Premium Partners

Commonsense Business Practices for an Improving Economy

For the first time in four years, we’re getting ourselves prepared for growth. In our little corner of the world, we’re not sure that things have gotten better, but they seem to have stopped getting worse — and we want to take advantage of opportunities that should present themselves soon. However, we’re not forgetting the hard lessons learned over the past few years.

With signs that the economy could be improving, it’s time to ensure employees don’t get lazy. (Photo by Andrew Cohen)With signs that the economy could be improving, it’s time to ensure employees don’t get lazy. (Photo by Andrew Cohen)

We weren’t bright enough to predict the Great Recession, but we saw enough writing on the wall to know that things were changing. The housing crisis started to affect our community in late 2007, and the spike in gas prices to $4 a gallon in the summer of 2008 caused a tangible impact on our business. We worried that the normally strong New Year’s period would be dismal in 2009 if nobody had any money to join a gym after heating their homes and paying for gas. So, we developed a plan in mid-2008 to address those concerns — and when the bottom dropped out of the economy, we ended up implementing the plan much sooner than we expected.

Now we’re seeing signs of improvement. We’re getting more leads from people who are relocating to our area. Our new personal training membership plan — a full-access pass that includes two training sessions a week and costs $349 — is gaining traction. Cancellations are manageable. Our location that has suffered the most during the recession has had a good first half of the year. Swim lesson revenue is up. These are all hopeful signs.

Since we’re feeling a bit more optimistic, you might think we’re planning on the typical things businesses do when preparing for growth — hiring, purchasing equipment and ramping up advertising. But we’re not planning to do any such things. Our strategy is simply to do more of the things that have gotten us through the recession. These are commonsense business practices that we can expand as we grow:

  • Revisiting Employee Training and Behavior. We know employees were on pins and needles during the past few years because of fears they might lose their jobs. Now that things appear to be improving, everyone on our staff is getting a refresher course on our performance expectations and professional standards. Our concern is that if members of our staff, especially our younger employees, perceive that the crisis has passed, they might get lazy. Will every phone call be answered properly? Will walk-ins receive proper treatment? Will customer complaints be handled sensitively?

  • Incentivizing Behavior — And No More Raises. We recently had a group fitness instructor say that she’s been with us for several years, so she thought it would be appropriate to receive a raise. The problem is that we are charging the same membership rates as when she started, and she’s drawing the same number of people to her classes. Why should we pay more?Forget about cost-of-living or annual salary increases. We occasionally now grant small raises when an employee has proven him or herself worthy over the long term, but the way for an employee to make significantly more money at our clubs is to add value. For example, our personal trainers receive bonuses based on the number of sessions they perform. Nobody gets more money for doing the same job the same way, and once a raise is given, it’s pretty much impossible to take it back, short of firing the person. With bonuses, commissions and similar incentives, we only pay for what we get.

  • No More Expensive Financing. Happily for us, we have no immediate financing emergencies. So, while we continually pursue funding, we do so now on our own terms. We are tired of turning over our entire life stories to a lender only to be turned down, so we’re pretty aggressive with pushback. We recently received a small cash advance with terms that were much more favorable than the lender originally proposed, simply because we refused the initial proposal.Equipment leasing companies continue to be a disappointment. They call often to see if we are planning to buy equipment, but none seem to bring any new ideas or creative programs to the table. So, as we prepare to purchase equipment for 2012, we’re considering buying, say, one piece of equipment per month, so that we can control our financial futures better than if we were to execute a lease agreement.

  • Less Traditional Advertising. The problem with traditional advertising — billboards, direct mail, newspaper, TV, radio — isn’t just that there are too many messages bombarding consumers, making it difficult to push through the clutter. The problem is that those mediums are meant to reach “strangers” — people who have no relationship with us. That used to be okay, because even if we couldn’t motivate strangers to join, we could at least remain foremost in their minds so that they would come looking for us when they were ready to join a health club.Now, when people are ready to consider a health club, they go to Google and type “health clubs” for their zip code or community. (If the phrase “search engine optimization” means nothing to you, go find out about it.) We will be investing more into our website and online presence, so that we are even easier to find when consumers are hunting online for a gym.Friends are our lifeblood. If reaching out to strangers isn’t worth it, that means we are left with our friends. And not just Facebook friends. We mean anyone we have any relationship with, and we use as many means as possible to reach them. Our e-mail list of former members and prospects is a rich source of swim lesson participants. We send special offers to anyone who has contacted us via our website. We have run Facebook ads targeting our fans and friends of fans. We’ve had great success using direct mail to existing members with special offers for them and their friends. Welcome letters, we-want-you-back offers and birthday deals are among the many things we do and will continue to enhance as we try to cut through the noise all consumers experience. Location-based social media such as Four Square and Facebook Places will be in our future, too, as will mobile apps.

If, as is said, that which doesn’t kill us makes us stronger, we think that the Great Recession has indeed made us stronger. We’ve learned lessons that will serve us well as we hope to capitalize on the (slightly) improving economic environment, and even if things don’t improve, we’re at least no worse off than we were. Whether it’s dealing with employees, lenders or advertising salespeople, we’ve become crystal clear about what it will take to succeed post-recession, and we’re going to be ready for it.

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