Despite the economic uncertainty, there are still ways to ensure your studio's success. Here are nine strategies to maximize recession resistance and ensure long-term growth.
While economic cycles naturally have periods of growth and slowdown, studio owners can take steps to minimize the impacts of a recession. Instead of worrying, try to see this as part of the business journey and proactively prepare for it. You’ve successfully navigated the closures and uncertainties of the COVID pandemic, even with limited data and understanding. And, unlike the pandemic, recessions have been experienced before, giving you the opportunity to develop strategies that can make your studio more resilient to its potential negative effects.
Having worked with hundreds of studios around the globe, here are our top 9 tips to prepare yourself for a recession, should a recession materialize.
KPIs—To ensure a strong grasp of your studio’s financials and distinguish regular patterns from issues, we recommend that studios analyze their key performance indicators on a monthly basis. These KPIs should look at data metrics including but not limited to revenue, recurring revenue, membership growth/loss, new client acquisition, retention and the profitability of services. By utilizing data-driven decision-making, you can prevent impulsive judgments influenced by individual customer experiences or interactions. Your KPIs provide an objective view of your business's well-being, offering clarity and insight.
Cash Reserve—To safeguard against a decline in revenue and avoid accumulating debt, it is crucial to establish a cash reserve. We highly recommend having a reserve that covers at least three months of operating expenses, although we strongly urge aiming for six months. High-ticket items such as teacher trainings, annual memberships and retreats can help you accomplish this faster.
Knowing Where/How to Cut Expenses—Many business owners tend to reduce their marketing and advertising budgets when faced with financial hardships. However, this overlooks the fact that these budgets are the driving forces behind generating leads and keeping their business thriving. Instead of cutting these vital components, we suggest exploring other areas for expense reduction. Take a closer look at your services to identify potential cost-saving opportunities or explore alternative, more profitable options. Additionally, consider redistributing tasks to different individuals to minimize overhead expenses. Take the time to revisit your business plan and formulate a comprehensive strategy on how to cut costs effectively, if the need arises.
Focus on Marketing—Whether in a recession or not, the key to driving new growth in your business lies in your marketing and advertising efforts.We recommend allocating additional resources towards SEO marketing, email marketing and partnership initiatives. These key components will help maintain your brand's relevance, establish top-of-mind awareness and effectively nurture the sales pipeline.
Prioritize Client Retention—To improve client retention, prioritize creating an exceptional experience rather than reducing membership costs. Instead, enhance the value offered to members by partnering with local businesses to provide cross-over perks. By continually adding value to memberships, you can maintain revenue and give your clients more reasons to stay satisfied.
Promote Stress-Relief—During periods of economic downturn, it is crucial to recognize the increased levels of stress among clients. This presents an opportune moment to introduce stress-relief and stress-management services, either as a continuous offering or through workshops. By acknowledging the general sentiment and offering support, you can address the current state of the economy and provide assistance in fostering well-being.
Expand your Income Streams—We've all grown weary of the overused buzzword "pivot," but it serves as a prime illustration of adapting to circumstances and constraints. Perhaps you have a VOD channel that has been neglected. Anticipate clients seeking a budget-friendly alternative that still upholds your vision and brand, and ensure you have tailor-made pricing choices and services to cater to these demands.
Reward Loyalty—By delivering exceptional services and fostering a sense of community, you can forge lasting connections with your clients. One effective strategy is to recognize and appreciate loyal clients by offering extras like guest passes, exclusive perks and member-only events. Upholding this commitment to rewarding your clients will make them feel cherished and valued in your business.
Give Back—No business is impervious to recession, as we previously stated. Every business is susceptible to its impact, although the extent may vary. While you aim to minimize the repercussions, fellow members of your community might not be as fortunate. By providing community classes and services, you not only lend a helping hand, but also cultivate a spirit of benevolence.
Now is the time to prepare your studio for a potential recession. Understanding how to be more recession-resistant will prove invaluable for your longevity and success. Start by implementing these nine strategies and keep in mind that challenges will arise along the way, but each setback carries new opportunities for creativity and problem-solving. As is true in nearly every facet of life and in business, it always pays off to be more prepared.
Catalina (she/her) is the founder of Telomere Consulting, a specialty consulting and marketing agency that serves boutique fitness studios around the world. Telomere is a consulting and marketing agency for boutique fitness and wellness studios worldwide. They have enabled growth for hundreds of studios in verticals such as yoga, pilates, barre, bootcamp, HIIT, spin, sauna, ice baths and more. Catalina and her team marry data-driven business assessment with forward-thinking, innovative marketing solutions to position studios as leaders in their industries. To learn more about how we can help your studio, visit telomereconsulting.com or book a free consultation with us here.