Why did you decide to get into coaching?
For many coaches, it stems from a passion for their sport and a knack for working with young athletes.
But, building a successful sports coaching business requires more than just passion.
When it comes to scaling, you also need to keep a pulse on key performance indicators (KPIs). These numbers will be the foundation for moving your business up and to the right.
With so many data points available to you, how do you know where to start? There are many important metrics that you could track. And, it can seem overwhelming. No matter your business size (whether you’re a single trainer or a large sports complex), here are 7 “basics,” or numbers you need to know.
7 Numbers Every Sports Facility Owner Should Know
Revenue is the amount of money you have generated from all of your services. To calculate your revenue, multiple the number of sales by the price of the offering. For example, if you are running a $150 clinic with 50 athletes, you would generate $7,500 in revenue. To calculate your total revenue, you would then repeat this calculation for each of your offerings:
- Private Lessons Revenue
- Membership Revenue
- Camps & Clinics Revenue
- Retail Revenue
Having a pulse on each revenue stream will help inform you of which programs are most successful/ biggest drivers of your overall revenue, and which areas may not be as strong. With sports software like Upper Hand, you can easily access your revenue at your fingertips, ensuring you are on track to grow.
Bonus tip: To take it a step further, if you have auto-renewing memberships, you can also track your recurring revenue, which is revenue that you can expect to generate each month, even into the future.
On the flip side, it’s also critical that you understand your expenses. Your expenses are the total outflow of cash for your business. Your expenses are typically broken down into fixed costs and variable costs.
Fixed costs remain the same each month, regardless of any changes with your business. Think rent or software expenses. Semi-variable costs include utilities such as electricity, which are relatively consistent month to month, but vary in exact figures. Variable costs fluctuate month to month, for example purchasing a new piece of equipment or making repairs.
Keeping a close eye on your expenses not only helps you calculate your bottom line, but also helps you determine where you may be able to cut back or re-allocate your budget.
At the end of the day, your profit is a key indicator of the health of your business. Once you’ve calculated your revenue and expenses, you can then determine your profit. Your profit is the difference between the money you have coming in, and the money you have coming out.
Profit = Revenue – Expenses
Profit can inform a number of business decisions. One example – setting your prices. Not only do you want your offerings to be valuable, but you also want to ensure that you can pay the bills. Take a look at where you may be able to increase your revenue to maximize the profitability of your facility.
4. Customer Lifetime Value (CLV)
Another important metric to track is the lifetime value of your clients. Customer Lifetime Value is the amount of money you’ve made from a customer over their entire time at your business.
So, for example, if a customer purchases a $100 monthly membership at age 10 and stays with your business until age 18, their CLV is $9,600 ($100 monthly x 12 months per year x 8 years).
Knowing your Customer Lifetime Value can help you improve retention and determine which customer demographics you should target. If your typical customer starts training at your facility at age 12 and stays for an average of 4 years, it may be worth investigating how you can attract new customers at an earlier age range, or how you can prevent losing too many of your 16 year old athletes. For example, you may reach out to a few clients to ask what they were missing from your facility’s offerings.
5. Churn Rate
Churn is the attrition rate of your customers over a given time period (for example, when a client cancels their membership). To calculate your churn rate each month, you divide the number of members you lost (cancellations) by the number of members you had at the start of the month. To convert this number into a percentage, you will then multiply the number by 100.
(# canceled members/ # customers you had to begin the month) x 100.
Let’s say you have 150 members at the start of October, but over the course of the month, 3 members decide to cancel their membership. Using the above formula, you will find that your churn rate is 2%.
Sports Software like Upper Hand will help you automate this calculation by giving you insights into your churn rate. Additionally, Upper Hand’s Membership Analytics report will help you predict your recurring revenue into the future.
6. Attendance Per Session
Especially when running classes or group training sessions, knowing which sessions produce higher attendance helps you identify your most popular class times, event types, or even instructors. You can then use this information to determine where to focus your time and resources to continue growing your business.
For example, if you offer an evening class on Tuesdays and Thursdays that is extremely popular, or always fills up, you may think about how you might implement a similar class on Monday and Wednesday evenings. Likewise, if your high school level skills clinic is consistently successful, you may look to offer other programs that target this age group.
7. Revenue Growth
In addition to just knowing your revenue on any given month or year, it’s important to know how you track year over year. When it comes to growing your business, knowing your revenue growth (or loss) will help you track against your company goals. And, when compared to industry averages, it will help you see how you stack up against your competitors/ the overall economy.
To calculate your revenue growth, you would take (Year 2 Revenue – Year 1 Revenue)/ Year 1 Revenue. Then, multiply that number by 100 to get a percentage.
If you made $59,000 in Year 1 and $62,000 in Year 2, your calculation would look like this:
(62,000 – 59,000)/ 59,000 = 0.051 x 100 = 5.1% growth YoY
The Key: Have a system in place.
At the end of the day, the key is to have a system in place when it comes to tracking KPIs. Consistently referencing these numbers and having a strong bookkeeping system will help you accurately track where your business is, where it’s going, and make decisions about how to continue to push forward. Using a software like Upper Hand will help you automate these calculations, giving you an accurate snapshot of your business at any time, so that you can prioritize growing your business.