standard staff training. There is a lack of standardized staff training, but expansion into USAís fitness market comes at a crucial time. The health club market in the US and Canada at this time has been compared to the early 1970ís American and European fitness and health club explosion.

Pilates infomercials in the USA tout the benefits of Pilates and have effectively laid the groundwork for Personal Training and Pilates rooms. A Personal Training - Pilates salon chain and franchise is a completely new concept and appeals to the broad market of personal trainers working at health clubs for someone else. Entering the market with this concept successfully now could create a dominant economic position and name recognition for the company that brings this concept to market first. By maintaining club ownership, this business could control an emerging sector of the fitness business and could ultimately generate millions of dollars in annual revenue.

3.3 Competitive Comparison

Fitness will not be not only a health club, as are the majority of competitors, but a personal training center. This organizationís business will be designing personalized state of the art exercise systems for members. The major function is to work with client to implement fitness strategies. Fitness has a vested interest in each individual member, unlike many competitors. An integral part of this service is following up and monitoring the customers.

3.4 Fulfillment

All state of the art fitness machines and weights will be purchased from regional exercise equipment distributors and all apparel accessories and supplements will be bought from a reputable supply company. Office equipment and fixtures will be acquired from local office supply outlets.

4.0 Market Analysis/Competition Summary

Western culture and pop movies may be helping to educate the people about the benefits of exercise and a trim and muscular, Hollywood style physique. The analysis is that in slowing economies the health club industry grows at a rapid pace because people are not working hard scrambling to make money and have more free time. An example of this phenomenon is the US and European gym market is the 1990s. When the economy was heating up and the fitness industry slowed. After the Internet bubble burst in 2000 the fitness industry heated up again and has been in a growing trend for most of this decade. Other examples of strong health club markets in a non-boom economy are Russia, Central America and South America.

According to recent articles, current competitors are fairing well in the America. The growth in health club membership best illustrates the development prospects for the fitness market.

4.1 Trends

Americaís fitness industry is still developing, with established facilities and new entrants working together to make the average consumer aware of the importance of exercise. Competing gyms may inadvertently help each other out through marketing efforts that educate potential customers about the benefits of health club services. The proliferation of international-style gyms enlarges the industry's market niche.

Competing health clubs target the same market segment: white-collar workers who can afford a health club membership. Local gyms attract nearby residents through advertising. Although Bally Total Fitness has launched a comparatively high-profile multimedia advertising campaign, the director of Bally's business development claims that membership growth is mainly a result of word of mouth. Ninety percent of members join because of member referrals. Most members choose a gym based on its proximity to their home or work, although price is always a factor.

4.2 Market Segmentation

The market for Fitness is not particularly segmented, as potential customers include all teenage and older individuals with a ten-mile radius of the club. Fitness, however, segments its services for individuals. Fitness works with members to design personalized health and fitness programs.

Market Analysis

Market Analysis Per Location

Potential Customers

Growth

2005

2006

2007

2008

2009

CAGR

Individual Members

35%

750

1,013

1,368

1,847

2,493

35.03%

4.3 Service Business Analysis

A dozen fitness facilities are currently in operation in the downtown New York, representative of major cities in the region, but they may have lost the personal touch that enhance member retention because of their large size. These organizations are primarily exercise facilities with little emphasis on personalizing individual plans to improve fitness or maintaining customer rapport. Customer service and innovation are the keys to developing market share.

4.4 Business Participants

Participants in the fitness industry include national, regional, and local companies. On the regional level, companies such as Bally, Goldís Gym and the YMCA offer exercise facilities and training programs. Those chains offer comparable services, while locally, small, privately owned businesses provide similar, but less extensive options to exercise-seekers.

4.5 Distribution Patterns

Few fitness centers are located in downtown population centers and malls and the majority are found in strip malls. By locating in shopping malls or close to professional centers containing restaurants, parks, and other recreational activities, the potential will be greater for additional non-local membership sales. Male and females at least 16 years of age and families are the intended target group. Fitness will be located in a neighborhood of approximately 50,000 people with an average income of $10,000 USD per household.

4.6 Main Competitors

The three main competitors for Fitness are:

  • YMCA-market is hard core weight lifters and/or students who want accessibility and affordability of fitness facilities.
  • Goldís Gym -services are targeted toward those motivated and dedicated individuals who workout five to seven times per week.

