Netflix, Hulu, Blue Apron, Spotify, Joe’s Gym, Geico… it’s easy to lose sight of where you’re spending your money even in your personal finances. So many of the services and products on which we spend come with convenient monthly billing these days. When price tags are low for individual services, it’s easy to allow months to go by where you don’t realize you’re being billed for something you don’t want, need, and for which you are no longer contractually obligated. In fact, multiple brands in our industry have constructed their business models around this assumption! It’s one thing to miss a few months of your $10 music membership, but when we’re talking business expenses, the stakes are much higher. If you’re not reviewing expenses monthly (and preparing a comprehensive financial statement), you are undoubtedly overpaying!
Here are a few real-life, new GYM HQ client examples uncovered in the last several months:
Managing Active vs. Inactive Employees on Your Payroll Platform
GHQ utilizes Paychex for its payroll clients, and the cost is factored into our payroll pricing. However, prior to onboarding with us, many of our clients used very different platforms. Some of these bill by the active employee. So, if a business hasn’t been diligent in terminating staff as they leave, overpaying is easy. Our industry poses a unique challenge as many trainers and coaches work on a very part-time basis. It may not be noticed when they cease any scheduling, and multiple pay periods can go by with them incorrectly listed as active. In a recent instance, the client had a very large employee base. So missed terminations came with a hefty price tag ($1000s wasted monthly).
Action: Research how you’re being billed and then conduct an audit to ensure your roster is accurate and up-to-date. The importance of this spans beyond cost savings.
Did you review your policy renewal data for accuracy? When changes have been made in your business (e.g., employee count, number of locations, property requiring coverage, policy limit adjustments, types of coverage needed), it’s vital your insurance agent be made aware. It’s easy to set coverage to autopilot and end up overpaying. Also, you’ll want to make sure you get a few competing quotes during each renewal period to ensure you’re getting the best rates.
Action: Request a copy of your policies and review them against your current business needs. If anything significant has changed, request an adjustment. These can be made mid-policy year. As renewal nears, reach out to additional brokers to request competing quotes.
When the latest and greatest in software, wearable displays, music streaming, group X programming, or marketing comes around, your excitement can lead you to leap in hopes of a big payoff. Once the initial enthusiasm dissipates, that new addition to your business may find itself unused and collecting dust.
Action: Review your current subscriptions. Are you using them? Are you still under an obligation to pay? If you’re under contract, make a concerted effort to relaunch the initiative or service, so you’re getting some ROI or, request the fees for early termination. Sometimes it’s better financially to pay for an early cancellation if you’re getting nothing from the subscription.
Late Fees & Penalties
If your AP process is a mess, you may find yourself scrambling to pay bills at the last minute, or worse, after the due date. This causes you to incur unnecessary fees. Do this enough, and they really add up. Credit cards fees alone can lead to wasting a substantial amount monthly.
Action: Ensure you have a list of all monthly and annual liabilities along with due dates. Review your AP process to schedule payments in advance of deadlines. Don’t forget yearly business registrations, reports, and licensure renewals. These generally come with a stiff fine for filing late.
Is that commission structure you put in place yielding the sales you need? Is your monthly bonus in line with how much you should be averaging for new member spend? Are your PT packages priced appropriately to account for the session rates you’re paying trainers? What about your salaries? Are you top-heavy? Payroll is by far the most common area for overspending, and it can cripple a business.
Action: Review all pay plans currently in place for your business. Compare the spends in each category (sales, PT, management) to industry or brand standards. Analysis should be done as a percentage of revenue and in the area of sales, the cost of acquisition per new member. These stats should be reviewed monthly. Carefully think through any adjustments prior to deploying new pay plans. You don’t want to roll out new structures frequently as this creates employee confusion and dissonance.
The main take away here is to keep your eye on the ball, your monthly financials. If you don’t have a clean set of books or a clear process for review, it’s very likely you’re wasting money. Take the extra time to ensure the money you work so hard to bring in the front door isn’t sneaking out the back.
Need help with accounting, reporting, and monthly P&L? We can help. Email email@example.com to learn more.