What you’ll learn from this episode
⬤ We’re going to cover the question a lot of us fitness facility owners are asking ourselves if times are tough: How long should we keep pushing on? Joe has interesting insights on what to think through when making that decision
Highlights from the interview
[07:49] – How to approach your landlord in case you need some help with rent
[10:19] – He’s going to answer the question: Are people going to return to the gym? Plus, actual survey results from a survey of gym goers
[12:51] – Joseph is going to give us an Outline for gyms to use so that they can reopen while keeping members safe from infection
[17:05] – We’ll also cover ideas of how a class and gym floor based business can make a profit if capacity is capped with social distancing
[24:26] – We’re going to cover the question a lot of us fitness facility owners are asking ourselves if times are tough: How long should we keep pushing on? Joe has interesting insights on what to think through when making that decision
About our Guest
Our guest today, Joseph Dispenziere is a serial fitness business entrepreneur with over 35 years of experience in the health and wellness industry.
One of his ventures, a cross training fitness studio, was an in-home personal training business and also a small group and one-on-one personal training studio that had 18 trainers, and at its peak 20,000 one-on-one sessions a year before he successfully sold it.
He went on to start Core Fit Consulting, which consults gym owners from sales, to facility design, to lease negotiation, and even financing. And as an extension, he also formed, “The Gym Broker”, which as its name suggests acts as a broker for gym buyers and gym sellers.
Here’s the second part of my interview with Joseph.
Edited transcription of Fitness Business Secrets Podcast, Episode 29
Landlord: Friend or Foe?
Kristy: Alright. So, now we get to talk to Joe about what gyms are doing as they face uncertain times about what to do with COVID, social distancing, and the fact that they were closed. I don’t even know how they bear the rent costs.
You’ve seen so much. Maybe just tell me what you’re seeing right now. A lot of states are opening up.
Joseph: A lot of states are opening up. Unfortunately, New York and New Jersey are not. That’s a whole other question that we can discuss at another time. Anyway, we won’t get political today.
I think going back to building relationships. Your first relationship when you buy a business is rule number one: your landlord is your partner. The reason for that is if you ever get stuck or if you ever have issues with business, you go to your landlord, talk to them, explain what your situation is, and you come up with a solution.
We’ll get back to that for a second because of COVID-19. There are different programs. There was the payroll protection program. A lot of the SBA programs reached out where if you have financing with the SBA, during COVID-19, they would actually make your payments for you.
Kristy: Oh, wow.
Joseph: For instance, if you buy a gym between now and the end of September of this year and if you close that deal by the end of September, the SBA will make your first six months of payments for you.
It’s amazing. So, the government is helping a little bit right now. Your landlord is your partner. Talk to them. Even if you made partial payments, come up with a solution. If you don’t talk to them, they’re thinking you’re not going to pay your rent, and that’s a problem because they probably have a mortgage.
We always have to think it goes up a level, so keep that open line of communication. I think that’s very important.
Gyms are opening back up. We have a client in Florida who opened up last week. He signed up 250 people in the first week.
Are people going to return to the gym? Results from a recent survey
[11:38] Joseph: There’s this built up energy that people do want to get back to the gym. There’s been a ton of surveys that have been done, but I’ll tell you the survey that worked. There’s a fellow named Blake McHaney.
We can talk about this after or I’ll send you his information. He ran a shutdown survey. This was sent out to over 600 gyms across the country. Blake was nice enough to share the results with me. They were very simple questions.
They talked about the cleanliness of your gym. What’d you like about it before? What would you like to see once the gym is back open? Are you going to come in on day one once the gym opens up? Because that’s what everybody wants to know.
You read some surveys out there, and people are never going back to the gym. Well, not according to the survey of the actual members from over 600 gyms, anywhere between 70% and 90%.
So, the gyms that were running smoother and had built more of a community, they were running 90% or over. People are coming back on day one. Just from my experience and everybody that we work with, the younger population will go back on day one. They’re ready to go.
Somebody probably my age or older is probably going to be a little more tentative because if you read the statistics, Coronavirus impacts older people, for the most part. Look at all the deaths from nursing homes. So, the older population is reading this and they’re probably not going to be a running back to the gym on day one, but they will come back because we all need social interaction and they love going to the gym.
Especially in older clientele, it’s like going to their favorite restaurant or coffee shop. They’re not going to change. They’re going to go to the same place, probably until they die.
So, people will come back. I think what we’ve heard from a lot of the experts is they’re screening their members. Basically, when they come in, they’re going to take the temperature. If it’s above a hundred degrees, I think that’s the number, they’ll ask them not to come into the gym or make sure that they get checked out to see if they’re okay.
