How to Make Your Studio as Recession-Resistant as Possible
Economists have been warning of a recession for a while.
According to Bloomberg’s December 2022 survey of economists, there is a 70 percent chance of a recession this year. Although the economy is designed to grow and slow down—it is part of a normal economic cycle—there are things we can do to mitigate the effects of a recession, especially as a studio owner. Just remember this is part of the business journey and instead of worrying about it, prepare for it. Many of you weathered the closures and uncertainties of the COVID pandemic. Unlike the pandemic, where we had very little data or understanding, preparing your business so it is recession-resistant is possible. (Please note: We don’t believe a business can be recession-proof; there are too many factors and individuals at play for your business to feel no impacts during a recession.)
The key is to prepare while the economy is still strong (ahem, NOW). Here are our top 9 tips for setting yourself up to be as recession-resistant as possible should a recession occur:
1. KPIs
Know your numbers. We advise all of our partner studios to run monthly KPI reports so that they can have a firm understanding of the financials of their business, and to be able to discern what are regular seasonal/monthly patterns and what are problems. You want your KPI reports to include revenue, recurring revenue, membership growth/loss, new client acquisition and retention. In addition, you want to be able to summarize which of your services are most profitable should you get to a place where you need to make any cuts. All of your decisions should be driven by your data; oftentimes we make rash emotional decisions from experiences or interactions you may have with a single customer. But your KPIs don’t lie. They will help you see with clarity the health of your business.
2. Build a cash reserve
Establish a cash reserve so that if you have a dip in revenue, you won’t incur debt. We advise a minimum of 3 months of operating expenses in reserve, but strongly recommend 6.
3. Know where and how to cut expenses
Oftentimes, business owners cut the very thing that would keep their business alive–their marketing and advertising budgets, which are the two arms of your business that are driving leads. As much as possible, you want to keep your acquisition tools in place. So where else can you cut expenses? Look at your services and see if there are opportunities to save money or replace one service with another more profitable option. Do you have other overhead costs you could reduce by shifting tasks to different people? Think through your business plan and have some ideas in place of where you could cut costs if necessary.
4. Focus on your marketing
Your marketing and advertising are what will continue to drive new growth in your business whether you’re in a recession or not. We suggest placing extra effort into your SEO marketing, email marketing and your partnerships. These three components will help you stay relevant and top-of-mind and will also continue to feed the sales funnel.
5. Focus on client retention
Happy clients are less likely to leave! To ensure that you have happy clients, you want to consistently provide the best experience possible. Instead of reducing the cost of your memberships, we suggest increasing perks for members. Partner with local businesses to allow cross-over perks and give your clients additional value. We find that it's best to continue to add value to memberships versus offering discounts—it keeps your revenue up and provides members with additional incentive to stay.
6. Promote stress relief
If and when a recession occurs, clients may be more stressed. This is a great time to bring in more services focused on stress-relief and management whether as a continuous offering or a workshop. Don’t ignore the current state of the economy; instead, you want to acknowledge what people might be feeling and provide services to help them feel better!
7. Explore alternative income streams
Oh, the ubiquitous pivot… I know we’re all tired of the word, but it’s a great example of being able to work with a situation and the parameters at hand. Many of you have a VOD channel in place that might be getting a bit dusty. Be prepared to see clients looking for a more affordable option while still supporting your business, and have pricing options and services available that meet these needs.
8. Reward loyalty
Most clients will want to stick with you because they enjoy your services and they want to be a part of the community. Reward loyal clients with additional guest passes, perks, member-only events, etc. Continue to reward your clients by making them feel special and loved—they are.
9. Give back
As we mentioned above, we don’t feel that any business is immune to a recession. In some capacity, you will be affected, and hopefully it is minimal. But others in your community may not fare quite as well. Offering community classes and services will not only help you help others, it will also foster a sense of goodwill.
Telomere Consulting provides business consulting and marketing services to studio owners in the boutique fitness and yoga space. The Telomere team helps you navigate business strategy from conception to implementation. We provide end-to-end marketing support and would love to hear from you. Click here to book your free intro call. We want you to treat your business the way you treat your body – making the right choices now to optimize its potential for a long and healthy life. Visit us here to learn more.
