Gyms struggling with financial problems

Advice for gyms with financial struggles due to the Coronavirus

Advice for gyms with financial struggles due to the CoronavirusDue to the ongoing effects of Covid-19, all gyms, leisure centres, and sporting facilities across the country had to temporarily close, some unfortunately ended shutting up shop permanently.

Of course, they were left with no choice, as there has been no available financial income over the past 3-4 months. That has been until now, as gyms and leisure centres have been given the go ahead to re-open.

Gym members are now having to make a decision on whether they will return and continue their old workout routines, or if they should stay at home a little longer until they feel more safe.

Keep in mind that many people will be excited by the prospect of your return, though some will also be hesitant in regards to going back out to exercise. This is because this type of environment is potentially dangerous as the health risks posed by Covid-19 still prevalent. Some others will have discovered the benefits of working out from home, including increased flexibility and a chance for them to allow their exercise fit into their day-to-day activities outside of the gym.

Gyms struggling with financial problems

It’s quite certain that gym owners will be lifted by the prospect of being able to open their businesses once again, it would be immature to think things will simply go back to how they were before the pandemic began. Owners of gyms will have to struggle with changing consumer preferences, as well as being ready to implement new rules when it comes to how many members are allowed to use the facilities at any one time. These are all things that will help to limit the risk of further spreading Covid-19.

These aren’t just merely business management challenges however, they will also likely contain more financial issues along the way, which is the last thing a returning business needs after being away for such a lengthy amount of time.

Changing consumer preferences and home workouts

As a gym owner, the first thing you should be aware of upon your return to business is the changes to your customers’ preferences. People have made changes to their exercise routines as they’ve since had to change the treadmill for their local park. Sales of workout equipment that can be used within the home have also shot up during the lockdown period. Weights, kettlebells and cardio machines are becoming increasingly difficult to buy, as fitness enthusiasts have been keen to create a gym environment in their own houses.

This is an area which may present problems to both you and your business model, simply because people that now have a gym-like setup in their own homes, which they’ve had months to develop and perfect for their workout schedules, may not be so easily swayed. They may rethink their choice of paying to use a gym and choose to continue their good work from home. Especially while they might be choosing to put their own safety first.

Personal trainers have shifted online

Personal trainers have also had a business reputation to uphold during the crisis, albeit an individual one. Many of them have strived to stick in their minds of their clients by setting up online classes by using applications such as Zoom Conference Calling and social media pages such as Instagram. These types of personal training services have been able to appeal not only to existing clients but also new ones, and in many cases a much larger audience. As being online removes the issue of distance and allows personal trainers to find clients from all over the world.

There is a possibility that some will have had their heads turned by these benefits, including the reduced costs compared to what they previously had to pay in order to connect with new cliental. They may not be so easily coaxed back to working at the gym, as their independent business models are proving to be a successful fit for them.

What does the future look like for gyms and leisure centres?

Even though gyms are on the brink of welcoming back their members, it is likely that they will look very different to how they did before the UK lockdown began. Social distancing will inevitably change the appearance of gyms and how they are run. There will be limits on the number of people allowed in group classes, as well as a reduction in equipment and machinery, so that social distancing rules can be accommodated. Gym attendees will most likely have to pre-book their exercise classes and find themselves with specific timeslots of when they can workout, in order to fairly let all members that wish to attend their gym have a chance of doing so.

This could stir up further financial issues, as gym owners may be limited to the amount of new sign-ups they can accept, as they will not want to risk their premises being overcrowded while trying to adhere to social distancing rules. Unfortunately, less new members signing up leads to further money problems that would have been avoidable without this awful virus.

Gyms and leisure centres experiencing cash flow problems after lockdown

There are certain non-essential businesses, such as cafes and restaurants, that have been allowed to continue to generate a smaller level of income during this lockdown period. That is due to the delivery services they’ve been able to offer. Obviously this hasn’t been the same for gyms during this period and has proven extremely difficult, if not impossible to generate any form of revenue. An extensive amount of free online resources and workouts has made paid-for distance sessions a very difficult sell.

