Time Flies When You're Working Hard: GYM HQ Turns 4

Saturday was GYM HQ’s 4th anniversary.  It's great taking time annually to remember our humble roots.  We started with a team of 9.  On a Saturday, a little less than two weeks after launch, we rented a Uhaul, bribed our spouses, and moved our meager start-up belongings out to our original space in Norcross, GA.  We found a cute 1,500 square feet sublease in an office building on Craigslist and got to work.  It wasn’t long until we were bursting at the seams!  We picked up another 800 square feet across the hall and “made it work.”  By the time we moved into our current location in 2016, we had a team of over 20 people in just over 2,000 square feet!  Needless to say, we didn’t need to hold team roundups to ensure we stayed connected.  We were almost literally all connected at the hips.

Starting a new business is hard.  It can be very rewarding, but it’s not without major sacrifices and stress.  When you don’t have a parachute, you’re forced to figure out how to fly.  With a great team and a lot of hard work, we found our wings.  Two acquisitions later (we were acquired by ClubReady March 2016 and Clubessential January 2018) we continue to push to remain the gold standard for back-office services in the fitness industry.   That’s why we’re always striving for better-- better solutions, better service,  and better support because good is never good enough.  We take our responsibility to the now nearly 1,300 fitness locations we support very seriously.  We're honored to be YOUR HQ and look forward to what's just over the horizon for GYM HQ and YOU!

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Protecting Your Business as I9 Audits Increase

Here it is, another article aimed at keeping your business out of trouble.  Boring.  After all you didn’t open your club to worry about forms and regulations.  We get it; that’s why GYM HQ exists!  But if there is one thing that we know business owners hate more than boring paperwork, it’s paying large fines to Uncle Sam.  So, consider this your heads up for what’s coming this summer.

Immigration and Customs Enforcement (ICE) wants employers to understand that, going forward, the agency will increase Form I-9 audits, conduct more worksite raids and promote involvement in the government's voluntary compliance program (E-verify).  Under the current administration, audits are expected to go up 4000%.  It’s also important to note that civil penalties associated with violations have increased.  Current penalties are between $224 and $2236 per violation (employee).  Now more than ever, it is important that employers ensure that Form I-9’s are being completed accurately and on time for each new employee.

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So what can you do to prepare?  First, ensure that any employee hired moving forward has a proper I-9 completed.  Here are some of the most common mistakes:

  • The employee not checking a status box or checking more than one status box
  • The employee not signing or dating the I-9
  • Not completing List A, B or C correctly or not completing at all
  • Attaching documents as a substitute filling out section 2.
  • Not using the updated version of the form
  • Not filling in the employee’s hire date in the Certification section
  • Not completing the Business/Organization name and address section completely
  • Filing Form I-9 with the government. Form I-9 is meant to be kept by the business in case an audit is conducted. Should an employee leave the company, the business must retain the forms for a period of up to three years from the date of hire or one year after the employee's final day, whichever is longer. 

Note: Form I-9 cannot be utilized in any capacity prior to making a job offer to a potential employee. Doing so could violate restrictions regarding discrimination against workers based on their ethnicity, race or other identifying factors. 

Remember, the few minutes you spend reviewing the I-9 could potentially save you thousands of dollars in the future!

Next, conduct an audit of what you have on file for current staff.  If you’re missing an I-9 for an employee, ask the employee to complete Section 1 of the I-9 immediately and present documentation as required in Section 2. The new form should be dated when completed—never backdated. If an employee has been working without documentation authorization, this could be because an I-9 form was not properly completed in the first place, or because the employee’s work authorization has expired. If this is the case, notify the employee (in private) of the discrepancy.

You should provide the employee with a copy of the I-9 and any accompanying paperwork. Then ask the employee to provide correct or updated documentation. In either case, if an employee cannot present proper documentation, you should terminate the employee immediately. If you don’t, you risk penalties for “knowingly” continuing to employ an unauthorized worker. Be sure to apply this strict termination policy consistently to avoid potential claims of discrimination.

You may not correct errors or omissions in Section 1 of the form. If you discover a problem in Section 1, ask the employee to make the correction. Employers may only make changes in Section 2 or Section 3 of the I-9.

Employees needing assistance to correct or enter information in Section 1 can have a preparer or translator assist them.

In either case, the individual making the correction should:

  • Draw a line through the incorrect information;
  • Enter the correct or omitted information;
  • Initial and date the correction or added information.

The time you take now to review your personnel files and ensure a solid process for reviewing the I9 when onboarding new team members will more than pay off should you face an audit! 

Need help with HR or payroll? Let us know. We help thousands of fitness owners nation-wide navigate the less than fun aspects of their business!

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GYM HQ Client Spotlight: UFC GYM Rocklin

Back at the beginning of 2016, industry vet Mark Polli and his wife, Kim,  set out to presale memberships for a new (to them) concept to add to their fitness portfolio, UFC GYM Rocklin. They enlisted the help of our team here at GYM HQ to tackle all of their back-office needs.  The journey so far has been a blast!  We love working with the Polli's.  It's been awesome to watch their progress as the location has matured.  We sat down with Mark to learn a little more about him and his views on the industry for this month's GYM HQ Client Spotlight.

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GHQ: How did you get started in the fitness industry?

MP: I have been in the Fitness business since 1981.  I was in my senior year of college in Upstate New York, and my Brother called me from California to come work with him at a health club in Foster City, CA.   I went out on my winter break and sold memberships for 3 weeks.  The Vice President asked me to stay, but I wanted to get my Bachelor’s degree in Business/ Marketing, so they agreed to pay my way back out there after my final semester.  I worked for that company for 5 years.  I took a break from the fitness Industry to become a stockbroker in 1985, just in time for the Black Monday crash in 1987.  I pushed through until 1991 when I was contacted by Mark Mastrov and went to work for Mark when 24 Hour Fitness only had 9 Clubs.  I worked at 24 Hour Fitness for 18 years as a Regional Vice President before I started with Crunch Fitness in 2009. Mark Mastrov helped me get involved with Crunch and we opened 5 clubs in the Sacramento area. Mark reached out to me again in 2014 and invited me to the UFC GYM convention, and it was an amazing experience. I was able to see and feel the difference between regular health clubs and “Training Different” at UFC Gyms.

There was 7,000 SF of space available next door to the Crunch Fitness in Rocklin and on the other side was a Century Movie Theater. The spot between the two was an “A” location, and I started negotiating with the landlord. I also had to get approval from UFC Gym Franchise and Crunch Franchise to have the clubs next door to each other. After a lengthy negotiation, we got the deal done and then the Landlord offered us an additional 3,000 sq. ft. which we agreed and so glad we did!  We are running out of room even with the extra space.
My wife Kim and I went down to Anaheim for the Franchisee Training and it was a great experience.

We contacted Melissa Knowles at GYM HQ to do our back-office work and it was one of the best decisions we made. We would have had to hire 3 full time people to do all of the work that they do for us and at a very reasonable cost.

GHQ: What are some of the biggest changes you’ve seen occur in the industry over the years?

MP: The biggest changes I’ve seen in the business are technology, equipment, and marketing strategies. I am not sure how we even did it in the 80’s with only a fax machine and corded phones. Equipment was more about looks than functionality with most all machines made of chrome and only 2 lifecycles in the clubs for cardio. Marketing today is an entirely different, especially with Social Media. But the best ever marketing in the clubs has never changed and that is referrals from current members.

GHQ: Why did you choose to go the franchise route and why did you choose UFC GYM?

MP: Working for a large fitness company had its benefits, and it was a great experience to help a company grow from their humble beginnings. Owning my own franchise is getting up every morning knowing that I am making a difference in the lives of my employees and our members. I take pride in every square foot of every club and working for myself means I answer to the community and the employees. UFC GYM offers an experience like no other club offers. 

Mark Mastrov was talking to me about doing UFC GYM franchise clubs in the Sacramento area while Urijah Faber was getting ready to do a signature club in Downtown Sacramento. I did some research and was on board with starting to check out potential locations.   I was on vacation in Hawaii and stopped into the BJ Penn UFC Gym and my wife and I were amazed about the classes going on and we were both surprised how many women were attending the classes.  When my wife saw all of the women in the classes, it completely changed her perspective about UFC GYM and she was all in! 

GHQ: What makes UFC GYM unique?

MP: UFC Gym is unique in every way. It’s a tight-knit group of members that you know every one of them by name and get to watch them as they improve physically, emotionally and reach goals they never thought were attainable. The Coaches take great care of the members and they live and breathe the UFC Gym brand.

GHQ: What do you currently have in the pipeline for growth and expansion?

MP: We have a lease signed in Folsom, Ca and it is going to be 12,200 sq feet.
We are very excited about bringing this brand to Folsom.


GHQ: What is the UFC GYM experience for members?

MP: The experience for members is amazing. Watching all of the new members come into the club and they are a bit nervous about what is going to happen is great. No one leaves the club without being dripping with sweat and a smile that says “I did it!” We have members that have lost over 75 pounds and others that have put on size and increased their strength dramatically. The skills classes have brought both men and women that had never worn boxing gloves and are now in the octagon or on the BJJ mat competing and winning.

Watching the kids program is especially exciting as we see them grow from tumbling to takedowns to submission holds. Their self-confidence grows on each visit as they learn BJJ moves and respect for the sport as well as respect for the other kids.

GHQ: What have been the most challenging aspects of the business?

