Nine Ways to Increase Your Profitability and Diversity By Adding New Revenue Streams To Your Business
The presence of an online or offline Fitness or Wellness business with only one or two revenue sources isn’t enough to survive in the current business market.
Unfortunately, many businesses learned this the hard way during the COVID-19 pandemic. They existed on an in-person, one-dimensional business model and then had to scramble to create new revenue streams to stay afloat.
For example, for a Pilates studio that relied heavily on large equipment that can only be used in a studio, the pandemic completely shut them down. However, if that business had other revenue streams, they could quickly pivot.
In the case of the pandemic, by having diversified revenue streams many studios were able to pivot, develop, and nurture their many sources of revenue to stay afloat.
Unlike a passive income business model, where you keep earning money even if you’re not physically providing a service, most fitness or wellness businesses operate on a service-based business model. When clients don’t come in for their training sessions and classes, the business doesn’t make money.
The reality of owning a studio is that clients come and go due to life changes — financial, travel, etc. Trainers and teachers do the same, and when they don’t work, the business owner likely doesn’t make any money from their work either.
As a fitness or wellness studio, it’s no longer sustainable to simply rely on one or two revenue streams to make more money.
Adding more services and diversifying and adding new revenue streams is a strategy that can potentially reduce business risk while also increasing profitability. Successful Fitness and Wellness businesses expand into different revenue streams instead of just earning revenue from the core business. Doing this acts as a protective shield for the business and makes you competent and resilient enough to cope with economic changes.
To help you get started with adding new revenue streams, we’re taking a look at nine ways you can increase your profitability.
What are Revenue Streams, and Why Should You Have Several?
Revenue streams are the various sources that Fitness or Wellness businesses can use to earn money from selling goods or services.
Adding new revenue streams is essential because it helps the business owner develop an effective strategy to grow and stabilize revenues for their Fitness or Wellness business. Plus, it provides stability and increases the earning power of the business.
For many Fitness or Wellness businesses, their primary source of revenue is classes and memberships. Because of this, a lot of businesses are missing out on new revenue streams that are available.
Benefits of Opting for New Revenue Streams
Having additional revenue streams benefits both you and your clients.
Here are a few key reasons why this strategy is so important.
You’ll have a more diversified business.
To make your business more diversified, it is essential to introduce various revenue streams. Compare a business that only sells memberships with one that also sells accessories and special programming. Which one has the potential to earn more revenue?
You can enhance your core business.
The main focus of your business is likely to help people to live a healthier life. When you consider adding additional revenue streams, think about other services that will not only support your current clients but attract new ones. You’ll discover there is a plethora of offerings that fit comfortably under the fitness and/or wellness category. From activewear, equipment, and nutrition to special programming and teacher training, having additional offerings will enhance your core business and take growth to a new level.
It assists in predicting and estimating sales.
Most wellness businesses have low-profit margins, and many things can impact sales month to month, which can make predicting the expected revenue difficult. Having several revenue streams gives the business more and better opportunities for consistent revenue and profit — and ultimately results in growth.
It adds value to your business and improves client retention.
As a business owner, it’s your responsibility to add value for your clients. This helps to increase client retention and make you stand out from your competitors. Also, it gives your clients a reason to stick around and maximize their membership. Consider adding services that will genuinely help your members and improve their fitness or wellness experience.
Recurring Revenue Streams are the Best Option
When considering different services for your business, it is best to find a way to set them as recurring revenue.
Recurring revenue is the portion of a company's revenue that is expected to continue. Unlike one-off sales, these revenues are predictable, stable, and can be counted on to occur at regular intervals with a relatively high degree of certainty.
An example of recurring revenue for a fitness business would be a monthly unlimited class membership. For a wellness business, it could be a monthly massage membership.
When adding new revenue streams, you generally aim to increase your monthly recurring revenue (MRR).
To calculate MRR, multiply the total number of paying customers by the average revenue per user (ARPU) per month. For example, if a business has 100 customers paying $100 monthly for recurring services, their MRR would be $10,000.
The recurring revenue model enables you to create relationships between the business and its existing customer base. When you have loyal, regular customers, instead of focusing on acquiring new customers, you can put energy into increasing the average dollar spent per year. This will increase your value per customer and also have a positive impact on your bottom line.
