Aussie Fitness (AF) and Aussie Fitness International (AFC) Case Study
Aussie Fitness are a dynamic 24/7 fitness corporation poised to capture a substantial market share in one of the fastest growing service industries in the country. Aussie Fitness Centre is a Perth corporation incorporated in 2001 and wholly owned by Mary and James Franklin. A Board of Directors (BOD) has been established and the Head Office comprises of a team of professionals: General Manager Finance, Assistant Finance Manger (and support team), Human Resource Department and Sales and Marketing Manager with support staff.
Aussie Fitness Centre intends to expand their number of centres as demand increases. It is envisaged that the investment per centre would be approximately $300,000. Additionally, AF are looking to expand the brand overseas, potentially New Zealand (NZ), United States (US), and United Kingdom (UK). By establishing their brand overseas, they will keep their current product and services standardised, no adaptation will be required initially as these countries have similar cultures to those of Australia.
Mary and James Franklin have fair leadership styles and understand the importance of leading by example, role modelling ethical behaviour and encouraging team participation in the development of the workforce skills and knowledge. They know in turn by leading their teams effectively that an increase in productivity within the organisation is likely and this then reduces employee turnover and absenteeism.
Mary and James are currently re-looking at the organisations business model and want to make some changes for the betterment of the business, by involving their workforce in continuous improvement and empowering them to make decisions from experience they know this will strengthen the professional standard of the gyms.
Mary and James contract the services of Lambert Consultancy (Market Research) for their expertise in market research data. The Franklin’s want each of the Centres Managers (CM) to conduct a gap analysis so that they each have a collection of data from each of the centres about what changes are required. From the data collated action plans can be created and organisational changes can be made accordingly. Based on the gaps identified these will require an increase of human, physical and financial resources to provide continuous improvement for the business.
Mary and James feel they have effective communication and consultation across the centres and want to encourage Centre Managers (CM) and Assistant Centre Managers (ACM) to analyse their own leadership and communication styles and skills. For example, how, who, what and when, they communicate with using an appropriate leadership style. The managers will be required to look at their leadership styles according to their teams and their personal approaches and provide strategies for continuous improvements with regard to how they are leading their teams. These strategies will require organisational changes, and training action plans to complete the gaps identified.
The Franklins see the business moving forward as a modern premier organisation with open and honest communication in order that their workforce will up-hold the values and want to strive towards always meeting the vision, mission of the organisation. Mary and James will encourage relevant training, through inductions, affiliations with quality suppliers and providers for additional training services e.g. Certificate IV or Diploma of Front Line Management. They will ensure managers are conducting regular performance appraisals so that employees can stay up to date with training, development and expectations of their job roles.
This is also an ideal opportunity for staff to discuss personal KPI’s and career progression. In turn they envisage that making improvements to the business will create a more committed and productive team which will have positive impacts on their current loyal members, word of mouth reputation and potential future members and clients.
See Moodle for The Franklins Alternative Therapies Health Hub facilities
The Centres each have a Centre Manager (CM), Assistant Centre Manager (ACM) and a team of various sizes composed of experts in health related fields such as sports massage, nutrition, physiotherapist and other fitness disciplines. Aussie Fitness Centre will continue to have its base of operations in Perth (Fitness Centre and Head Office), Brisbane, Cairns, Sydney and Melbourne. It is planned to open another centre in Adelaide in the next 2 years and internationally in the near future.
The owners and Chief Executive Officers (CEO), Mary and James Franklin, have extensive experience as personal trainers, life coaches and managers of fitness centres. In addition, they have approved a marketing strategy that is well suited to building a larger market share. Aussie Fitness Centre now has the potential to gain a reputation for offering quality in health and life enhancement that provides value long after the classes end.
The Centres are based in rented facilities located in near the largest shopping centres in each city and will be for future national and international centres. The facilities are easily accessible, have a crèche, a coffee shop, substantial parking, and are serviced by public transportation.
Aussie offer a wide range of memberships for various lifestyles at competitive prices in order to reach as many demographics as possible.
