What Role Does ROI Play In Your Business?

We are in a time when now more than ever, setting up a business is not as easy as 1, 2, 3.

We need to consider a multitude of factors and are often restricted by a limited budget and strict timeframe.

So how do you start up a business – maximise your return – and most importantly survive the statistics of failing as a small business within 2 – 5 years?

Possibly one of the most important factors that is often overlooked – is your ROI.

So what is “ROI”?

ROI stands for Return on Investment (also known as “rate of return”, “rate of profit”, or simply “return”). Basically it is the ratio of money coming in (cash flow / income / profit), relative to the total amount invested (capital / asset / expense).

Now if you start getting into this it can get quite complicated, however for the purpose of this article we’ll simplify it right down.

In regards to your fitness business, the key factors you want to look at in regards to your ROI is:

  • How long will it take you to recover the money you have invested?
  • Will you still be paying the equipment off in 6 months? 12 months? 2 years? Longer?

Key ROI tips when Setting Up Your Business…

Tip #1 – Avoid Unhealthy Debt

You don’t need to purchase everything outright when you first start out! Always consider your budget. If you have savings and can purchase outright – fantastic! If however you need finance, then that’s another story.

Do you already have debt? If so – will more finance add extra pressure and stress to you and your business before you even start?

If you have no existing debt but do need finance – then the next step is to consider what you need vs. what you simply want. Wants and needs are two very different things!

Unhealthy debt creates a stranglehold on your business. It generates stress and creates unnecessary pressure as you build your business.

Positive debt (if it can be called this…!) is based on your projected rate of return or ROI realistically being achieved within a minimal timeframe; from 6 to 12 months.

In regards to your fitness equipment selection, always choose equipment that is within your means (budget) and not excessive to needs. Therefore you will maximise your ROI and ensure you will pay it off within a reasonable time frame.

From here you can make the choice to gradually invest in more equipment. A positive method is to save as you go, and only invest in more equipment that you can purchase outright. Then you can safely do so with the knowledge that you’re not adding extra pressure to yourself or your business.

And…you can make a big deal about new equipment coming in via newsletter and social media so your clients start getting excited about these new toys!

Tip #2 – Set Up the Smart Way

Setting up the smart way” begins from Day 1 of planning your business. The questions you need to keep asking yourself are

What is the most cost-effective way to do this?”

And “Does this fit within my budget or is this excess to needs?

Now some things can’t be helped – accountant, insurance, design work, business cards. However some of these things can be helped with a little know-how, or thinking outside the square.

  • Can you do a contra with a professional you know (contra personal training for work)?
  • Are you social-media savvy enough to start up your presence via social media to save on initial website costs?
  • Can you get free publicity?
  • Can you work out a deal on space i.e. utilising the room of another business until you have enough money to move into your own space?
  • Can you get in someone else to help cover the costs?

Maximising your ROI means cutting down your expenses – which is a matter of thinking outside the square!

Tip # 3 – Select the Right Equipment for your Business Model

The key investment for your start-up business should be fitness equipment, second only to upgrading a room or area as your working space (if you have the money to do so).

In deciding what equipment you’re going to purchase, it’s important to think about the following:

  • What will your point of difference be?
  • What space do you have available?
  • What is your primary training model? (personal training/multi-client/group/team)
  • And most importantly – what is the minimal equipment that will achieve all of this for you to start out with?

It is for these reasons and more that fitness professionals are now opting for a functional training studio over purchasing static, single-plane machines.

Functional fitness equipment often offers a multitude of exercise options that can be performed and tailored to the clients’ individual needs.

Most static machines on the other hand have limited use and simply take up space.

Functional = diversity + maximum use of space.

Other factors to consider when selecting your initial and ongoing fitness equipment:

  • Does the product present longevity? – i.e. they won’t present dated training methods in 2, 5 or 10 years.
  • Does the product offer diversity? – i.e. they offer a number of different exercise options with the one product
  • Can the product work for you? – i.e. is there a product that can be used by your clients unsupervised and offer extra income to your business?

In addition, it’s never a bad idea to consider products that will either create an added point of difference, such as:

  • Foam Rollers (for after-session use)

Or in some cases invest in higher priced items that can pay for itself unsupervised, and is based on a booking system. Examples include:

  • Inversion Table
  • InfraRed Sauna
  • InfraRed Light

By considering an added point of difference you can maximise your profits, and set yourself apart!

Solutions!

In summary, when planning your business:

  1. Avoid Unhealthy Debt
  2. Set Up the Smart Way
  3. Select the Right Equipment for Your Business Model

Always consider your ROI…take the time to research all the options available to you…and make the smartest decision that meets your needs, in the most affordable way.

Final Note – from HQH Fitness

Why Total Gym is great for ROI.

HQH Fitness truly believe in and back Total Gym as a product. This is not only because it’s such a high quality product, but also because of the ROI Factor.

Total Gym offers great rewards.

As a product it is unique and diverse – it not only has personal training and multi-client personal training applications, but also group, Pilates and Post-rehab programming to work within any fitness or wellness business model. It works amazingly well as a centrepiece for Circuits and Small Group Training or Team Training.

The diversity alone means you can increase what you offer, position yourself apart, and have minimal space working for you 24/7.

With complete education support, free online marketing tools, and for such a minimal investment, it’s just like a franchise model – without any of the on-going fees.

Many HQH Fitness customers simply choose Total Gym and a few accessories to begin with, pay off their equipment within the first 6 months, and after that…it’s pure profit.

From there, they will gradually add other tools and equipment – and build up their business as they go, doing so in a way that means they aren’t suffering financially as they go.

HQH Fitness even offer a free interactive Business Planner where you can work out your own ROI with Total Gym!

If you’re interested in setting up a studio, click here to learn more about different models and options.

Shara Curlett
Shara began her career in the fitness industry at Les Mills Dunedin in 2005 and from there combined her passion for fitness with her strength in business to create a niche role for herself specialising in “the business of fitness”. Shara has consulted for gyms and small studios, developed an indoor cycling program, and continues to work one on one with fitness business owners as a sideline passion. As business development and marketing manager for HQH Fitness, Shara is focused on business development, company strategy and marketing and is passionate about helping business owners achieve their goals.

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