More Money, More Problems? How to Avoid Growth Pains in the Health Club Industry

Tracking cash flow and managing funds for growth in the midst of ongoing market disruptions require special expertise.

You’re in business to make money. That doesn’t mean that an inflow of cash solves all your problems, especially in the health club business, where volatility is the norm. Membership fees, employee turnover, equipment upgrades, and servicing—these are just a few of the unpredictable cost variables of health club management.

Tracking cash flow and managing funds for growth in the midst of ongoing market disruptions require special expertise. A bookkeeper with a QuickBooks account isn’t going to cut it.

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Meticulous Planning Is the Key to Expansion

Ask Spencer McDaniel, vice-president of ATC-Fitness, a Memphis-based business that owns and operates 18 locations in Tennessee and Mississippi. ATC-Fitness began as a single family-owned club 25 years ago, and cautious, meticulous planning was the key to expansion.

“We are a family business and can grow only so fast,” says McDaniel. “We have expanded at a rate of about a store and a half per year in the last 12 years. We’ve retrofitted as we’ve grown, so we have had to stay at the forefront of new technologies and trends.”

McDaniel lists a few of the responsibilities involved, including:

  • membership management;
  • point-of-sale systems;
  • tracking of key performance indicators (KPIs);
  • credit card processing;
  • telephone collections.

And that’s only a partial list. It’s enough to keep any health club owner’s medicine cabinet stocked with antacids and painkillers.

Finding Help: Locating the Expertise You Need for Success

The key to handling all the responsibilities of running a health club is knowing what you do well and knowing who to hire for essential operational tasks. ATC-Fitness will open their 19th location next spring, and McDaniel believes that this steady growth would not have been possible without their support from ABC Financial, who has been with them for almost 25 years. ABC Financial provides billing and club-management software, but McDaniel says they do much more.

“They are a one-stop shop for any size gym: small mom-and-pop clubs; middle-of-the-road family businesses like us who have multiple locations; or massive franchise models,” says McDaniel. “They’re able to handle pretty much everything you can throw at them.”

Besides all the tasks listed above, ABC Financial excels at customer service, says McDaniel, whether it’s billing issues or other questions that on-site staff may not be able to answer.

“They handle the phone call based on the procedures we supply them,” says McDaniel, who stresses the collaborative nature of their relationship with ABC Financial. “They want the same thing we do, which is a happy customer.”

ABC Financial's ability to scale their services to any size business includes careful monitoring of operational cash flow, according to McDaniel.

“Their reporting doesn’t stop at the end of the month,” he says. “They can provide you key performance indicators whenever you need them.

“We consider them part of our family. I don’t have to call customer service and go through an account executive. It’s an open door.”

Jim Schmaltz

Jim Schmaltz is a contributor to IHRSA.org