The holistic approach
Methods that Aussie Fitness Centres use to distinguish themselves from its competitors is through the holistic approach and accommodating all ages within the community. The support on specific concerns of client’s personal health and well-being status, interesting and exciting classes coupled with innovative new concepts were the keys to Aussie Fitness Centre’s early acceptance. The incorporation of life coaching, remedial massage and other health services increases the use of the Centres and provides convenience for current members and external customers.
The Triple Bottom Line (TBL) is a framework that businesses focus on Profit, People and the Planet. The idea of the TBL is for the business to reduce their ecological footprint, they will strive for sustainability which in turn will add to profits (bottom line). However, it is not just about the money, it is about how the business can reduce its impacts on the planet and how the people who work for them and the members also see the business.
Aussie Fitness wants to send a positive message to the external stakeholders that they are being responsible. Which in turn could also be a selling tool, and a reason why someone would join the fitness centre due to their own beliefs in environmental practices.
Additionally, internal stakeholders also want to be part of an organisation who are seeking to implement practices to reduce their environmental impact.
Essentially when Aussie Fitness is able to add financially to their bottom line (profits) then all internal and external stakeholders will benefit. Benefits would include room in the budgets for training, rewards programmes, commissions, marketing and more.
Mary and James Franklin are the owners and Chief Executive Officers of Aussie Fitness Centre. They have significant experience and management skills developed as centre managers.
Mary Franklin was a remedial therapist and training instructor for 8 years before becoming a manager of a centre 15 years ago. She holds a degree in sports physiotherapy, Graduate Diploma in Management and a Trainer Certificate in Life Coaching. In addition to establishing Aussie Fitness Centre, Mary oversaw the development of a series of comprehensive programs for life coaching. The innovative process of combining personal fitness, maintenance health care and advanced life skill training will be adopted in Aussie Fitness Centre’s training programs.
James Franklin was a personal trainer and professional bodybuilder several years before becoming a manger of a centre. He competed in the World Bodybuilding Championships in 2014. He then opened up his own gym, Franklin Fitness, which went on to be a great success in his hometown of Perth and which he ended up selling in 2017.
Mary originally coordinated a staff of 6 personal instructors and taught a number of different fitness classes.
Because of their technical backgrounds, education and experience, management often consult the couple when complex issues arise. Their experience has proved to be especially valuable in day-to-day operations.
Customer Relationship Management
The Franklins would like to update the current Customer Relations Management (CRM) software system they have in place for more efficient reports with regard to member details, sales, forecasting and Key Performance Indicators (KPI’s).
The suggestion is to find a suitable software system that will conduct surveys, collate the data and generate user friendly reports to be able to make more informed decisions by current obtained data. A dashboard system would be efficient in producing relevant reports in a timely manner with reliable and live data. This in turn would assist CM’s and ACM’s to be able to make solid informed continuous improvement suggestions based on current reliable data.
The Franklins will request the finance manager to conduct a Cost Benefit Analysis (CBA) to implementing such a new system. The finance manager will be required to obtain three quotes for comparison and seek approval from Mary and James before making a final decision on which system to introduce. Initially a pilot test of the suggested system option which will effectively increase productivity and more accurate reporting will be conducted at the Sydney centre to ensure that it is user friendly.
The Franklins undertook substantial research on the geographic markets they planned to service prior to establishing Aussie Fitness Centre. The focus of this research was on the growth of holistic life management including personal training and fitness to suit a diverse group of demographics, with different needs. The research results provided by Lambert Consultancy were quite encouraging. The holistic health approach, personal training and Life Coaching were at the beginning of a period of great expansion, according to the findings of several respected industry trade journals.
Because of transformations desired in personal and business life and the anticipated positive impact of health enhancement on daily life, many businesses are finding that by encouraging their workforce to attend a fitness facility the business will essentially reap the benefits. Benefits include less absenteeism due to healthier lifestyle, increased productivity, and increased employee engagement.
By Aussie Fitness making contact with local surrounding businesses and offering corporate memberships this will in turn increase this style of membership. It is then presumed that additionally, the corporate member will then recommend family and friends, therefore, another aspect of increasing memberships.
The sales team will have a group audience when selling the corporate memberships which is an effective method to communicate the product and services offered by Aussie Fitness all at the same time. This, is time saving by approaching a captured audience and provides the potential clients with more personalised face to the business.
