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Why the Gym’s Out-of-Business and the Porn Store’s Thriving

Written on August 5, 2011 at 6:23 pm, by Eric Cressey

I’m up in central Maine visiting my wife’s family for the weekend, and on our way in to town, I couldn’t help but notice that the local gym in the center of town had gone out of business since I was here about eight months ago.  When I commented on it, my wife’s response was: “No surprise; there have been three gyms there before it, and they’ve all gone under, too.”

It’s not all that surprising, given how many health clubs, gyms, and fitness facilities go belly-up each day in America.  What was a bit surprising, though, was that while you’d think the other businesses in the area would be struggling in light of the recession, that really wasn’t the case at all.

About 1/2 mile up the road, the parking lot at an “Adult Film” store was completely full.  I would have snapped a picture of that, too, but it probably wouldn’t have made the patrons in the parking lot too happy.

Instead, I got this one of a doughnut shop not too far away.  Yes, the place was hopping at 3:30PM on a Friday afternoon – not exactly what I’d call pristine “doughnut consumption time.”

Recession, huh?  Would you consider porn flicks and doughnuts necessities?  Surely, if people have the disposable income to splurge on fornication and chocolate glazed awesomeness, they can front the $20/month to get rid of the spare tire that’s hiding their unmentionables from view.

Taking it a step further, this doughnut shop has over 3,000 locations, and apparently, the porn store dude has several locations in the area and has done quite well for himself.  So, why can’t the gym catch a break, in spite of their noble intentions?

Very simple: they likely made some big mistakes that their more successful counterparts avoided.  Right off the top of my head, here are three:

1. They likely went too big. - This gym opened at over 6,000 square-feet, while the porn store started as a small location with lower overhead and (presumably) grew into more locations over time.

Cressey Performance started at 3,300 square-feet, expanded to 6,600, and then went to 7,600 just recently.  We bit off what we could chew, and nothing more.

2. They likely overpaid for commercial space on the main road. – Location is important for a business, no doubt, but too many people think they need to pay for crazy expensive commercial property just to get as many drop-ins as possible.  This isn’t exactly in line with the “niche” name, either, as it implies that they’re pushing to be a specific location that people seek out because they serve baby boomers better than anyone else.  The porn store was on a side street.  Why?  People seek it out; they don’t just drop in to pick some up on a whim.

Cressey Performance is in an industrial park in what seems like the middle of nowhere – but it works because we are in a niche and clients will travel to train with us.

3. They likely wasted money silly equipment instead of investing in their greatest assets: their people and their relationships. – This is quite possibly the biggest mistake I see upstart gyms make; they spend thousands on cardio equipment and fixed-motion resistance training equipment rather than spending conservatively in this regard, and instead investing those financial resources on their true assets: people.

For the $30,000 it costs to purchase a treadmill, elliptical, recumbent bike, and 4-5 apparatus fixed-motion resistance training circuit, those folks could have purchased more effective equipment for 1/3 the price and instead spent the remaining $20,000 on staff education and referral bonus gifts for existing clients.  They probably blew a ton of money on direct mail and newspaper advertising, too, when they should have been out hustling to network in the community and tap into their existing clientele for referrals and help spreading the good word.

In short, they probably devoted money to depreciable assets when they should have been using them to add value to existing investments.

You know what porn videos are?  Investments.  They pay themselves off over time.  Seated triceps extensions doohickeys don’t.

Several gyms had already gone out of business there previously, and it seems readily apparent that these folks tried to improve on a flawed business model instead of just scrapping it altogether.  They changed the oil on a car with no wheels.

Unfortunately, this kind of failure is pretty rampant in the fitness industry – and there were surely a lot of other factors that contributed to the business not making it.  While I don’t claim to be a true expert, I can say that we’ve had a thriving business for almost five years now – and I’ve been fortunate to communicate on a regular basis with not only fitness industry business experts, but other guys in the field who run successful businesses.