LA Fitness-aimed at casual fitness-seekers that do not workout with a high intensity but still desire the status and recognition.

  • Bally Fitness - a much larger facility that may discourage members by its sheer size. Downside is that Bally sized clubs have a much greater overhead and require greater membership number while losing the personal customer relationship that is the hallmark of mid-sized clubs.

 

5.0 Strategy and Implementation Summary

Fitness will offer one on one personal training and nutrition counseling services to individuals employing a staff of contract trainers. The pilot facility will be located in a New York mall in a high traffic area. The expected greatest profit will accrue from selling personal training packages to members. Resale and customer long-term retention will be maintained by employing a monthly billing system that features an automatic bank draft from the memberís bank account or credit card. A photo card ID system will be employed to make sure all members are current in their dues.

5.1 Marketing Strategy

Fitness will attract area residents through conventional advertising and orchestrate in-house promotions and membership drives targeting current members "warm market" and family. By sponsoring local fitness events the chain can raise public awareness and enhance Fitness name branding. The company may choose to advertise on large subway station billboards. Another high expense option that may be utilized at a later stage might be to launch a high-profile multimedia advertising campaign. Membership growth is still mainly a result of word of mouth. Ninety percent of members join a health club because of member referrals. Most members choose a gym based on its proximity to their home or work, although price is also a factor. Thus, in house promotions will be the essential form of building customer base after the initial media advertising campaign.

New York's health club industry has changed enormously since 1995, and the city's fitness industry growth will continue. Many of the gyms mentioned are planning to open additional locations in the stae and around the country. even though some have just opened up their first site. Fitness should seek to develop at least the fifty locations within ten years.


5.2 Pricing Strategy

Prices for using Fitness ' services are comparable to those of higher-end fitness centers. An employee choosing to utilize a Fitness center will pay a $50 USD monthly fee.

5.3 Revenue

Personal training minimum appointment income projection is approximately 20 personal training appointments daily, producing $500 per day, or $15,000 USD monthly ($180,000 USD annually) initially. Minimum membership sales projections are 100 new members monthly paying $50 each for a total of $5000 USD monthly ($60,000 USD annually). Minimum clothing, tanning, weightlifting accessories and supplements sales project to be an additional $2000 USD monthly for each location ($24,000 USD annually). Each store is expected to generate approximately a minimum of $240,000 USD in revenue per year.

 

Fitness will offer one on one personal training service at a rate of $15 to $25 USD per half-hour session selling 12 session monthly packages, depending on what the market will bear at each location. Prior to opening each site memberships will be pre-sold at a table or trailer outside the new facility. A counter will be set up to begin selling memberships and training packages to the public.

 

5.1.2 Promotion Strategy

Following initial promotional activity through advertisements in newspapers, magazines, and on television and radio, Fitness will significantly reduce its promotional efforts in the hope that word-of-mouth will attract potential clients. Promotional activity will still be utilized through these media outlets, but only minimally. After each club opens incentives and contests will be promoted to members to bring in friends and family. Twelve-week shape up contests with cash prizes will help boost personal training sales.

 

5.2 Sales Strategy

A detailed and proven sales script and procedure will be taught to each staff member. Staff will call member-referred individuals and invite them in for a free visit. Each potential customer will be given a tour of the club and placed on showcase pieces of equipment before sitting down at a closing office table with contracts for signing.

5.2.1 Sales Forecast

Anticipated sales are shown in the accompanying table.

Sales Monthly

Sales Forecast

Sales

2005

2006

2007

Sales

$120,000

$240,000

$300,000

Other

$0

$0

$0

Total Sales

$120,000

$240,000

$300,000

       

Direct Cost of Sales

2005

2006

2007

Sales

$33,000

$44,000

$55,000

Other

$0

$0

$0

Subtotal Direct Cost of Sales

$33,000

$44,000

$55,000

6.0 Management Summary

Fitness is currently a growing organization and should be headed by three individuals. The CEO/Director of Sales and Marketing oversees the activities of the Director of Health and Wellness Programs and the Director of Finance and Administration.

The Director of Health and Wellness Programs is the contact for and supervisor of the fitness specialists and health educators and promoters.

The Director of Finance and Administration provides guidance for fitness facility attendants.

