Your accountant may be able to help you calculate essential business KPIs, but you can also use personal trainer software to find the numbers you need.
Calculating KPIs with personal trainer software
Ok. So now we come on to the real maths: how to calculate the four KPIs that you need to know. These will tell you a lot about the success of your PT business. Don’t fall in to the trap of thinking everything is going really well because your gross income is more than you ever imagined. Your net profit (after expenses) might not be quite so healthy!
Many people say that this is the area of business that scares them, but you don’t need to worry about performing all the calculations in your head. Technology can pretty much do it all for you.
1. Operating Margin
Your operating margin takes into account your gross income as well as your expenses (including your income). This will then give you the sum of money that you are keeping in the business. The higher the percentage of your operating margin, the more money your business is making.
For example, PT business ‘A’ has a gross income of £10,000 per month, but by the time you have taken into account expenses of £9,000 per month, the operating margin is 10%. Compare this to PT business ‘B’, bringing in a gross income of only £5,000 but maintaining an operating margin of 60%, because expenses are only £2,000 per month.
It’s important to keep track of this figure, because the bigger your PT business grows, the more difficult it is to keep your operating margin high. But ultimately, this determines the cash you have left in the bank each month.
2. Primary Source vs Expenses
Your primary source income includes your clients who are on agreements or contracted direct debits. Don’t include one-off payments or short-term packages within your primary source income.
Ideally, your primary source income will exceed your expenses. You will then be able to operate as a PT business knowing that your primary source income is enough to cover all of your bills, and allow you to make profit each month. It’s therefore really important that you take into account your expenses when calculating your primary source income. This figure ultimately determines the financial success and stability of your PT business.
Personal trainer software should be able to help you calculate your primary source income vs expenses. Don’t fall into the trap of letting the figures look after themselves whilst you spend more time training clients. Operating a business ‘blindly’ won’t end well, or if it does – you’ll be very lucky!
3. Primary Source Conversion Rate
For your PT business to work, you need financial success, and for financial success, you need clients. This figure will allow you to determine the success of your marketing and sales. It reflects the number of ‘prospects’ and ‘trial clients’ converting to ‘new clients’ on a monthly basis.
Membr’s personal trainer software can help you determine this figure. Ideally, your primary source conversion rate will be high – indicating that your sales and marketing are operating successfully. However, if the figure is low, it’s an indication you need to spend more time and effort on that area. You need to capture your prospect and trial member data, and communicate with them in order to gain their commitment as new clients on more permanent packages.
4. Primary Source Growth Rate
Finally, you’ll need to know how quickly your business in growing, and hopefully discover that you are gaining more clients than you are losing. This growth rate will be your key statistic in determining whether you’re growing fast enough to stay on track towards achieving your goals.
This figure needs to take into account your new clients, your retention, as well as the previous month’s total client base. Again, your personal trainer software should be able to calculate this figure for you as it captures all of your client information.
Do the math
It’s easy to hide away from these figures when you don’t think things are going well, or if you find yourself too busy delivering the personal training (which is the thing you probably enjoy doing most!)
Often people measure how busy they are and use that as a measure of their success. But the truth is that success is in the figures. If you don’t put time and effort into staying on top of this, then your PT business is likely to experience a downward spiral.
Not everyone enjoys working with figures, but it’s an absolute necessity if you’re to operate a successful business. Luckily, if managing figures and statistics isn’t your strong point, technology can help.
Personal trainer software can make it so much easier to do your calculations. Membr can even generate simple reports to show your findings. So there’s no excuse about not having enough time, or not being good at maths – the success of your business depends on it! Get in touch with our team for a free demo of Membr’s software.