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ACE Personal Trainer Manual, 4th edition

Chapter 18: Personal-trainer Business

Fundamentals

Learning Objectives Based on Chapter 18 of the ACE Personal Trainer Manual, 4th

ed., this session provides the basics of running a personal-training business, including business planning, marketing, and financial planning.

It also explains the advantages and disadvantages of working as an independent contractor or direct employee.

After completing this session, you will have a better understanding of:

– How to develop a sound business plan

– How to create a brand and communicate the benefits of a business

– Marketing to acquire new clients and retain existing ones

– The professional services needed to run a successful business, including an attorney, accountant, and web developer

– How to sell personal-training services

Introduction Whether working with clients in their homes or for a

major health club, a personal trainer needs to know how to properly manage and operate a business.

The fundamental purpose of a business is to generate profit by delivering a product or service to customers.

Operating a successful personal-training business involves:

– Creating a budget

– Developing a marketing plan

– Having the ability to sell training sessions

– Delivering a quality product that meets client expectations and drives retention and referrals.

Personal Training Is a Service Business

Service businesses offer knowledge, skill, and expertise.

Service companies build their businesses through interpersonal relationships.

A personal trainer needs to match the desire for helping clients with the ability to quickly establish rapport with them.

– This combination will provide a strong foundation for a personal-training business.

The Direct-employee Model In the direct-employee model, a trainer is usually paid:

– A lower rate when working a scheduled shift on the fitness floor

– A higher fee when working with a client as a personal trainer

– The pay rate for delivering a personal-training session can range anywhere from 40 to 70% of what the client pays the club or training studio.

Many companies reward trainers with bonuses if they meet certain performance objectives.

A personal trainer must also decide in which environment to work.

– Large health-club chain

– Non-profit center

– Community or university recreation center

– Corporate fitness facility

– Independent health club

– Personal-training studio

Considerations for Direct Employment Determine whether the facility attracts the type of clientele the trainer is

interested in working with and if those potential clients have the disposable income to pay for personal-training services.

The facility should be conveniently located for commuting.

The facility should be located in an area that gets steady traffic throughout the day.

Determine the reputation of a company.

Determine the requirements for employment.

Advantages of the Direct-employee Model The employer pays the cost of marketing to new facility members.

The employer pays for equipment and all expenses related to the maintenance of the facility.

Many employers provide benefits.

Some employers provide uniforms and offer continuing education opportunities.

The employer is required to submit taxes on behalf of the trainer and issue an annual W-2.

Employers often let trainers take part in the decision-making process before ordering equipment or changing the layout of a fitness floor.

Employers offer opportunities for promotion.

Staying at the same location throughout the day eliminates the cost of travel additional commuting time.

Many facilities offer group exercise classes for members.

Many health clubs provide opportunities for trainers to deliver small-group training sessions.

Disadvantages of the Direct-employee Model

A trainer has to conform to the uniform and professional grooming standards of the employer.

Per-session training fees are often lower than what the trainer could make working independently.

Many employers have requirements for the minimum number of hours to work.

Many employers establish sales goals for their personal trainers, which can create a high-pressure sales environment.

The Independent-contractor Model In the independent-contractor model, the personal trainer contracts his or

her services to a health club or training studio.

– A trainer will pay either a per-client or monthly fee in return for being able to use that location with clients.

– The trainer is responsible for paying all of his or her own operational costs.

– Requires the trainer to make a decision about how much money to charge for services

When starting out, personal trainers will probably want to price themselves slightly lower than some of the competition (only 5% or so).

When setting their fees, trainers must remember that taxes are paid on any earned income.

– A personal trainer should not simply set a rate that sounds inexpensive.

– A trainer must do the research to determine if the rate can cover all of the required expenses of being in business for one’s self.

Considerations for Working as an Independent Contractor

What facility will be used and what arrangements will be made to use the facility?

If the plan is to work in clients’ homes, the trainer should research on the local market to see if it has the demographic to support the fees for a private trainer.

What type of marketing expenses will be required to advertise for new clients?

What health-screening forms and liability waivers will be used to protect financial assets against litigation?

What assistance will the trainer need from an accountant or lawyer?