As the firm grows and expands, more director positions will be added as needed.

6.1 Organizational Structure

There are currently two divisions of Fitness: Health and Wellness and Finance and Administration. With the growth of the company, more divisions can be created if the need arises. Contract labor and outsourcing items like legal consultants will be integral business strategies.

6.2 Management Team


  • CEO and Director of Sales and Marketing. This person is responsible for providing leadership, direction, and control for all aspects of the company's activities in order to realize optimum profits compatible with the best long- and short-term interests of the shareholder, employees, consumers, and public.
  • Director of Finance and Administration. This person is responsible for guiding and directing financial and control activities of the company in a manner designed to protect assets, meet reporting requirements, and effectively plan for and audit the financial needs of the firm.
  • Director of Health and Wellness Programs. This person will assume the overall management of the health promotion program, including organizing and conducting health education programs.

6.3 Management Team Challenges

The challenges of Fitness í management team include:

  • To create market share and name recognition in the Asian/Malaysian region fitness markets.
  • To develop financial solvency and profitability within one year at each club location.

6.4 Personnel Plan

Employee payroll (not including management) is projected to be $6 per operational hour or $2580 USD monthly totaling $30,966 USD annually. Traditionally in the health club industry some overhead expenses such as cleaning services may be traded for gym memberships. The figure is based on average annual salary in New York for six employees including trainers.

Fitness' personnel staff requirements and payroll projections are shown in the table below.

Personnel Plan

 

2005

2006

2007

Fitness Center Manager

$15,000

$15,000

$15,000

Program Director

$54,000

$54,000

$54,000

Personnel Manager

$36,000

$36,000

$36,000

Health/Fitness Specialists

$33,000

$33,000

$33,000

Attendants

$12,000

$12,000

$12,000

Other

$0

$0

$0

Total People

0

0

0

Total Payroll

$100,000

$100,000

$100,000


  • Personal training revenue will make up approximately seventy-five percent of total revenue, with the rest coming from membership, clothing, and accessory sales.
  • Salaries and rent are the two major expenses, while depreciation is another significant cost that will increase as the company develops. Although the purchasing of fitness and office equipment is expensive, constant replacement will be needed to minimize depreciation costs and maintain a competitive edge.
  • In order to maintain steady gross margins, salaries and advertising expenses are not likely to increase within the first two years of operation, unless cash flows significantly increase.

6.5 The Planning Process and Human Resources

  • The first and most important process involves the planning process and human resources. There are three central issues that need to be addressed:
  • The selection and training of personnel,
  • The coordination and planning of operations, and,
  • The development of all programs.

The proper planning of a health club determines how successful it will be in the future. During this stage, the club general manager and/or owner must shoulder the responsibility for making it work. Hiring experienced, dependable and enthusiastic staff is a priority for management. Items like housekeeping and cleaning services are often bartered for a membership in the fitness industry, although regular staff should keep each facility pristine. An employee handbook will be issued to each staff member.

7.1 Important Assumptions

Three assumptions for Fitness are:

  1. A constantly growing economy without any major recession or boom.
  2. No unpredictable changes in fitness or office equipment.
  3. No major national or global events that threaten the stability and health of the country and its citizens.

General Assumptions

 

2005

2006

2007

Plan Month

1

2

3

Current Interest Rate

3.00%

3.00%

3.00%

Long-term Interest Rate

10.00%

10.00%

10.00%

Tax Rate

25.42%

25.00%

25.42%

Sales on Credit %

60.00%

60.00%

60.00%

Other

0

0

0

 

7.2 Fiscal Management

A major key to profitability is budget management. There are financial issues such as the budgeting process, revenue generation, advertising and promotion, membership retention, costs vs. expenses, and purchasing that must be properly regulated. These financial factors will determine viability of Fitness í business.

7.3 Key Financial Indicators

The most important financial indicators are net increase in cash and net income. Net increase from cash will exemplify the relationship between net income and net cash from operating activities. Expense control and debt paydown will positively affect financial indicators.

Benchmarks

7.3 Break-even Analysis

Fitness ' break-even point is at 1667 units each month with monthly sales at $16,667. Sales forecasts indicate that units sold and monthly sales are expected to be much greater than the break-even point.