Some possible ways to create a recurring revenue model include:
Launching a membership program based on your services.
Offering retainer plans. (E.g., Offer an auto-pay plan for a personal training package that automatically charges them when it runs out. You can offer it at a lower price than the one-time package price. To ensure retention and recurring revenue, make sure it has a minimum commitment to purchase and enroll in the program.)
Introducing physical product subscriptions.
Hosting or offering teacher training or educational workshops
Becoming an affiliate for products.
Combining two models – membership program + physical product delivery.
Types of Revenue Streams
There are many options for adding new revenue streams to your fitness or wellness business. We’re going to take a look at nine proven ways you can do this.
#1. Service-Based Revenue Streams
Personal Training:
With personal training, a member gets individual attention from the trainer. This could mean reaching goals faster and developing a stronger member-trainer relationship. It has a higher price point since it comes with extra perks a member would not enjoy during standard group training. This means extra income for both the owner and the employees.
You could offer personal training as one-on-one sessions, small group sessions, consultations, or home services. Advancements in technology have broadened the ways personal training can be delivered.
Memberships:
This is a significant revenue stream as it is the core of the business. Often, most of the recurring revenue comes from memberships, and these clients are your biggest supporters!
You must have enough class offerings to offer different types of memberships. If this revenue stream is smaller, consider offering autopay types of membership, meaning the client purchases a package with several visits, and when it runs out, the package automatically renews. This is a good model for class-based businesses as well as personal training-based businesses.
Class Packages:
The same applies to this type of service. Design the class packages to be a recurring revenue stream with an autopay option, so it performs like a membership.
#2. Product-Based Revenue Streams
Clothing/Accessories:
Clients coming for workouts also like to purchase workout gear. They look for footwear along with other necessary items to kickstart the fitness journey. Offering accessories is a great way to add a revenue stream.
Branded Merchandise:
Selling branded merchandise not only generates additional revenue but also increases brand awareness and loyalty. When customers wear or use branded products that showcase your business logo, they become walking advertisements for you.
This gets your business name out in the area and helps spread it amongst the locals.
Branded merchandise can also help to build a sense of community among members, as they feel like part of a larger group or team.
There are various merchandise options that you can offer to your members, such as t-shirts, stringers, water bottles, gym bags, and even phone cases or hats. These items can be sold in your studio, on your website, or mobile app to cater to a broader audience.
Workout Equipment:
Aside from accessories, some clients prefer purchasing equipment to use at home. The equipment for the exercise at home could be any of the following:
● Dumbbells or hand weights
● Pilates Accessories: rings, squishy Balls, bands
● Foam rollers
● Resistance bands
● Resistance balls
This equipment is easy and relatively reasonable to purchase so it doesn’t overextend the business' resources to carry a small amount of stock.
#3. Special Programming Offerings
Adding new programs and services that are complementary but different from what you currently offer can increase the per dollar spend by current clients and potentially attract new clients.
Here are a few examples:
Hire or partner with a Health Coach/Dietician and offer nutrition coaching programs.
Bundle the nutrition programs with memberships and private training packages to increase that revenue stream.
Offer personal meal plans, personal at-home or online workout plans.
On-demand online workouts and classes.
Offer special programming to your fitness or wellness classes 6-12 weeks long and require additional purchases, such as bootcamps, myofascial release for enhanced recovery, and meditation courses.
All of this additional programming will not only diversify your revenue streams but also help you retain your current clients, increase the average dollar per client spent, increase your MRR (monthly recurring revenue), and attract new clients.
#4. Consider Adding Other Fitness/Wellness Niches
Today’s stressful lifestyle is taxing on the overall well-being of individuals. Therefore, people are looking for guidance that helps them change their lifestyles. Adding other wellness services as a new revenue stream will help your clients lower their stress levels and save time for them by having all of their wellness needs met in one place.
Some ideas include:
Sauna Services
Cold Baths
Massage
Physical Therapy
Although some of these options may require additional space and capital, you should consider the long-term benefits. It may be beneficial as each of these options will diversify your revenue streams and improve your bottom line.
