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Thursday
Jun012017

Identify and Monitor Key Performance Indicators (KPIs) to Keep Your Health Club Fit

You didn’t get into the health and fitness industry to monitor financial key performance indicators (KPIs). But that doesn’t make them any less vital.

While tracking KPIs may seem tedious, the process will help you to run your club more efficiently, increase revenue, and help more members get fit. Besides, if you don’t keep an eye on your KPIs your business could falter.

“The most important reason to identify your club’s key performance indicators is if you’re not monitoring it, you may not find out there’s an issue before it’s too late,” says Greg Manns, CPA, CGMA, CITP, senior vice president of Industry Insights, Inc. “The key performance indicators oftentimes will give you a heads up before things go haywire.” 

How to Approach Your Health Club’s KPIs 

You should look at your financial KPIs through two lenses:

  1. Compared to your club’s historical performance
  2. Compared to the industry at large 

“If you’re constantly looking at yourself in that silo of how your club’s performing, you may be missing out on a lot of potential profits without knowing what the industry is doing,” Manns says. “That’s why it’s important for clubs to participate in IHRSA’s Industry Data Survey to get a sense of where you stand compared to other businesses.”

(Note: clubs that participate in IHRSA’s annual Industry Data Survey by June 9 will receive a free copy of the 2017 Profiles of Success ($499.95 value), which is chalk-full of industry KPIs and other benchmarks.) 

Identifying Your Health Club’s KPIs 

In IHRSA’s Thursday, June 8 webinar, “Key Performance Indicators Every Club Operator Should Monitor,” Manns will go over more than 20 KPIs that you should be monitoring regularly. Some of the financial KPIs are straightforward metrics that your club’s accountant can provide, but others require some deeper thought. 

“The first step to identify the most relevant measures of performance for your club is to determine your overall vision or strategy as a company,” Manns says. “Most people haven’t necessarily become a club operator just to make money—a lot of the time they got into the business to improve the lives of members. So those key performance indicators might be a little different than those who are more focused on maximizing their financial success.”

Essentially, you should identify what is most important to your club and that will drive you in the right direction as you identify your KPIs.

Monitoring Your Health Club’s KPIs 

Once you know where your focus is, you need to commit to regularly monitoring the indicators you’ve identified.

“If you’re monitoring that info you’re going to see things start to move outside the norm before it’s too late and you can adjust according,” he says.

For example, if you see that your return on assets has decreased, you might realize you haven’t made any equipment investments in the last five years and maybe it’s time to buy new machines.

That said, it’s important not to overreact just because some metrics are a bit off.

“When you’re outside of those norms you don’t always need to make a knee-jerk reaction,” Manns says.

He suggests monitoring your KPIs similarly to how a physician monitors your health. If, say, your temperature is too high, your doctor will order more tests and do a deeper dive to try to find out why you’re outside the norm. Club operators should treat KPIs in the same way; if an indicator is off, either for the industry or your individual club, take a closer look before reacting. 

Ultimately, Manns says identifying and monitoring your KPIs will “improve your club’s profitability, and so on, all the way down to the bottom line.”

Attendees of the June 8 webinar will learn how to: 

  • Identify the most relevant measures of performance for your club.
  • Examine key performance results from leading club operators.
  • Review and interpret KPI findings.
  • Create an action plan to improve select KPIs. 

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