Outline for gyms to reopen while keeping members safe from infection
[22:16] Joseph: These are the first steps.
- They’re gonna go on capacity limits. Depending on what the local guidelines are, they may have some limitations.
- Regarding equipment access, a lot of gym owners are turning off every other cardio machine. That allows people to stay socially distant. They’re moving machines apart from each other.
- They’re educating their staff on how to handle members when they come in. There’s a lot more hand sanitizers.
- A lot of them are not opening up childcare or even the locker rooms for the first few weeks. They just want to get people comfortable with going back to the gym again.
- Sometimes they’re limiting the amount of time you can spend in the gym. How much time do you need to spend anyway? You can’t get it done in two hours. You’re probably wasting your time anyway.
- I think they’re going to have to train members on social distancing.
- And train members how to participate in cleanliness before and after using the equipment. There’s plenty of wipes around.
What we know about COVID-19 is we get it from air droplets and possibly from surfaces. Although they flip flop back and forth on that, we don’t know. Either way, look at social media. These gyms are immaculate.
When I worked for Chicago Health and Fitness many years ago, we had something called operation upgrade. We literally went in and painted the pipes in the boiler room, and whatever gym was the cleanest, we got a $5,000 bonus for the gym. All of our gyms, nowadays, remind me of operation upgrades. Everybody’s upgrading their gym. They’re immaculate. Childcare is probably going to be closed down for a while.
Something that we’re working on with corporate consulting is we’re working with HVAC engineers right now. There’s something called a bipolar ionization. Basically, what it does is it’s a retrofit that connects to your existing heating and air conditioning unit.
What happens is you have all these particles and germs going through the air. You always hear about getting sick on a plane because of the recycled air. What happens in the gym is right now, viruses or mold or anything goes through the filtration system, and it comes back out into the gym.
What bipolar ionization does is it makes the particles bigger, somehow they oxygenate them. I’m not an engineer, so don’t quote me on these things. So, when they come through the filter, they get stuck instead of coming back into the gym. I think gyms are going to have to really look at this going forward.
These things look like they’re going to be here to stay. I think we have to anticipate, so maybe we can get ahead of that. Then, if anybody wants to learn more about them, we’re going to be doing a webinar in the next couple of weeks with the engineers. We’ll probably post it on LinkedIn. I’ll send it to you, and we can talk to people about it.
I think if we can keep the surfaces clean and focus on social distancing, we can educate the staff and the members. Then, if we can make the air cleaner, I think we’re probably good to go.
Is that helpful?
Kristy: That is helpful. I also have follow up questions. I think this is a great outline. If you can communicate that with your customers, then you have a really good case for them to come back. So, I think that’s great.
How do class & gym floor based gyms make a profit if capacity is capped?
[44:52] Kristy: Now, the owner side of me, if I was still a gym owner, is going to say, “What about costs?”
Let’s say regarding the classes. That was a big thing at the gym I owned. Not everyone does it, but a lot of people have classes, and it was in New York city. Have you ever been to a Bikram yoga class? Sometimes it’s very tight, like mat to mat. Now, all of a sudden, that could have been their profit margin that last five to six people. How do they do that?
Now, they have to limit them, and then, in a way, offer more classes or something to make everyone happy. All of a sudden, there’s no profit margin. How do people get around that?
Joseph: Well, I think the first response would be, “What’s changed in the industry during COVID-19, other than the aesthetics?”
Well, virtual training has become more popular, and I think that’s here to stay. I think gyms can drive some revenue through virtual training, so members are going to have the opportunity to train at home or if they’re traveling. They can go to the gym if they want that personal experience and social interaction. So, I think that’s one industry that’s going to continue to grow.
To your point, which is a valid point, if you’re a smaller facility and maybe you had 20 people in there, and then you could only have 10, it’s going to be hard to double your classes because your payroll is going to go up too high and you can’t charge twice as much. So, you have to come up with some other options, but it’s better because it’s fee-based compared to the restaurant.
Think if a restaurant had 10 tables, and all of a sudden, you can only have five. Are you going to charge twice as much? You can’t. Maybe you’ll make a little bit and maybe roadside pickup, but that’s where these industries are going to change. The good part about a gym business is the fact that it is membership based and it’s recurring.
You’re going to continue to collect that, but then you’ve got to be an entrepreneur. You’re going to have to come up with options to sell different programming. It can’t just be the ‘blue collar mentality’ of, “How much am I paying for this collect?”
