Ever notice that gyms all seem to cluster together in one corner of the neighborhood? It’s like where all four corners of an intersection each have a gas station on them. How does that work? And what does that mean for the small business owner? It works because everyone gets to maximize their presence in the market and the cluster makes everyone more visible than they would be alone. The sum of the businesses is greater than the parts. If you have no other choice but to open a gym in a fitness saturated area, here are some positive economic points to ponder.

The Economics Of Clusters

Without getting into the whole game theory/economics thing, there’s a best location to serve the most possible customers. You might think that setting up your gym away from all the other gyms would give you an advantage but it doesn’t necessarily work like that. What would actually happen is that you’d get a smaller share, as the cluster gets the most customers for the given competition levels.

One of the tough business facts of life is that there is going to be competition. Location is the deciding factor in maximizing your market share because of the way the fitness business works. Members have to actually travel to your gym to get the value out of it. Competition means that the gyms that are in the optimum location get the biggest share of the market. The community and the customers get the biggest win when there’s a healthy amount of competition.100 dollar money boat on water

A Rising Tide Raises All Boats

There are some collective benefits as well from being part of the cluster. The old saying is that a rising tide raises all boats, meaning that you can get a shared benefit just by being in the right place. If potential members think of one place where all the gyms are located, then that’s where they go when its time to join up and get fit. The marketing efforts that bring in the members to one gym will bring them to others as well, as prospects shop around for the best deal.

Being part of a cluster also defines your service. For example, if you stay open all hours your competitors will be compelled to do the same. After all, you wouldn’t give the other owners the chance to get that kind of advantage, would you? Neither would they. So when you are part of a cluster of gyms, or any type of businesses really, be prepared for the fact that everyone’s offerings will tend to be similar.

If you try to break away from the crowd, with a new service, your rivals will watch you closely. If your new and unique service appears to work then they’ll copy you. If it fails then you’ll have paid the price of doing an experiment alone, while everyone gets the lesson. So conformity will tend to dominate. The best you can get is likely to be an equal slice of the gym membership pie. Assuming that’s enough for your business to prosper that’s about as good as it gets.

In the arena of fitness center and gym ownership, you have to compete. The first step is to show up. Don’t worry about the other gyms, get the right location and then put all of your efforts into building the best service and reputation around.

Points To Ponder That Help You Stand Out In The Cluster

● Offer all the profitable services of your direct rivals
● Make sure your signup process is smooth and easy
● Be out there on social media and apps with a positive presence
● Connect with your customers via email and SMS
● Make sure you have the information at your fingertips and never ever lose track of files or payments
● Ruthlessly keep your costs down

As a fellow gym owner and as the developer of Gym Insight, I feel your pain. It can be frustrating as heck when that fifth or sixth gym opens on your street. It means that the competition will be that much tougher. That is why we’re always working to expand our gym management software to give you the functionality at the front desk and in the back office. We’re working to make sure Gym Insight will give you the support and features you need to stand out from the crowd.

Sources:

http://en.wikipedia.org/wiki/Hotelling%27s_law

http://en.wikipedia.org/wiki/A_rising_tide_lifts_all_boats

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