MP: The most challenging part of the business is driving New Member Sales daily as we try to limit attrition. The other hard part is changing people’s perspective about the gym being a fight club. We have been successful with our outreach in the community by setting up Women’s Self Defense classes as well as Anti-Bullying classes in schools.

GHQ: How important are back-office functions for the business and why did you decide to partner with GYM HQ?

MP: Choosing GYM HQ was one of the easiest and best decisions we made. There was no way I could drive new business, work with our existing members and be present in the club if I was doing back office work. From Payroll to Accounting, Accounts Payable and HR they are a terrific group of people who are always available and quick to respond. 

GHQ: What gems of advice would you like to share with others looking to own their own fitness business?

MP: Be Present in the club.  Build the culture in your club yourself and make sure you are in the club working with the employees, members, and guests.  Be part of the community and do everything you can to help people in the community by donating time and resources to local charities.  Hire great people who are passionate about Fitness and live the brand.  Treat everyone with respect and deliver a great product and service that outshines all of the competition.  There are a lot of fitness clubs out there and the biggest difference maker in the club is YOU! 

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Featured GYM HQ Team Member

DeAndre Tapia, Customer Service

DeAndre joined the GYM  HQ family back in February.  His previous work experience includes serving as an Apple IOS-iTunes Tech Support representative, an Office Depot/OfficeMax Warehouse Distribution call center agent,  and Customer Service Manager at WINN-DIXIE.

By continuously challenging himself to learn and grow, he's proven to be a great asset to the team and shows great potential..  He was recently named the GYM HQ MVP for the month of April.

What makes DeAndre so awesome?

  • His commitment to understanding his role as a Client Service Agent.  This exemplifies the GYM HQ Core Value of Competence.
  • His ability to correctly complete all tasks and projects for which he is responsible
  • His willingness to assist with other projects.  This exemplifies the GYM HQ Core Value of One Team
  • His constant study of our clients' membership and service contracts.
  • His willingness to assist with escalated calls
  • His positive attitude!

Because of his outstanding performance, he was promoted to the role of Tier II Agent.  He recently conducted a training class regarding new policies put in place for one of our clients!

DeAndre likes all sports and food.  He is a bright star with an even brighter future and we love having him as a member of our team!

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Employee Recognition and Rewards Part III: Creative Ideas From Top Companies

As promised, our third and final article on employee recognition highlights businesses successfully utilizing non-traditional methods of rewards and recognition.  While some of these may not be a great fit for your business model, I hope they encourage you to think creatively when contemplating a recognition program for your team. 

Bonusly

Bonusly is an employee recognition software that allows employees to award points to their peers.  Peer-to-peer recognition is very impactful and will likely become increasingly important as younger generations move into the workforce over the coming years.  Bonusly pairs P2P with a social network platform which is also a win with the younger elements of the workforce.  Points are redeemable for gift cards and prizes from major retailers like Uber, Nike and Starbucks.  A few companies using Bonusly: Hulu, Chobani, SurveyMonkey, Oracle and ZipRecruiter.

Flexible Hours

Dallas Web Design Inc. uses flexible working schedules as a way to motivate staff to become better.  They claim an 80% increase in productivity!  According to a 2016 Gallup survey, 51% of employees said they would change jobs for one that allowed them to work more flexible hours, while 37% would change jobs if they could work from where they want at least part of the time. Job seekers are demanding a flexible work environment, and if you don’t offer that in 2018, you will lose talent to your competitors who are. Use this as a perk for top performers who can be trusted with remote work or handling a non-traditional schedule.  Keep in mind, this may not work for all staff who must be onsite to directly interact with members/clients.

Training Responsibilities

At GYM HQ, we made our own employees subject matter experts in designing our employee training program.  We asked our top performers to assist in developing our onboarding process for new hires.  This practice fulfills two functions: recognizing the employees for their strengths and developing our company-wide training program.  It also allows employees to be exposed to additional functions and responsibilities which is vital for employee growth and development. 

Create a Company Mascot

At Moncur, they have a biweekly employee award program where team members pass a little wooden statue they call Peggy to another member who has done outstanding work or showed incredible acumen.

Being a digital and creative agency, they take it to the next level by requiring each member to dress Peggy up in a style that reflects the awardee and encouraging them to post her “adventures” on a designated Instagram channel.

Access to the Leadership

Many leading companies such as Whole Foods and CarMax, open up access to their senior leaders for all employees.  Whether its town hall meetings, cookouts, or visibility into company decisions, it’s clear that employees crave this access.  Consider sharing more that you’re comfortable sharing if you want your employees to commit to the cause.  One of your future members of leadership is likely sitting amongst your current ranks.  Access to senior leadership is one way to ensure the right exposure is happening long before succession planning is even a thought.

Milestones

Recognizing employee anniversaries is still important.  At Groupon, instead of the traditional certificate or pin, yearly milestones are recognized with a top-of-the-line, bright green Adidas track jacket. Employees can even personalize their jackets with unique nicknames and receive star patches for each additional year at the company.  These personalized jackets are great daily reminders to new staff of what they’re striving for and a source of pride for veterans. 

The take away after three articles on recognition is that your company should have a program!  From a team to 5 to a team of 5000, recognition is important.  It helps retain and attract the best talent, sets you apart from your competitors, and encourages a positive, perhaps even fun (gasp!) work environment.  There’s a reason why the top 100 companies to work for are just that.  Employee perks, programs, environment and recognition all play a part in employees being excited to go to work every day!

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Understanding Employee Classification (Exempt vs. Non-Exempt)

Aside from guidance on the use of 1099 Independent Contractors, exempt vs. non-exempt employee classification is perhaps the most popular topic amongst fitness business owners that our HR team fields here at GYM HQ.  Tracking and keeping accurate records of employee time can be a substantial administrative burden; so the draw to pay someone a salary and throw caution to the wind is strong! It’s also very enticing to demand work of a team member in excess of 40 hours a week (or 8 hours a day in California) without the need to pay them additional compensation. Today we review the vital steps for employee classification to keep you in compliance and out of hot water.

Are they an employee?

First, let’s tackle the question of 1099 Independent Contractor vs. W2 Employee.  Review our previous article for guidance on that topic here.  Spoiler alert, I’d wager you have yourself an employee. 

Salary Basis & Threshold

Next, let’s talk pay.  Employees must be paid on a salary basis and at not less than $455 per week or two times the state’s minimum wage, whichever is higher, to qualify for an exemption.

Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period.  The predetermined amount can’t be reduced because of variations in the quality or quantity of the employee’s work.  Subject to the exceptions listed below, an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.  Exempt employees do not need to be paid for any workweek in which they perform no work.  If the employee is ready, willing and able to work, deductions may not be made for time when work is not available.

Deductions from pay are permissible when an exempt employee: is absent from work for one or more full days for personal reasons other than sickness or disability; for absences of one or more full days due to illness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; to offset amounts employees receive as jury or witness fees, or for military pay; for penalties imposed in good faith for infractions of safety rules of major significance; or for unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct rule infractions.  Also, an employer is not required to pay the full salary in the initial or final week of employment, or for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.

Once you’ve determined that the employee’s compensation passes the salary basis and level tests, your next step is to take a look at their regular duties.

 Duties Test

The employee should fit squarely into one of the exemption categories below:

For the executive exemption, employees must have a primary duty of managing the business or a department or subdivision of the company; must customarily and regularly direct the work of at least two employees; and must have the authority to hire or fire, or their suggestions and recommendations as to the hiring, firing or changing the status of other employees must be highly considered. 

For the administrative exemption, employees must have a primary duty of performing office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, and their primary function must include the exercise of discretion and independent judgment with respect to matters of significance.

For a professional exemption, employees must have a primary duty of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by prolonged, specialized, intellectual instruction and study, or must specialize in a few other similarly, highly specialized fields, such as teaching, computer analytics, and engineering.  Aside from a select few members of a corporate team (legal, accounting, etc.), this exemption is rare in the fitness industry.

Examples:

An Assistant Fitness Manager may be one of several employees who direct the day-to-day activities of other team members but may have no discretion as to whether to hire or fire employees.  He may spend more than half of his time selling training packages, assisting members, or doing other routine tasks that require little or no discretion and independent judgment.  Even if he were to meet the requirements of the salary basis and salary threshold tests, he would not qualify for an exemption because he would not meet the duties test requirement.

 A General Manager oversees the entire club’s operations (often with little interaction from ownership for days on end).  She is tasked with managing the entire staff (hiring, firing, coaching, scheduling) and making decisions which significantly impact the business.  Though she may also engage in sales or menial administrative or manual tasks (cleaning, paperwork, etc.), she clearly passes the duties test under two both the executive and administrative exemption.

Owners often wonder what the consequences would be if they are found to be misclassifying their team members.  There is a litany of legal cases which point to how severe and costly these consequences can be. In 2011 Levi Strauss agreed to pay over $1 million in back pay to 596 (12%) of its employees who were improperly classified and therefore not paid overtime. In 2014 US Bank settled a misclassification suit for $1.9 million. After seven years of litigation, 24 Hour Fitness settled a misclassification case in 2013 for $17.4 million.  They’d previously settled another wage and hour class action in 2006 for $38 million.  These figures and cases are tied to very large businesses, and it’s sometimes challenging for a single club owner to correlate that to the impact he’d see for his company.  Here’s the easiest way to look at it, when has anything involving hiring a lawyer or law firm ever been less than costly?  Wage and hours claims are one of the most common for small businesses and aside from any money paid out to the claimant, are very costly to defend. How much are you comfortable dishing out to defend a claim?  How sure are you that you have a strong defense?  Is your team currently classified correctly?  As the old adage says, “An ounce of prevention is worth a pound of cure.”  Or in this case, an ounce of preparation (doing things right starting now) is worth a pound of defense.

