Throughout the United Kingdom businesses have been instructed to close their doors. Some trainers, who were unable to take their business online, may find themselves with very little, or even no income right now. That is scary, especially if you weren't financially prepared to get by for at least a few months without earnings.
We still don't know when the lockdown will be lifted, and some people may be starting to feel the pinch financially now. If you run your gym or a studio, the situation might look even more cloudy depending on what type of company you have set up.
This article is tailored to freelance personal trainers, studio and gym owners and other fitness business owners operating in the UK. However, we appreciate that the fitness industry is in the same boat on all continents. Many of the principles mentioned below apply wherever you are, for opportunities available in your country, check your government advice and get in touch with financial institutions to find out about loans and else.
If you're unable to work during the COVID-19 pandemic, there may be support available from the government. We will look at a few scenarios here.
Coronavirus Job Retention Scheme
If you are an employee of the gym where you work, the government's furloughed worker policy covers you. In this situation, you'll receive the lowest of 80% of your salary or £2,500 per month. The gym owners can decide whether or not they cover that 20%. In this case, you don't need to do anything; your employer needs to sort the admin. Keep in mind that you cannot work for the company while you are furloughed, you can however work for another company, or for yourself if working outside of your normal work hours.
If you are a fitness business owner employed by your own business in any position, you may also be eligible for the furlough scheme. Check with your accountant to see how you can make a claim.
Self-Employment Income Support Scheme
However, in the UK, most personal trainers are self-employed. If that's you, check if you are eligible for the Self-Employment Income Support Scheme. If you've been filing your tax return online, you will already have had instructions through via email. The great news here is even if you are eligible for support you can keep working and keep earning.
This week's when people can start to make claims, so if you haven't done it yet, and you need support, check the above link to see if you are eligible. If you are, they'll also tell you the date and time from when the online system is open for you to make a claim.
What are the eligibility criteria? - you are either self-employed or member of a partnership - you traded in the tax year 2018/2019 and submitted your tax return before 23rd Apr 2020 for that year - you operated in the tax year 2019/2020, and you intend to continue trading in 2020/2021 - your activity has been adversely affected by the pandemic - your profits were less than £50,000 in tax year 2018/2019, and they make up at least 50% of your trading income - if you are not eligible based on 2018/2019, HMRC will check the three years together: 2016/2017, 2017/2018, 2018/2019
If you meet these requirements, you are eligible for 80% of your profits (not earnings) averaged over the last three years from self-employment as a taxable grant. A grant is different from a loan because you don't need to pay it back. Payments will be capped at £2500 per month, and HMRC aims to pay the three months in full as a start sometime in June 2020. On top of this you can keep working while claiming this support so keep training your clients online and you can top up your earnings very effectively.
These quite stringent requirements mean that many self-employed personal trainers aren't eligible for very much support at all - if any. Besides which, payments don't start until June - when they will be backdated. Gym closures in the UK happened on 20th Mar - that's a long time to be without income.
Universal Credit is a payment to help with your living cost and it's not a scheme introduced as a result of COVID-19. It's replacing many previous benefits, and people who are out of work, have meager income or cannot work may be eligible. Universal credit is designed to top up your earnings so once again you can keep working and can keep increasing your online income while getting support with Universal credit.
You'll find all the ins and outs on the above link, ensure you read through it all. The amount you would receive is not much, and you may not be eligible to claim both. I highly recommend reading through the information provided to make sure you pick the right option for you.
If All You Had Were Your Savings
If you're not eligible for any government support, how long could you last on the savings you have in the bank? What income sources do you have right now? How can you increase your current income?
There are financial calculators online to help you figure this out. If you're looking to get an idea yourself, sit and calculate how much money you need to cover your bills. Not all of these may be relevant, but consider:
- Mortgage/ rent - personal and business - Rates: Council tax, Business Rates - Utilities: Water, gas, electricity bills - Insurances: professional liability, car, phone, home & contents - TV licence, subscription services (e.g. Netflix) - Road tax - Current business costs - Mobile phone contract - Debts and credit cards - Cost of food
Get crystal clear about how much money you need to survive per month. Often, it's less than you think. If you're struggling to remember, then open your online banking app and scroll through looking for monthly payments. Maybe even print out a couple of month's worth of statements and go through with a highlighter.
Then look at how much you're currently earning. If you're making more than you're spending, things are fine. But if not, think about ways you can increase your earnings, the primary goal here is to earn more than you spend, if you mange this you're fine no matter how long the restrictions are in place. To be prudent also look at your current income and current spending, check what the difference is and calculate for how long your savings will cover that difference.
Is it 6+ months? That's ok, no reason to panic. 3-6 months? Still, no reason to fear, but you may want to start becoming structured with your finances right now, so you don't feel the pressure so much. Do you find you have less than 3 months' of savings? That's a scary thought, sure, but if you start acting from that fear, you may make mistakes you wouldn't otherwise. Instead, try to keep your cool and now take a second look at your finances, start working out which expenses aren't needed for your survival and how you can increase your current income.
Minimise Your Outgoings
Once you know where you're spending your money, there could be scope to take "payment holidays" from some of these bills. You may choose to stop some of them completely. Liaise with your landlords, both for your home and your gym. See if you can agree on how to get through this without either of you having to go bankrupt.
Speaking to the companies that provide this service will be your first step - don't just stop paying these bills without talking to them first as that could cause severe financial consequences long term.
Make More Money
Consider ways that you could make money while not delivering in-person personal training services.
Thinking outside of the box will gain new meaning during these challenging times for many trainers. Remember, so long your goal is to help your current clients through this period, you will be able to come back stronger. If you find that some of them are keen to try online personal training services, PT Distinction is here to support you through the setup process and make the transition smooth.
Many personal trainers struggle to manage their finances, choosing to ignore their bank balance and not get on top of their accounts. Without clarity on how much you need to cover your bills, and knowing how much you're earning, it's even more stressful because you're left guessing whether you'll be able to cover your bills this month.
Our advice is to set aside a few hours, half a day at most, to go through your accounts and figure out your income, your outgoings, anyway you can increase your current income and, anywhere you could trim some excess spending. Once that weight is off your shoulders, you'll have more creative capacity to start thinking ahead!