In our three-part series on seasonal lulls in business, Entrepreneurs’ Organization (EO) members share strategies and best practices to prevent seasonality from impacting your business bottom line.
We asked Entrepreneurs’ Organization (EO) members in the health and fitness industry to share insights and best practices that helped them survive a summer slowdown without forfeiting bills, payroll and other financial obligations. Here’s what they had to say.
The U.S. health and fitness industry is booming. With a global market generating more than US$80 billion in revenue per year and a North American market estimate of US$28 billion, personal health and fitness is one of the world’s fastest-growing industries. Whether it’s yoga, kickboxing, spin, boot camp or hip-hop, people work out to maintain or improve their physical fitness. In the U.S., about 25 percent of the population report that working out is part of their daily routine, a practice they incorporate to maintain or lose weight, enhance muscle tone, improve their appearance and gain an overall feeling of personal wellness.
Statista says there are about 36,000 health and fitness clubs operating in the U.S., with about 55 million members. What those stats don’t mention is the seasonality of the industry, due to reasons ranging from lower motivation to exercise in warmer weather to leaving town on summer vacation. Whatever the reason, the lazy days of summer can impact a fitness studio’s sales cycle and wreak havoc on the business bottom line. It’s ironic: the season when people show off their physiques in bathing suits and tank tops is the same season the health and fitness industry suffers its slump.
To find out how personal fitness businesses contend with the challenge of reduced participation, we asked EO members Lee Prosenjak, who runs Cherry Creek Dance with his wife, Stephanie, in Denver; and Lian Tal Lebret, who runs Body & Pole in New York City, to share how they navigate the cash flow crisis that summer can cause in the health and fitness industry.
Lee confirmed our hypothesis of a fitness industry summer slump. “Summer is historically a tough climate for our business. As a dance studio offering classes in ballet, tap, jazz, hip-hop, musical theatre and breakdance, July is our slowest month with June and August taking a big dip as well,” Lee stated. “We understand that people head off on vacation, but the decreased enrollment impacts cash flow and employee morale.”
Lee isn’t alone in this concern. Lian’s studio has also experienced a summer lull: “In my experience, knowing your clientele and planning well ahead of time can help even out cash flow in the slower summer months. We approach the challenge by implementing innovative strategies.”
Years ago, a fortunate coincidence helped Lee identify an ideal strategy for raising summer enrollment levels.
“In a strange twist, 2008 was our best summer ever. Due to the down economy, many clients cancelled their usual summer vacations and stayed in town. A dance camp seemed like a minor expense compared to a full family vacation. Our camps filled up quickly,” he remembered. “We added a few extra camps to our roster but couldn’t keep up with demand in that first year.”
Leveraging the “staycation” mindset and catering to working parents whose kids want fun summer activities, Lee continued to grow the studio’s offerings by adding multiple camps and maintaining many regular class offerings.
“Our plan succeeded! Every summer, we’ve continued to increase enrollment and add camp offerings,” he explained. “We started with six camps in 2008 and now offer multiple camps each week from the end of May through August.”
Though she caters to a different demographic in New York, Lian’s studio employs a similar strategy: offering special classes and programs to drive interest from her body- and budget-conscious students.
“We offer ‘summer school’ memberships that give students unlimited classes throughout June, July and August,” she explained. “We offer this special program for a set, non-negotiable, non-refundable price and open it for advance enrollment in April. It’s such a great deal for students who attend regularly that we sold out almost immediately, providing a nice cash advance two months before the expected summer slump.”
A perk of both scenarios is that having ample students in the studio during the traditionally slower summer months builds enthusiasm for both students and staff. Bonus: when other students see a crowded studio, they suffer from FOMO (fear of missing out).
“We also offer a huge deal in June, akin to a Black Friday deal. We change the specific offering each year, keeping it fresh and exciting,” Lian continued. “We start promoting it in May and hold it open for 72 hours only, creating a sense of urgency. This year it provided a strong cash infusion from three days of selling class packages alone.”
Special offers, classes and camps, especially when sold in advance, help to maximize a business’s cash position. Another smart tactic is to identify other potential cash-generating opportunities.
“We rent our space for events when we aren’t using it, and we’ve added a summer sale on merchandise in mid-July,” Lee said. “The combined results of all of these efforts have helped bring revenues in July back up to an acceptable level.”
Knowing their target audience enables both studios to maximize student participation through unique offers crafted for their specific audiences.
“By implementing these actions, we have enjoyed busy, successful summers despite the industry tendency for a summer slump,” Lian said. “Establishing a marketing and strategic plan well in advance so that you’re not scrambling last-minute to make money when cash flow dwindles is crucial for success.”
Lee concurs. “Creating special classes and offerings to keep students interested during the summer certainly requires extra work, but the cash flow it brings is definitely worth it.”
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