Official Predictions for the Post Covid-19 Coaching & Fitness Industry
Which Business Models Will Fail? Which Emerging Trends Will Lead?
FREE Resources. Information. Solutions. How to Pivot.
This article was written on Thursday, April 23, 2020
(updated April 27, 2020, April 28, 2020, May 3, 2020, May 4, 2020, May 8, 2020, May 11, 2020, May 13, 2020, May 21, 2020, May 28, 2020)
Who would have thought that the coaching and fitness industry would be experiencing the dramatic shift which is happening right now? NESTA has served over 65,000 coaching and fitness pros in over 60 countries since 1992. We’ve seen many ups and downs and dramatic shifts in trends, equipment, training philosophies, and business models. But, nothing even comes close to what’s happening in 2020.
The coaching and fitness industry is not going away now, in the near future…or ever. However, you need to be prepared for some massive shifts occurring now, and in the next 3 to 6 months. You need to be the person who’s ready. Be nimble!
UPDATE: Here is a complete list of what you need to do when you re-open your gym, fitness center or personal training studio. Download the PDF right now!
QUICK NOTE: We can all agree on a few things. First, the media isn’t always the best source of truth. Facts and figures keeps changing. The reality of the situation, and a person’s perception of the situation are usually completely different.
The following Industry predictions are based on available data, decades of experience, interviews with industry leaders, formal and informal surveys, feedback from our students and graduates, and a good dose of common sense based on observation of nearly 30 years in the coaching and fitness industry.
Let’s break things down into “departments” or business formats. After a discussion of each of these departments, we will provide information on various solutions and options.
SMALL BOX GYMS
To keep things simple, let’s talk about this department as independent gyms and boutique studios that are independently owned and operated and not part of a larger business model or franchise. In recent years, small box gyms have obviously been very popular and profitable for many. In other cases, high rent and additional costs such as insurance and payroll can keep profit margins lower than needed. In various surveys, we have read from North America and Australia, it seems that anywhere from 20% up to 40% of these businesses may not last through the end of the year because of the quarantine and extenuating circumstances.
Each of these businesses has a different model. Some have independent contractors. Some have only employees. Some are individually owned by a person or family. Some have a very small footprint, maybe as small as 400 ft.². Others have a larger footprint, perhaps up to 3000 ft.² or more. This creates a significant ongoing fixed cost for rent and miscellaneous expenses. There may also be other city, county, and state fees. With the information currently available at this time, we believe that many small box gyms will continue to thrive after quarantine. However, it is quite possible that many of them will close, as suggested in the various surveys.
We can cite one example specifically (Corey) where an individual owned a private training facility in an industrial area, which was about 5000 ft.². It generated multiple six figures per year in revenue. However, when this individual factored in all the fixed and variable costs and insurance, the profit margin was not big enough to overcome the headaches involved. He now works 50% less from his home, training clients in his garage, online, and at the beach. He even trains numerous UFC fighters in his garage gym. You may have read his cover story in Personal trainer Magazine. His take-home pay is 35% greater than it was when he was grossing 500% more as a gym owner. Remember, it’s what you keep that matters. It never matters just what you make.
In short, this segment of the industry could be hit very hard. There are a lot of very talented trainers and coaches who have good business sense, and yet there are so many factors outside of their control. This could be the segment hardest hit. Be willing to do what it takes to survive and thrive. Don’t let pride get in the way of intelligent decisions.
There are some obvious advantages to buying a franchise. You get a business model that has been refined over time. You also get the benefit of nationwide marketing. Of course, it is your job to do your due diligence that these franchisors actually deliver what is promised in your contract.
There are some obvious huge downsides to a fitness franchise. First of all, in addition to all the costs related to the small box gyms mentioned above, you will have significant upfront and monthly fixed and/or variable costs associated with your franchise. When you add this to all the other costs of doing business, it can be prohibitive.
Here is another thing you need to consider if you are thinking about, or already do operate, a fitness franchise or small box gym business model. There is something called an “anchor tenant”. This is a larger and more prominent business that brings in most of the traffic for a strip mall or similar type of commercial development. Many of these businesses are also in trouble. If you have been relying on foot traffic from that anchor tenant, and now they are gone, how are you going to make up for the loss in foot traffic (which could be potential clients)?