Pat Rigsby, co-founder of the Fitness Consulting Group, is among the former. Mike Robertson, co-founder of Indianapolis Fitness and Sports Training, is among the latter.   And, the three of us have teamed up to create a product called The Fitness Business Blueprint, which is a great resource I’d encourage you to check out for more fitness business strategies like the ones I discussed in this post.  

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  • http://PHILIFORM-CENTER.BE MILO

    GREAT STUFF.KEEP IT UP. I M FRENCH RUNNING MY OWN FITNESS STUDIO WITH SUCCESS OVER HERE.. I PLAN MAYBE TO MOVE TO THE US AND START MY OWN THERE .WHEN? PROBABLY WITHIN A COUPLE OF YEARS. UNTIL THEN I FEED MYSELF UP WITH ALL YOUR VALUABLE ADVICES AND TIPS. THANKS.

  • Nan

    You are totally right. People are the key. I joined a mega gym up here in Michigan one summer because I was impressed by their facilities but after three months I quit because not once during that time did ANY staff member speak to me. They were so big, I was a non-entity. The next year I joined a smaller, well-equipped gym and been treated like a member of the family. I’ll never leave.

  • http://GordonWatts.com/#health FLASH! Gordon Wayne Watts

    It’s pretty bad when PERVERTS have better business common sense than normal people… LOL.

    But then again, it’s not too surprising:

    After all, we’re the country that has a LOWER life-span than 42 (or is it now up to 47?) other countries –and a much HIGHER cancer rate than MANY countries –and this in *spite* of the fact we spend *more* on healthcare than ANY nation on this planet.

    *** We’d better ‘get it in gear!’ ***

    PS: Your title’s outlandish? –but it’s true… and: So are my claims *equally* outlandish –but also equally true — about other countries kicking our BUTTS –and I also back my claims at my ‘Health’ research paper at the links above and elsewhere.

    Gordon Wayne Watts, editor-in-chief, The Register
    http://GordonWayneWatts.com/#health / http://GordonWatts.com/#health
    BS, The Florida State University, Biological & Chemical Sciences, double major with honours
    AS, United Electronics Institute, valedictorian

    “I’m Flash Gordon, and I approve this message.”

  • http://www.jilltrains.com Jill

    Great post :) The porn industry is THE cutting edge industry to watch for marketing. Sex & sweets kinda sell themselves but if the fitness businesses followed and implemented marketing strategies the way the porn store and donut store has, I believe they would still be there. They needed the Fitness Blueprint!

  • Bonnie

    I love topics like these, even though I have no desire to run my own fitness business.

    A question, though. In our very, very large gym (claiming 60,000 sq ft), the weights room is rarely used in comparison to the machines, which in my (unscientific observation) get used at least a majority of the time.

    People just seem to love cardio machines. They come in, work for an hour, and feel good about themselves. If our gym was smaller and had no cardio machines, they’d lose a ton of clients right there. I’d say the cardio machines are in use at least 80% of the time.

    The fixed-weight machines get used a lot, too, not as much as the cardio machines, but still more than the free weights.

    (The cardio classes are always crowded, too… Zumba, spin, etc.)

    So if a gym opened without them, wouldn’t it lose the “hampsters”? (Those clients who like doing the same things over and over and over again regardless of results?)

    It’s not the righteous way to run a fitness business, but wouldn’t it draw in enough of the clientele to pay the bills while still promoting more effective fitness techniques?

  • Joe Zwick

    After training at home for several years and now having trained at a small commercial gym for about 2 years, I have found the real value comes from who you get to train with. I have been training with some top notch power lifters 3 times a week. I never thought much about the cost of the membership, which works out to be about $2.00 per workout.
    The value that I get out of the membership is so much more than that, it can’t be calculated.