 

Featured GYM HQ Team Member

Travanta Wright, Customer Service 

Travanta impressed us with his enthusiasm and professional demeanor when he was hired as a Past Due Communication Agent in April 2017.  Travanta quickly excelled in his position earning the opportunity to train as a Customer Service Agent in May 2017 where he continues to learn and grow professionally.  His quick advancement speaks to his overall intellect and ability to learn.  Travanta brings to all of his activities energy, enthusiasm, positivity and commitment. He has proven himself to be reliable and flexible and accepting of any task with which he is challenged.  While the role of a Customer Service Agent is not always simple, Travanta consistently delivers a quality level of service to our client’s members.

Of particular value to us is Travanta’s team player mindset, enthusiastic embrace of change, ability to work with minimal supervision and unwavering commitment to exceeding our client’s expectations.  He is a hardworking, top-performing customer service professional.

Travanta is currently in school to be an Athletic Trainer and will soon enter the Graduate Program at Life University.  He was the GYM HQ MVP March 2018 and is a consistent perfect attendance winner!  

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Employee Recognition Part II: Who's Your MVP?

While installing a rewards and recognition program does take effort, it need not be overly complex or time-consuming.  And the positive effects are invaluable!  Think of recognition as a communication tool which helps to reinforce the behaviors and outcomes your organization values most.  It provides a pathway for you to say, “YES, that’s exactly what we’re looking for.  Do more of that!” This article is the second in a short series on Employee Recognition and Rewards. Today we focus on two ideas that bridge the gap between the old-school and the new.  In a workplace that consists of several generations simultaneously, it’s important that your program speaks to everyone!

First the old tried and true Employee of the Month.  The calendar naturally provides us with 12 smaller times frame during which to measure success.  Dedicate a few moments each month to recognize one outstanding team member and crown them your MVP.  This team member should be recognized in front of the entire team (at a meeting or morning stand-up).  Make sure to clearly outline why this person is such a vital part of what makes the company great and how their actions contributed to success during the month.  Complete the recognition with a certificate and reward (bonus, gift card, prize pack, etc.).  This adds a formality to the presentation and makes it feel “official.”  Consider a wall of fame to showcase the current month’s MVP as well as past superstars.

Formal monthly appreciation is great, however, while the month flies by, don’t forget to give out praise DAILY as opportunities arise!  The best leaders don’t make team members wait to let them know they’re doing a great job.  They recognize achievement as it happens.  So, while you may be keeping score internally for your monthly MVP, don’t forget to give frequent pats on the back when any team member exemplifies your brand ethos, hits a milestone, or goes above and beyond.  The best part about daily praise is it’s free!

While your younger team members will undoubtedly appreciate being recognized via the non-digital channels above, don’t forget to speak to them in their language as well and hit social media.  Your Facebook, Twitter, Instagram, and the company website is a great platform to broadcast “shout-outs” to a much broader audience.  Hit millennials with praise where they live!

Your company homepage and blog are prime real-estate.  Dedicate a portion of them to your hard-working employees.  Use these areas to highlight team members and provide their backstory (accenting their passions and unique life histories).  This not only allows for recognition but also showcases your valuable team to your clients and potential clients.  After all, for most fitness businesses, people are the number one differentiator! 

Don’t forget social media!  Nothing is better than watching a post on which you’re featured rack up likes and shares.  This will help supplement your in-person efforts and ensure everyone sees the contributions your team members are making.  This is especially important if your team works in multiple locations or you have remote staff. 

Next month we’ll conclude our employee recognition series with a curated list of non-traditional methods of recognition being successfully used by top companies.  Get ready to think outside of the suggestion box!

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Understanding the Family Medical Leave Act (FMLA)

If you’re like most employers, you’re aware that there is a Federal Medical Leave Act (FMLA), but since it’s not something that tends to come up a lot in the day-to-day running of your business, that is where your understanding ends. However, as with all employment law, ignorance offers neither bliss or a free pass from the consequences of getting it wrong.  This month, we’ve highlighted some of the key guidelines for the FMLA to keep you compliant.  If you’re a single small studio owner, it’s unlikely you’ll ever be required to comply with the FMLA.  However, if you own a large club or cluster of clubs or studios, this article will help prepare you to meet these requirements confidently. 

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FMLA refers to the Family and Medical Leave Act, which is a federal law that guarantees certain employees up to 12 workweeks of unpaid leave each year with no threat of job loss. FMLA also requires that employers covered by the law maintain the health benefits for eligible workers just as if they were working.

Covered employers must grant FMLA leave for one or more of the following situations:

  • The employee cannot work because of a serious medical condition.
  • The employee must care for an immediate family member that has a serious medical condition.
  • The birth and/or subsequent care of the employee's child.
  • The placement and/or subsequent care of an adopted or foster care child.
  • A "qualifying exigency" that arises out of the fact that the employee's spouse, child or parent is on active duty or has been called to active duty for the National Guard or Reserve in support of a contingency operation.

Eligibility

Employees are eligible for leave if:

  • They have worked for their employer at least 12 months (the 12 months don’t need to be consecutive but should not be separated by more than 7 years);
  • At least 1,250 hours over the past 12 months;
  • Work at a location where the company employs 50 or more employees within 75 miles.

Under some circumstances, employees may take FMLA leave on an intermittent or reduced schedule basis. That means an employee may take leave in separate blocks of time or by reducing the time he or she works each day or week for a single qualifying reason. When leave is needed for planned medical treatment, the employee must make a reasonable effort to schedule treatment so as not to unduly disrupt the employer's operations. If FMLA leave is for the birth, adoption, or foster placement of a child, use of intermittent or reduced schedule leave requires the employer’s approval.

Under certain conditions, employees may choose, or employers may require employees, to "substitute" (run concurrently) accrued paid leave, such as sick or vacation leave, to cover some or all of the FMLA leave period. An employee’s ability to substitute accrued paid leave is determined by the terms and conditions of the employer's normal leave policy.

Requesting Leave

Employees must comply with their employer’s usual and customary requirements for requesting leave and provide enough information for their employer to reasonably determine whether the FMLA may apply to the leave request. Employees generally must request leave 30 days in advance when the need for leave is foreseeable. When the need for leave is foreseeable less than 30 days in advance or is unforeseeable, employees must provide notice as soon as possible and practicable under the circumstances.

When an employee requests FMLA leave due to his or her own serious health condition or a covered family member’s serious health condition, the employer may require certification in support of the leave from a health care provider. An employer may also require second or third medical opinions (at the employer’s expense) and periodic recertification of a serious health condition.

Employee’s Return to Work

Upon return from FMLA leave, an employee must be restored to his or her original job or to an equivalent job with equivalent pay, benefits, and other terms and conditions of employment. An employee’s use of FMLA leave cannot be counted against the employee under a “no-fault” attendance policy. Employers are also required to continue group health insurance coverage for an employee on FMLA leave under the same terms and conditions as if the employee had not taken leave.

 Next steps for your business:

  • Develop a sound policy.  Include a written and current policy your handbook and be sure to clarify how the use of paid vacation, sick, or personal time when FMLA is requested.
  • Train manages.  Your management team will be the ones fielding questions regarding FMLA.  They’ll need to understand how to respond to FMLA requests without violating the employees’ rights or the law’s anti-retaliation provision. 
  • Carefully review all requests to prevent fraud and abuse.  Don’t merely accept vague medical information.  If things are unclear, ask for clarification from the medical provider.
  • Give termination decisions a thorough review.  Reasons for termination must be unrelated to illness or a request for FMLA leave, and these reasons must be clearly documented.  Otherwise, you set yourself up for a retaliation or discrimination claim. 
  • Be aware that some states (11 currently) have their own versions of the FMLA:  CA, MN, VT, CT, NJ, WA, HI, OR, WI, ME, RI.  If you operate in any of these states, make sure you research and integrate their specific laws.

As with most legal guidelines, if you have questions or are unsure about anything, get help.  Your lawyer or a certified HR professional can help clear up any doubts.

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Employee Recognition and Rewards Part I: You're a Star!

"Millennials are accustomed to attention and praise from their earliest days and expect regular affirmation in the workplace. They are also prepared to switch jobs earlier and more frequently than previous generations, so employers need to take particular steps to maintain Millennial engagement," said Rodney Mason, GVP of Marketing with Blackhawk Engagement Solutions, an international incentives, and engagement company.

Remember when continued employment and a steady paycheck was enough of a reward for a job well done?  If you replied no, there’s a good chance you were born after 1982.  If you’re shaking your head and proclaiming, “Hear, hear!  Those were the good old days,” you’ve got the old right in that statement. Millennials will make up over 75% of the workforce by 2015. Take a look at your workforce, and understand that recognition must go beyond a paycheck nowadays! 

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Millennials don’t just expect recognition, they demand it.  Work environments devoid of pathways for praise will find themselves with a revolving door.  Millennials move more often than Gen Xers or Baby Boomers.  If retention matters to your business, recognition should matter to you.  Your goal should be slow down their pattern of switching jobs, show them a road to growth, and ensure that road is littered countless opportunities for small successes.  Like it or not, this is your team and what matters is getting the most and best out of them, participation trophies and all!

