5 Numbers You Must Know to Evaluate Your Business

5 “Numbers” You Must know to Evaluate Your Business
By Larry Indiviglia

1. Client Capacity
2. Revenue per Square Foot
3. New Client Acquisition Percentage
4. Client Attrition Rate
5. NET Client Growth

Client Capacity

The average fitness studio provides 9 sq ft per client. So if your studio is 3,000 total square feet

Client Capacity = Total Square Footage of Studio / 9 sq ft per client

e.g. 3000/9 = 333 client capacity

Your business should be able to serve 333 clients realistically via a full range of services.

Note: studios less than 2,000 sq ft (total) average closer to 7 sq ft per client

Client Capacity allows you to calculate your studio’s potential for growth. Knowing how many clients your studio can handle is a fundamental way of assessing and projecting your potential revenue.

Revenue Per Square Foot

Total Revenue from all sources/ Total square footage of Studio

e.g. 3,000 sg ft (total for studio)
$360,000 annual total revenues

$360,000/3,000 = $120 per square foot

Note: the best operating studios have a Revenue Per Square ft of > $100

Average Revenue Per Sq Ft for ALL studios: $63 per sq ft

For Studios 2,000 sq ft or less: $65 per sq ft
For Studios 2,000 – 5,000 sq ft: $70 per sq ft
For Studios 5,000 – 10,000 sq ft: $61 per sq ft

Revenue Per Square Foot is a common metric of your business PRODUCTIVITY.

New Client Acquisition Percentage

You will need some BEGINNING and ENDING (data) to calculate this metric.

1. Get the number of clients/members that you have at your business at the beginning of the year, Jan 1st, e.g. 300

2. Get the number of clients/members that you have at your business at the end of the year, Dec 31st, e.g. 420

3. Subtract the BEGINNING number from the ENDING number to calculate the number of NEW CLIENTS you gained during the year,
e.g. 420 – 300 = 120 new clients gained *****hopefully this will be a positive number

4. Divide: Number of New clients gained/Number of Clients at Beginning to get New Client Acquisition Percentage e.g. 120/300 = 40%

Note: the average New Client Acquisition Percentage for ALL studios is: 44%

For Studios 2,000 sq ft or less: 43%
For Studios 2,000 – 5,000 sqft: 55%
For Studios 5,000 – 10,000 sqft: 35%

New Client Acquisition Percentage is best used and viewed in conjunction with Client Attrition Rate which is discussed below.

Client Attrition Rate

This is a measure of how many clients/members have left your business.

1. Get the number of clients/members that you have at the beginning of the year, Jan 1st, e.g. 300

2. Get the number of clients/members who have left your business during the year through Dec 31st, e.g. 75

3. Divide The total number of clients/members who left/ the total number of clients at the beginning e.g. 75/300 = 25% attrition rate

Note: the average Client Attrition Rate for ALL studios is: 21%

For Studios 2,000 sq ft or less: 17%
For Studios 2,000 sq ft – 5,000: 17%
For Studios 5,000-10,000 sqft: 23%

To successfully GROW as a business your Client Acquisition must be greater than your Client Attrition.

NET Client Growth (rate)

When a studio’s acquisition exceeds its attrition this is called NET CLIENT GROWTH. This is a good indicator of the success of a studio’s marketing program and existing client retention.

1. Get the total number of clients/members at the END of the year, Dec 31st, e.g. 375

2. Get the total number of clients/members at the BEGINNING of the year, Jan 1st, e.g. 300

3. Use the following equation to get NET CLIENT GROWTH as a percentage:

Total number of clients at END of Year – Total number of clients at Beginning of Year / Total number of clients at Beginning of Year

e.g. 375 – 300 / 300 = 75/300 = 25% (Net Client Growth rate)

Note: the average NET CLIENT GROWTH for ALL studios is: 23%

For studios 2,000 or less: 26%
For studios 2,000 – 5,000: 37%
For studios 5,000 – 10,000: 11%

Additional notes:

A business does not have to wait until the end of the year to calculate the above numbers, you can do it by QTR to see how the various rates change/stay the same etc and it will help identify seasonal trends and more importantly will help in evaluating NEW program/product launches, success of marketing campaigns and of course the ultimate benchmark – the successful and consistent delivery of your products and services.

You can simply use the BEGINNING number on the first day of the QTR, e.g. Jan 1st and the ENDING number on the last day of the QTR – March 31st. If you do this for ALL 4 Qtrs of your business year you will be able to identify TRENDS and that is the secret in running your business along with Margins.


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