No matter what motivated you to join the fitness industry, at the end of the day, it’s a business and it has to be run like one. You can’t stay in business if you don’t make money, and that requires knowing how to keep track of your financial status while you pursue more revenue opportunities.
IHRSA’s Financial Management Tool can be an invaluable aid in managing your finances, especially if you don’t have a full-time accounting staff on-hand. The Strategy & Finance section of the IHRSA website also has other resources that will help stay financially organized if necessary, especially if you’re a new club owner or operating a startup.
But in this hypercompetitive marketplace, even seasoned club owners can find themselves with challenging financial quandaries in organizing their books. One reason is the prevalence of electronic transactions. You need powerful health club management software to help keep track of all the digits flying in and out of your accounts from multiple payment systems. More revenue streams are great, but they have to be tracked with precision, so you can determine if your initiatives are in the black.
A healthy cash flow is essential. According to the IHRSA Health Club Business Handbook, the industry enjoys an advantage in “free” cash flow, which is defined as “all operating expenses (including rent and/or debt service), interest expense, taxes, maintenance CAPEX, and working capital investment.” Most retail businesses are in the 2%-5% of cash flow, while the health club industry has a range of 5%-12%.
If you’re lagging in cash flow, you need to see where you may be falling short.
Optimizing Your Financial Revenue Stream
Here’s a few questions to ask yourself about your financial status if you don’t think you’re optimized for growth.