Break-even Analysis

Break-even Analysis:

Monthly Units Break-even

1,667

Monthly Revenue Break-even

$16,667

   

Assumptions:

 

Average Per-Unit Revenue

$10.00

Average Per-Unit Variable Cost

$4.00

Estimated Monthly Fixed Cost

$10,000

 

7.4 Projected Profit and Loss

 

Sales are predicted to increase each month with first year annual sales totaling close to $150,000. Gross margin, likewise, is expected to increase in correlation, ending at close to 94% for 2005.

Compared to total sales, net profit will increase each month and is predicted to increase for 2005 through 2007.

Pro Forma Profit and Loss

 

2005

2006

2007

Sales

$150,000

$242,000

$300,000

Direct Cost of Sales

$33,000

$44,000

$55,000

Other

$0

$0

$0

 

------------

------------

------------

Total Cost of Sales

$33,000

$44,000

$55,000

Gross Margin

$150,000

$242,000

$300,000

Gross Margin %

73.88%

78.24%

83.34%

Expenses:

     

Payroll

$100,000

$100,000

$100,000

Sales and Marketing and Other Expenses

$15,200

$15,200

$15,200

Depreciation

$7,200

$7,200

$7,200

Insurance

$1,400

$1,400

$1,400

Rent

$60,000

$60,000

$60,000

Other

$0

$0

$0

Utilities

$25,200

$25,200

$25,200

Leased Equipment

$27,600

$27,600

$27,600

Payroll Taxes

$12,500

$12,500

$12,500

Other

$0

$0

$0

 

------------

------------

------------

Total Operating Expenses

$123,100

$123,100

$123,100

Profit Before Interest and Taxes

$82,975

$183,650

$247,500

Interest Expense

$10,926

$12,531

$14,174

Taxes Incurred

$42,424

$67,780

$110,137

Net Profit

$29,625

$103,339

$223,189

Net Profit/Sales

24.05%

31.25%

39.15%

Profit Monthly

7.5 Projected Cash Flow

With cash flow increasing significantly and expenses remaining relatively static with only minimal increases, cash flow will experience a similar increase for each period of financial evaluation.

Cash flow is expected increase from just over $150,000 in 2005 up to over $242,000 for 2006, with corresponding cash balances of $30,000 and $83,000.

Cash

Pro Forma Cash Flow

 

2005

2006

2007

       

Cash Received

     

Cash from Operations:

     

Cash Sales

$150,630

$250,300

$330,240

Cash from Receivables

$174,145

$210,237

$279,369

Subtotal Cash from Operations

$189,775

$240,537

$329,609

       

Additional Cash Received

     

Sales Tax, VAT, HST/GST Received

$0

$0

$0

New Current Borrowing

$27,000

$24,750

$24,750

New Other Liabilities (interest-free)

$72,575

$85,755

$93,450

New Long-term Liabilities

$9,000

$9,000

$9,000

Sales of Other Current Assets

$0

$0

$0

Sales of Long-term Assets

$0

$0

$0

New Investment Received

$30,000

$30,000

$30,000

Subtotal Cash Received

$189,350

$240,042

$329,809

       

Expenditures

2005

2006

2007

Expenditures from Operations:

     

Cash Spending

$31,505

$34,664

$41,313

Payment of Accounts Payable

$144,524

$102,918

$148,363

Subtotal Spent on Operations

$176,029

$137,582

$189,677

       

Additional Cash Spent

     

Sales Tax, VAT, HST/GST Paid Out

$0

$0

$0

Principal Repayment of Current Borrowing

$0

$0

$0

Other Liabilities Principal Repayment

$0

$0

$0

Long-term Liabilities Principal Repayment

$0

$0

$0

Purchase Other Current Assets

$0

$0

$0

Purchase Long-term Assets

$21,700

$9,600

$9,600

Dividends

$0

$0

$0

Subtotal Cash Spent

$129,729

$106,518

$156,912

       

Net Cash Flow

$150,000

$240,000

$367,533

Cash Balance

$30,000

$83,482

$100,621

7.6 Projected Balance Sheet

The balance sheet indicates that at the end of the first year of operation, net worth will be positive and constantly increasing to the point of $242,000 by the end of 2007.

