Mastering Financial Fitness: How To Make Your Fitness Business More Profitable

James was standing there, dripping sweat, staring at me with an amused and slightly smug smile on his face.

"You do see the irony in that, don't you?" he asked. He seemed almost gleeful for our roles to be reversed for once.

James was one of my personal training clients. In fact, he was one of the first clients I ever signed after moving from Australia to London.

He's about the same age as me, but that's about where the similarity ended.

James was a refined Oxford graduate, with a very successful business and worth a few million pounds. He was gangly and uncoordinated and not very athletic, although he loved playing sports.

And I was a 27-year-old personal trainer from rural Australia, struggling to make ends meet.

I’d been James' personal trainer for about 6 months at this point, and we'd somehow morphed into this symbiotic relationship. He was mentoring me (although I don’t think he realised it) in business, and I was helping him get stronger, more athletic, and coordinated.

I had this cliché that I would often repeat when we talked about tracking his workouts and meals.

"If you're not assessing, you're guessing."

I said it ALL the time. It was almost a running joke at the time that it was my very clichéd catchphrase.

We had just finished a workout, and as was our routine, he was asking me how my fledgling personal training business was doing.

He was one of those people that didn't do small talk. His conversations always had a level of intensity to them, which I really liked, not being one for much small talk myself.

It was October 3rd, and he had specifically asked how the last quarter went.

"Okay, I think," I answered.

"What do you mean, I think? It either was or it wasn't," he said.

"It was good," I decided. "I had a few clients away in August for the Summer holidays, but they were all back in September."

"So was it better than the previous quarter or about the same?"

"I don’t know exactly, I think it was about the same?" I squirmed a little bit because he was making direct eye contact, and I started to feel like I was back in high school being grilled by a teacher for not completing my homework.

"You do see the irony in that statement, don’t you?" he smirked.

It took me a minute, then it dawned on me.

"If you're not assessing, you're guessing," we said at the same time with a bit of a rueful laugh on my end.

That was one of many epiphanies that I had while talking with James, and from that day forward (mostly) I made it as much of a priority to track the revenue and expenses for my business, and it was one of the most boring (but game-changing) habits I developed that has followed me through the half a dozen businesses that I've owned or invested in since.

What Is A Quarterly Review, and Do I Need To Do One For My Health and Fitness Business?

One of the biggest mistakes I see health and fitness professionals make when they're trying to grow their business is getting stuck in the self-employed or sole-trader mentality, instead of running their business like an actual business.

They treat any money that the business makes like they would if they had a regular job that paid them a salary.

But if you want to be able to increase your revenue, profits, and freedom, you have to treat your fitness business like you're running it for someone else.

What does that mean exactly?

Imagine for a second that you've been hired by someone to be the general manager of a private personal training studio and it's your job to try to grow the business, and you have an owner to report to.

Would you run that business the same way you're running your own currently?

I'm guessing not for most of you.

If you were charged with the responsibility of getting more clients and increasing revenue and profits, I'm guessing you’d probably be much more focused on tracking sales, expenses, and income, and you certainly wouldn’t be drawing every penny out of the company as your personal income.

Most personal trainers and fitness professionals I’ve worked with over the years operate month-to-month without much in the way of tracking any sort of financial data and usually treat any money that comes in after expenses as their income and pull it all out of the business.

This mentality of ‘owning a job’ instead of owning a business leaves you stuck in the rut of fluctuating monthly income and never really having a clear idea of what’s going on in your business, or how to plan for the future.

So, if I can convince you to make just one small change to your mindset, it would be this:

Imagine that you have a business partner, or that you’re running the business for someone else that you have to provide monthly and quarterly reports to."

This one small shift in your thinking will help you super-charge your results over time.

What Is A Balance Sheet?

Tracking the finances of your fitness business doesn't need to be complicated.

Most people in our industry really don't like sitting in front of a computer and fiddling with spreadsheets (myself included).

But just like tracking macros for someone trying to lose weight, if you're not doing it, how do you know you're on the right track and making progress towards your goals?

A balance sheet is, at its most simple, a document that you can pull up at any given time and know within a few minutes the state of your business.

You should be able to track your monthly income, your fixed expenses, and your variable expenses.

This will let you see your monthly profit margins. You can start to compare each quarter with the one before, and you can set realistic targets for the one coming up and tie those targets with specific actions you're planning to take to achieve those outcomes.

How To Track Your Finances To Increase Your Fitness Business Profits.