  • http://www.mrfatlosstv.com Emile Jarreau

    Hey Eric,

    Great article…and yes it’s it important to bite off chunks that are manageable. And at the same token…pick the goals that will force you “to take a big bite”

    I sat in a “big box” for a long time before poking the box and getting set up in a micro-gym that i did out of a 2 bedroom condo next to the facility gym. Made 6 figures and no overhead but mortgage.

    Now several multiples of 6 figures and 50 feet down the side walk from a 40,000 sg ft Gold’s Gym corporate box.

    Which by the way is a great business model for anyone wanting to eliminate a lot marketing expense…but you need to be pretty solid with training skills and producing results.

    Things have changed in the last decade and its guys like you, Mike and Pat that helped with the understanding of what was “needed” and how to implement them quickly. Speed of “accurate” implementation is the key…and paying attention to solid, trusted mentors…even when they may be a decade or so younger:)

    You guys are always on my “radar speed dial” when I want to get the pulse of the fitness industry with other guys that have rolled their sleeves up and have produced…not whined…but walked their talk.

    Great job fellas…keep it up!

    Emile Jarreau
    Bea Fox
    M2FitnessPros
    TEAM Fox
    http://www.mrfatlosstv.com

  • http://www.RobKingFitness.com Rob King

    Eric

    Fantastic post man, fantastic.

    I have a small gym 2000 sq feet, blowin the doors off the 10 000 square foot place I rent

    They charge nothing, my memberships are expensive, but by building community and people my gym is blocked.

    Great post there is a ton of great info here if you apply it.

    Great stuff again, thanks Eric.

    Rob
    http://www.RobKingFitness.com

  • http://Fitnesscrossing.com Mike

    Absolute truth.

  • Dante

    Jeez, Eric, where in the world can one get rid of one’s spare tire for $20 a month? Every gym where I live is $60 a month and up. It’s why I get your newsletter, so I can get ideas I can implement at home.

    Tell me where and I’ll move. (Actually, I live in South Carolina, moving is a good idea anyway.)

  • http://www.trainmainefitness.com Ben McCrillis

    I’m not sure if this is factual information but Maine seems to have the most training facilities/gyms/ health clubs per square mile than any other state. There are many reasons for this but(respectfully) I’m not sold on your reasons for the failure in one or many clubs – amidst the recession- can be compared to the thriving market in the fettish/entertainment business. For as long as I can tell, alcohol, tobacco and well, porn will always survive and statistically – its blossoms in a recession because people are depressed,broke and escape their misery through indulging in substance and fantasy. Honestly, the fitness industry as a whole, is (as compared to the above mentioned) realitively NEW! Arguably- about 30 years in total- well commercially. We still don’t have it figured out yet. Just go to Perform Better Functional Summit 1 time and you’ll find 15 highly certified experts all claiming their modalities to be superior.and for many of them they are correct. Its hard to deny Mark V for his obsession for dynamic warm up when he’s so effective just as its hard to knock Carlos C. For his get-up-and go. Hey, just 5 years ago Boyle criticised personal trainer.. Until he “took a walk in our shoes”. Its all very confusing to the trainers themselves..now think what that mindset does to the consumers. However, with porn- you pretty much know what you’re gonna get everytime! Instant results! Ha

  • http://www.newpolymath.com Isaac Wilkins

    Hey Eric,

    This really cracks me up because I know EXACTLY where you were. I run my business out of a facility that’s literally less than a mile from there.

    I made several of the same observations to a buddy of mine about a year ago before Boomer Fitness went under. (I know a little about the situation, but I certainly wouldn’t say I’m privy to the details). It was a gym business designed to fail.

    Another thing to consider is the target market and that the owner of the Boomer Fitness didn’t *really* consider them: The gym in question was vaguely (not clearly) targeting middle-aged, low-key trainees. This isn’t a particularly hungry crowd (strike one), the parking was terrible and inconvenient to get to (strike two for unmotivated people), and isn’t really convenient to any real residences or places of employment (retail district, strike three).

    The porn shop, on the other hand, has a hungry crowd, its own parking, and is a destination spot that doesn’t depend on residences or workplaces.