Now that we’ve acknowledged that recognition is essential, you’re likely wondering, where do I start?  Glad you asked.  This article is the first in a short series on Employee Recognition and Rewards.  As today’s title suggests, we’re going to start with a star.  This simple system allows your entire staff to participate quickly and inexpensively in peer-to-peer and supervisor-to-staff recognition.  It’s something we do here at GYM HQ.

  • Start with a clipart created star form.  You can see the one we use here in the picture.  It was delivered through my doorway anonymously via paper airplane; a pretty sneaky delivery method with a note that brightened by afternoon.
  • Explain the program to your staff and encourage them to give out as many stars as they’d like.  They can give them to helpful teammates, overachievers, cheerleaders, or consistent performers.  What matters is they give them.
  • Place the star forms in an accessible area, like your breakroom, and keep the stack stocked.
  • Ask your managers to champion the process by getting some stars out early.
  • Encourage your team to display their stars at their desks/ cubes, on their lockers, or on your club bulletin board.
  • Hold a monthly meeting where stars are shared with the entire group.  We have a PowerPoint presentation on loop in our breakroom with the stars from the previous month included amongst the latest in news and announcements.  This allows team members across all departments to see what their teammates are achieving.
  • Give prizes!  We do a monthly drawing.  Every five stars turned in from the prior month gets a team member one ticket for our drawing.  Winners (2) receive their choice of several prizes.  Our current choices include gift cards, early leave days, and longer lunches.

It’s that simple.  A stack of copied stars, some pixie dust from manager-driven participation to get things moving forward organically, and closure with additional rewards at the end of each month.  You’re off to the races with your very own recognition program!

As a closing note, we tend to pick on millennials a lot.  But admit it, EVERYONE likes to be told they’re doing a great job from time-to-time, even you!

The Formula for Successful Customer Service

The fitness industry is ALL about service first.  While your facilities may boast the latest in advanced technology or the best in equipment, it’s your people and their interactions with your members that matter most.  Today’s post looks at 12 key ingredients that must be included when creating your perfect formula for successful customer service.

1.    Be friendly first.  Service starts with a familiar person with a warm smile who offers welcoming words.  Make sure the team members manning your front desk are service obsessed.  Each member should be greeted (preferably by name) when they enter your club.  This level of interaction should trickle down to every employee.  It takes little effort to smile and say hello, and it makes a huge impact.

2.    Attitude precedes service.  Your team’s positive mental attitude is the basis for the way they act and treat members.  Your team should carry a member first mentality into the club every day. “You become what you think.” 

3.    Your team’s first words set the tone.  All encounters with members are theirs to control.  Even a seemingly negative contact, like a service or billing complaint, can be turned positive by the way it’s handled.  First words can either disarm or aggravate.  If your team learns to see each interaction as an opportunity to win a member for life, it shifts the approach dramatically.

4.    Know how to service in terms of the member.  They don’t care what your situation is; they only care about their situation.  So your billing system made a blunder, and they were billed twice, or the new janitor assigned by your cleaning service isn’t up to snuff, that’s not the member’s concern.  What can YOU do to ensure they’re happy and your day-to-day business hiccups don’t impact them?

5.    The member has lots of problems besides you, and may just be using you as a frustration vent.  Don’t take it too personally if a member flies off the handle.  Behind every seemingly minor complaint, there is real stress.  Your team’s job is to serve as a stress reducer.  After all, that’s why many people come to your club!  Offer solutions, not excuses.

6.    The member doesn’t want to hear why you can’t.  Don’t tell them when or why you can’t; tell them when and why you can—enthusiastically!  In every situation, there is something that can be done for the member, make that your team’s focus.

7.    Recognize members for what they are, the lifeblood of your business and your team’s paycheck!  You don’t pay your team’s salaries, your members do. 

8.    Don’t confuse company policy with customer service.  Don’t quote policy or hide behind it.  Policy is there as a guide, not a prescription for member success.  Listen first, and then determine where the request fits into your standard procedure.  If you adhere to your contract rules 100% of the time, you miss tremendous opportunities to win with your members.  You may win the battle, but you’ll lose the war.

9.    When a member walks away angry, it’s twelve-to-one they’ll leave forever or at least be leery.  It takes 12 positive impressions to overcome a single negative one.  In this day and age of social media, every interaction counts and has the possibility to impact far more than one member’s opinion of your business.

10.  YOU are responsible, or it won’t get done.  Individual responsibility leads to a happy member.  No one likes to be passed off for help. 

11.  Take your job seriously, but don’t take their complaints personally. If you take it seriously, it’s you with them.  If you take it personally, it’s you against them.  

12.  Teams are made up of individuals who work together and get their own jobs done.  Never underestimate the impact of a single team member.  If each link is strong, your entire chain will be secure. 

If you embed these 12 values into your club’s culture, how can you lose?  Would you be happy supporting a business with this outlook and attitude toward customers?  Would you encourage friends and family to join you in your support?  At its core, excellent customer service starts with the golden rule.  Treat your members the way you would want to be treated.

Need help with member services?  GYM HQ offers solutions designed specifically for fitness businesses.  Contact us to learn more about how we can help with member requests and all of your back-office needs.  Click on the “contact us” link, email info@gymhq.club, or call 404-921-2269 today!

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GYM HQ Client Spotlight: Sky Fitness & Wellbeing

Two years ago, a great team out of Tulsa, Oklahoma joined our family of clients, Sky Fitness & Wellbeing.  From our very first call with owners Jay Wagnon and Travis Wood, we knew we were in for treat!  These guys truly "get" the fitness business.  Each interaction is a pleasure and we look forward to continuing to support their business as it grows.

Sky Fitness & Wellbeing operates two high-end facilities in Tulsa, OK and recently opened a third location in Broken Arrow.  

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OUR MISSION: IT STEERS OUR ENERGY.
At every interaction, on every day, we go out of our way to provide an exceptional experience for every member.
Our mission, vision, and beliefs all share a common focus: to “Wow” our members. We want to surprise, thrill and inspire our members with truly exceptional service and we understand that an exceptional experience is not a goal, it’s an ongoing process.

We sat down with Travis Wood, Vice President of Operations, to learn more.

GHQ: How did you get started in the fitness industry?

TW:  I started in the fitness industry almost 20 years ago in Fayetteville, AR.  I started as an “opener” at the front desk and worked my way up through a myriad of positions including Member Service Manager, Program Director, and Asst General Manager.  I took over as a General Manager at a facility in Ohio and moved on to Sky in Tulsa to become the Vice President of Operations in 2009.

GHQ: What are some of the biggest changes you’ve seen occur in the industry over the years?

TW:  Obviously, the popularity of different modalities change almost yearly but, the number one thing that I’ve seen change in my career is the sheer amount of knowledge and education that the member is now coming into our facility with.  They are performing exercises that would have been advanced for Private Trainers just a few years ago. 

GHQ: Where did the Sky Fitness brand come from?

TW: As odd as it may sound, Sky was conceived from a combination of standards and frustration.  One of the owners, Jay Wagnon, was working with a franchise and becoming increasingly dissatisfied with the lack of emphasis being put on the member “experience.”  After a few months into the building process, Jay broke from the franchise and instead created a new brand – Sky Fitness & Wellbeing.

GHQ: And what does the Sky brand stand for?  

TW:  While I’m sure that every gym in the industry would like to think their employees make the difference because of their personalities, Sky focuses on being a piece of a bigger puzzle.  We focus on creating what we call an “Exceptional Member Experience.”  This is more of a holistic approach that goes beyond just a friendly smile.  It includes education, the fitness offerings, nutrition, and stress management (Sky’s circle of success) in a setting that is clean and welcoming. 

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GHQ: What do you currently have in the pipeline for growth and expansion?

TW: We recently opened our third location in the Tulsa area and have plans to grow more in the near future.  We’ve made the commitment that Sky will grow with an importance on quality, not quantity.  We try to take a little extra time to make sure each location is not only profitable but set in the standards that helped create Sky.  With the competitive landscape becoming more and more crowded, our focus is even more important.

GHQ: What have been the most challenging aspects of the business?

TW: The most challenging has been, is, and probably will continue to be the communication and execution of the brand ideals.  It’s easy for us to spout what we’re about, but it’s becoming increasingly difficult to educate the public in this climate of “information overload”.  Price and location are no longer the first two criteria from a prospective member, it’s now reputation and presentation.  Of course, it’s also critical to never take your current membership for granted.  Loyalty to a business is a fading ideal and we are constantly having to challenge ourselves to not accept the status quo and try to reinvent our offerings.

GHQ: How important are back-office functions for the business and why did you decide to partner with GYM HQ?

TW: Anyone that is in our industry that does not understand the importance of ‘back-office functions’ is basically on a list set for extinction.  From HR to A/P to Payroll, today’s workforce will not tolerate anything less than uber-professionalism.  This is exactly why we decided to partner withGYM HQ.  The idea of keeping up with the ever-changing laws was daunting enough that we knew we needed an outside vendor that specialized in it.  We looked at it like this; Our members expect a level of professionalism, knowledge, and expertise that they couldn’t obtain on their own so why would we differ in regards to our back office needs?