Though staff costs have been largely covered by the government’s furlough scheme, the need for a grand location with large premises has meant gyms still have huge overheads which need to be paid for. Customer’s payments have been frozen, while income generated from personal trainers’ house fees has also been cut off. But the big issue is that the payments and fees surrounding the physical location of these gyms has continued to be paid for.

New costs are also brought along by the so-called ‘new normal’. Thorough cleaning regimes, as well hand sanitiser stations and so on, all come with a price tag that will need to be covered by the gym itself. This brings added costs to a leisure centre business that simply have to be covered one way or another.

Insolvency advice for gyms, leisure and sports centres

If you are the owner of a gym or leisure centre and are experiencing financial distress, or fear that your business will struggle to generate enough income in the future, you should make it a priority to take advice from a licensed insolvency practitioner. The sooner you have this conversation, the more options will be open to you and your business.

You should make it your mission to get in touch with a member of our expert team today, here at Business Insolvency Helpline. We can advise you on the next steps and guide you through the insolvency process if needs be.

Business rescue advice for struggling gym businesses

Perhaps your business’ problems are only set to be relatively short-term, if so it may be that your company has a viable future. In this instance a formal solution such as a Company Voluntary Arrangement (CVA) may be the right option for you.

On the most basic level a CVA functions as a legally-binding payment plan between your outstanding creditors and yourself. This will make your monthly payments reduce to a more manageable level, and depending on what you can afford to pay back, a certain level of debt may even be written off all together.

If you decide to place the company into administration, you will give yourself respite from a creditor threatening legal action. This will buy you some time and allow you to form a restructuring plan that provides a healthier future for your business venture. You could do numerous things and make a vast amount of changes, such as closing down the less profitable areas of your business, though only you will know for sure what needs to be included in your business plan for the future.

Liverpool gyms in danger

A huge amount of Merseyside businesses are in a great amount of financial distress, including roughly 200 gyms that face potential closures, due to the ongoing effects of COVID-19. The fitness industry has been a key component of Liverpool’s overall business market over the past decade, but is now facing major levels of disturbance as 2020 progresses.

Liverpool Business News have reported, “In its latest quarterly Red Flag Alert survey, insolvency specialist Begbies Traynor lays bare the devastating impact of the COVID-19 crisis on businesses across the Liverpool city region. It reveals that more than 8,000 firms on Merseyside are in ‘significant financial distress’, despite Government support measures. There has been a 17% surge in firms in financial turmoil. Bars and restaurants have seen a 12% increase in distress. 192 gyms in the region are on the brink, despite the reversal of the initial decision to order their closure under Tier 3 COVID restrictions. This represents a 31% rise. The report shows 91% of all business sectors analysed saw a quarterly rise in distress levels”.

These effects look set to be long lasting as well, as it seems that a vaccine will not be developed until 2021 at the earliest, meaning lockdown restrictions will likely continue to tighten until then. This will spell bad news for gyms planning on having a better time around the new year, as it essentially means that some areas will be okay to go on as they wish, while some will struggle to motivate customers to visit them, those in a tier 3 area for example. The surge in business closures is unfortunately going to be staying put within the health and fitness industry, though we’re hopeful of a change in luck at some point next year

Gyms, coronavirus, and liquidation advice

It is likely that several months of enforced closure has left your company in a much worse financial position to what it was in prior to all this. This may have even left your business in an extreme level of financial distress. Meaning that unfortunately, there may be no option but to close the business on a permanent basis. This can be done with a Creditors’ Voluntary Liquidation or CVL. Both must be administered under the guidance of a licensed insolvency practitioner, which is where we can help you out.

If you have found yourself considering liquidating your gym due to coronavirus pressures, or would like to explore business restructuring and turnaround avenues, Business Insolvency Helpline can aid you in doing so. Call our expert team today on 01246 912052 to arrange a free no-obligation consultation with a licensed insolvency practitioner.

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