Problem 1. Budgeting
All of the budgets are included in a single workbook on three pages labelled “Revenue Projections”, “Cash Receipts” and “Cash Budgets and balances.” This makes for a clear and easy to follow presentation. The figures for the year 2010 are presented on top and immediately below them are the figures for 2011.
To achieve the targets for 2011 obviously some further assumptions beyond an increase of Pilates volume and an increase in training volume of £300 per month is required. To achieve the targeted figure the budgeted figures for 2011 were revised to include a further revenue increase gradually throughout the year in both Pilates and training volume. The revised budget for 2011 can be assumed to be a 2012 budget, but as the initial 2011 budget show cash shortfalls, or at best modest cash profits throughout the year and a year end deficit of over £1,200 by year end. In order to achieve a profit for the year and bring the ending cash balance to neutral it would be necessary either to forgo the salary increase or build revenue volume. The revised revenue budget for the year shows gradual on-going revenue gains and produces the £1,000 cash surplus at year end that is one of the operational goals discussed.
Problem 2. Marketing
The aspirational summary of the business is to build the volume to the point where the owner can increase her salary to £1,300 per month and show a positive cash production each month to build cash reserves at £1,000 per year. This would probably require an increase in both Pilates volume and training clients. An alternative would be a price increase, but this might reduce the number of clients and have an overall negative effect. There are a limited number of ways of increasing sales volume, but they all depend on price increase, unit volume increase or a combination of the two. For what is apparently a relatively new struggling business the only practical approach seems the volume increase road.
An analysis of the business environment without knowing a considerable amount about the geographic market in which the business is located is difficult. It is almost impossible to listen to a television news broadcast, read a newspaper or look at Internet news without realising that the United Kingdom is in rather desperate financial straits. Austerity is the keyword in British economics currently. A personal trainer is clearly a deferrable expense.
Another thing we do not know about the business is if there is a physical studio where the owner practices or if the practitioner goes to the client. The latter seems more likely, and with a fuel allowance of only £50 per month even with a tiny vehicle like a Smart car would not allow a lot of long distance travel to call on clients. With a vehicle as small as a Smart car it is questionable how much Pilates gear could be transported. Just how the business handles the question of Pilates without a studio is an open question.
An analysis of the business would indicate that it is primarily based on cosmetic considerations as opposed to building the health of the client. There is no question that exercise has great health value, but physical conditioning does not require a personal training instructor. This is usually more connected to toning the body for aesthetic purposes. As such a personal trainer and Pilates classes clearly come under the heading of discretionary spending. It is interesting the “luxury” market has been less impacted by the current financial and economic crisis that has impacted the overall economy.
The product is one of personal services and not something that can be differentiated from other similar products. Sit ups and push ups are pretty standard exercises and stretching can be learned from the many books on the subject and if this is not sufficient is generally covered on books about running. This leaves price as the other competitive tool. Low cost producer is not really relevant in this context.
The best value offering may be relevant, but it would be rather difficult to demonstrate a value proposition. A program based on additional “free” sessions related to a contract to take a agreed number of paid sessions might be effective, but is tantamount to price cutting, a strategy that competitors can easily match in the personal training field. An alternative is quality of service, but again demonstrating this quality is difficult if not impossible,
The business owner in this case has instituted and advertising program, but beyond making it known that he or she offers personal training and Pilates services it is difficult to understand what she is advertising. Probably an Internet site is the most practical single tool, but again, there is not really much to say. To claim, “I am a good personal trainer” is not terribly effective unless it can be dressed up with a celebrity endorsement, and even then it is questionable. Probably the best way to gather new clients is based on recommendations of current clients or possibly physicians and physiotherapists. This does not address how to convince these individuals to actually recommend the trainer.
Successful trainers have been in business for a long period of time and having some well know satisfied clients will also help build volume. Satisfied clients that recommend the trainer to friends will not work to build a major practice quickly, but slowly but surely will if the existing client base is satisfied and securing good results. It is worth noting that successful results are more a function of client participation that training skills. The real key here is the trainer’s motivational skills, which will produce successful, hence satisfied, clients. This is not simply a typical new small business.
A SWOT analysis of a personal training practice is again not a realistic exercise. The only real strength a trainer can have is a large satisfied client base that will recommend his or her services. Again the concept of celebrity clients is an additional benefit that relates to client satisfaction. The weakness of the business is that there is no way to differentiate the products and traditional price competition is at best a two edged sword that the established practitioners can use more effectively than the new entrant. The real motivations of the practitioner probably must centre on elements like self-satisfactions and helping others as opposed to great business success. There are examples of practitioners that have achieved great business and financial success, but these are “the exceptions that prove the rule.”
The opportunity is difficult to see unless one knows the specific market in question. Physical trainers almost by definition require relatively upscale markets where appearance is a critical issue. It is ordinarily a market for young upscale consumers. If this describes the specific market in question there may be some opportunity for an additional trainer there. One would also have to how many physical trainers already serve the market and what success they are enjoying. This is definitely a niche market and the underlying question is the size of the niche the new trainer is planning to enter. The greatest threat to a career as a personal trainer is that the client base may discover that the trainer is a substitute or a prop for self-discipline. Their service is simply to encourage the client to eat properly and exercise on a regular basis. There is nothing they know or do that the client cannot easily learn from a few books or the web. The discipline for these simple choices must come from the client. Conversely, the risk of young people or public personalities loosing their interest in their appearance is very small.
The Way Forward
The only realistic way forward is to persevere in the field and be satisfied with slow growth. There is no simple or magic plan that will provide success in the career. The Internet offers a number of certificate programs and physical training schools, but there does not seem to be any viable way to evaluate any of these offers. Interestingly enough, a regular bridge partner of the author is a dermatologist physician who at about 170 centimetres tall weights more than twenty stone and has a very successful diet practice.
The individual in the problem seems to have established at least a modest success as a physical trainer at the outset of the problem. It would appear that continuing what she has been doing and building a reputation and following should eventually bring her at least a larger practice than she has now. Probably the most effective promotion is by word of mouth. The other possibility is to find groups to speak to concerning the advantages of exercise and good diet and offer personal counselling sessions to follow the meeting. With some success among clients the practice will probably grow organically. It is highly questionable if an affordable advertising program will contribute much. It might even make sense to go to gyms, doctor’s offices and other places where overweight people can be found and hand out cards much like unscrupulous lawyers do in courthouses, and hospital emergency waiting rooms.