To run a successful personal training business, you must know how to manage your money. You may be able to deliver results on the scales, but you also need to provide results in terms of your bank balance.
The trouble is that for many personal trainers, this may be their first time managing expenses, pricing up services, and dealing with all of the other financial elements that come with running a business.
Let's look at some basic money management principles you can follow.
#1 - Always aim to cut costs and increase revenue.It sounds simple enough on the surface but may feel challenging in practice. In principle, every personal trainer wants to spend less and earn more. However, putting this into practice is a different matter entirely.
The key here is to reduce your expenditure without decreasing the quality of service you provide.
At the same time, it's about spending less on items and services that won't bring you any business or revenue.
Some of the things that personal trainers tend to overspend on include:
• Overpayments on supplies, leases, and equipment
• New technology and equipment that's not needed
• Untargeted marketing campaigns
• Business travel
• Excess employees
Not only do you need to reduce unnecessary expenditures, but you need to look for ways of increasing your revenue. For example, you can introduce loyalty and refer-a-friend programs, add new fitness services to sell, offer discounts, and promote your training programs via social media or email marketing.
You'll need to adjust your approach based on the economic climate. For example, with the current recession, it's wise to offer shorter sessions and group classes to lower costs for the consumer while increasing revenue for yourself.
#2 - Create a budget.Taking the time to create a budget makes it much easier for you to manage your money.
Budgets help you establish revenue and expense goals. It shows you the exact costs required for your business to operate at a profitable level. When you know how much you can spend, you can manage your money more efficiently.
A budget will also forecast the amount of revenue your company will receive. If your earnings are lower than what you have budgeted, you need to look for ways to boost your income and cut expenses.
#3 - Time your purchases.Whether you're thinking about buying new exercise equipment or you're wondering when to invest in online fitness marketing services, timing your purchase is a must.
Your bills need to be paid before you make any unnecessary payments. Wait until you have sufficient cash on hand to cover new costs.
Also, timing your purchases can help you in other ways. For example, you can leverage discount periods to spend less. Moreover, you can llower your tax liability if you make purchases of tax-deductible items before the year's tax period ends.
For instance, UK personal trainers should be up-to-date with their books of the current tax year by the end of January at the latest, so they can make purchase decisions that will be deductible in the year if they buy before the 5th of April.
If you pull together your balance sheets in the last minutes for the tax return deadline, you'll never know if you could save some tax money by sourcing business assets before the tax year is done. It's one of the disadvantages of having ten months to file your tax returns after the tax year ends in the UK. People think there's time to do the challenging tasks a lot later and then get surprised by their tax bill.
#4 - Don't mix personal and business expenses.We have all been there; you're at the self-checkout, and there's a long queue behind you, so you use your business credit card to pay for your family's weekly grocery shop. While it seems harmless, it can make it incredibly difficult for you to manage your finances effectively.
Plus, your bank statements are vital in monitoring your spending, reconciling your books, and tracking profitability.
Disorganized records are guaranteed if you mix company funds with personal funds. This habit results in overspending and missed growth opportunities, which is the last thing you want.
Furthermore, if you keep your personal and business funds in one account, you'll be much more prone to dipping into your business funds for personal expenses and vice versa.
#5 - Put together an emergency fund.Also known as a contingency fund, an emergency fund is a set amount you keep aside for the safety of your personal training business. You should only ever use this money if there is an emergency.
Most financial experts recommend that you keep enough funds for between three and six months of the running of your business.
From economic issues like Covid-19 and the subsequent fallout to natural disasters, there's no telling when something could strike that would derail your business. This is why you must be prepared and have an emergency pot of funds to ride the wave when things get complicated.
Other problems could occur should you get injured, go on maternity leave without replacement, or be hit by an unexpected event like a flood in your studio.
#6 - Stay on top of all of your deadlines.Lastly, keep on top of when your bills are due, such as credit card payments, business loan repayments, and software subscriptions, and ensure you have a sound system for paying them on time and without fail.
The same goes for your taxes. The rules might differ based on where you live, but you must pay taxes on your earnings. Whether you pay monthly, quarterly, or yearly, it's best to plan it into your budget and use a separate account to separate your taxes from your other income.
Your expenses will only increase if you do not pay your bills on time. Added interest and late payment fees will be heading your way! This can then sour your relationships with vendors and lenders while lowering your business credit score, hurting your chances of loaning money in the future.
So, it's critical to say on top of your deadlines. Keep a record of when payments are due and set alerts, so you don't fall behind. It's a good idea to have these added to your diary or set an alarm on your smartphone or computer that will alert you a few days before the payment is due. Even better if you can use direct debits or standing orders to manage your bills on autopilot.