GHQ: What gems of advice would you like to share with others looking to own their own fitness business?

TW:  Gems, huh?  We’re still trying to figure it out as we go, but if I were asked what I’ve learned?

1.    This is not a hobby or “passion project”, it’s a business.  If you treat it any other way, you will get eaten alive. 

2.    The minute you stop advancing, you will be passed by someone who is.  New classes, new equipment, and reinvention of your offerings are a day-to-day operation.

3.    Many years ago when I was a novice to this business, I was lucky enough to have some important “nuggets” passed on to me by a trusted friend.  None of these stuck with me more than the following:  “Don’t f#@% with the money.”  Trust is such a vital part of the relationship now, as soon as you create a crack it will explode into a rift.  Be upfront with the dues, have open access to the billing history, and teach everyone on your team not to be scared about a member’s money.  Money is not a “dirty little secret”, it’s the absolute core of any business and avoiding it or treating it like it’s not important is a recipe for disaster.

Learn more about Sky Fitness & Wellbeing by visiting their website.

Learn more about GYM HQ and the solutions we can provide for your business by requesting a discovery call info@gymhq.club.

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The Dreaded Chargeback

You’re happily growing your business—signing up new members and growing your draft—when bam, you see a negative amount show up on your remit or merchant statement.  You didn’t provide this member with a refund, so what could this be?  Meet the dreaded and largely misunderstood, chargeback.  Unfortunately, this little hurdle is a part of running a business.  And like most things in business and life, the more you know about it and the process behind it, the better off you’ll be.

Let’s start with the definition for a chargeback.  A quick Google search provided this handy definition. “A demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction.” Simply put, it provides the consumer protection and a pathway for recovering charges that they don't believe are justified.  So why do members chargeback payments?  There is a litany of reasons.  Perhaps they don’t believe they are getting the services they were promised.  Maybe they think they’ve properly canceled their contract yet are still being charged.  Possibly they want to cancel and are being held to the terms of their agreement (which you’re validly enforcing). Whatever the reason, when members initiate chargebacks, they’re basically saying, “I’m not going to take responsibility for paying this charge on my card because I don’t think it’s valid.” 

 

 HOW DOES THE CHARGEBACK PROCESS WORK?

The process begins when your member, the cardholder, “files a chargeback” – this means the cardholder notifies his or her bank of a transaction alleged to be in error. The cardholder’s bank (called the “issuing bank”) usually has its own internal process for pre-screening a disputed charge, and, if the issuing bank finds the charge to be valid, the cardholder will be charged. Typically, a processing fee is added. If, however, the issuing bank finds sufficient evidence to support the cardholder’s claim, it will open a file, notify the merchant’s bank of its findings, and temporarily re-credit any disputed funds to the cardholder’s account pending the outcome of the dispute. The merchant bank will then do its own investigation. As part of this process, the merchant bank may collect evidence in support of a disputed charge. Where the merchant bank deems the evidence collected as sufficient, it will present its findings, and the proof, to the issuing bank. If the issuing bank approves the merchant bank’s findings, the cardholder loses, and he or she will be liable for the charges and any associated fees. If, however, the issuing bank disagrees with the merchant bank’s findings, then the cardholder wins, and the recredited amounts will stick – the cardholder will not be liable for the charges.

HOW LONG DOES IT TAKE TO RESOLVE A CHARGEBACK?

Resolution of chargeback disputes can take anywhere from six weeks to six months. We generally see chargeback disputes resolved in about 45 to 60 days. This is a complex process that involves multiple parties; it’s not something that resolves quickly.

IS THERE ANYTHING I CAN DO TO BETTER MY CHANCES OF WINNING?

Glad you asked. Yes, there absolutely is. Keep in mind; the ability to defend yourself in a chargeback dispute will only be as good as the evidence you can present. And gathering that evidence starts at the club level. What you need, more than anything, is documentation which tends to prove the legitimacy of a charge. This could include:

▪ A signed and dated Membership Agreement, or PT Agreement, showing the cardholder as the “Buyer.”

▪ A written notice of cancellation signed and dated by the cardholder, detailing the reasons for cancellation.

▪ A checklist signed and dated by the cardholder showing receipt of legal agreements, or acknowledgment of key provisions.

▪ Email correspondence between you and the cardholder regarding the substance of the disputed transaction.

▪ The cardholder’s check-in history or PT session bookings log.

▪ Any notes in your club management system as it relates to a disputed transaction.

 

In addition, here are a few more best practices you can follow:

▪ The more you can resolve through customer service channels, the less likely it will be that you get hit with chargebacks. Take the time to properly train your customer service teams.

▪ Be thorough and complete in your approach to getting agreements signed. Make sure names are correct, payment terms are correct, and cancellation policies are clearly stated and adequately explained.

▪ Make sure the name on the credit card used by your member or client to pay for services matches the name on the agreement, whether as the “member” or the “buyer.”

▪ If you change your business practices in a way that materially changes your products or services, you should notify all members in advance of the change and, in some cases, get signed agreement modifications or new agreements altogether.

▪ Don’t load pictures (i.e., .jpg) of contracts to the system. What you need is the actual signed agreement as a PDF document.

▪ Please make sure all documentation is legible, and that there are no blank spaces in contracts.

▪ If you’re in a chargeback dispute, please respond to all requests for more information as quickly as possible. A delay could result in a missed deadline and a lost chargeback.

 

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Chargebacks aren’t always fair, and the decisions made by the member’s issuing bank may not be just either.  Remember, even when you do everything right, there is always a chance a member will chargeback a payment and win. In the end, you have to chalk these instances up to the cost of doing business.   The goal is to limit the number of chargebacks you have to fight and when you do face a chargeback, to have a full arsenal of facts and documents at your disposal to fight it. 

Don’t want to handle the chargeback process on your own?  Find help.  Several club management softwares offer solutions that will manage the chargeback process for you.  ClubReady’s fully managed software and billing platform takes this burden off your shoulders and works to fight any disputed charges on your behalf.  To learn more about this feature or the other solutions ClubReady offers, visit www.clubready.com.  In addition to billing assistance, ClubReady can also assist with other core back-office functions such as accounting, payroll, HR, operations, and customer service through their professional service division, GYM HQ.  Learn more about GYM HQ at www.gymhq.club.

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Business Back-Office Trends for 2018

What a difference a year makes.

Last January I put together a list of the top 10 mistakes gym owners make to kick off the new year.  While the vast majority of the items on this list still ring very true (you should review all 10 here), we find ourselves heading into 2018 with several very new areas of focus to add to this list. Here is what’s trending for 2018.

Pay Equity

In 2017 more and more states adopted a ban on previous salary questions on applications and during job interviews.  This trend is likely to continue this year. The intent is to eliminate the influence of gender and race on the wage-setting practices of businesses.  According to the Institute for Women’s Policy Research, “Women are almost half of the workforce. They are the sole or co-breadwinners in half of American families with children. They receive more college and graduate degrees than men. Yet, on average, women continue to earn considerably less than men. In 2015, female full-time, year-round workers made only 80 cents for every dollar earned by men, a gender wage gap of 20 percent.

Women, on average, earn less than men in nearly every single occupation for which there is sufficient earnings data for both men and women to calculate an earnings ratio. In middle-skill occupations, workers in jobs mainly done by women earn only 66 percent of workers in jobs mainly done by men. IWPR’s report on sex and race discrimination in the workplace shows that outright discrimination in pay, hiring, or promotions continues to be a significant feature of working life.”  This disparity in pay is still very prevalent for minorities as well.  It will take the next 44 years for women to reach pay equality, but Hispanic women will have to wait another 215 years and black women another 106 years based on IWPR’s research.

Other trends emerging in this arena are blind hiring and pay transparency initiatives.  Many companies are employing techniques that anonymize or “blind” demographic information for a candidate during the initial screening process. Pay transparency policies are becoming increasingly popular and more businesses (e.g., Google, Whole Foods, and Buffer) have begun to display salary info next to job postings or even lifting the lid on what employees within the company earn. This practice pushes businesses to do a better job explaining how pay rates are set.

Paid Sick & Family Leave

 Several years ago only a few states had mandated paid leave specific to personal time for illness or family care.  This is changing.  Eight states and Washington D.C. currently require paid sick leave (AZ, CA, CT, MA, OR, RI, VT, WA, and DC).   Moreover, five states and DC have paid family leave (CA, NJ, WA, NY, RI, and DC).  2018 will likely bring additional states to the table, and there is growing pressure to refine and implement a national program.  

Employers should be mindful of changes in their state’s requirements and ensure, where required, proper accruals and tracking are in place for their employees.  Failure to comply can come with stiff penalties.

Sexual Harassment Training

 Unless you’ve been under a rock for the last several months, you have undoubtedly already recognized that ensuring a safe and harassment-free work environment for ALL team members is more important than it has ever been.  From a risk management perspective, ensuring you have a comprehensive sexual harassment policy in place is imperative.  However, having a policy in your handbook is not enough.  Training of management and all staff on a consistent basis takes the necessary next step to ensure your team is well-versed in your policy, and your management team is capable of properly tackling issues as they arise.  Policy is all but useless without buy-in from your team and consistent application by your managers.  Not only is this the smart thing to do, any owner worth their salt should see the importance of their team feeling safe and comfortable while performing their job duties.