Of course, you can increase your Facebook and other social media presence and advertising budget. However, with the additional fixed expenses, now your total expenses have increased. These are real things to consider. Again, it’s too early to know exactly what will happen. However, the scenarios are real. The costs are real.
In short, just like small box gyms, this segment of the industry will be hit hard. It will be interesting to see how small box franchises fare because of the additional costs incurred by the franchisee. Are you willing to pay these fees and additional expenses? Is it worth it to you? Would it be a better choice now to work from home (and/or online) and keep things simple and more profitable? Time to assess.
BIG BOX GYMS
As you may have read, TSI [Town Sports International] and 24 Hour Fitness have recently had some financial challenges. In fact, 24 Hour Fitness said that they are considering filing for bankruptcy in part due to the loss of business during the quarantine. There are various types of bankruptcy and timelines to go through this process. It is too early to know exactly what will happen. It would be pure speculation at this point. They are both huge fitness Industry leaders and offer something very special for a wide range of fitness enthusiasts and fitness professionals around America and the world.
By contrast, LA Fitness often owns the building/land where their gym is located. This could give them more options for survival and adjusting finances.
It has also been reported that Gold’s Gym will be closing approximately 30 locations permanently. It is our understanding that these are corporately owned locations, and not their franchised locations.
So, what does this mean for you and the fitness industry? The honest answer is that we just don’t know. Some of these clubs have monthly overhead expenses that exceed $250,000 — Perhaps much more. Just like some “small box” gyms and fitness franchises, big-box gyms have changed their business model so that large group format classes represent a larger percentage of revenue, and the reason people come to clubs.
Based on new guidelines, the question remains as to how a group class can be taught when everyone, by default, is in close proximity to each other? And, if there is a greater space between individuals, there are fewer people who can participate in a class. This decreases revenue. The next questions are, ”How long will this last?” and “How will people respond?”
We have read numerous informal polls targeting fitness enthusiasts and consumers. Their response varied widely as to when they want to return to a gym/health club. Some of them said “immediately” and were very enthusiastic. Others were somewhere in between and wanted to use caution. Still, others said “never” and were looking for home gym and outdoor fitness solutions. Again, you have to ask, ”What does this mean for you as a fitness professional or fitness business owner?”
From our perspective, it means you need to be flexible in what you perceive to be the right thing to do at this moment. It could change tomorrow. It may stay the same for a month and then change dramatically.
One thing is certain. The fitness industry has changed forever. You need to put yourself in control.
As we stated, the industry is not going away, and it’s not doom and gloom. It’s just going to have a massive shift, and you need to be nimble to take advantage of the new opportunities that are emerging.
In short, these giants will survive (mostly). They will look different. Some will fail. Most will thrive again. Opportunities for trainers and coaches within these facilities is unclear. It couldn’t remain the same. It could falter in the short-term. It is too challenging to be certain at this time. But, the big-box segment of the industry will go on forever in some capacity.
REBIRTH OF PERSONAL TRAINING
Everything that was old, is new again. Being a Certified Personal Fitness Trainer has always been, and will always be, the most fundamental credential and skill to have as a fitness professional. As a personal trainer, you have the foundation to do anything. Of course, specialized training is needed in some cases. However, without a doubt, personal training is the basis for everything else.
As a personal trainer, you can work at a gym, small box franchise, health club, spa, resort, fitness center or boutique fitness studio. You can also teach fitness from your home, a client’s home, in a park, at the beach or online. In short, you have endless options.
And, NO LARGE GROUPS. No social distancing required for groups of just 2 people (just you and your client).
Single Day Income Example: Train 1 client at their home for $70. Train 1 person at your home for $60. Complete your day by working with 2 online fitness training clients for $40 each. You worked a total of 4 hours and made $210/day with a very large profit margin and big tax advantages.
ONLINE COACHING & TRAINING
This trend has been growing for several years and has recently skyrocketed. Although there are many technologies to offer this service, Zoom video conferencing is one of them.
To give you an example of how much Zoom has grown since the pandemic began, look at these facts. According to fool.com, Zoom was growing quickly before the pandemic. It ranked seventh as the fastest-growing app in the enterprise market by Okta, the cloud software company, and for its fiscal 2020 fourth quarter, it reported 78% year-over-year revenue growth. Full-year sales growth was up 88% to $623 million.
