Profit is crucial for the long term sustainability of any business and without profit there ultimately will be no business. But for businesses starting out there will be no profit if there is not first growth.
Growth is hard
As a founder of a software company, growth is everything. Profit will come with time, patience and hard work. At Training Tilt we've started monitoring our growth more seriously with a great tool called Bare Metrics which directly integrates with our payment gateway. We can even share our growth publicly using their new sharing feature. Check out our growth chart on a public page, looks pretty good. We can even embed it in our blog like so...Enough about us let's get back to fitness businesses.
Sorry growth charts no longer supported by Baremetrics
What's the difference between growth and profit?
Profit in it's most simple form is what you earn less what you spend in your business. If you earn $100,000 revenue in a year and spend $60,000 then your profit is $40,000.
Growth is the difference between the past and the present and can be applied to many metrics including revenue, expenses and profit. For this post I'm focusing on growth in terms of revenue and it's relationship with time and eventually profit. Growth is commonly measured as a percentage rather than a dollar figure. So if last month your revenue was $10,000 and this month it was $11,000 then growth was 10% for the month.
The typical fitness business
The growth pattern for a typical fitness business will start with initial growth as the business builds momentum and aquires clients and generates revenue. Then growth will flatten out. The flat growth is likely due to reaching full capacity of clients when the coaching business literally does not have time to service any more clients.
The scalable online fitness business
Wikipedia says "Scalability is the capability of a system, network, or process to handle a growing amount of work, or its potential to be enlarged in order to accommodate that growth".
Most fitness businesses aren't scalable, but if you create systems and processes that improve your scalability then the potential for growth is exciting.
Creating a scalable business takes time and effort, and often money. You can't always start generating revenue on day one because you need time to create the systems and processes you need for scale. Because of this initial start up cost revenue growth will be flat for a time. This will sting a little and you'll need to be patient but once the systems are live then revenue will start growing.
Because of the systems you've put in place you've now removed the glass ceiling of revenue and your business can continue to grow beyond the typical fitness business levels.
Is your business scalable?
You might already know the answer to this, if you are unsure then the answer is probably no. But here are some tests to determine how scalable your business is.
If the number of clients you service went up by 30-50% in the next month would you be able to cope with the work load without hiring new staff?
If you answered no, then your business is probably not scalable. The growth in revenue at that level is probably not enough to cover the cost of hiring the new staff. So as you continue to grow revenue you will continue to grow costs at a similar rate.
If you couldn't work for a month would your business still generate revenue?
If you answered no to this then your business is definitely not scalable. A scalable business will generate revenue even with key staff members absent for periods of time.
Have you implemented automation in your business processes to achieve economies of scale?
Do your invoices get generated automatically? Can your customers book, pay for or receive goods without a person having to manage the process? Do you spend a lot of time doing paper work for each and every customer?
If you have a lot of these manual processes then each new customer will cost the same amount to service. To be scalable you need to achieve "economies of scale" which in simple terms means each new customer should cost less than than the previous customer to service.
So growth is cool, what about profit
The great thing about scalable growth is that profit continues to rise along with growth and although costs still rise the costs rise slower than revenue because of the economies of scale.
The more you grow, the larger the gap between revenue and costs becomes. That gap is profit.
How do you get started?
There are some key things you'll need to create a scalable fitness business
- Hard work
The first three are up to you but we can help with guidance and the tools to implement a scalable business.
At Training Tilt we offer software to help you grow your business by earning more revenue in less time in an automated way to help you achieve economies of scale.
Because we offer our software as a service there are no startup costs. You can use our software for an affordable monthly subscription that you can cancel anytime
Interested? then signup to our 14 day free trial. Or just send me a message using the message bubble below, and don't forget to leave your email address.
Take our Free "Authentic" Marketing Course for Coaches
Designed for endurance sport coaches. Marketing doesn't need to be pushy. The best marketing simply creates a win-win relationship between you and your customers. Take the simple 6 part course to learn more.