Privacy

The fitness industry has a somewhat spotty track record and a tendency to lag behind other sectores when it comes to the adoption of technology.   It is incredible to me how many clubs are still utilizing paper agreements!  However, the tide is turning, and even in our industry automation and paperless everything is becoming the norm.  With better tech solutions available, we find ourselves faced with a new dilemma, ensuring our members’ data remains private and safe.  Data security breaches are becoming more commonplace even at seemingly well-protected organizations (see the Equifax debacle), and legislation is rapidly being written to combat this issue and force companies to take additional protective measures.  A recent example of this type legislation is the EU’s General Data Protection Regulation (GDPR) which goes into effect May 2018.  Even if your business is 100% US-based, the GDPR may still affect you.  Say you sell a temporary pass or membership to an EU citizen; you may be held accountable for complying with the GDPR rules.  These include provisions on encryption of data, tighter definitions of consent, and a broader view of what constitutes personal data.  It even codifies a “right to be forgotten” so individuals can ask a business to delete their data. 

While there are still many questions surrounding this new law and its application for US businesses, it is certainly worth a place on this list and your radar for early this year.  As with most regulations, failure to comply carries massive penalties.

The most important thing to remember is that the climate is ever-changing when you own a business.  Having a solid back-office team in place and having access to expects is vitally important.  When the stakes are so high, there is no room for guessing.  Have a safe and prosperous 2018!

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Santa's Naughty List, Fitness Business Edition

Twas the night before Christmas, and all through the gym,

Memberships weren’t selling, and margins were thin.

Year-end deadlines were looming in the cold winter air,

In hopes that miracle revenue soon would appear.

You know the old poem.  And hopefully, the above scenario doesn’t apply to you.  Perhaps you are swimming in the black and 2017 has been a banner year.  Or maybe you’re hoping 2018 will be your year.  Whatever your scenario, we’d be remiss if we didn’t provide you with an annual list for contemplation.  After all, we’re fast approaching the month of months for lists, goals, and positive change.  While we can still hear sleigh bells, let’s close out 2017 with one final, holiday-themed, post.  Here are is our list of five things that will land you on Santa’s naughty list.

Not Paying Your Taxes or Paying Them Late

This one seems like a no-brainer, but you’d be surprised how often we’ve had to intervene to assist an owner in resolving taxes that haven’t been filed or paid.  Most of the time the misstep isn’t willful, but the state and federal governments aren’t very forgiving of even the most innocent of mistakes.  Late payment penalties and interest really rack up!  For example, say you file your federal business taxes three months after the April 15th deadline.  Your penalty would be five percent of the unpaid taxes for each month or part of a month your tax return is late.  If your gym owed taxes of $30,000, your fine would be $4,500!  Remember, each state also has their naughty list fines.

The worst idea for solving for a cash shortage is to delay paying the IRS the employees’ withholding amounts from payroll.  Unfortunately, we’ve seen this before after taking over the back-office for a business.  They were never able to get ahead of the sins of their past and ended up closing their business.  What’s worse than shutting your doors?  Dealing with the IRS for the foreseeable future.  This is a big no-no that can cost an owner their personal assets and often carries criminal sanctions. 

Employee Misclassification, Independent Contractors

We get it; the urge to pay out wages via the much loved and regularly abused 1099 is real.  After all, you save on employer taxes, and there are no pesky state and federal quarterly reports to file.  Heck, you don’t even need to use payroll software!  But 99% of the time this is a great way to find yourself on the wrong side of the IRS and state.  Very, very rarely are you ever legally justified in paying your team anything other than W2 wages.  See our previous article on this.  The fines are stiff and criminal charges can apply.

Employee Misclassification, Exempt vs. Non-Exempt

The guidelines on who may be compensated via salary and not track time are fairly ironclad.  Be careful here, or you’ll find yourself faced with the gift of a wage claim lawsuit.  It’s the gift that keeps on giving (hire a lawyer) and giving (rack up a healthy legal bill) and giving (pay out a huge settlement or judgment).  Read more on employee classification here.

Incurring a Ton of Debt with the Hope of Future Revenue

The tried and true advice to never to count your eggs before they hatch is timeless financial wisdom.

So is the exercise of prudence when it comes to credit cards and lines of credit. While using credit cards responsibly is a normal business practice, it also exposes you to the risk of deep debt if mismanaged.

Because credit cards are so convenient to use, many new business owners fail to see that they're compounding their expenses and incurring interest charges every time they leverage their credit line and don't pay off the full balance each month.  See more big money mistakes like this here.

Trying to Do It All

The greatest mistake business owners make is believing they can do it all by themselves. While you can do almost everything, you end up doing almost everything poorly. Just like any other person, you likely have one or two natural talents. As an entrepreneur, it is your job to identify those talents and focus on them to your fullest. Surround yourself with people who are strong where your talents are weakest. Great companies are built on the foundation of exploiting a few strengths, not on trying to be masters of everything. 

 

Need some help?  What’s on your help wish list this holiday season? Now is the time to make a change for 2018.  GYM HQ can take many necessary, but very time-consuming tasks off your hands next year.  Imagine having payroll, accounting (from all your financial reports to payables), business registrations, HR documentation and compliance, member issue resolution and late membership dues management all taken care of by your new back-office, GYM HQ!  We can be here for all of that and much more—like making sure you don’t make any of the mistakes on this list!  Visit our site today to learn more!

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GYM HQ Gives Thanks

As we move into the holiday season, we find ourselves at a natural place for contemplation.  Thanksgiving asks us to look at our lives and find things for which we’re thankful.  Christmas and Hannukah gather friends and family, allowing us to bask in their company and the cheer of the season.  Right behind that is New Years.  We consider what the new year will bring.  Who will we be?  What can we do better? 

Our careers and businesses play such a role in our lives that surely, they must be mentioned when we’re rattling off our gratitude list or setting goals for next year! I came across the following on Inc.com from 2015.  In it, Janine Popick, CMO for Dasheroo and founder of VerticalResponse, shares five things to be thankful for this holiday season in your business.

If you're running a business you know there are ups and downs - the good, bad and the ugly. Things can be great, and things can be tough, but when it all comes down to it you've got to ask yourself: are you happier running your own business than working for someone else?

If the answer is yes, it's that time of the year to look on the bright side of things and give thanks. There are those out there that aren't as fortunate as you, so it's a good time to reflect on the things that matter, the things that make your business the success it is today.

What's simple? Shoot an email to those that helped put you where you are.

1.    You are alive and kicking - Thank a higher power.

2.    Your business is doing well - Thank your employees.

3.    You've got some great partnerships - Thank your partners. Thank you, Inc.

4.    You've got money in the bank - Thank your investors for believing in you.

5.    You've got revenue coming in your door - Thank your customers.

This year at GYM HQ, our list looks pretty similar to the one above.  It’s been a fun and very busy twelve months! We’ve brought on some great new team members and have watched our veterans develop and take on new roles.   We’ve helped over a thousand business owners run their clubs and studios.  I’d venture that we’ve freed up nearly a million hours of time for owners and managers by tackling necessary, but unpopular, tasks such as reaching out to past due members (almost 180K members to be precise), processing payrolls (so many payrolls), paying vendors, navigating tricky HR challenges (someone make these employees stop texting!), generating financial statements, calming angry members, fixing agreement issues, reviewing KPIs, and tackling business registrations (in almost all 50 states)—just to name a few!  Because of this, these owners were able to focus on why they opened their businesses in the first place, selling membership, changing lives, and growing ($).   We’re honored, with each and every task we accomplish, that they’ve put their trust in us! 

We have big plans for 2018, and we look forward to continuing to support the best in the industry!  With that closing sentiment, we’re off to prepare for tomorrow’s GYM HQ #teamsgiving.  What are you thankful for this year?

 

Need help with payroll, accounting, member services, operations or HR?  Tired of handling it by yourself?  Wondering how you were suddenly expected to manage your own mini corporate office?  We can help.  Give us a shout!  info@gymhq.club or 404-921-2269

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ACA Reporting Requirements for 2018

If you’re like many business owners, your attention span and patience for understanding the current Affordable Care Act (ACA) requirements wore thin long ago.  Will it be repealed? Replaced? What changes will we see? What are you required to do under the current legislation?  The only thing that may seem clear at this point is that nothing is clear!  Meanwhile, the IRS has announced that it is still moving forward with ACA reporting on the 2017 tax year with the 2018 deadlines. During the first week of October 2017, they published final forms and instructions to help employers prepare for reporting on health coverage they offered to their employees in the 2017 year. While Congress hurls daggers back and forth across the aisles, we’re here to arm you with the latest guidelines and reporting requirements so you may prepare for year-end 2017. 

ACA Reporting Deadlines for 2018

FORM 1095-C and FORM 1095-B

Due to employees Wednesday, January 31, 2018

Employers are responsible for furnishing their employees with either Form 1095-C or Form 1095-B by Wednesday, January 31, 2018. Employers are still responsible for filing copies with the IRS by Wednesday, February 28, 2018, if filing by paper or Monday, April 2, 2018, if filing electronically (same as Form 1094-C or Form 1094-B). 

Which do you file?

Companies providing minimum essential coverage to an individual during 2017 must file an information return reporting the coverage. If an employer had at least 50 full-time employees, including full-time equivalent employees (FTEs) on average, the employer is considered an Applicable Large Employer (ALE), is subject to the Employer Shared Responsibility Provisions of the ACA, and is required to file Form 1095-C.  Employers with fewer than 50 FTEs are not subject to the shared responsibility provisions.  If no minimum essential coverage was provided to employees, no reporting is required.  If coverage was provided, Form 1095-B should be filed.