You’ve got to sell more programs. You have to build your community. Tie it together with weight management programs, challenges, and different things where it’s not going to be so specific on that one class.
That’s my point. Smart owners are already on this. For weeks, I’ve been telling people to gear up. This should be a re-grand opening for you. It’s like re-grand opening your facility. That’s how you have to look at this. It’s going to be immaculate like day one.
All the things that you wanted to change, you got an opportunity to change them.
It’s a great time for a pivot – but how do you know what to pivot towards?
Kristy: It sounds like you’re saying virtual training, focus on programs of some sort, and then make a pivot. Now, we don’t know what the pivot is. Right now, you can make that a reason why you change your model, and so your customers can be receptive.
Joseph: Yeah. You have to be profitable. Another part was just like Blake did with the surveys, ask your members what they want. They’re going to give you some great information, and you have to listen to them. It’s not square peg and round hole here. You have to listen to your members. You can’t force feed something to them.
They’re going to tell you what they want. You learn more from a member who’s complaining about something than from somebody who is very quiet and just goes away. At least if they complain, you have a chance to fix it. If they complain too much, you can tell them they can leave.
Overcome new challenges by trying new things…track, track, track results!
Kristy: We’re all walking that fine line. Is this a good feedback or is this taking up too much time? What have you seen your smaller training facilities do when they have classes or when they’re one of the places where they kind of have a small gym floor and it can get tight real fast during high load times?
Joseph: Well, that’s tough. A lot of times they’ll do outdoor bootcamps or maybe something out to the park. They’ll use parking lots. During the peak hours, they’ll try to have a few different things going on at the same time.
Kristy: I like that actually. That’s not a bad idea.
Joseph: Especially now, open air is a great idea. Actually, in the state of New Jersey now, you can have an open air program.
Kristy: That’s a good idea. So, if you haven’t even been able to reopen up or your gym is too small, you may have to do a satellite class nearby.
Joseph: Try different things. We used to do spin in the parking lot. It’s crazy. Back in the day, we were the first one of the first studios in the state of New Jersey to have spinning. I was way wrong about that. I never thought it would be a trend for so long.
Look at Peloton. It’s brilliant. Even as experts, we don’t always get them right. I think you just try things. If it works, to do it again. If it doesn’t work, you tried it. It’s okay. It’s really fine.
That’s my point. You constantly have to be reinventing yourself and keep honing your skills, but make sure you document what works and what doesn’t work. It’s the same thing with marketing and advertising. That’s a whole other subject.
We could spend two hours on that. Are you prepared? Do you have a year of marketing and advertising set up on your board? What are you running? How are you doing your ads or is it social media? Who’s running that? What kind of returns are on those investments? First question I ask people is, “What’s your return on your investment?”
“I don’t know.”
“How much did you spend?”
“I don’t know.”
If the phone rings or if people come to your website, are these things documented? How many people actually came in? When they came in, what percentage of them bought something?
“I can’t tell you that.”
Then, how can we evaluate? You have to do these very simple things. These things have been around since the eighties, but my point is it may change right now.
We’re speaking on a zoom and we’re live on Facebook. I used to do it in an appointment book. So, it doesn’t matter. They’re the same skill set. We’re still talking about personality and people. Maybe the picks and shovels change, but it’s still about a positive experience and letting people move their bodies.
Times are tough – how do I know if I should keep pushing on?
[57:30] Kristy: It sounds like you’re optimistic and you feel that as long as trainers and gym owners can provide that same positive fitness experience, you’re sensing from your customers that things are going to be okay or at least 90% of them.
Joseph: Absolutely. Blake’s shut down survey said the same thing. I don’t listen to any surveys unless I know where they came from, and he’s an industry expert. He did the work. We have them specific to the Northeast. We have them for over 600 gyms nationwide. The numbers are good.
Now, again, it depends on the gym. Some gyms have already closed because they just can’t make it. But, I think on a whole, I think they’re going to be okay. It’s going to be a little different for a little while.
Kristy: So, I hear that the gym customer is still there. Just provide them with that plan that you had mentioned about how you’re going to keep cleanliness, create other programs, try different ways, and measure them to see if they’re working to provide the same level of service, but in the new social norm that we have.
My final sort of possibly sad question is there are some gym owners listening and looking for answers right now. They’re saying, “We were doing okay.” In certain neighborhoods, maybe they got in with green eyes and signed to a big lease or something, but they’re like, “We were kind of making it and I was hoping to figure it out, but now it’s been hard.”