Just like homeschooling, people didn’t realize all the technologies and opportunities that were available with online coaching and training until they needed it as a new business model and reality. As you may know, we are giving away the complete comprehensive training for online coaching and training with the purchase of a certification from NESTA and the Spencer Institute. This training has sold for as much as $2,000, but we’re giving it to you free.
There is a bit of irony with the online coaching and training business model. For us, it was originally designed so people can travel the world and become location independent and a digital fitness nomad. Although that is still true when the quarantine is lifted, we learned that the business model is perfectly suited for anyone who is a trainer, coach, or consultant to work from home as well.
There is a real benefit to coaching and training someone online as opposed to in person. First of all, if you had a physical location such as a fitness franchise or small box gym, all of those expenses go away. You have essentially zero overhead to run your business each month. When the quarantine is lifted, you can choose to work at home. You can also choose to work at a coffee shop. You can work at the beach or a park. Or, like many health and fitness experts are discovering, they can travel the world extensively, or even indefinitely, while working with clients online.
In short, online coaching and training is an obvious winner. Some coaches/trainers earn six-figures and beyond with profit margins near 80% (before taxes). Compare that to a franchise or small box gym with fix costs and high rent. An an online expert, if you are a little slow one day, week, or month, your expenses don’t stay at a high rate as they would if you had a physical location. And, it gives you the opportunity to be mobile when you desire.
Another thing to consider with online coaching/training is geoarbitrage. Geoarbitrage is an interesting concept, often closely related to the definition of lifestyle design. It basically means relocating in order to take advantage of the lower costs of a city/country. There are different ways you can go about this. However, it can be related to staying/working from home (online) and benefiting from each country’s best benefits. EXAMPLE: Work online from your current home and outsource work you don’t like or know how to do. Find workers in countries such as Pakistan, India, The Philippines, Vietnam and Afghanistan.
They are hard-working, skilled, dedicated and very affordable. You can find these people on sites such as UpWork, Fiverr and other outsourcing sites. You help them, and they help you. Win/Win. You may focus on finding clients in another country which has a stronger economy than your own. Or, maybe they just want a foreign flair to their program. Also, think of this… Australia has summer at the opposite time of year as America. If you offer “summer shape-up” training. Re-direct your online efforts via Facebook ads 2 times per year. The benefits and examples are endless. Learn more about online coaching and training.
OUTDOOR FITNESS TRAINING
You won’t have any issues with this social distancing when there are no walls to contain the group. Just the fact that you are outdoors makes people feel healthier. It is symbolic of fresh air and not stale, recycled air, and sweaty equipment. Sometimes marketing is as simple as perception, even though there are real health benefits of getting outside.
There are several small box fitness franchise systems which do offer a group fitness business model. There are times when people are generating several hundred thousand dollars per year in gross revenue with these types of business models. That is good. But, what happens when there are social distancing orders? What happens when people are freaked out and don’t want to get close to someone who is coughing or sneezing on equipment?
If your costs of doing business are high and somewhat fixed with the small box or fitness franchise, and fewer people want to take a chance with their health, how can you maintain your profit margins? These are real questions that need to be considered.
With an outdoor fitness business, you have zero franchise fees. You have zero rent. You have unlimited social distancing. This makes your business more resilient in a challenging economy which is sure to come (and is already here in many cases).
In case you don’t know, NESTA offers you the PURSUIT outdoor fitness certification and complete business model. No ongoing fees. No franchise fees. No rent. And a ridiculously low investment for your training and certification. It’s definitely worth investigating. PURSUIT certified coaches can make $500 per day with an 80% profit margin. Those are real facts and real numbers.
In short, outdoor training is fun and it feels good to be in the fresh air. It does have obvious health benefits, and it gives people a perception of greater health and cleaner air which will be beneficial for your business for the foreseeable future.
Bryce Krause, 7x National Muay Thai Champion, and the creator of Muay Thai Fitness, has been training his clients on the beach while his gym is closed. He’s happy, tan and keeping the money rolling in. In fact, he got 5 new clients while on the beach.