These forms help employees complete their individual tax returns by providing important information regarding their health coverage for the previous calendar year. On Line 61 of individual tax returns, employees must show whether they or their family members had minimum essential coverage.

Employers should report the following:

  • Proof of Minimum Essential Coverage (MEC)
  • Employee ID number
  • Social security numbers of the employee and his/her dependents (not spouse)

FORM 1094-C and FORM 1094-B

Due to the IRS via paper: Wednesday, February 28, 2018

Due to the IRS electronically: April 2, 2018

This form functions as “proof” that Applicable Large Employers (ALEs) provided the coverage they were required to under the Employer Shared Responsibility Mandate. It also functions as the cover sheet used to transmit forms 1095-C or 1095-B to the IRS.

ALEs with more than 250 full-time equivalent employees (FTEs) are required to file electronically.  Those with fewer than 250 may file on paper or electronically.

Employers with less than 50 FTEs who voluntarily provided minimum essential coverage and therefore filed Form 1095-B for all covered employees, should also file Form 1094-B.

FORM 8809 (Extension Request)

Employers who expect to miss the stated deadlines should file for an extension.  To apply for an extension, submit FORM 8809 on or before the due date. 

PENALTIES

Failure to file complete and accurate Form 1094-C or Form 1094-B by the form deadline will result in penalties equal to $250 per form, not to exceed $3 million per year. Failure to file and furnish correct information on Form 1095-C or Form 1095-B could result in a $500 per form penalty for employers.

Since the required reports are somewhat time-consuming to complete manually, consider outsourcing the process to a 3rd party.  GYM HQ utilizes Paychex as our preferred payroll platform for our clients.  They offer ACA reporting as an add-on service.  This is a great way to ensure that reports are accurate and timely.  If you’re preparing the filings in-house, start preparing now. 

  • Ensure you understand how to complete all the required forms.  Instructions can be found on the IRS website.
  • Start determining the reporting you’ll need to pull from your payroll software and benefits website in order to complete the required forms.  Sometimes this involves building out custom reporting. 
  •  Determine if you qualify as an Applicable Large Employer (ALE). See our guide on this.

 

  • Start communications with your staff on what they should expect.  Three primary messages to convey are: what form they’ll receive (Form 1095-C or 1095-B), why they should care (information is needed to file their taxes), and when they should expect to receive this form (by January 31st).
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ACA Requirements: Are You Considered a Large Employer?

As you gear up for year-end and all the important reporting requirement hoops through which you’ll need to jump, now is the perfect time to start getting prepared for compliance in 2018!  Time spent preparing now will make year-end 2018 a breeze. In the meantime, we still have 2017 to consider. Over the next several weeks, we’ll post helpful articles to aid you in the process.  First up, the Affordable Care Act. One of the biggest reporting and compliance demands comes courtesy of the ACA.  As we head into year two of the full reporting requirements, one of the first items you’ll need to determine is if your business qualifies as an Applicable Large Employer (ALE).  Two of the ACA provisions apply only to ALEs:

  • The Employer Shared Responsibility Provisions; and
  • The employer information reporting provisions for offers of minimum essential coverage (MEC).

Your determination as an ALE happens yearly and depends on the average size of your workforce during the prior year.  If you had fewer than 50 full-time employees, including full-time equivalent employees (FTEs), on average, during 2016, you wouldn’t be considered a ALE for the 2017. If you had more than 50 full-time employees, including full-time equivalent employees (FTEs), on average, during 2016, you would be considered a ALE for 2017 and be subject to the Employer Shared Responsibility Provisions and the employer information reporting provision. 

To determine your workforce size for 2016, add your total number of full-time employees (30+ hours per week on average or at least 130 hours for the calendar month) for each month of 2016 to the total number of FTEs for each calendar month of 2016.  Divide this total by 12.  If you were only in business for part of 2016, use those months during the calculation and divide by the total number of months you were in business.

An FTE is a combination of part-time employees who, in combination, are equivalent to a full-time employee. To determine your number of FTEs for a month, combine the number of hours for all non-full-time employees for the month but do not include more than 120 hours per employee. Divide the total by 120.  The resulting number is your FTE count.  It should be noted that FTEs are only relevant in determining if you’re an ALE.  If you’re determined to be an ALE, you DO NOT need to offer MEC to part-time employees. 

Example 1 – Employer is Not an ALE

  • Company X has 40 full-time employees for each calendar month during 2016.
  • Company X also has 15 part-time employees for each calendar month during 2016 each of whom have 60 hours of service per month.
  • When combined, the hours of service of the part-time employees for a month totals 900 [15 x 60 = 900].
  • Dividing the combined hours of service of the part-time employees by 120 equals 7.5 [900 / 120 = 7.5]. This number, 7.5, represents the number of Company X’s full-time equivalent employees for each month during 2016.
  • Employer X adds up the total number of full-time employees for each calendar month of 2016, which is 480 [40 x 12 = 480].
  • Employer X adds up the total number of full-time equivalent employees for each calendar month of 2016, which is 90 [7.5 x 12 = 90].
  • Employer X adds those two numbers together and divides the total by 12, which equals 47.5 [(480 + 90 = 570)/12 = 47.5].
  • Because the result is not a whole number, it is rounded to the next lowest whole number, so 47 is the result.
  • So, although Company X has 55 employees in total [40 full-time and 15 part-time] for each month of 2016, it has 47 full-time employees (including full-time equivalent employees) for purposes of ALE determination.
  • Because 47 is less than 50, Company X is not an ALE for 2017.

Example 2 – Employer is an ALE

  • Company Y has 40 full-time employees for each calendar month during 2016.
  • Company Y also has 20 part-time employees for each calendar month during 2016, each of whom has 60 hours of service per month.
  • When combined, the hours of service of the part-time employees for a month totals 1,200 [20 x 60 = 1,200].
  • Dividing the combined hours of service of the part-time employees by 120 equals 10 [1,200 / 120 = 10]. This number, 10, represents the number of Company Y’s full-time equivalent employees for each month during 2016.
  • Employer Y adds up the total number of full-time employees for each calendar month of 2016, which is 480 [40 x 12 = 480].
  • Employer Y adds up the total number of full-time equivalent employees for each calendar month of 2016, which is 120 [10 x 12 = 120].
  • Employer Y adds those two numbers together and divides the total by 12, which equals 50 [(480 + 120 = 600)/12 = 50].
  • So, although Company Y only has 40 full-time employees, it is an ALE for 2017 due to the hours of service of its full-time equivalent employees.

Employer Aggregation Rules

You should also be mindful of the Employer Aggregation Rules.  If your company is part of a larger organization or a collective of companies with common ownership and/or functioning under the same management, then the combined number of full-time employees and FTEs for the group are considered when determining ALE status.

New Employers

If you’re a new employer and weren’t in business on any day in 2016, you should use the 2017 calendar year to determine if you’re an ALE.  Consider if you reasonably expect to employ or actually have employed at least 50 full-time employees or FTEs.

Failure to Provide Coverage

What if you qualify as an ALE but fail to offer any MEC to at least 95% of full-time employees? 

If you fail to offer MEC to at least 95% of your full-time employees (and their dependents) and at least one full-time employee receives the premium tax credit for purchasing coverage through the Health Insurance Marketplace, you will be required to pay a shared responsibility penalty.  This payment is equal to $2,000 for each full-time employee, with the first 30 employees excluded from the calculation.  This calculation is based on ALL full-time employees (minus 30), including full-time employees who have MEC under your offered plan.  Example: You employ 62 full-time employees.  One employee receives the premium tax credit when purchasing coverage.  Your fine would be 62 total employees- the first 30= 32 employees for which the penalty applies.  32 x  $2000= $64,000. 

If you do offer MEC to at least 95% of your full-time employees (and their dependents), you may still be liable for the second type of employer shared responsibility payment if at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace.  This penalty is equal to $3,000 but only for each full-time employee who receives the premium tax credit.

Minimum Essential Coverage

A plan meets the standards for minimum value if it covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan.  Since you likely do not know the household income of your employees, you can rely on affordability safe harbors. These are Form W-2 wages, an employee’s rate of pay, or the federal poverty line.  If you have questions concerning if the coverage you offer meets the MEC standards, consult your insurance broker.

Tax Credits for Small Employers

If you have fewer than 25 full-time employees, including FTEs, you may be eligible for a Small Business Health Care Tax Credit to cover the cost of providing non-mandatory coverage.  Learn more here

Reporting Requirements

All ALEs are required to file Forms 1095-C and 1094-C.  Employers who are not ALEs but chose to provide MEC to full-time employees are required to file Forms 1095-B and 1094-B.  Reporting requirements and deadlines will be discussed in detail in our next article.

 

Interest in learning more about how GYM HQ can help keep you compliant and take some work off of your plate?  Contact us today: info@gymhq.club or 404-921-2269.