Let’s say they had to pay some of the rent. They weren’t making any money. They’re kind of just not sure if they should continue, but they were kind of making money. Let’s say they were doing $60,000. So, they weren’t at $100,000. They were $40,000 to $60,000. Sometimes $70,000.
What would your recommendation be for them? Let’s assume they’re a small studio.
Joseph: I think it comes back to their passion, where they are, how far along they are in their career, and what makes them happy. If they still feel like they want to see this through, you got to at least open up and see what the market brings.
I would try. Unless you just can’t do it and you’re so far behind, sometimes you just have to cut your losses and learn from it. There’s a lesson there. That’s okay. It doesn’t define you. If an owner comes to me and they’re just so down because they have to close their business, I just tell them all the time, “This doesn’t define you. Sometimes things work and sometimes they don’t. Do your best.”
“Did you do good work?”
“Did you help people?”
The rest doesn’t really matter. Sometimes a business just doesn’t work. It could be location, opportunity, or a million different things. That’s okay. Dow, but don’t put your family in harm. Don’t stress yourself to the point where you’re unhealthy about it. Just do your best. That’s all we can ever do.
Kristy: So, maybe try to open and see how it goes. If it’s not working for you and you’re not making that money, it might be time to be okay with closing. Is that what you’re saying?
Joseph: As much as I hate to say that, I think that consolidation is real and sometimes places do have to close. There are restaurants where I am. There’s probably 10 openings already, places that have closed. They’re not coming back. This was a thriving town three months ago. It’s just the way it is.
Look at Manhattan and at the Upper West side. How many stores are empty there? It’s crazy. It’s amazing to me.
It’s case by case. If somebody needs help and they need to have a conversation, share my contact info. I’m happy to talk to them, but we’ll go over risk reward, and see if we can help them salvage their business. Sometimes people have a successful business and they’re just a little burnt out. They’re tired.
I got to that place. That’s why I sold my studios. You get to a point where the day to day operations are not that exciting for you anymore. That’s okay, too. I wouldn’t beat myself up over it. I would just say, “You know what? That part of my life is over and I’m going to figure out the next thing.”
With the current environment, are there still opportunities to sell a gym?
Kristy: If they said, “We were doing pretty good. We had a strong set of customers.” Let’s say they even reopened and a lot of customers come back, but they’re uncertain with social distancing, the classes, the spacing, and the payroll. Do you think there’s still an opportunity for them to sell their gym or do you think in the current environment, it’s pretty hard?
Joseph: No. We’re in the process of selling a bunch of different businesses right now. Some of them are stuck because the gyms have to be open for the banks to finance them, but we think in the next few weeks, pretty much everybody’s going to be open.
So, I would say that there’s always an opportunity to sell if you’re profitable. If you’re not profitable, it’s really tough. I’ve done it. I’ve pulled a couple of rabbits out of hats for people, but it’s always better as a selling to strength.
Kristy: What I hear is maybe give it a shot, then maybe you can get your numbers back up. If you feel the future is uncertain or maybe you’re a bit burnt out and stressed after everything that’s happened, try to get the numbers off, give Joe a call, and maybe he can still help you sell your gym.
Kristy: Well, I don’t want to end on a negative. I feel like that got real dark.
Joseph: That’s not even a negative. It’s not because sometimes it’s like everything. It’s a business or a relationship. It’s life. Sometimes they end. Sometimes they were really good for a long time. Then, when they’re not good anymore, you’ve got to move on. It’s okay. It really is.
Kristy: People buy and sell stocks all the time, and that’s an investment in a business.
Joseph: If I sell a stock, I never think about it again. It’s like I never owned it.
Kristy: There’s nothing personal about it. Exactly. I think listening to this interview, you might start to think of a different business model and you could still be in fitness. You could do outdoor bootcamp, in-home training, or something.
Joseph: Find your passion, and then write your plan because that’s important.
Kristy: I love it. Thank you, Joseph. This has been really informational. If people want to find you, what’s the best way for them to get in touch with you?
Joseph: They could just contact me through email at firstname.lastname@example.org. We have the gym broker website, and you can connect to me on LinkedIn. If you could share my contact information, you can always call me. My phone is always on.
Kristy: That sounds great. Well, we’ll provide your info below and I think a lot of people have a lot to learn from, your advice today. So, I appreciate it so much.
Stay connected with Joseph!
Joseph: That was great. It was great to meet you. This was fun.
Kristy: Great. Thanks so much, Joe.
Joseph: Alright. Take care.
Kristy: Take care. Bye.