Who Is In Charge Of Your Cashflow?

by Dr Debit (Fitness Business Consultant)

Who is in charge of your cash flow?

Your member or client payment system should be regarded as the most important system in your fitness business, and having the right people managing your payment system is even more crucial. Everything you do from advertising and marketing your business, to selling memberships and training clients all comes down to one thing � profit! That�s the reason you�re in business in the first place isn�t it? (If it�s not then you might as well get out now and do something else).

The single most important number to track in determining the stability of a fitness business is the 70% coverage rule. This rule addresses the relationship between your business's monthly base operating expense (BOE), and your monthly receivable income. The 70 % rule should be the primary goal of any fitness business for this is what will give your business long-term stability and growth potential.

Some fitness business have almost 100% of their client base paying through a monthly automated payment system which is why they are leading the way and setting the standards now seen in the Fitness Industry, whilst other businesses are still struggling to make ends meet every month. Imagine having to continually sell 10k 30k 50k 100k in new sales every month just to cover your expenses, then have to do it all over again next month!

It does take time to grow your monthly receivable base but executed correctly, and handled by the right people, you will find that your business will become far more profitable and be far more valuable should you choose to sell one day. It�s pretty easy to pick a fitness business that doesn�t have a strong monthly receivable base, they�ll be the ones with out of date equipment, worn out carpet floors and advertising campaigns selling discounted membership all year round.

The reason they haven�t changed too much in all their years in business is not that their members love the old equipment and dirty environment, it�s because the business just could not afford to upgrade their equipment & facilities.

In today�s fitness & wellbeing market consumers are getting smarter and competition is getting fiercer. Buying decisions are being made based on your businesses look & feel, and even the greatest sales person in the world will have difficulty overcoming the � I just don�t feel comfortable here� objection if you have a facility full of out of date equipment & and a big dirty fan posing as your air conditioning system.

The fact is that most successful fitness businesses have a strong monthly receivable base, and those that are leading the way; have The Right People looking after this area of their business. Wether you run a gym, personal training studio or any membership based business, don�t risk the one thing you get up each day for � your profits.

It�s pretty easy today to find software programs and club management systems that can perform the billing of member payments. When it comes down to actually administering the system you need to be sure you have the right person handling it. The one thing you don�t want to have to do as a business owner is � have to handle it yourself�, remember that your responsibility is �running your business� not running your member payments department.

10 questions you should ask yourself when considering �doing your own billing�:

1. Who have I got looking after this area of my business?


2. Are they running it as efficient as possible?


3. How do you know they are doing the best job possible?


4. What happens if that person is away?


5. Are you collecting at least 97 % or higher?


6. Who is following up on missed payments?


7. Are they successful in rectifying missed payments?


8. Is doing a billing run everyday cost effective?


9. Would it be better if I outsourced to a professional 3rd party company?


10. How much is the saving I�m making really costing me?