Pro Forma Balance Sheet

       

Assets

     

Current Assets

2005

2006

2007

Cash

$50,621

$100,621

$135,015

Accounts Receivable

$49,300

$59,513

$75,504

Other Current Assets

$0

$0

$0

Total Current Assets

$80,921

$122,995

$166,518

Long-term Assets

     

Long-term Assets

$21,700

$31,300

$40,900

Accumulated Depreciation

$7,200

$14,400

$21,600

Total Long-term Assets

$14,500

$16,900

$19,300

Total Assets

$94,421

$129,895

$245,818

       

Liabilities and Capital

     

Current Liabilities

2005

2006

2007

Accounts Payable

$26,221

$28,851

$34,385

Current Borrowing

$27,000

$51,750

$76,500

Other Current Liabilities

$42,575

$58,330

$51,780

Subtotal Current Liabilities

$75,796

$118,931

$132,665

       

Long-term Liabilities

$109,000

$118,000

$127,000

Total Liabilities

$104,796

$106,931

$109,665

       

Paid-in Capital

$130,000

$200,000

$290,000

Retained Earnings

($55,000)

($30,375)

$42,964

Earnings

$149,625

$240,339

$323,189

Total Capital

$69,625

$102,964

$205,153

Total Liabilities and Capital

$84,421

$159,895

$245,818

Net Worth

$69,625

$102,964

$256,153

 

 

7.7 Business Ratios

The following table outlines some of Fitness ' more important business ratios. The final column, Industry Profile, details specific ratios based on the Physical Fitness Facilities industry as it is classified by the Standard Industry Classification (SIC) code, 7991. These ratios indicate strong financial growth and an impressive chance for investment opportunities, making expansion and further development possible.

Ratio Analysis

 

2005

2006

2007

Industry Profile

Sales Growth

0.00%

20.72%

26.87%

4.96%

         

Percent of Total Assets

       

Accounts Receivable

16.19%

9.02%

6.59%

5.74%

Inventory

0.00%

0.00%

0.00%

2.91%

Other Current Assets

0.00%

0.00%

0.00%

31.21%

Total Current Assets

95.24%

97.44%

98.32%

39.86%

Long-term Assets

4.76%

2.56%

1.68%

60.14%

Total Assets

100.00%

100.00%

100.00%

100.00%

         

Current Liabilities

41.32%

36.21%

31.65%

21.71%

Long-term Liabilities

35.81%

17.88%

11.08%

29.51%

Total Liabilities

77.13%

54.09%

42.73%

51.22%

Net Worth

22.87%

45.91%

57.27%

48.78%

         

Percent of Sales

       

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

93.88%

93.24%

93.34%

100.00%

Selling, General & Administrative Expenses

69.94%

61.99%

53.97%

72.76%

Advertising Expenses

2.78%

2.31%

1.82%

2.44%

Profit Before Interest and Taxes

33.94%

43.59%

54.20%

3.01%

         

Main Ratios

       

Current

2.30

2.69

3.11

1.05

Quick

2.30

2.69

3.11

0.73

Total Debt to Total Assets

77.13%

54.09%

42.73%

2.72%

Pre-tax Return on Net Worth

247.11%

89.49%

66.04%

61.25%

Pre-tax Return on Assets

56.52%

41.09%

37.82%

7.03%

         

Additional Ratios

2005

2006

2007

 

Net Profit Margin

24.05%

31.25%

39.15%

n.a

Return on Equity

186.18%

67.12%

49.26%

n.a

         

Activity Ratios

       

Accounts Receivable Turnover

6.56

6.56

6.56

n.a

Collection Days

29

51

50

n.a

Inventory Turnover

0.00

0.00

0.00

n.a

Accounts Payable Turnover

14.14

14.06

13.20

n.a

Payment Days

16

25

25

n.a

Total Asset Turnover

1.77

0.99

0.72

n.a

         

Debt Ratios

       

Debt to Net Worth

3.37

1.18

0.75

n.a

Current Liab. to Liab.