Training “Under the Table”

Some fitness facilities will prosecute trainers for shoplifting or trespassing if they are caught training “under the table.”

– Taking money directly from a client without properly paying the facility operator for using the space

Because this practice is illegal and unethical, it violates the ACE Code of Ethics.

Training under the table might seem like a tempting option for a struggling trainer, but there are serious potential consequences.

Advantages of the Independent-contractor Model

The personal trainer is able to establish the fees based on experience and what the market will pay.

Many personal trainers appreciate the opportunity to move around and work out of different facilities.

The personal trainer is able to develop his or her own financial goals.

Disadvantages of the Independent-contractor Model

The personal trainer has to maintain business records and pay quarterly taxes.

The trainer is responsible for all of his or her own marketing costs.

If renting space, the trainer does not have control over the operations of the facility.

If training clients in their homes, the personal trainer will have to travel between different locations throughout the day.

Starting a Career The best way to get started as a personal trainer without taking any

financial risks is to work for an employer.

Facilities provide:

– A steady stream of potential clients

– Some of the experience needed to operate a fitness business without investing the time and money to start one

A good employer will train its personal trainers to market their skills and make sales.

Another benefit to working for health clubs is that they are often involved in community projects that can provide experience working with the public.

Beginning as a personal trainer working in the direct-employee model can establish the foundation for a long and rewarding career in the fitness industry.

Business Planning To have a successful career, a personal trainer should develop a

business plan.

No one starting a business plans to fail.

– They simply fail to develop a systematic plan for running a business.

A personal trainer should create a detailed business plan that establishes definitive goals and a structure for achieving them.

The components of a business plan include:

– Executive summary

– Business description

– Marketing plan

– Operational plan

– Risk analysis

– Decision-making

Executive Summary

The executive summary is a brief outline of the business and an overview of how the business fills a need within the marketplace.

A well-written executive summary is one page and includes the following information:

– Business concept

– Financial information [with an emphasis on the expected return on investment (ROI)]

– Current business position

– Major achievements

Business Description

This section provides the details for the business as outlined in the executive summary.

A succinct mission statement should be developed that describes the benefit of using this particular personal-training service.

When describing the business, the personal trainer should:

– Identify the operating model and how it is different or unique when compared to other training studios in the area

– Describe the fitness industry specific to the local market

– Provide details such as the number and location of competitors, how many employees they have, and the number of clients to whom they provide services

– List the members of the management team, highlighting their knowledge, skills, and experience

Potential lenders or investors need to see this information before making a decision about providing capital.

Marketing Plan This section of the business plan specifies how prospective clients

become paying clients.

Marketing is the process of promoting a service by communicating the features, advantages, and benefits to potential clients.

Marketing tools should tell a story about how the service can enhance a person’s life.

– All marketing pieces should communicate the benefits of working with an ACE-certified Personal Trainer.

The marketing plan should list the:

– Details on the demographics for the area around the training business

– Demand for personal-training services

– Specific type or brand of training services being offered

– Plan for communicating the benefits of personal training to potential customers

Operational Plan This portion describes the structure for how a business will

operate.

– Includes an organizational chart that identifies key decision makers and the employees responsible for executing those decisions

A business plan for a personal trainer will not need a lengthy operational plan if the trainer is working directly for an employer.

If a personal trainer decides to follow the independent-contractor model, a decision should be made about which operational model to use.

– Sole proprietorship

– Partnership

– Corporation

– Franchisee

Risk Analysis

There are a number of risks involved in owning and operating a business.

Risks can be categorized into one of the following general areas:

– Barriers to entry

– Financial

– Competitive

– Staffing

For personal trainers who work as direct employees, most of the financial risks are covered by the employer.

Independent personal trainers will need to conduct an analysis to:

– Identify competitors

– Categorize the risks of competing in a specific marketplace

SWOT Analysis A simple tool for conducting a risk assessment is the SWOT

analysis, which is illustrated on the following slide.

– Stands for strengths, weaknesses, opportunities, and threats.

A basic SWOT analysis is easy to perform by dividing a piece of paper into four squares.

– The upper-left square should be labeled “strengths.”

– The upper-right square should be labeled “weaknesses.”

– The lower-left square should be labeled “opportunities.”

– The lower-right square should be labeled “threats.”

