How to Proactively Manage Your Fitness Business During a Mandated COVID-19 Shutdown

If you operate a health club or studio in the United States, it's likely your facility has already been mandated to close due to the coronavirus pandemic. It's also likely you've had to make difficult decisions regarding your employees, membership and fitness offerings that will affect your business for the foreseeable future.

So, what's next?

In Club Industry's March 26 Master Class Series webinar, Honor Yoga CEO Maria Turco moderated a discussion between three expert panelists who shared numerous strategies for how you can further stabilize your business during this uncertain time.

The webinar panelists—Adam Siegelheim, shareholder at Stark & Stark Attorneys at Law; Lindsay Vastola, founder of VastPotential; and Paul Bosley, managing member at Business Finance Depot—outlined pragmatic, step-by-step actions that can be taken by almost any fitness business owner. These include negotiating with landlords, securing additional funding and communicating with your employees.

The free webinar is now available for on-demand viewing.

Seek Rent Relief

Siegelheim suggested first submitting a business interruption claim with your insurance provider. The vast majority of these claims are denied, but even a formal letter of denial can serve as meaningful leverage when negotiating with banks, landlords and government agencies, he said.

The first week of April 2020 is significant because it marks the first rent payment most fitness business owners will be required to make after the mandated closure of their facilities. Siegelheim encouraged business owners to seek the advice of legal counsel when preparing a rent payment strategy.

Most leases include a force majeure provision that acknowledges that unforeseeable circumstances could prevent one or both parties from fulfilling their end of the agreement. In many cases, force majeure suspends the terms of a lease but does not pardon the renter from still paying their landlord, Siegelheim said.

Siegelheim recommended approaching your landlord with a plan. Perhaps you offer to pay 50 percent of your base rent now and add the remainder to the end of your lease or divide the remainder between future payments.

Prioritize Internal and External Communication

During this time, simply communicating with your banks, landlords, members and employees is just as important as launching a virtual training program, for example, Vastola said. She emphasized the importance of managing employee-employer relations while everyone is away from brick-and-mortar facilities.

“We need to look at how the workforce in the fitness industry may change,” Vastola said. “If you have a trainer that's been working for you, is he or she now streaming online their own workouts depending on their contract? … Now they're going to see, ‘Wow, I can do this online thing. I can do it on my own.’ I’d encourage you to think ahead because, at the end of the day, what’s happening right now is changing the consumers' expectations about how they receive fitness.”

In the webinar, Vastola also outlined key distinctions between exempt and non-exempt employees as well as layoffs versus furloughs.

“What’s hard in our profession is that we're altruists at our core, and we just want to help people,” she said. “We want to help our staff, our employees, our communities and our people. But at the end of the day, we're running a business, and compliance for the protection of our business so you can actually survive this and thrive beyond it is absolutely imperative.”

Secure Additional Funding

Business owners should apply online for an Economic Injury Disaster Loan with the U.S. Small Business Administration (SBA), Bosley said. The application can be completed between one and two hours, but Bosley recommended applying during a slow time of day, such as 2 a.m., to avoid overuse issues that are affecting the website. He also suggested readying all of your business’s relevant paperwork in advance so that you don’t have to step away while you’re halfway through the application.

“The idea is you have to show economic injury over the time the virus has impacted the economy,” Bosley said of the loan application.

The loans offer up to $2 million and include a 3.75 percent interest rate for small businesses and a 2.75 percent interest rate for non-profits. They can be used to cover payroll, fixed debts, accounts payable and many other components of your business.

To view the full webinar, click here.

For more coronavirus-related resources for fitness professionals, view this page.