Essentially, Aussie Fitness Centre markets itself as offering high quality, all round training due to their team having up to date current qualifications, specialisation in their fields of interest and industry experience. Aussie Fitness Centre will focus on investing in resources to focus on staff development, maintaining equipment and the physical aesthetics of all the facilities.
The preferred method of advertising is word-of-mouth and social media. Aussie Fitness Centre hopes to hold information seminars on its services at all the Chamber of Commerce luncheons, service groups and schools within a 30-kilometre radius of the business.
The Franklins have begun writing several articles for a national lifestyle publication to advertise in a variety of health and lifestyle magazines. In addition, the Aussie Fitness sales teams will personally approach Human Resource Managers in larger businesses to promote the benefits of the holistic products and services that AF can offer to their employees. Research results suggest that this type of marketing initiative can generate a significant amount of corporate business.
Aussie Fitness Centre also intends to continue with the tender process, by approaching medical centres and aged care centres to offer special arrangements for their people to improve their mental and physical health through diet, exercise and companionship. This will be heavily subsidised and offered mainly as a community service. They will not rely on a sale force to generate business.
CM’s and ACM’s are to work with the Sales and Marketing (S&M) Team to discuss tactics and trends to attract new members and keep existing members interested in their respective centers. Suggestions include staff posting videos of how to use the gym equipment safely on Instagram and Facebook, additionally post Healthy Recipes, and Success Stories of their clients. The CM’s and S&M are required to update the website ensuring they are keeping up with industry trends. They must also ensure that the website is user friendly and all links for enquires are actively working continuously.
See Moodle Web-links – Building Community in the Gym, Increasing engagement among your members.
Aussie Fitness Centre will charge competitive prices for their services, Aussie Fitness Centre are lucky enough to have lower overhead expenses. Based on a survey of fitness training facilities in major cities and surrounding suburbs, similar gyms charge, on average, $220 more per person for a 12 month membership.
There are special arrangements and pricing for corporate partners, special interest groups and community initiatives.
Aussie Fitness Centre plans to continue to keep wage and salary expenses low. To achieve this objective, Aussie Fitness Centre has salaried their personal trainers rather than contracting services. The expectation is that when not involved in delivering classes, or consulting with those for whom they are the personal trainers, they will be volunteering their training services to schools, hospitals and other community initiatives to raise the profile of Aussie Fitness Centre. The facilities also have contract cleaners who start at 4am Monday – Saturday. Additionally, each Centre has a maintenance and facilities person to conduct repairs and general up keep of the facility.
Aussie Fitness Centre offers reduced cost for full payment options for membership services. Member payments may be made monthly or quarterly at a higher rate than annually and with Ezidebit, cash, EFTPOS or credit cards. Payments for casual classes are set at a premium level, as per industry standards in the local area/competition.
Aussie Fitness Centre will offer deferred monthly billing and a 25% discount to corporate clients with 10 or more employees taking corporate memberships. Since the revenue generated from this client segment is expected to be small, and the risk of non-payment is small, the accounts receivable and bad debt expense should not be a consideration.
Rent, salaries and the cost of equipment leases are the largest expenses that Aussie Fitness Centre faces.
Following an exhaustive analysis of the financial and other implications of buying or leasing, Aussie Fitness Centre has decided to lease its equipment. A factor that played a large part in that decision was the likelihood that any purchased equipment may become dated in a relatively short period of time. Aussie Fitness Centre must have equipment that is at least equal in sophistication to those desired by its competitors and members. The substantial initial cash outlay required to purchase equipment also played a part in the decision to lease.
Aussie Fitness Centre obtained estimates from a number of distributors for the purchase of resistance equipment. The most competitive price that Aussie Fitness Centre found averaged $2,699 per machine. The total purchase price was $46,855 per Centre including GST.
Based on estimates obtained from several leading rental firms, Aussie Fitness Centre could expect to pay approximately $8,450 a month to lease the same equipment.
Finally, in order to lease the equipment, the best price quoted was $33,500 per Centre, which includes all maintenance of the machines. The lease would run for 36 months with interest at an 11 percent annual rate. The total of the 36 monthly payments would be $37,855.
