Increase Utilization Rates to Boost Profits

During a recent conversation with a profitable Pilates studio owner, she mentioned three times within the first ten minutes that she wanted to open a second location. When I asked why this was her top priority, she responded, "I want to grow my business."

As we continued our discussion, it became clear she wasn’t aware of her instructors' utilization rate. I suggested she assess this metric and a few days later, she shared her findings: "We have so much potential for growth at my current studio. I really need to figure out how to fill these open spots." She discovered that by filling just 60% of her open spots, her studio could generate an additional $250K, representing a 50% increase in revenue.

Throughout my time as CEO of BFS, I’ve had similar conversations with many studio owners. Unfortunately, too many equate business growth solely with opening more locations.

However, growth is better measured by profitability, and one of the best ways to boost profits is by increasing revenue while controlling expenses (keep in mind, opening a new location increases short-term and long-term expenses).

A great strategy to increase profitability is by maximizing underutilized capacity—whether that’s filling more class spots or by booking additional sessions for your coaches and instructors.

In the example above, the pilates studio owner discovered that her instructors were only at 60% utilization and shifted her focus from opening a new location to increasing utilization to 80%.  Instead of thinking about where to open a new location, she started thinking about where and how to find new clients for her Instructors.

Key Takeaways:

1. The studio owner was not making data-driven decisions
2. Her goal was too vague—she wanted to "grow" when her actual objective was to increase profitability
3. Her strategy wasn’t aligned with achieving her goal

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