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Do You need a budget to run a fitness club?

In order to give a clear cut answer towards this question, we need to take the first step and ask ourselves: what is a budget?
Do You need a budget to run a fitness club?

In order to give a clear cut answer towards this question, we need to take the first step and ask ourselves: what is a budget? If we keep it simple, a budget is nothing more than a cash flow in and cash flow out, so  in other words a balance sheet with planned profits and costs. This super simple description really gives a correct response to the title question. Why? Well, it has the key word: planned. Is this true for every fitness club? When opening every new business we start from preparing a business plan where we put in details all forecasted financial data. Can we treat a health club as an enterprise? From a business perspective: we should!

Expectations vs reality

Fitness and health industry has been expanding for few  a years now and its growth is tremendous. People spend more and more on their self-development meaning on their general body and health care. There is a high demand on leisure and fitness services, as more and more people are using them. The whole trend is even more dynamic in developing markets where changes are faster. Big famous chain gyms or budget chain health clubs or boutique studios are a pretty new type of enterprises and market players. Their budgets and know-how is often far  more sophisticated than local businesses. What is more, the reality can be often that such clubs don’t have any budget, they don’t use any management software, they cannot analyze fully their business situation. This only one scenario, but honestly speaking there could be lots more. A budget is like  a house foundation for your business – without a solid base, sooner or later, it will fall apart. Every action, every plan you want to put into effect has to have the support in the budget.

How to create a proper budget?

What should be taken into account? What parts will it consist of? We create a professional budget for the following year not later than two months before the end of a current year to have time to discuss it and plan activities with club managers, if you run a network of clubs, or with a manager, owner or department managers, if you are responsible for a single entity. Most importantly, it should include three seasons in a fitness year:

1. from January to May (sometimes also in June) –the  high season in the fitness industry

2. from June to August (depending on the specificity of the place, e.g.  a club based on customers from nearby universities - we can also include September) – the low season, hard times to survive

3. from October to December (December must be especially planned in details with the use all Xmas actions and ideas) – the second high season

We plan on a quarterly basis broken down into sections:

- member statistics

- cash inflow (along with its diversification)

- variable costs

- fixed costs,

- EBITDA (earnings before interest, taxes, depreciation, amortization) based on the planned number of club members (sold memberships) – and in consequence acquired "net gain".

Do you need a budget?

Definitely yes! Your budget is the starting point for any data gathered and processed in your club with Perfect Gym management software. When customizing Dashboard and choosing desired KPI to be presented, they all somehow relate to the budget and what was planned for upcoming year. Without this base you cannot measure your business and you cannot observe any trend, and in consequence, take right conclusions and measures.

Thanks for your attention.
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About the author
Perfect Gym

Karol

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