Some experts have speculated that the economy is getting better and people are spending more. The most recent Physical Activity Council’s 2012 Participation Report indicated active Americans spent $1 million more on fitness in 2011 than they did in 2010, and 6.4 percent of respondents plan to spend even more in 2012.
But Gerry Faust, president of Faust Management Group, told IHRSA attendees that to survive and thrive in difficult times, fitness business owners need to operate as though the recession is still on — and will continue for several years.
It's all part of Faust's “10 Principles," which he presented at IHRSA last month. SNEWS brings you a recap of the session, and outlines the 10 rules Faust said every business owner should live by.
“These are the things you really should know about managing successful businesses and keeping them fine-tuned to be successful over time,” Faust said.
Gerry Fausts 10 Key Principles to Understand when Times Get Tough:
- It is better for you to believe that the recession we are in is going to last another four years. Faust said he could argue the case that the economy is improving, but he could also counter that it's getting worse. He noted that the next round of people to be laid off are government workers, and that the economic recovery is not V-shaped — it’s L-shaped. “It’s going to go down and stay there for a long period of time,” Faust said in the session.
- Don’t waste the crisis. At some point, all businesses face a crisis. When it comes, Faust encourages business owners to look hard at what they need to do, take action, go with gut feelings regarding underperforming employees and be fearless when asking staff to do more. “Many people think they can’t worry their employees about what’s going on,” Faust said, adding that when there is a crisis people in the business already know about it, and deserve honesty.
- When times are tough, you want to hang onto every customer you’ve got and you need to go the extra mile. Faust said it’s time for every business owner to brush up on customer service. He noted that encouraging customers to try something new — for example, if they like Pilates, suggesting similar activites — could allow sales associates to sell more equipment.
- Focus. Faust said when things get tough a lot of people believe, "I’ve got to work harder and faster." But the key is to work smarter, and do fewer things better. “Focus is the most powerful thing you can have in business,” said Faust, who has designed strategic plans for businesses all over the country. He suggested finding two to six strategic changes to tackle each year. Businesses shouldn’t try to do too much, rather they should solve the big problems.
- Use teams to add power to your improvement efforts. Faust said business owners need to get people involved to help solve problems from all angles. Theoretically, Faust said, a team could be composed of one person. “The teams have got to involve the right people,” Faust said. “Look at it this way: Any time you’ve got a problem to solve or a task to accomplish, there is an appropriate team for that task or that problem."
- Restructure the business to be consistent with expected revenue and margins. Business owners shoud analyze the function of every person in their organization, and restructure those roles based on the company’s expected revenues, rather than what revenues were in the past. Part of analyzing the positions is to see which “hats” each “head” will wear, and for a growing organization, hire to the “hats," i.e. for a specific function, not just to “help somebody out.” It goes the other way as well: When a business is downsizing, owners must “consolidate the hats.”
- Identify trouble and make changes early. Make changes you believe are necessary, such as cutting staff, as quickly as possible, Faust said. Because the earlier you make the changes, the more money you’ll save.
- For cost cutting: “Do it right, do it deep, do it once." Cut more than you think you need to and get it over with.
- Enhance performance management: Get specific on what you’re requiring of your staff, Faust said. The idea, Faust said, is to manage people for results and measure their performance. Raise the bar on your your people. Plus, Faust offered “Gerry’s Two Rules of Measurement,” which are: That which is measured, improves and that what is measured and hung on the wall improves even more.
- Work on revenue, margins and expenses: A lot of people in difficult times think it’s all about cost cutting, but it’s not, Faust said. He said looking at margins and revenues as the things you want to address is his suggestion. “Do not be held captive by average pricing,” Faust said. “One of the things I know in business is that averages are the things that hide the things you need to change in business.”