0.54

0.67

0.74

n.a

         

Liquidity Ratios

       

Net Working Capital

$164,125

$204,064

$343,853

n.a

Interest Coverage

16.75

22.64

31.57

n.a

         

Additional Ratios

       

Assets to Sales

0.56

1.01

1.39

n.a

Current Debt/Total Assets

41%

36%

32%

n.a

Acid Test

1.91

2.44

2.90

n.a

Sales/Net Worth

7.74

2.15

1.26

n.a

Dividend Payout

0.00

0.00

0.00

n.a

8.1 Exit Strategy

After the business is profitable and has reached target goals the investment group may offer it for sale to the highest bidder for $10 million to $50 million USD within five to ten years. A decision to divest or create a publicly traded company with shares tendered to for sale in international stock markets are options for consideration.






SUMMARY

As you establish your business and build a steady customer base is always put the welfare and feelings of the customer first. When staffing do your best to hire "smilers," or applicants with a positive mental attitude. A grumpy front desk person or trainer will kill your business. You can train someone whoís got an upbeat personality to do any job you need done, but you canít train a pessimist to be an optimist. Negativity is a personality characteristic that wonít change no matter how many Tony Robbins seminars the person attends.

You now understand that management plays a one hundred-percent role in the success or failure of any business, and even more so in the competitive health club industry. Your decisions will make or break your business.

It takes energy and enthusiasm to become successful in the fitness business. You are equipped to make informed business choices so that you can manage any training facility or retail business.

A manager is the person that directs policy; selects, trains and oversees personnel; and allocates business resources to maintain positive cash flow and profitability. As a health club facility manager you will be responsible for making decisions about where to locate your club(s), who to hire, what equipment, furniture and inventory to purchase, employee and appointment schedules, and how to pay the bills each month. It is up to the manager to negotiate leases and vendor contracts, while concerning him or herself with local zoning laws and ordinances about things as mundane as sign placement and size. You will be dealing with sales calls continually, but the most important duty a manager performs is keeping precise track of income, inventory and cash flow. You must know how every penny earned is spent, while keeping a tight reign on extraneous or frivolous expenditures.

Running a PT salon or gym business will take time, space, equipment, and money to open. A small personal training salon or commercial health club can range in price from $5,000-$1,000,000 This manual will provide a reference book to help you profit and succeed in the gym business. Refer back to it for equipping, staffing operational information.

Small gyms or training salons make great family owned and run businesses. Profits in a well-run business can usually support the family after expenses, and everyone pitches in to work at the club. As you ponder your options, bear in mind that when there are two or more partners in a small gym operation, perhaps no one will earn enough money to justify the long hours.

Every possible situation must be covered by a partnership agreement ratified by your business attorney. With money and investments at stake, disagreements between partners can become intense. Even families are not immune to the divisions that running a business can cause.

If you open a small salon, as soon as feasible, develop a young trainer to pick up training appointments. Eventually you should groom two or three helpers so you don't have to train anyone yourself. Youíre a manager. Try to sell your trainer management services to a larger local health club. Your expertise will create a profitable PT program for them. The topics youíve learned may give you a new way to look at your business potential. You now have many excellent handouts that you may give your customers explaining nutrition and weight loss weight.

You are going to be able to make positive, life changing improvements in your memberís and clientís lives. There is nothing so rewarding as seeing someone lose eighty pounds because of the help you and your club has provided. Just use common sense. Donít put yourself into a compromising situation by promising more than you can deliver. Make the member realize that he or she is the person responsible for the results, and your trainers are simply there to coach and help them.

Good luck with your health club business. E-mail, fax or mail your finished exam. Donít try to do a rush job on the exam, there is a $25 retest fee if you fail. I canít wait to hear from you about how your new business is doing!

God bless.

Greg Ladd

 

 

AMFPT HEALTH CLUB MANAGEMENT FINAL EXAM

            ESSAY QUESTIONS

For each question write a one page answer based on the manual reading material. The answer must be clear and comprehensive. Check your grammar and spelling. You can put the answers in e-mail sent to exams@amfpt.com and amfpt@aol.com. You must include your name and address or the exam will be returned ungraded.

  1. Create a business plan for a small personal training studio.

     

     

  2. Create a business plan for a full service health club.

 

 

3. Create an operational model for a small 3000 square foot training salon and large 50,000 square foot commercial club outlining scheduling, staffing, ordering, inventory control system.

Mail or e-mail finished exam along with name, address, phone number and e-mail address to:

American Muscle & Fitness

102 Benedict Road

Pittsford, NY 14534

AMFPT

exams@amfpt.com and amfpt@aol.com

amfpt.com