Aussie Fitness Centre considered several options regarding the type of service to offer to its clients. Because the Franklins did not wish to tie up funds on a long-term basis, the purchase of a training facility was not considered a reasonable option.
Aussie Fitness Centre has negotiated a favourable lease on all properties with the property management firm that manages the centres in which the facilities will be located. The firm has offered Aussie Fitness Centre a 3-year lease with a 3-year renewal option. The monthly rent is $1,500 for the first year, $1,700 the second year and $1,900 for the third year. During the 3-year renewal period, rent will increase by 5% per year. This rental amount includes water, waste removal and all maintenance costs.
Financial Projections (See individual Centre Budgets on Moodle)
Based on a survey of 100 Fitness Centres across Australia, it was determined that a Fitness Centre with 5 full time staff members can be expected to train 30 new clients every week. Of this number, it is expected that 25% will be repeat customers. That means that Aussie Fitness Centre can expect to generate 120 new clients and continue with 30 previous clients every month.
The percentage breakdown of the number of clients who will select either a single class or the membership option is based on statistics provided in the National Fitness study and a report included in the Journal of Fitness, June 2018, Vol. 18. The findings of both of these reports stated the fact that individuals who have taken previous memberships are more likely to pursue additional membership to gain even greater proficiency and health benefits. Using these statistics, Aussie Fitness Centre estimates that gross revenue this year from the combined centres will be more than $2,500,000 or over $5,000 per centre per month.
The financial goals of each Centre for the coming year are:
Because the demand for Aussie Fitness Centre services is expected to grow in the current year of operation, gross revenue for the second year is expected to increase to more than $3,000,000.
While these calculations are based on an average of the gross by month, Aussie Fitness Centre, like many businesses in the fitness industry, will be subject to common business cycles. Based on the above mentioned study done by the Journal of Fitness, market research shows that the number of clients participating in training January through to March will increase by 10% to 25%. During the months of May through August, the number of clients drops off by approximately 20%.
Fitness firms can expect a 20% to 30% increase in the number of clients during the months of
September through November (surge in numbers just before the summer/Christmas holidays). As with other non-retail businesses though, December sessions usually drop by 25% (Many people go on holiday). One way that Aussie Fitness Centre will try to counter the ‘holiday slump’ is by increasing tendered classes and those for special interest groups.
Aussie Fitness Centre plans on offering a holistic class in developing and maintaining a healthy weight initiative. The class will also focus on how individuals can make gradual and comfortable but sustainable lifestyle changes. Aussie Fitness Centre will incur little additional expense by offering this new initiative and still generate an additional 3% in revenues every month.
Aussie Fitness Centre is planning for a 15% increase in membership sales in the coming year. For a detailed analysis of the actual monthly budget, review the budgets
See Moodle Web-links - Centre Budgets
Growth and Expansion
Aussie Fitness Centre relies on the proven skills of its founders to take advantage of the growing need for fitness training, personal coaching and other related health enhancement services. Mary and James Franklin, who combined bring more than four decades of personal training and life coaching expertise to the business, lead the company as it was established, as a high quality fitness provider in four capital cities and one major regional centre across Australia.
Aussie Fitness Centre initially focused on attendance generated through advertising, tendering for training and general health enhancement. Currently memberships provide the basis of funding and the tenders and causal visits and add-on options of life coaching and health enhancement specialists generate larger profit margins.
Constantly evolving classes and advertising offer an opportunity to work smarter. But the increased opportunity comes at the expense of increased complexity, such as group fitness timetable changes, qualified group fitness trainers (availability), marketing cost increases - campaigns. Substantial market research establishes that personal training coupled with life coaching and natural health enhancement is one of the fastest growing service industries.
Aussie Fitness Centre is in a position to capture a significant portion of their local markets in each of their localities, currently Cairns, Brisbane, Sydney, Melbourne and Perth. Further, Aussie Fitness Centre is projected to return a profit annually due in large part to the size of the market and the relatively low investment required. 2018 year revenue combined from all centres was projected to exceed $2.5 million.
