Understanding the financial side of your business is as crucial to your success as understanding the physiology of the human body. Paul Dorkings and Dave Christophi from Your Guardian bring you three essential financial concepts that will empower you not just to count your calories but also your cash flow.
As a fitness professional, you’re used to counting: reps, sets, intervals and even the grams of macronutrients for your clients. But, when it comes to financials, many fit pros find themselves less eager to dive into the world of numbers. Here are three vital concepts to understand, so you can get on top of the numbers.
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Know your numbers
In the realm of fitness, precise numbers mean progress – it’s the same with your finances. Knowing your numbers isn’t just about glancing at your bank balance now and then; it’s about understanding the details of your income, expenses, profit margins and cash flow.
Start with revenue: how much do you earn monthly and where is it coming from? Break it down by services offered – personal training sessions, group classes, online coaching, etc. Next, tally your fixed costs like rent, utilities and insurance, and variable expenses such as equipment and marketing.
Understanding your profit margin – the amount by which revenue from sales exceeds costs – is key. It’s what’s left over to pay yourself, reinvest in the business or save for future growth. Keep a pulse on these numbers to make informed decisions, such as when to invest in new equipment or expand your services.
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Understand your key revenue drivers
What brings in the most money? Is it your high-intensity interval training classes, one-on-one sessions or your nutrition-planning services? Identifying the services that generate the most revenue will help you to focus your efforts effectively.
Consider also the lifetime value of a client – how much a client is worth to your business over the entire duration of their relationship with you. This understanding will influence how you market your services and retain clients, ensuring long-term success.
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What are you really spending on your business?
Every business has costs, but are you spending money in the right areas? Evaluate each expense and ask yourself: is this driving my business forward? Does it help to retain clients or attract new ones? Analyse spending patterns over time to identify areas where you can cut back without compromising on quality.
Also, don’t forget about hidden costs – the non-obvious investments like continuous education and certifications that keep you at the top of your game. Ensure these are accounted for in your pricing strategy.
‘Make Sense of Pence’
Financial literacy is crucial and the earlier it’s developed, the better. Your Guardian has introduced ‘Make Sense of Pence’ – a comprehensive series of books and learning resources designed to help young children grasp the fundamentals of financial literacy. These resources bring complex concepts to life through simple explanations and engaging activities, equipping the next generation with the knowledge to make informed financial decisions.
And here is something for you to get your hands on… Have you checked out Your Guardian’s business courses yet?
- The Foundations of Running a Business
- The 7 Steps of Effective Selling
- The Business Acumen Planning and Skills
- Filling your Strategic Gap
