Friday, November 18, 2016

Part 4 continued: Creating a marketing budget for your fitness boot camp business

Today we are going to continue our conversation about budgeting and expenses, with what is probably the most overlooked and most important area: Marketing. In the last post, we talked about the other basic expenses and budgeting concerns of starting a fitness boot camp business. Every personal trainer and group fitness instructor needs to understand these ideas.

How do you create a marketing budget for your fitness boot camp business?

This includes a website. I created my websites for free with Google Sites. You can also use WordPress. In the beginning, don’t spend a lot of money here, as you can easily get sucked into spending $3000 for some crazy awesome site that won’t even matter until you get bigger. If you want to hire someone to help you, that is fine, but don’t spend over $200 here. You also may want to buy some things like plastic gift cards for referral generation and get flyers made, but all of this should cost under $300 in the beginning. All in, $500.

In summary, you have roughly $250 for rent, $2,400 for equipment, $400 for licenses, insurance, and various fees, and $500 for marketing, MAXIMUM. Don’t let yourself spend more than that in the beginning. The total of my round figure rough estimate is $3,550.

If you have the funds to do this and already have a clientele, then go for it and get equipped. Compared to most businesses, this is still a drop in the bucket and very low overhead. When I started my first gym, I spent $13,000 per month before the common area maintenance charges and utilities, and the equipment was $500,000. So this stuff to me is peanuts, and I recommend you keep things in perspective too.

If you are flat broke and even $3,550 sounds crazy to you, then you don’t need to despair. Just realize that you will eventually be investing in your business and end up spending it at some point, but in the beginning just start with what you can. The biggest place to save is on your equipment, and a great trainer can potentially build a business on body-weight exercises alone, which means you don’t even have any equipment at all. You can then add all these line item expenses as you bring money in to cover them. Even if you go this route, however, remember that investing back into your business is a requirement if you want to succeed and maximize your business potential, so don’t think you are going to get away with demanding the most for the least and being cheap. Your clients can tell if you are stingy.

Budgeting is another issue. You are going to have ongoing costs of doing business. The first thing to consider is your rent, which we already covered. The next is your billing method. If you take checks and cash for sessions, you are behind the times. This is fine when personal training, but will become an endless headache if you are going to build a large Boot Camp enterprise. You need to take credit cards and bill monthly EFT (Electronic Funds Transfer). This means you have an agreement with the client that you will charge them for their sessions in blocks automatically or you will charge them a flat monthly fee, which is the way I always prefer.

Dealing with punch cards and invoicing is difficult and time consuming. You don’t want to be doing that, since you need time to build your business and focus on training. You don’t want to be chasing people down for money. You want it all automated. This requires a billing system so that you get the money up front and effortlessly and if someone wants to cancel, they just tell you. That way you don’t have to remind them or renegotiate every month. For this I recommend Fit Roster.

 It handles all the client management, billing, tracking, classes, trainers, payroll, and much more for a ridiculously low cost and there is nothing like it for our type of business. The cost for this type of service, with bank fees and the like, is usually a percentage of your revenue, so you aren’t risking anything. However, to ballpark it for now, plan on paying a few hundred dollars a month for your back-end billing systems.

You will have to renew your insurance and your licenses, but these are usually annual charges that you can prorate to only $30 per month.

Your websites and online presence, including email newsletter software (if you don’t bundle everything in Fit Roster), should only cost you about $50 to $100 per month.

Other marketing expenses, like print work, should not exceed $300 per month. If you are buying things like door hangers or flyers and cards, you can find these really cheap online and it is good to set a budget for this type of thing so that you can keep promoting your business properly.

Your total regular expenses for one location should only be $700 to $900 per month when you are starting out. If that number makes you squirm, just keep in mind that it is an aggressive small business budget to really get things cranking. You can avoid this, and build with only sweat equity, but again, if you invest in your business you are going to get better returns and faster growth. You have to be willing to invest back into your business. I can’t overstate this!

Finally, if you want to budget the big picture over multiple locations in a general way, you can multiply equipment by the number of locations. Due to economy of scale, you will save money in bulk and also you will be able to reuse your website and other back-end systems without higher costs. The added expense will be rent and payroll. We will cover more on this later, but expect to have your costs be 50% to 60% of your revenues, primarily due to payroll costs. In other words, if you plan on making $8,000 per month in revenue from a location, your costs will be $4,000 to $4,800 total.

Again, please remember these are ball-park figures just for general planning purposes. 40% to 50% profit margins are awesome, by the way, which is another reason to do this business and to do it right!
Now, write all your potential revenues for a month and all the ongoing expenses so you can get a glimpse of what your cash flow will look like.

In the next post, I am going to discuss The Legal Form to Start Your Business With and Why

No comments:

Post a Comment