Sample SWOT Analysis

Decision-making Criteria This component includes a detailed cost-benefit analysis.

– Demonstrates that the expenses for operating the business are worth the financial risks involved with establishing operations

– The specifics about the business plan that prove that it will be a successful business venture should be highlighted.

This final section is simply a conclusion summarizing how the business will be a profitable venture.

More time spent in the early planning stages allows a business owner to focus his or her efforts on:

– Implementing the plan

– Attracting the clients

– Providing the service once the business starts operating

Creating a Brand

A brand represents what a service or product stands for.

– An easy way to communicate its value to potential customers and clients

– An important step in establishing an almost immediate emotional connection with a client

– Helps prepare the client for what to expect during the personal-training experience

A brand establishes an instantly recognizable value for the product or service being sold.

The benefit of developing a distinct brand of personal-training services is the establishment of a unique identity.

Building a Brand

When building a brand and identifying a target demographic, a personal trainer should take a few minutes to answer the following questions:

– What can be done to create and communicate a unique brand identity that will attract the target demographic?

– Who is the ideal target customer?

– Where is this target customer located?

– What time of day will this customer be interested in working with a trainer?

– What marketing efforts can be used to reach the potential customer to convert him or her into an actual paying client?

Communicating the Benefits There are a number of different ways to market to prospective clients.

Every new-member fitness assessment is an opportunity to demonstrate the benefits of working with a personal trainer.

Personal trainers should use the time working on the fitness floor to build as many relationships as possible.

It is a good idea to make business cards and distribute them to as many people as possible.

Personal trainers can create a testimonial book or have testimonials from current and former clients on a web page.

Trainers should make an effort to work with clients in a visible area of the facility so that other members can see the personal-training experience.

Independent contractors can create signage for their cars and make T-shirts for clients with the trainer’s name and logo.

Trainers can use the Internet as a powerful and efficient tool for promoting personal-training services.

Personal trainers can also expand their reach by becoming ACE-certified Group Fitness Instructors.

Trainers can create adherence, orientation, and/or education programs to attract new clients.

Small-group Training Small-group training involves a trainer servicing two or more clients during

the same session.

From the trainer’s perspective, semiprivate training provides advantages in the areas of:

– Finance

– Time management

– Referrals

For the client, benefits include:– A lower cost per session

– Enhanced camaraderie among workout partners

– Opportunity to receive instruction in a small-group setting from a fitness professional

Information on how to create effective small-group programs can be found in ACE’s Small-group Training Online Education Program.

– www.acefitness.org/continuingeducation

Marketing for Client Retention

Once a prospective client becomes a paying client, it is important to have a retention plan.

To retain a client for the long-term, a personal trainer should develop a long-term exercise plan based on the concept of periodization.

The ACE IFT Model uses periodization as a long-term, science-based plan for exercise program design that is aimed at meeting individual client needs, while also providing the personal trainer with a marketing strategy for client retention.

Marketing Through General Communication

The most common form of communication with potential clients on the gym floor occurs through visual means.

For personal trainers, communication begins with a professional appearance.

Every interaction should leave a positive impression.

A trainer should focus his or her communication efforts on helping prospective clients maximize their return on training time to achieve specific fitness results.

New trainers should realize that it will take approximately three to six months of work to develop a full client schedule.

Considerations for Starting a Business Considerations for starting a business include:

– How to structure the business

– Whether to work with partners

– Whether to establish a corporate structure to create an additional layer of liability protection

Factors to consider when starting a personal-training business include:

– The level of experience that the potential business owner has in the fitness industry

– The level of self-motivation

– The ability to create and execute a business plan

– The size of the proposed business

– The location of the proposed business

– The cost of running the proposed business

– The structure of the proposed business

Professional Services for Starting a Business Attorney

– Critical for structuring the necessary articles of incorporation or partnership

Accountant

– Helpful for structuring the best cash-flow and financial-management system for the needs of a business

Web Developer/Graphic Designer

– Helps with creating a brand and establishing a unique brand identity

Insurance Broker

– Provides the most effective way to develop and structure a portfolio that provides the necessary levels of protection

Real Estate Broker

– Helps in finding the optimal location for a successful personal-training studio or fitness center and negotiating the most favorable lease terms

Contractors

– Helpful in dealing with ongoing repair and maintenance issues of any facility

Financial Plan

To be successful, trainers should establish budget and revenue goals for themselves.

