Club Management

5 Reasons Why Gyms Fail

gym-fail-t.jpgAfter eight years of analyzing business results data from over 8,000 clubs, Michael Scott Scudder has discovered the five characteristics that failing clubs have in common.

1. Undercapitalization

Undercapitalization is lacking sufficient funding to invest in anything beyond basic month-to-month survival. These clubs may not have had enough capital to begin with or failed to create and maintain enough revenue to invest in renovations, marketing strategies, or new programming and equipment. If your club has struggling sales staff (or none at all) and has to offer constant specials to get members in the door, it likely suffers from undercapitalization.

2. Lack of A Clear Business Identity

You can’t be everything to everyone. Clubs that offer a plethora of services without specialization suffer from trying to be “something for everyone” instead of finding a market niche to serve. This especially applies to medium-sized-and-priced clubs that try to appeal to everyone. Clubs that constantly boast superior services, have high turnover of members or employees, and continually lower membership fees are clubs that need to find their business identity.

3. Inconsistency in Marketing and Sales

In an increasingly competitive market, having a consistent marketing and sales strategy is key to success. Clubs must have a strong brand identity to rise above the pack. They change their messaging every month, and their advertising often offers a “kitchen sink” of club options instead of focusing on their brand’s value proposition. These clubs need to find a core brand identity and value proposition to focus their advertising around. They also need to adopt new digital marketing strategies, such as a website, a strong social media presence, a club mobile app and integrating members’ wearables into their club’s operations.

4. Increasing Marketplace Competition

With the rise of large budget club chains, competition has never been fiercer in the fitness industry. Though this usually only affects markets with a population of 40,000 or higher, large national club chains have increasingly begun to enter smaller markets as well. Clubs that have old equipment and facilities will lose ground to the “quality budget-clubs” in their market space. Clubs that don’t have modern product offerings, lack a clear brand identity and whose value proposition is price-based will struggle to compete.

5. Management Concentration on Working IN Their Businesses, Instead of Working ON Their Business

Working on your business means having a clear strategy for how you run and will grow your business. Does your club have a defined employee development system or just rush to fill jobs as they open? Do you actively track important benchmarks and performance indicators? Does your club have a long term strategy? Is your club prepared to persevere through rocky starts to pursue their strategy? Is the strategy shared with all employees? If the answer to any of these questions is ‘no,’ your club may lack management focus. Other indicators are inconsistent profit margins and important service job positions that are underpaid. Clubs in this category need management to refocus their energies into organizational restructuring, and long-term planning.

If your club fits any of these descriptions, you should evaluate your business processes immediately. Without a sustained effort for change, your club will likely struggle to compete in 2016 and beyond. 

Evaluate the strength of your club's brand with our Ultimate Guide to Club Branding:


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