Running a successful parkour gym is an exciting venture, but it comes with its fair share of financial responsibilities. Budgeting is a crucial component of managing your gym efficiently. It helps you stay organized, plan for growth, and ensure the long-term sustainability of your business. In this article, we'll break down a typical revenue and expense breakdown for a parkour gym, making it easy to set your budget numbers quarterly. We'll explain these expenses in simple terms for our employees who might be curious.
Setting Expense Targets as a Percentage of Revenue
To effectively manage your parkour gym's finances, it's essential to have target numbers for your expenses as a percentage of your total revenue. This approach provides a clear guideline for allocating your resources and ensures that your business remains financially healthy.
Payroll: 45%
Payroll is the largest expense for most service-based businesses, including parkour gyms. This category covers the salaries of all employees, including managers. Keeping payroll expenses at or below 45% of your gym's total revenue is essential to maintain financial stability.
Knowing this number will also empower employees to create their own revenue-generating events such as workshops or camps. When team members are able to craft their own revenue streams for the business you can confidently pay them up to a 45% commission as opposed to their hourly pay so long as they fully own the creation and fulfillment of these events. This can be an awesome way to empower team members to help grow the gym and increase their earning potential all in one swoop!
Rent: 15%
Rent is your second-largest expense but is generally more predictable since it's a fixed cost. Aim to allocate no more than 15% of your revenue to cover your rent expenses. Be sure you're getting the most out of each section of your gym. Turn any "dead spaces" into revenue-generating areas. Additionally, find times on your weekly schedule when the gym is being underutilized and discover ways to pack the gym with additional revenue-generating activities.
Marketing: 10%
To attract new members and grow your gym, you should plan on dedicating around 10% of your revenue to marketing. This budget covers paid advertising and other activities like social media and print marketing.
Liability Insurance: 3%
Liability insurance is crucial to protect your gym from unforeseen accidents or incidents. Allocate approximately 3% of your revenue for this expense. This is typically a required expense in a building lease and a generally vital safety net for business owners.
Utilities and Gym Management Software: 3%
Utilities and gym management software ensure your facility runs smoothly. Keep this expense to around 3% of your total revenue.
Gym Repairs: 2.5%
Gym equipment and facilities can wear down over time. Allocate about 2.5% of your revenue for repair costs, including fixing parkour equipment or making necessary facility improvements.
Gym Supplies: 5%
This category includes expenses for office equipment, printing costs, purchasing new training equipment, and restocking merchandise. Aim to spend no more than 5% of your revenue on these supplies.
Other Expenses: 4%
Set aside approximately 4% of your revenue to cover unexpected expenses and taxes that may arise throughout the year.
Payment Processing Fees and Other Bank Fees: 2.5%
Explain to your employees that payment processing fees and other bank fees are essential for handling customer payments and managing your business finances. These fees typically amount to about 2.5% of your revenue.
The Importance of Profit: 10%
Finally, let's emphasize the importance of profit in your parkour gym's financial plan. The Profit First method of accounting suggests that allocating 10% of your revenue to profit is essential. Profit is not just a reward for your hard work; it's a vital component that ensures your business's sustainability and growth. It allows you to reinvest in your gym, create new opportunities, and provide job security for your employees.
Conclusion
Managing the finances of your parkour gym effectively is key to its success. By setting expense targets as a percentage of your revenue, you can ensure that your budget remains balanced and that you're prepared for any unexpected costs. Remember that controlling payroll expenses, keeping profit in mind, and adhering to these expense guidelines will contribute to a thriving gym that positively impacts the community it serves.
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