Restaurants closing because of COVID-19, and the future challenges of restaurants following the pandemic, creates a HUGE OPPORTUNITY for Certified Personal Fitness Chefs. Well over 120,000 restaurants in America are closing permanently because of COVID-19. Others will have very restrictive measure which make business difficult. People still want good food, healthy food, and convenience. If you have a passion for food, cooking or nutrition, this may be the career pivot for you. Become a personal chef and/or build your meal prep business. This system shows you how.
TRAINING CLIENTS AT YOUR HOME
Aside from going to a client’s house, this is probably one of the oldest forms of fitness training. There are many benefits. First, you basically have no overhead costs. If someone doesn’t show up, you do laundry, clean the house, eat, work on your business or take a nap. No time is wasted.
There are so many different ways to set up your home to work with clients. If you do health or wellness coaching, you only need a clean and appropriate space to sit and talk and discuss the strategies for improved health and wellness. If you’ve been offering online coaching, you may decide to do the in-person coaching in your house in the same office as you do your online coaching.
Additional benefits of working with clients at your home include extensive tax reductions, less wear-and-tear on your car, the ability to be home when your kids get home from school, and less wasted time driving around.
NESTA is giving you a complete system called Home Gym Profit Center. It teaches you everything you need to know from business, to compliancy, to home gym set up. There’s nothing to buy. Just grab your copy now.
In short, training clients that your home makes sure life easy and it gives you huge tax benefits which you can learn in our free program we’re giving you.
Some trainers and coaches like to divide their time. You could work with a group outdoors in the morning. You could coach or train clients at your home sometime during the day. And, you could coach a couple of clients, or a small group, online in your area of expertise. The benefit of a hybrid model is that you have essentially no overhead costs. You save time. You don’t have franchise fees or rent to pay. And, the diversity reduces the chance of boredom.
In short, hybrid models give you freedom, variety, and low overhead.
EXAMPLE OF PIVOTING AND THRIVING
Emile Jarreau is a certified fitness professional, writer and author with a background in performance nutrition, and the creator of NESTA’s “Physique and Figure Training Specialist“ certification.
He is using his past experience to pivot and thrive by adapting his earlier one-on-one training style into a hybrid model with semi-private training inside a small studio combined with outdoor boot camps. Obviously some of this has changed during the lock down. Emile is also offering online coaching and training for fitness, figure and physique competitor clients from around the world. Over the past 2 years, Emile’s online coaching business has grown, so the transition was fairly seamless. Click here to watch videos from Emile as he shares exactly how he build a successful online fitness, figure and physique training business.
As you see on this page, some martial arts schools have closed, many are struggling and all that remain will have to change business practices. If you hold rank in a particular martial arts, or teach self-defense, you will want to look into the MMA Conditioning Association’s (MMACA) program which shows you how to take your current martial arts skills (regardless of style or tradition) and add in the MMACA fitness/conditioning course, certification and home business system. No gym = no problem.
SOMETHING FOR EVERYONE TO CONSIDER
- Will you have new liability concerns, or will you be covered by existing policies?
- Consult with your CPA to maximize tax benefits for any major decision.
- What is the best way to reduce fixed business expenses?
- What do you need to learn now to succeed?
In some areas, gyms owners and lobby groups are demanding that gyms re-open.
People exercise in front of a courthouse to protest gym closures.
Fox News discussed how gym owners are pivoting.
CNN discussed how our industry is changing.
Here’s what Change.org says about making gyms “essential”
Here’s an example of what’s happening in Colorado.
This is what NBC News is saying about gyms being safe. How can you address this concern in advance?
Here’s a local Fox News affiliate’s information on gyms reopening
This is what CNN says about how gyms got included in Phase 1 of reopening the economy.
SOME FITNESS BUSINESS OWNERS ARE DEFYING ORDERS AND KEEPING DOORS OPEN WHILE OTHERS ARE CLOSING
The fitness industry is here to stay. It has changed forever. Be nimble. Be flexible in your perspective. Be okay walking away from something that isn’t working and no longer serves you. There is something very important that you should always consider when making personal, financial, and business decisions.
You have endless options for working from home, outdoors, at client’s homes and online. See all of our resources that help you.
Ask yourself this simple question: Do I want to be right, or do I want to get what I want?
As always, we welcome your thoughts and feedback. We are grateful for the opportunity to serve the fitness industry for nearly 30 years in over 65 countries. Please share this article online. We value your perspective regardless if you agree with our findings or not.
The NESTA Team