Thu, May 5, 2011 at 11:09 | Guest Blogger Money Management 101
By Shannon Fable
Oftentimes, club employees rise through the ranks and become responsible for areas where they’ve succeeded on the front lines, but might possess little training for what happens behind the scenes. Star trainers and instructors may excel with members, but the financial concepts necessary to run a department effectively might be all new. It’s important to acknowledge the business side of your new post and find resources to help you. With some guidance, you’ll learn what’s expected to run a department that will positively contribute to the club as a whole.
The group exercise department has a direct line to dues, whether you see it clearly or not. This requires a bit of a mindset change. While every club differs in their expectations of what group fitness contributes, providing cutting edge equipment and programs while controlling payroll is quite a balance. Here are a few tips that can help you.
There are three areas to consider when working on a fitness budget: analysis, development, and management.
Analysis
The most critical step involves understanding the big picture. How is the club doing financially? How many members do you have? What’s the projected growth, earning and spending trends? Understanding the overall club budget will provide a clearer picture of how your piece affects the bottom line.
First educate yourself on the expectations: 1) How much money are you supposed to bring in 2) Is the revenue divided up by program/service or one lump sum, and 3) How does this revenue projection compare with actual numbers from the previous years?
Next, review labor costs: what is the projected payroll expense for your staff (and does this include your salary) and how does it compare to years past?
Last, review all expenses that are housed under your department: 1) Equipment (large equipment, if at all possible, should NOT be included under your department’s budget but rather pulled out as a capital expense; 2) education, dues/subscriptions and professional expenses for your staff; 3) business supplies; 4) equipment repairs.
Development
Once you’ve analyzed a current budget, you can make predictions for how you will increase revenue or decrease spending to influence the club’s bottom line.
When developing a budget, look first at a healthy growth curve for revenue. Three percent growth is a solid number. Do the math; take the revenue projections from previous years and notice the trends.
As well, take into account how payroll may need to grow (annual raises, predicted additions to classes/programs) and adjust your revenue to offset or plan to seek increase in the expenditure column. If an increase in payroll is not possible, you will need to get creative with your programming. It’s best to know ahead of time and have a plan!
Management
Once your budget has been approved, your number one job is managing the money. Plenty of reports exist for you to keep an eye on your performance. Make sure you have access on a consistent basis (monthly, at the least). As these reports may be new to you, seek resources that can help you translate. The more you know, the better your department will be.
Of course, this merely scratches the surface in managing a budget. Finance may not come naturally to fantastic movers and motivators. There are a plethora of sources out there: business books, tradeshows, seminars, online classes and, most accessible and important, your peers. Avoid ignoring the area due to lack of immediate understanding … prove your business worth and watch your career explode in management.
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