Lessons: Learned New Opportunities: Earned


Overview of Leading Markets: Expert Insight


How was your company affected by the recent financial/monetary crisis and how have you emerged from it?


Stephen Tharrett, CEO Russian Fitness Group Moscow, Russia


Stephen Tharrett: In 2009, our revenues dropped slightly (approximately 2%) from 2008, but our EBITDA (earnings before interest, taxes, depreciation, and amortization) increased. During the crisis period, we were able to introduce a new organizational structure that provided for greater decentralization of decision-making. We also implemented new educational programs for our staff, particularly in the areas of cross-promotions, customer service, and leadership. In addition, we developed new technology and services. As a result of our strong balance sheet, we actually put our- selves in position to capitalize on potential growth opportunities, both for organic growth and acquisition. So far in 2010, we’re about 7% ahead of 2009 in our existing clubs.


Stâle Angel: In Norway, the impact from the crisis has been minimal. For our business, it’s actually been positive. Sales have stayed at the same level as 2008, but our member-attrition numbers have improved. More people want to get and stay in shape, and they have more time to use their memberships. We’ve seen more traffic at our clubs than ever before.


Roberto Rodriguez: Everybody, including Curves, has been affected. Perhaps the biggest negative point has been the restrictions on credit for new ventures. In this respect, in 2008, we were already seeing a very strong negative trend in the number of people interested in buying franchises. I think it’s fair to say that fear affected economical decisions. We determined that, in order to maintain our growth, we needed to double the number of presentations that we make in order to sell our franchises. We also decided to support the brand with a stronger presence (both for franchise sales and franchisees’ business) with advertising and at events in order to catch the attention of the limited number of buyers. The goal was achieved, and, in 2009, we achieved the same number of sales as in the previous year.


Stâle Angel, CEO Elixia Nordic Oslo, Norway


What lessons have you learned from this experience?


Dave Wright: The silver lining of any recession, new competitor, or business struggle is that you learn to overcome complacency. These events basically sort the wheat from the chaff in the same way that natural selection does in the wild. It forces you, as a company, to look at the services and products that you offer and find ways to raise that standard so that the end-user has a better result. The old adage of “In good times, you should market, but, in tough times, you must market” rings true. It’s those com- panies that took the opportunity to promote their businesses when everyone else retracted that are remembered and seem to soldier on when circumstances improve.


Roberto Rodriguez, Director General Curves Europe


70 Club Business Internat ional |


Tharrett: First, we learned how important it is to be transparent with our goals and results so that our managers and leaders feel a sense of ownership and are ready to contribute to the difficult challenges that are faced. Second, we learned that during a recessionary period, education is critical. By focusing on developing our people and providing them with new skills, our company benefitted. Third, we learned that, during a recession, creativity is vital in maintaining revenue stability. While you must watch expenses very closely, you must also find new ways to generate revenue, since former revenue streams will be negatively impacted by changes in consumer spending. Lastly, during a recessionary period, competitors will discount their prices and, therefore, as an operator, you need to find a balance between maintain- ing the integrity of your pricing position (it is part of the brand image), while also making sure you’re not priced out of the market.


JANUARY 2011 | www. ihrsa.org


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