– The first step when establishing a personal budget is to list monthly expenses.

– The next step is to determine the number of training sessions required to achieve the revenue to cover expenses.

– Next, a trainer can determine how many prospective clients he or she needs to communicate with to successfully market the services.

A personal trainer must establish realistic goals for income and the number of sessions to deliver to achieve that income.

The financial plan provides the specific details for how a business will generate cash flow and produce a profit.

Time Management

As a personal trainer takes on more clients, there will be many demands for his or her time.

– Trainers should develop a schedule that accommodates all of their needs.

– It is important to set strict guidelines for hours of availability and adhere to them.

A trainer who carefully manages his or her time and makes specific hours available to clients:

– Creates demand by giving the perception that this limited time is indeed valuable

– Helps clients appreciate their timeslots and be more likely to show up for appointments

If a prospective client is not able to adjust his or her schedule to fit into the time that a trainer has available, that client should be referred to another trainer.

Creating a Realistic Schedule

The schedule for a personal trainer should include time for all of the following activities:

– Working with clients

– Client management

– Prospecting for new clients

– Developing marketing or advertising materials

– Other job duties

– Exercise

– Personal time/home life

How to Sell Personal Training Personal trainers must be able to ask potential clients to spend

money on the purchase of training sessions.

ACE-certified Personal Trainers must provide a high level of customer service to make the transition to sales professional.

Sales professionals are also leaders who help clients make the best decisions for their needs.

Two basic components to being a successful sales professional:– Marketing the personal-training service to potential clients

– Asking for the sale

Selling is a win-win process, especially when it relates to personal training.

– When a trainer sells training sessions, the client “wins” because he or she is purchasing a needed and valuable service.

– The trainer “wins” because he or she has gained a new client and a new source of revenue.

Establishing a Successful Client−trainer Relationship Buying decisions are emotionally driven.

The selling of a fitness service requires a personal trainer to make an emotional connection with a prospective client and have empathy for him or her.

Other important traits for establishing a successful relationship with a prospective client are honesty and integrity.

A trainer should identify the emotional needs behind the client’s decision to start an exercise program, and work to accommodate those needs.

When a personal trainer meets with a potential client, no matter what, a sale will happen.

– The prospective client will be sold on the fact that working with the trainer will be worth the investment of time and money.

– Or the client will sell the trainer on the fact that he or she is not actually committed o achieving results.

Transitioning From Presenting Information to Closing a Sale

There are four basic questions required to move from presenting information to closing the sale.

These questions should be asked once the prospective client has experienced the first full workout session with a trainer.

– Did you enjoy the workout?

– Would you like to continue to experience the benefits of working with a trainer?

– Do you have the ability to invest in yourself by purchasing a package of training sessions?

– When would you like to schedule our next appointment?

Closing the Sale An effective method to close a sale and earn a new client

is to ask a series of questions that relate back to the client’s goals.

The following questions focus on the needs of the client:

– You have told me your goals. How long have you had these goals?

– Why is it so important that you achieve these goals?

– What has kept you from achieving these goals in the past?

– From what you have told me, I think I can help you work toward meeting these goals. Would you like that?

By asking a series of directive questions, the trainer can direct the conversation so that the client continues to say “yes.”

Selling Training Programs Training programs clearly communicate a defined outcome so

that the client knows what he or she is investing in.

A training program is different than a series or package of sessions because it progresses each workout toward a predetermined goal.

A series of training sessions marketed as a program should begin and end with the same specific assessments.

The types of programs to offer might include:

– Performance enhancement

– Weight loss

– Event preparation

– Post-rehabilitation

Summary A successful career as a personal trainer requires forethought on the part of the

trainer to develop a plan to attract clients and operate the business.

This session covered:

– The direct-employee model

– The independent-contractor model

– Starting a career

– Business planning

– Creating a brand

– Communicating the benefits

– Marketing for client retention

– Marketing through general communication

– Choosing a business structure

– Professional services for starting a business

– Financial plan

– Time management

– How to sell personal training