Historically, sports and fitness businesses have relied on maximizing capacity to generate the most revenue. This could mean filling up classes and time slots for lessons, or renting out resources.
However, with capacity limitations still in plan due to COVID, many businesses no longer have the option of maximizing capacity in order to reach max profitability.
So with this option off the table, how do sports facilities stay profitable? What can they do to cut costs and boost revenue? We’ll walk through three ways here.
Identify which programs, equipment or offerings can be eliminated or adjusted
Start by identifying areas to cut costs in order to accommodate for reduced or lost revenue. You’ll want to see which low margin equipment or offerings can, and should, be eliminated. By eliminating the elements that see low returns, you can focus on what is working in your favor. Elements with low margins could be classes that never fill, or a treadmill that costs more to maintain than replace.
Consider running an analysis to determine this.
A great low-margin analysis should include the following per each resource, offering, or piece of equipment:
- The cost to customer (price/revenue)
- Hard costs (sanitizer, cleaning supplies, etc.)
- Labor costs (cost to clean, manage, maintain)
- Time costs (amount of time (in hours) to do the job, operate the resource or offering)
As COVID measures continue, this calculation can assist in selecting which pieces of equipment to put a “Closed for Social Distancing” sign. Should you do that for every other piece of equipment? Or should you remove low Gross Profit margin equipment and then space all the higher Gross Profit margin equipment to accommodate social distancing?
Long-term, this approach will improve how you see your business and give you new insights into how you can improve margins over time. Should you increase the price? Or should you decrease the costs? This can be a great indicator of whether it’s time to invest in technology to reduce the hours to complete a job, thereby improving your gross profit margin.
Create multiple uses for each large space in your sports facility
Another way you can maximize profitability at your sports facility is to increase the amount of activities that can occur in each space.
One way to do this? Literally start from the bottom, up. Evaluate your flooring.
Sport Stable, a large multi-sport facility based in Superior, CO is in the process of renovating their fields and courts to allow any sport to train and practice in any area through the use of Sport Court.
Sport Court is a multi-use flooring option that is great for basketball, futsal, volleyball, and any number of other sports or activities. By moving to this alternative flooring option, the facility can keep courts and fields constantly booked without having to limit the number of uses.
Another option to help you maximize your opportunities with a large space is to install retractable dividers, nets, and/or baskets. This will allow you to quickly transform your courts or fields to accommodate for various sports. Additionally, it will allow you to segment off your large space so you can run individual 1 on 1 training sessions, camps, and team practices simultaneously.
Incorporate advanced technical training methods
The third way you can maximize profitability is to offer high-tech training. Do you have a smaller space that’s currently not being utilized efficiently? Consider placing a golf or ski simulator in there. This is typically a one-time machine cost that can bring in revenue without much additional overhead.
You can also offer video analysis training in addition to your typical training methods. Video analysis training is an awesome supplement to any sport or activity. It offers additional value to athletes and clients, and allows them to visualize areas of improvement in their techniques. Another benefit to using video tech to train is that it shows athlete progression over time. Because of this extra value, you can increase session price and maximize profitability of your clinics, lessons, or camps without doing much more heavy lifting.
Having worked with countless sports facilities over the years, the Upper Hand team is well versed in the methods of maximizing profitability. We’re happy to consult with your business and provide suggestions on how your specific business can drive revenue growth now and in the future.