Aussie Fitness are looking to expand the business and additionally their membership base targeting the baby boomer age group (a person born between 1946 and 1964) this initiative will be pilot tested through the Sydney Centre . This initiate of attracting this demographic age group would attract more members during the off-peak times between 10am-4pm, which would off-set running costs such as electricity, water and rent space. The current website will need to be updated and designed to improve marketing strategies and ensure the marketing is aimed at a wide demographic group.
See Moodle Web-Links – Marketing: Extra Ways your fitness centre can make money and New Business Model for Youth and over sixties
Aussie Fitness Centre continues to differentiate itself from its competitors with their unique selling point of continuing to develop unique classes, personal training and expanding on the one-stop-shop for health enhancement. The one-stop-shop approach of Aussie Fitness inclusive of the gym itself, fitness classes, creche, café and holistic services is expected to allow substantial gains in the largest segment of a growing market. This focused approach also makes it easier for Aussie Fitness Centre to establish and retain a position as a premier industry leader.
Membership and Affiliation
Aussie Fitness want to become affiliated with Fitness Australia, this membership has benefits to the
Business, Employees and Members: See Moodle Web-links – Fitness Australia Registration
In order for Aussie Fitness to be affiliated with Fitness Australia they are required to have their employees qualified and experienced. Employees also need to demonstrate on-going Continuous Education Credits (CEC’s) over their own two-year registration, employees become known as AusREPS’:
See Moodle Web links – Continuing Education Credits
Aussie Fitness has a policy that states the expectations of employee professional development standards: See Moodle Web-links – AF Personal Development Policy and Fitness Industry Workforce
The owners of Aussie Fitness are considering sending their employees to train through Australian Institute of Fitness and moving forward will only recruit people with a minimum Certificate III and First Aid Certificate.
See Moodle Web-Links – Fitness Australia Education
Benefits of Membership:
Another benefit of joining Fitness Australia is the provision of additional business tools to assist in making the right decisions lawfully for all stakeholders concerned.
Due to wanting to increase customer satisfaction ratings and memberships Aussie Fitness needs to select, recruit and induct at least an additional two staff members per centre. With a minimum Certificate III in personal training, first aid certificate and 1 years’ experience. All existing staff are also now required to obtain their minimum Certificate III in personal training, and ensure they have there up to date first aid certificate. However, this request may cause resistance as some of the staff feel that they have enough experience that they do not need a qualification.
Working with the Human Resources Department, CM and ACM’s are to be involved in the recruitment and selection criteria for their respective centres. Managers are expected to have a hands-on approach with selecting the appropriate team member to join their particular centre. Ensuring that inductions are performed to the required standard before a staff member is allowed to work independently in the centre. This is to reduce chances of high turnover, which ultimately costs the business in recruiting, inducting and training again.
Aussie Fitness would like to use the highly skilled and qualified team as a selling point for obtaining more members. From experience and research the owners know that people join a fitness centre because they feel safe in the hands of qualified and experienced staff. This will be a key selling point when it comes to marketing to the older generation demographic as safety will be a high priority for them.
For AF, labour needs keep fluctuating requiring the hiring of temporary staff to fill labour gaps during peak times. Assessing their business staffing requirements enables AF to anticipate and plan for peaktime staff shortages and make the necessary labour arrangements.
Conducting a business labour assessment helps AF figure out the number of workers they will need, and the hours needed for the temporary workforce. By knowing the number of hours that need to be filled in each department and the areas where staff might be required to help the most, labour shortages can be eliminated, and efficiency greatly improved.
Planning for staff requirements enables AF to balance between efficiency and cost. It prevents under or overstaffing by ensuring they always have the optimum number of workers.
To have a good understanding of AF business’ labour requirements, they need to check the following:
When it comes to labour needs, planning is important because:
Effects of hiring unqualified candidates
The work done by an unqualified candidate may never meet the expectation and this can cause money loss as well as reputation of an organization in front of members.
Hiring someone who is not qualified and not suitable for the job is a risk.
The reputation of AF depends on the basis of the work they do and their employee. If AF hires an unsuitable candidate for the job it shows poor decision-making skills. AF cannot gain a good reputation in the market if their employees are not qualified for the job.