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Seven Musts for a Healthy Draft

The monthly draft is the lifeblood of most fitness businesses.  You put in the work to grow your member base and achieve your business model’s goal for recurring revenue.  When you finally attain it, you breathe a little easier.  The draft is there like a big blanket—keeping your business warm and cozy during the coldest nights.  Or, as is generally the case in fitness, the slower sales months of summer.  Something so precious to your business should always be top of mind.  You should nurture it with new sales (obvious), mind your cancellations (still obvious), and ensure you have a good system in place to pick up missed monthly payments (totally obvious, right).  That last piece is where we’ll focus today.  Because, while obvious, chasing past due payments is something that frequently falls by the wayside for many fitness businesses.  Somewhere between driving new sales and running your club, this vital process gets relegated to a task on the front desk staff’s daily task list.  Maybe it gets done, likely it doesn’t. 

A healthy draft requires a systematic approach and constant work.  Our Past Due Communications team here at GYM HQ works with successful ClubReady clients across the country to ensure no member is left behind!  But, if you’re stuck tackling the chore yourself, here are seven key steps to ensuring your hard-earned draft doesn’t slip through the cracks.

An ounce of prevention is worth a pound of cure.

The absolute best way to maintain a healthy draft is to prevent past due payments from ever occurring.  Ensure that good billing information is captured at point of sale.  If your billing system allows for two payment methods (ACH and credit card), obtain both.  Inquire if your system or merchant provider can set you up with an account updater service.  This will help pick up the new card data for many cards (due to changes in card number or expiration date).

Make sure you can reach all your members.

Capture ALL contact information from ALL members at point of saleIn order to clear up a past due balance or update billing information, you must be able to get in touch with the member.  It’s also a great idea to run member rosters from time-to-time and spot check the data.  Is your team filling in real email addresses or na@na.com?  Are they capturing cell numbers?  The more contact points available, the more pathways you have for resolution.

Have a system and schedule for contacts.

How often will you contact your members?  After how many days past due?  For how long?  How will you make contact (email, phone, letter, SMS)?  What will your message be?  In business, everything needs a process and this is no different. To be effective, it should be clearly mapped out and followed consistently. This includes considering which team member(s) is responsible for making the contacts. Dependable, consistent contact provides the best chances of successful resolution.

Trust but verify.

Once you have a system in place, it can’t be “set it and forget it”.  Just like any other task you assign your team, it’s going to require some degree of monitoring and oversight.  How do you know calls are being made?  Insist that your staff notate all contacts on the members’ accounts.  This way you can audit the process anytime you’d like.

More contacts x more ways = more money.

Phone calls are great, but some people respond better to other channels.  Text is a great tool as most of your members always have their cells in hand!  A personalized email explaining the amount due and who to contact to make payment can also be effective.  Make sure your team is utilizing all methods of contact to maximize the impact.

Start early.

Why allow a past due payment to languish for weeks on end?  The longer a balance ages the smaller your chances are at resolving it.  Your process should start outreach within the first few days of the missed payment.  The golden rule in successful billing resolution is contact early and often. 

Consider outsourcing.

Numerous club management software providers offer billing support as an additional service.  This is well worth exploring.  While prices can seem prohibitive at first glance, the amount of draft saved and the missed payments collected generally far outweighs the costs!  Many operators find it challenging to micromanage the process internally.  Staff members aren’t incentivized to succeed and it takes away from new sales.  Outsourcing the process eliminates this headache.  Regardless of who is minding your draft, what’s ultimately important is that these past due accounts are receiving attention.

 

Bonus. Utilize a collections firm for later stage balances.

After 90 to 120 days, the soft approach used by your team or the software/billing company has lost its impact.  Every effective process needs a closed loop.  For past due members, this is determining when to walk away.  There are varying opinions on the use of collections agencies.  Many owners would rather write off the loss than deal with the fallout from heavy handed collectors.  However, the right firm can be effective and help return some of that lost revenue back to your bottom line!  Consider these key factors when selecting an agency:

Skip those who charge a fee when you remove someone from collections.  You should always be able to pull a former member who is causing bad press for your club or who wants to come back into the fold without a fee being associated with it!

Ask your trusted fitness network for references.  The sales guy will always tell you they’re the best.  An owner will be honest about performance and any issues they’ve had with agencies. 

Ensure you can reach an account manager.  Will you have a direct point of contact when you have an urgent question?  Will they be responsive?

It all boils down to people (who’s working the accounts), process (how are they working the accounts), and profit (retain more of that hard-earned revenue).  Want to talk past dues?  Shoot me an email and I’ll be happy to help or connect you to someone else who can!  Tasks others loathe, we love at GYM HQ. 

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Client Spotlight: Lighthouse Fitness Management

We support some really great businesses here at GYM HQ.  We're thrilled to highlight one of our favorites, Lighthouse Fitness Management, in our first ever Client Spotlight.  We've enjoyed supporting them as they work on smart growth, increased productivity, and delighting their customers.  The personal training niche can be challenging when a business grows into multiple locations in multiple states, but these guys strive to do the right thing by their clients and provide excellent service.  A good example of this is the very labor intensive project of addressing their BBB score. Any business owner will tell you that the BBB is a beast to deal with!  It's hard to get your complaints channeled properly, the size of the business is never considered (15 complaints for thousands of clients isn't too shabby!), and rarely do people take to the BBB to say good things. They've started the process of tackling this hurdle head-on. Their management team is top notch and they have HUGE goals to change thousands of lives as they grow their business.  This month we sat down to learn a little more about John Cuthill, CEO and Kyle Davis, Executive Vice President.  

GHQ: How did you get started in the fitness industry?

JC:  I was at a point in my life where just making money wasn't enough, I wanted to make a difference in people lives. I joined the Gold's Gym in Columbia SC, they offered me a complimentary session, and the next thing I knew I was meeting with the VP talking about an entry level sales position.  I started January 7, 2010 and never looked back. 

KD:  I changed jobs close to every year due to lack of interest. I was going through a money vs. happiness dilemma and as I was sitting in my gym in between sets I decided I might be happy working in a gym.  So I quit my job and start looking for a job in fitness. I found one within a few weeks and after about 6 months as an AGM, I decided that selling memberships wasn't enough.  I felt like all I was doing was selling people parking passes to their favorite event, but what they needed was the actual ticket to the show and that's when I knew I needed to get into the PT side of the business. 

GHQ:  What are some of the biggest changes you’ve seen occur in the industry over the years?

JC:  Low cost models. I remember paying $50 per month and thinking it was a good deal. 

KD:  How many different ways people can change the words and methods they use to describe exercise science and convince people it's different from the previous words and methods people have used to describe exercise science.

GHQ:  Where did the Lighthouse Fitness brand come from?  

JC:  The Lighthouse Fitness brand has a spiritual meaning.  We are called to be the light of the world. We all were thinking of a great name that had power and meaning and Lighthouse hit me like a ton bricks.  I knew that was the name. 

GHQ:  And what does it stand for?  

JC:  At Lighthouse Fitness we want to show you the way to health and fitness.   Most people are lost when they join a gym and we want to be the guiding light to help them every step of the way. 

KD:  Yeah, we are your guiding light in health and fitness...

GHQ:  What do you currently have in the pipeline for growth and expansion?

KD:  Finding more club owners who need a guiding light in their gyms.

JC:  We are working with our existing partnerships and growing with quality as our focus.  

GHQ:  What is the Lighthouse experience for clients?

JC:  When people meet with a Lighthouse Fitness employee, they will feel like they are meeting with a good friend that cares about their well being. Our goal is to help them reach their goals.

KD:  We try to be more than just personal trainers and personal training sessions. We want to create an environment where we are more than that. The idea of selling training sessions to someone, forcing the client to use them as quickly as possible and providing them zero knowledge as to what to do in between sessions and when they run out if they can't afford more is disgusting to me.  I want to create a personal training experience full of motivation and education so that one day our clients won't need us anymore but may still want us. It's really hard to build a car from the chassis up. Even if I gave you a state of the art garage with every tool under the sun and the parts to build your dream car it would be really hard for you to put it together especially if I just walked away and wished you the best of luck. Now on the other hand, if I stayed with you for a year and helped you build your dream car and taught you what we were doing as we put each part together, then at the end of that year when I hand you the keys for the very last time you could certainly maintain that car on your own. It's hard to build a car but if you know how it went together you could easily change  the oil, rotate the tires, flush the radiator, maintain it. I want to help people build them dream bodies and lifestyles in a way so when we are done they can maintain that hard work on their own.  

GHQ:  What have been the most challenging aspects of the business?

KD:  Finding club owners who would prefer their  patrons to get results instead of simply paying for a membership they won't use.  Also, finding people in the employment pool who are willing to work for what they want instead of expecting it to be handed them.

JC:  Definitely finding people to join our team that care about the clients as much as we do. 

GHQ:  How important are back-office functions for the business and why did you decide to partner with GYM HQ?

JC:  Choosing Gym HQ was an easy decision.  We knew we could count of them to service our clients and staff as if it was their business.  The back-end functions are very important to helping our team accomplish our goals. 

GHQ:  What gems of advice would you like to share with others looking to own their own fitness business?

JC:  It is like a marriage, if you want it to work it takes dedication and hard work. 

KD:  Never allow yourself to completely compromise your morals or integrity in exchange for financial gain. This is an industry full of ego and everyone's is different.  You can't manage any two egos the same way. 

Lighthouse Fitness Management is an outsourced personal training business providing services to members of Gold's Gym, 10 Gym, BFit, Omni Fitness, Club Fitness, and Fitness Unlimited locations throughout the country.  If you're a gym owner interested in outsourcing your personal training department and want to learn more about Lighthouse Fitness Management, contact John at jcuthill@lhfmgmt.com or 910-527-3305.

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