Hi Steemians! @mazzle here. If you’ve been following my recent posts, you’ll know that I am working hard to turn my business into a profitable venture. In my last post I discussed why I am continuing with a business that is making a loss and what keeps me motivated.
In this post I’m going to talk about the things I am doing to turn my business around. The reason I am making these posts is a little selfish. It helps me clarify my strategy. My hope is that my insights also help some of you as well, and that you might find enjoyment in following my journey as well.
But first, a little background for you:
When I first took over this business, I drafted a business plan. This plan identified my immediate strategies to increase revenue in the business while also listing the high risk items that could put my business at risk.
These high risk items were:
- key staff leaving the business
- a significant competitor opening up close to my business
- significant equipment failure
- and a few other items
Interestingly (and depressingly), almost all of these high risk items took place in some shape or form in the first 6 months of me taking ownership of the business. Ultimately, I saw a decrease in revenue by almost 50%.
This hurt... a lot. And almost broke me both financially, and emotionally. And this is why I wrote my last post. I needed to identify why I should keep going.
So with my “why” identified I now need to identify the “how” or what I am gong to do to make this business successful again.
In this post I’ll describe everything I have done and am doing to turn my business around.
When reviewing my financials it is very clear that we have 2 primary costs to cover in my business. One is the lease of the building and the second is staff. So the most obvious first items to address are these.
Lease
Conveniently, my lease is up for review at the end of the year. I am currently investigating options to reduce the rent I pay or, failing that, moving my gym to a new location. Relocating isn’t a great option, and is costly, however it could potentially save me a very substantial amount of money per year so is an option worth reviewing.
I may also have a case to reduce my rent by a substantial amount at my current location. If this is possible then it makes sense to stay put.
Staff
My staff cost my business almost as much as my rent. I have no intention of removing staff (I have a fantastic team who have already helped my business to grow) unless it is absolutely critical so my best option is to look at utilisation of staff.
This will mean reviewing what the staff do and identify if their roles can include more work that increases revenue. For example, can they help with marketing of the business? Can they promote additional services in the business to get our clients to spend more?
Then there is the staff roster. Can we identify times where rostered hours can be reduced? Should I roster myself into the roster to allow staff to knock off earlier?
There are definite cost savings to be made here in addition to finding ways to work smarter rather than harder. One thing I am doing my best to avoid is putting myself into a position where I have to work in the business more than I currently do. I have seen many business owners waste their lives away working in their business rather than on it. The key difference here is that owners working in their business aren't spending enough time growing or working on their business.
Marketing
My marketing budget isn’t big. I only spend about $15k per year on marketing. The key to improve what we do here is to have a very good understanding of what marketing brings the biggest bang for our dollar.
I find that google AdWords works best for my type of business followed by Facebook and then letter box drops. Not many other marketing channels have proven to be very effective.
I made a few marketing blunders early on such as advertisements in newspapers that cost me a couple of thousand dollars but resulted in zero leads. I now stick to what I know and what I have seen good results from.
The trick here isn’t so much to spend less, but to only spend on what brings in good quality leads who convert well into paying members.
The pro tip here is to make sure that the marketing we do is intentionally targeted to gain leads that convert mostly into members that want only high level memberships rather than members who are after cheap memberships. I'm still learning this trick obviously, but we're getting better at this all the time.
Weirdly, the members that stick around the longest are the ones that pay the highest membership rate. It’s these members that we want. Cheap memberships are also short lived memberships. The reason for this is that people on cheap memberships don't generally invest emotionally (such as building strong friendships) in the business.
A further marketing opportunity is to increase our involvement in the local community. This could mean providing free or low cost health and fitness services to members of the community that don't normally have access to these services. The benefit of doing this is that we're immediately making ourselves known to our community and we're recognised as caring for our local community and helping where we can. It's essentially very low cost advertising, and gives me an opportunity to get into local newspapers for free.
Other Expenses
Finally, there are the other day to day expenses that we can look at with a critical eye. These are items such as:
- Printers for hard copy marketing materials
- Common supply items such as bathroom supplies
- Consumables sold to members such as water, supplements etc. Are there better and cheaper suppliers of these goods?
- And so on.
Summary
Overall, what I need to do, is take a detailed and very critical look over all business expenses and identify where we can make real and long term savings.
The other item to consider is, can we work smarter rather than harder? And what opportunities do I have to increase the work that my staff currently do to grow my business?
This is no small job to complete. And to be honest, is something I should be doing on a fairly regular basis.
What did you think of this post? Is this useful content for you? I'd love to hear feedback in the comments.
In my next post I'll discuss the opportunities I have either completed or am looking at to rapidly increase revenue in the business. Keep an eye out for this one, it should be very interesting.
And don't forget, if you like this content please upvote, follow @mazzle and resteem.
Thanks for reading!