I'm a huge proponent of the K.I.S.S Principle. While business finances should always be worked on in conjunction with a Certified Accountant, you don't need to have an MBA or a degree in finance to put together a simple tracking sheet for your Health and Fitness business.

What To Track:

Revenue: This is the gross (total) amount of money the business has generated during the defined timeframe. This can and should be looked at on a monthly, quarterly, and annual basis and compared with the months, quarters, and years previous to get a clear picture of the overall business.

Fixed Expenses: These are expenses that are the same each month. Things like rent, professional memberships or fees, insurance, and software subscriptions to run your business, not including your personal salary (more on that in a minute).

Variable Expenses: These are costs that fluctuate from month to month or are one-off expenses. Things like utilities if you have your own Personal Training studio, clinic, or gym, phone, equipment, education, clothing, etc.

Gross Profit: This is the amount that is left once you take your revenue and subtract your fixed and variable expenses.

Net Profit: This is the amount that is left once you take the Gross Profit and subtract the money you should be putting aside as business savings (more on that in a minute) and the money you’re putting aside for taxes.

BONUS: We’ve put together a spreadsheet template to help you do this. You can download that using this link.

How To Increase Your
Fitness Business Profits

You should be treating yourself like an employee of your business, even if you’re the only person in the business currently.

That means you should be paying yourself a regular salary that is a fixed amount every month.

If you’re currently unable to do that because your business income is unpredictable, then you need this guide more than ever!

There’s a great book called "Profit First" that I highly recommend that covers this idea in great detail if you want to read it, but essentially you should try to aim for something like this:

So let’s do an example business to see how that works.

Self-Employed Personal Trainer

$7,500/m in Revenue puts them in Band A from the above table ($0 to $250,000 a year)

Profit 5% = $375 (to be put aside into a savings account you can’t easily access)
Owner’s Pay 50% = $3,750
Tax 15% = $1,125 (to be put aside into a different savings account than the profit that is also not easily accessed)
Operating Expenses 30% = $2,250 (This is then what you’re left with for your fixed and variable expenses)

So what do you do if you don’t make enough money to cover your personal income needs and put aside money into tax, savings, and have enough left for operating expenses?

Step One: Use the Wellness MBA Balance sheet to track your monthly expenses and see if there’s anything that isn’t currently absolutely necessary that you can cut for the short term.

Step Two: Know your numbers. Sit down and work out what your minimum expenses are for the business, and what your personal income requirements are for your own life. Then reverse engineer these numbers, and that is now your revenue goal for your business.

For example - if you need $3,000 a month personal income, and your gym rent is $1,500 a month, plus another $300 a month in other expenses on average, then you know that to be able to draw $3,000 a month following the Profit First principles, you will need to be generating roughly $7,000/m in revenue.

After tracking your income on the Balance sheet, now you should know exactly how far away you are from that number, and that becomes your target for the next quarter (or year, depending on how far away you are right now).

Step Three: Focus all of your efforts for an entire quarter on revenue-generating activities. That means marketing! Things like handing out flyers, running internal promotions inside your gym if you can, asking for referrals, running ads, running challenges, reactivating old clients, etc. Try to focus on what’s worked well in the past and do the work.

Next Steps

If you do this consistently over the space of 12 months, your business will be unrecognizable this time next year from its current state. Just note, that business (like fitness) is never going to be linear in the way it progresses. There will be ups and downs, and unforeseen things that pop up that slow down or hinder progress.

And that’s okay!

Running a business (like fitness) is a lifelong process. You never ‘finish’ getting fit; you have to work on it all the time. The same goes for running a successful health and fitness business. You never ‘arrive’ at an end destination unless you sell the business to someone else one day. It’s something that you’ll always be working on. So learn to love the process, and approach it the same way that you approach taking care of your health. Take care of your business, and it will take care of you!

Pro-Tip: At the end of the 12 months, the money that’s set aside in the Profit account can be used however you like. Take your family on a holiday, reinvest it into your business, take it as a Christmas bonus, or leave it in the savings account as your ‘Rainy Day’ fund until you have 3-6 months' worth of operating expenses set aside.

Having enough money put aside to keep running your business for a few months if, in the worst-case scenario, you have zero revenue for a while does wonders for your stress levels!

If you're interested in learning more why not join our
Free Community - Fitness Business Builders.

Inside the community we regularly share tools like the Wellness MBA Balance Sheet Template as well as video trainings on things like marketing, advertising, sales, lead generation, finances and more.

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