#5. Offer or Host Teacher Training and Continuing Education Workshops
Teacher Training Programs, continuing education, and client workshops are excellent options for creating new revenue streams.
Pilates and other fitness modalities are growing as many people are making their health a priority. The demand for instructors outweighs the number of Pilates and FitnessTeachers in the industry, and finding qualified teachers is difficult.
Choosing a training program that offers you a portion of the revenue will help you grow your business as an additional revenue stream and provide quality instruction, which will result in higher retention rates.
You can be a host site for these training programs or offer your own training. There are several companies to choose from to help you achieve this goal.
Another option that is less time-consuming and usually only requires a day or couple days of commitment is to offer continuing education workshops for teachers already trained and looking to enhance their knowledge base. Write and deliver your workshops and apply to get your courses approved, or host someone else presenting classes or workshops and make a portion of the fees.
Consider also offering specialty workshops to enhance the knowledge and practice of your clients. These can be set up as additional enrollments that bring in additional revenue. An example of this could be a foot care workshop: show them how to stand, wear the proper footwear, and include take-home exercises they can do to improve their gait, balance, and recovery of their critical asset!
#6. Corporate Wellness Programming
Corporate wellness programming is experiencing significant growth as businesses prioritize their employees' health and well-being.
Due to growing demand, now’s a great time to jump into this market and add it as a new revenue stream. It is easy as it is similar to what you already do daily.
There are several ways to run this business model:
Offer group rates to companies in your area for their employees to attend your classes and work with your private trainers at your business.
Conduct onsite classes in the early morning, lunchtime, or right after work, bringing in your own equipment that’s easy to travel with. Charge the employer a set rate regardless of how many clients attend. You can also purchase equipment to be stored on-site and have the company reimburse you for the expenses.
Teach classes or take clients onsite and directly charge the employee, charging a premium rate for traveling to the site.
Before embarking on these, don’t forget to check with your insurance agent to ensure you are adequately insured to provide services outside of your space. Also, make sure you have the proper waivers for participants to sign as well.
#7. Fitness/Wellness Retreats
Hosting retreats can bring added value to your business and set you apart from your local competition. You can host a retreat focusing on the same workout style you offer in your business or consider combining multiple modalities to add variety and attract other types of clients.
Retreats require a lot of planning, and it may be helpful to run them through a company that already offers them and receive a percentage for everyone you refer to them.
Or, if you’re feeling adventurous, do your research to do it yourself. This will enhance your community and be another great retention tool for your business.
#8. Affiliate Marketing
When you become an affiliate partner, you promote, share, and encourage people to buy a specific brand or product. You receive a small commission when a person buys the product. Ways to promote the product could be on your website, through your physical business, a good fitness blog, or a social media account. Affiliate marketing is an easy way to generate additional income and create a new revenue stream without considerable effort.
Affiliate marketing most likely won’t generate a massive amount of income, but it’s an excellent way to add a little extra revenue. And if you can create affiliate relationships with multiple companies, it will add up.
Remember to only recommend products that you truly believe in.
#9. Rent Out Your Space
Renting out extra space in your studio/business can be an excellent opportunity for additional revenue. You can offer the space for personal training sessions, small group classes, photo and video shoots, or special events for neighboring businesses.
Offering to neighboring businesses also provides you with the added benefit of free marketing. Your business can benefit from images or videos of your space potentially being shared on social media or other online platforms.
Uplevel Your Business With New Revenue Streams
There are numerous ways for fitness/wellness businesses to generate new revenue streams and increase their profitability beyond traditional membership fees.
By implementing the creative and innovative strategies outlined above, you can attract new customers and retain existing ones while generating more income.
Remember, profitability results from attracting and retaining customers, optimizing revenue streams, and controlling costs. By leveraging these strategies and continuously evaluating and adapting your business model, you can make your gym or fitness studio more profitable. When considering adding new revenue streams, always look for new ways to increase revenue without increasing overhead.
So, get your creative juices flowing, think outside the box, and explore these opportunities to stay ahead of the competition in your industry. With the right approach and effective marketing, these strategies can help your facilities grow your business and achieve long-term success.
Looking for some help with growing your business?
I can help you create strategic plans to help you meet your business goals.
You can learn more about how I can help right here.