Company good will:
Hiring unqualified candidate can damage AF good will. By not hiring the right candidates it can have impacts on potential clients and members.
If the candidate is from a higher rank in the organisation, then it can have negative impacts as an unqualified worker is less harmful than unqualified manager due to the responsibilities they have and the decisions they take when working for the organisation.
Member satisfaction is what AF works for and also to gain profit. Member satisfaction is less likely obtained if employees are unqualified. Member satisfaction also boosts worker confidence and AF image in the marketplace.
Unqualified candidates can put the burden on other employees because they have to carry the person and ensue to keep the members satisfied.
Quality of work:
Quality of work decreases by hiring unqualified candidates. The high quality of work is what makes AF successful in the business world and an unqualified candidate affects the quality of the work in the organization because the employee does not have knowledge of the role.
Wastage of time:
The time spent on hiring unqualified candidates will not work in AF’s favour and the recruitment process will need to start again
Recruitment and Induction:
Currently the recruitment and selection criteria is not up to date and induction does not always happen. See Moodle Web Links - Getting Staff Induction Right
Centre Level Staff Induction:
Although the Centre Level Staff Member Induction is detailed there are issues with performance and the culture within the work environment that is occurring at the Centres:
slips, trips, and falls – o Risk Assessments are required to be conducted on a regular basis.
See Moodle Web-links – Recommendations for un-supervised fitness facilities
2. Culture and work environment:
See Moodle Web-links for:
The CM’s and ACM’s are being requested by the owners to implement and engage continuous improvement methods by being more involved in lifting the level of their centres and encouraging and empowering their teams to increase brand recognition by promoting a safe environment for all ages. Managers are to encourage team meetings to seek feedback in relation to what the employees are hearing from their clients in order that they can make better decisions and implement continuous improvement.
Additionally, by role modelling effective leadership traits and involving employees in the centre decision making processes this will in-turn impact the reduction of absenteeism and change the culture of the centres to a learning environment for all involved.
CM and ACM’s are encouraged to use their entrepreneurial skills and suggest their centres teams create an employee rewards and recognition program this way they will gain more buy in from those involved in creating a positive work culture.
Additionally, they are to steer their teams in to taking responsibility for creating a Work Health and Safety (WHS) and risk assessment committee consultation team. With the facilities being 24 hours, therefore, un-supervised at times Managers are required to ensure a risk assessment is conducted on a monthly basis and reported to Head office.
Furthermore, all staff members must also attend risk management training, which includes information about their own welfare and that of their members. This will generate data for consistent regular compliance assessments which will be formally reported about and addressed for the wellbeing of the stakeholders and formal auditing purposes. Regular WHS and Risk committee meetings are required to be scheduled and held, so that continuous improvement and priority of issues can be addressed accordingly.
Additionally, Managers will need to ensure that they have correct policies and procedures in place for all operational aspects and in particular risk management and WHS, in order that all stakeholders whom enter the centres know they are entering a safe environment (particularly important for the older generation). Managers are to review policies and procedures, conduct and or arrange training by an approved external training provider to bring all staff up to the minimum level requirements. Additionally, they are required to ensure that all staff are aware of the Current Code of Ethics, which should be placed on the intranet See Moodle Web-Links – AF Code of Ethics
Managers are to be involved in the creation/ongoing continuous improvement, monitoring and measuring of the Strategic Plan, Business Plan and Marketing Plan. Managers are required to seek feedback in order that they can contribute to adjusting strategies, making informed decisions and continuously improving the brand. Managers are required to model continuous ethical behaviour in their day to day work ethic and lead by example to their work teams to maintain a healthy cultural environment.
Managers are to arrange a communication plan with stakeholders so that consistency in information sharing becomes a cultural habit. Managers are also required to work on providing leadership to their team and having an ‘Open door policy’ to encourage a team environment and to encourage staff to approach senior staff with any issues or concerns they might have. The reporting levels and procedures are to be clarified for all staff to ensure that everyone is aware of how, what, why and when information is to be generated and disseminated.
Finally Mary and James will visit each of the centres to show support and obtain first hand feedback and observe the team environment. From their filed trips they will continue to make improvements for the betterment of the centres working culture and environment.
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