    That, and around Halloween time the owner puts this huge Velociraptor statue with a pornchick-mannequin’s head in its claws up on the roof. Seriously. I’m not sure what that does for business but given that I drive by it at least twice a day I’ve gotta say it’s pretty awesome.

    Thanks for giving me the best laugh I’ve had all day,

    Isaac

  • http://healthpathtoday.com Christine

    Hey Eric,

    Excellent info. It’s a shame that gyms struggle when their intent is to help people. I guess it’s much easier to be a doughnut eating -porn watcher than it is to work out. Hey……maybe I’ll open up a gym that sells doughnuts and you can watch porn while on the treadmill – that could be interesting.

  • http://www.brandonchapin.net Brandon Chapin

    Eric you make some great points ! I Sending money on education is key if you are going to run a gym where you are going to have to teach people how to use equipment. Sadly I am seeing more and more people opening gyms that little education.

  • Wayne

    Good lessons here. I have to investigate what it takes to start a porn store :)

    The new course looks interesting. I’m sure people could save themselves a lot of money – and a lot of headaches – by getting a business building education before they start their own gym.

    Unfortunately being a great trainer doesn’t guarantee success. Just like being a great chef doesn’t guarantee a successful restaurant. In this day and age, you have to be both a great trainer and a great business person to succeed.

  • http://ericcressey.com Eric Cressey

    Nan,

    You’re not alone; I think that is the direction the entire industry is headed. The big box gym’s dying!

  • http://ericcressey.com Eric Cressey

    Bonnie,

    I’d be interested to see “what else” this gym is doing. They may be good at building camaraderie among customers behind the scenes (hence the cardio classes). They also might have started smaller and grown over time.

    It also may be a scenario where they know exactly what their niche is…misinformed middle-aged fitness consumers (especially ones who barely show up to exercise). PF does this, if you really think about it – and they’re profitable as a result.

    It’s important to keep in mind that this might be n=1. For every gym like this that makes it, there are probably 100 that are out of business in a matter of two years.

  • http://ericcressey.com Eric Cressey

    Absolutely, Joe!

  • http://ericcressey.com Eric Cressey

    Great stuff, Emile! Congrats on your success!

  • http://ericcressey.com Eric Cressey

    Dante,

    Where in SC are you? Always wanted to go down and check out Charleston. What’s the gym scene like down there?

  • http://ericcressey.com Eric Cressey

    Well said, Ben! Agree with you on the prevalence of health clubs in Maine; seems like a new one opens and closes every single day!

  • http://ericcressey.com Eric Cressey

    Small world, Isaac! I’ll have to reach out to you next time I’m up in that neck of the woods and come by to say hello, and possibly to get a lift in.

  • Angela

    Great post Eric. I always enjoy the dose of humor you add to real issues. I have friends that spend $50 every other week to get a manicure and pedicure but wouldn’t think of joining a gym. Then there are others who spend their hard earned dollars at the beer store.

    What do you think of a fitness studio that offers discounted pedicures and beer with each membership?

  • http://www.advancedchirocenter.com Derek

    Somebody told me once that you can’t sell people what they need, you can only sell them what they want. The people have spoken. Donuts and porn it is.

  • BenK

    Come on Eric, a porno is not an investment. It’s bad for the viewers, bad for the producers, and bad for the “performers.”

    Ask your wife whether you should “invest” in porn and see what she says.

  • http://starfactoryfitness.com Conor

    Love the topic! I’m currently running training sessions out of my garage that I’ve turned into a studio and doing well (420sq. ft). It’s all about your environment and your relationships with people. I train teenage hockey players and give away NHL jerseys for referring me. The guys love it!
    Conor

  • http://www.jeremybelter.com Jeremy

    Exactly Eric! Gyms, training centers, fitness places go in and out of business around here like wildfire and you have explained why. I am content growing out of my facility and/or maximizing revenue first:)


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