Grappling with an unprofitable business, Wendy L. Goldstein, the owner of Diamond Fitness in the Village of Oyster Bay, cut its hours to reduce payroll. And when that didn’t do the trick, she recast Diamond as a fee-for-service company, scrapping the 13½-year-old firm’s membership-based model.
Fitness industry experts said there are an array of member-generating strategies Goldstein could use to try to reverse Diamond’s fortunes, including promoting the club in two-minute YouTube videos and revamping its website to feature, on every page, a submit form — a call to action — as in “sign up today to lose weight,” and testimonials from satisfied members.
Goldstein said that after purchasing the business in May 2014, she had a rude awakening: The computerized membership roster, she contends, was bloated with names of employees, people who had never paid to join and those who had cancelled their membership.
Goldstein stopped making buy-out payments to seller Stephen Gourlay Jr. Lawsuits against each other have since followed.
Citing their ongoing legal battles, Gourlay, 44, declined to discuss Goldstein’s claim that she had been deceived. He noted, however, that before acquiring the club, Goldstein, with her lawyer and accountant, had more than six months to “comb through” financial information.
A self-described gym rat, Goldstein, 53, who also operates a marketing and public relations business in her Rockville Centre home, said she remains committed to turning around her business. By year’s end, the firm projects revenue of $183,000.
Last September, Goldstein said, she curtailed its hours and raised its membership fee — which she refers to as a monthly assessment — from $39 to $49 for new members.
But in mid-November, with the business still struggling, Goldstein pink-slipped all seven part-timers who worked the front desk; reduced the gym cleaner’s hours; and disbanded memberships in order to charge fees for the center’s services. Although she made refunds to members who had pre-paid their assessments months in advance, her “on the brink” business necessitated returning other payments only upon request, Goldstein said.
She now charges $10 for one-day passes and $65 for monthly passes to use the gym’s equipment. Fitness classes, including yoga and spinning, are offered for $20 a session, while personal training runs $60 an hour. Customers get free access to the equipment on the day they take a class or work with a personal trainer.
John Atwood, managing partner at the Natick, Massachusetts-based Atwood Consulting Group, which advises fitness facilities, believes that on Long Island Diamond could get as much as $75 an hour for personal training, since the national average — which includes rural parts of the country — is $55 an hour.
In response, Goldstein said that her $60 fee was to “get more personal training in the door.”
Her revised game plan also involves new hours. On weekdays Diamond is open from 7 a.m. to 10 a.m. and from 4 p.m. to 8 p.m. She has also rehired a part-time employee and provided keys to trainers so they can meet clients at any time.
Oyster Bay resident Bob Santos, 58, who had been a member for five years, said that he appreciated Goldstein’s efforts to keep the facility running, and with the new fitness classes, the 58-year-old IBM sales representative looks forward to spinning. “Now, I can target my time and the type of workout I want,” Santos said.
Too soon to tell
It’s still too early to know whether Goldstein’s re-engineered operation will spin a profit. But Jim Thomas, president of Dallas-based Fitness Management & Consulting Inc., gave thumbs down to the fee-based model, because it fails to generate recurring revenue, which he said is one of the benefits of owning a gym.
Moreover, Thomas called giving keys to personal trainers “a slippery slope with ice on it.” The approach “lacks accountability because personal trainers could keep the money,” he said, and it could lead to liability problems, including claims of sexual harassment.
Goldstein’s “main focus should be on driving traffic to her business,” stressed Thomas. His suggestions include using Twitter to follow people in the media and to get the firm’s press releases in their hands; promoting the gym with Groupon deals; and inviting current and past members, as well as their friends, to special events, such as a holiday party.
For her part, Goldstein said that Diamond is monitored with cameras, and it has held open houses in the past. Plus, as a member of the Oyster Bay-East Norwich Chamber of Commerce, she plans to host a chamber event at the facility next year.
Among its other marketing strategies, the firm, Goldstein said, offers coupons for a free spinning or TRX suspension training class, and it has secured a SilverSneakers designation, which means Medicare picks up the tab for insured participants who work out at the gym. Goldstein has also arranged for Diamond’s personal trainers to serve as “guest teachers” of TRX training in high schools in the Oyster Bay-East Norwich school district.
Atwood gave Goldstein credit for trying different strategies to get her business in shape. “Frankly, you never know what guerrilla marketing is going to work,” he said.
At a glance
Diamond Fitness, Village of Oyster Bay
Owner: Wendy L. Goldstein
Personal trainers (contractors): 4
Class instructors (contractors): 3
Members prior to disbanding memberships: 300
Projected 2015 revenues: $183,000