Most people aren’t experts in every aspect of running their business. So why try to be?
To be successful as a fitness business owner you need to have a profitable, competitive business strategy and then master three key business functions:
1. Marketing your business effectively
2. Delivering your fitness service promise consistently
3. Managing every aspect of your company’s money.
The challenge for many business owners is that they spend most of their time and energy in the area where they are strongest (delivering the fitness service), and so marketing and money-management suffer. In some instances, business owners don’t spend enough time marketing their businesses because they are weighed down by the other demands of running their businesses, which in most cases are not their core strengths (e.g. accounts receivable and payable, BAS (GST and PAYG), payroll, financial reporting and cash-flow management).
Although you are working hard to build up your business it never reaches its true potential. If you’re not effective at marketing, you’ll never maximise the capacity and profit of your business. If you’re not effective at money management and bookkeeping, you might suffer financial consequences like tax problems and suffering a reduced business value.
Tax problems can manifest themselves in different ways. You might be paying too much tax or you may get an unexpected tax bill that threatens your liquidity.
Increasingly, as in many industries, smart fitness business owners and investors are working in the functions where they are strong and outsourcing the functions where someone else can do things better, cheaper or faster. Some owners spend hours a week processing accounts, paying bills and wages, and entering data where that time would be more profitably spent in marketing to increase revenue.
Looking to free up time and resources?
Network Members looking to outsource their fitness business’ financial management can receive a free detailed Customer Assessment Survey with Vertaccount, a company that provides complete accounting services to small and medium-sized companies. For more details email email@example.com
Consider the huge growth of franchised fitness operations. It is a classic case of outsourcing. The franchisor provides the brand, competitive strategy and the marketing for the franchisee to implement (#1 business function). Some franchisees work in their business, while some outsource, and some investors even outsource all operations to employees (#2 business function). That leaves the multiple tasks involved in money management and keeping good books (#3 business function).
If you’ve ever looked at buying an existing fitness business, the first thing that you’ll have wanted to see (without delay) are clean and up-to-date financial statements – preferably monthly statements that show the true trends of the business.
Many business sales fall over either because of the delay in getting accounts, or because they are shoddy and full of personal items. The business still might sell, but for tens of thousands less than its potential worth.
If you’re focused on growing your business – or one day selling your business – you’ll need to ensure that you have clean financial statements every month. Growing your business often relies on bank or investor finance and this requires ready access to good financial statements.
This gives rise to the question of whether you should do your own bookkeeping or consider outsourcing it to a bookkeeping service to provide you with regular up-to-date reports and good financial control.
When it comes to managing the money of your fitness business, if there’s one task you need to do internally it’s reconciling your members’ direct debit payments. This is made easier with a number of billing companies that integrate with specific membership software. The other tasks, such as accounts payable, payroll and BAS (Business Activity Statement), can be outsourced to a bookkeeping service.
Many business owners also worry about having control. Of course, you should have total control of your business’ money, but that doesn’t mean you personally have to enter all the bills, compute payroll and lodge your BAS. If a business takes over $1,442 per week ($75,000 per annum) it needs to be registered for GST and submit a BAS.
To really control and drive their business, the owner/s should be able to sit down at the same time each month with last month’s profit and loss statement, balance sheet, bank statement and membership summary, to clearly consider how their business is performing compared to any targets they have set.
Reviewing your profit and loss statements, and setting financial targets (cash flow plan) are made much easier if you get your bookkeeper to provide a profit and loss multi-period spreadsheet. This shows any number of months all on the one page in separate columns. This can help you identify the trends and calculate averages – especially expense averages – so that you can calculate your business’s break-even. When reviewing their accounts some owners even pay a business mentor or coach to sit in as a guest director.
To succeed as a business owner, you should recognise where your strengths and weakness are – then do the work where you are most effective and consider outsourcing where you are least effective. Doing so can help maximise your business growth and value.
Getting on track
Picture the scene: kitchen table, invoices, receipts, payroll time sheets, already late for the quarterly BAS – all after working a 12-hour day. Plus, add a neglected and unhappy partner into the mix for good measure. Sound familiar? Keeping the business books up-to-date is an essential element of any business, but it’s one that most leave to the last minute.
So how can you avoid this recurring headache?
- Schedule a regular weekly appointment in your diary to manage your financial affairs: two hours should be the maximum time you need to allocate.
- Review your financial platform, be it MYOB or Xero.
- If applicable, review your club management software and investigate how best data can be manipulated into these programs. There is an abundance of software solutions, and you simply have to find the right fit for your business, but do not ‘over-software’ your software. These new technologies afford a product like iconnect360 great flexibilities by combining most things in one easy-to-use, paperless platform streamlining existing manual processes and needless double entry of data.
Integrating your accounting platforms with tools such as iconnect360, credit card billing and banking accounts is critical to get right and will require expertise to establish. Once you have it set up, however, it can save you a great deal of time and resources.
Regardless if it’s big or small, you have a statutory obligation to file your quarterly BAS and annual tax returns. Nobody wants the ATO to come knocking. If you or a trusted member of your team are very number-savvy and have a good understanding of business accounting, then you may be happy to manage your business’ financials in-house. If you’re not, then consider outsourcing this area to an expert who can manage it more quickly and efficiently, freeing up your time to run and build your business.
As well as being a cost-effective solution for many businesses, outsourcing enables a third party to gain an understanding of your business and then help you make informed business decisions. It also removes tedious data entry, of course, and when the time comes to submit those quarterly BAS or annual returns, it’s simply an email away.
Ask for help, get an assessment of your systems and technology, and you may be surprised by the improvements that can be made – including getting your life and your kitchen table back!
David Hayes recently took the giant leap from mobile marketing to bookkeeping with Vertaccount because he was constantly confronted with clients who were great at marketing but lousy in financial management. Saving businesses sounded like a good business idea. vertaccount.com