“We’re sweating out stress at the gym, too, which also hits the V-spot: Aerobic exercise and yoga enhance Vagus nerve output — as does meditation. The Equinox fitness club chain, with locations nationwide, reports an 18 percent increase in usage of its gyms since last autumn; attendance at Curves, a women’s-only national chain, was up 22 percent in January 2009 compared with the previous year. Memberships at Life Time Fitness, which has locations in 18 states, are up 14 percent.”

These facts have mirrored our own club numbers at elements, and have taken us onto the path of acquisition of additional company-owned facilities. 2009 is proving to be an excellent year to acquire or start up a new club, the economic factors are all working in our favor… there is a narrow window of opportunity which has seen many entrepreneurs charging ahead. We have announced new club openings in Toronto, Grand Rapids, Cape Cod, Charlotte, Atlanta, and California to date this year.

To me, this means having consumers, employees, franchisees, and executives tied to the brand, feeling as if it the ownership is theirs. By formally offering stock in elements parent company (to qualified investors) we have done just that… taken our loyal franchise owners, team members, vendors, and “friends,” and have allowed them to share in our tremendous growth and upside.

As we continue our international expansion, this will give select investors the opportunity to share in the growth of the brand, and will allow the company to grow without being burdened with heavy debt.

An initial company valuation makes this an ideal time for investors to get on board with the company, but more importantly- stock gives us another vehicle to make the brand “sticky.” Sticky is a word I use frequently, meaning that people have additonal reasons to revisit the brand, the club, or the website, or to encourage others to do so.

“No one lives long enough to learn everything they need to learn starting from scratch. To be successful, we absolutely, positively have to find people who have already paid the price, to learn the things that we need to learn to achieve our goals.” – Brian Tracey

… what a great quote, and what a concise way to summarize what great leaders and entrepreneurs already know. Time is a precious resource, in many cases it can be even more precious than money with respect to a new business. After all, who would want to be in the perilous position of overcoming all of the hurdles of site selection and construction, actually getting a business open, only to wonder what truly comes next… sounds scary, right?

I remember this feeling vividly, now more than 12 years ago, when I opened my first health club. Although business skills came natural to me, there was so many details that, as a rookie, I didn’t even know to consider…. do I take the small or the large phone book ad? Is tile the right place to save on construction? Which is the best graphics vendor, local or regional? Negotiating techniques with landlords and vendors… marketing techniques… upselling memberships…. it goes on and on! Time (and a great team) has taught me well. Looking back, I could have saved hundreds of thousands of dollars not to mention the headaches!), had I aligned with the right partner…. it is a very common story in business, mine was lucky to end up happier than most. Choosing the right team, and the right partners, is a critical decision which can greatly affect the success of your new business. Don’t ever underestimate the value of having an experienced team by your side, as you build, launch, and grow your business… time is money, and this advice is sage.

Chris Palumbo is a noted business author, speaker, and founder of the popular elements fitness and lifestyle brand.

“Conventional wisdom says we turn to comfort foods and cocoon at home in our jammies when the economy goes south. But research suggests that it may actually be the opposite—that during a downturn, we exercise more and are less likely to be obese than when times are good. Christopher Ruhm, the Jefferson-Pilot Professor of Economics at the University of North Carolina-Greensboro, has published research indicating that mortality actually decreases when the economy goes temporarily sour and suggesting that a drop in body weight and increase in physical activity—as well as a decline in smoking—are partially responsible. [click here to view article]

Studies by the Service Management Group (SMG) show that businesses (specifically with service and retail businesses) with higher customer satisfaction rates have much higher growth in in-store sales. Although practically every business understands that good customer service is important, I ask you which businesses have tools in place to track and measure their customer satisfaction index, and what systems do you have in place to ensure a great customer service at each location. You cannot manage what you cannot measure, so we believe that it is vitally important to manage how the customer experience translates into customer satisfaction and loyalty. In fact, if you do not know which employee behaviors and customer experience create customer loyalty in your stores, you are essentially competing with one of your hands tied behind your back.
Because the best brands DO know, we track customer satisfaction and loyalty in every unit, every day – the same as we track costs and inventory. We link customer experience data to financial metrics such as average transaction amount, lifetime customer value, and same store sales growth. When you are able to calculate the value of superior service, you can reinvest dollars deliberately to increase sales from the customer experience.

The founding principle of customer experience management, is that when you improve their experience, customers not only remain loyal, they give you a larger share of their wallet. They also refer others to you. Since the cost of these sales is essentially zero, your customer acquisition cost actually drops as your brand and service levels get stronger.

For more information on business opportunities, click here.

[ Click HERE] to Read to the article

Chris Palumbo is the founder of the popular elements fitness and lifestyle brand.

What an exciting time of the year to be able to announce our expansion into the consumer products space. elements has been growing steadily since 2004, to emerge as the category leading fitness brand for women. We have been heavily investing into the creation of consumer portals and networks, such as our elements living magazine, our All Star Fitness Advisory Board, BalanceD interactive Diet, elements living TV (coming soon!). Possibly one of our most exciting announcements comes at the end of this year… the birth of Oceånica, by elements. Our creative team has developed a genious offering with Oceånica products…. the beautiful, smartly designed line will feature organic and very potent anti-aging, slimming, and health enhancing ingredients. Over the next few months you will see a very exclusive line of weight loss products unveiled.

Having an exclusive, well-designed line will help the elements brand in many ways, including adding a powerful new revenue stream for franchisees, a great addition to the wellness experience for members, and an important “star” to allow elements into some of the top fashion and lifestyle books. Look for many exciting announcements to be coming about Oceånica, our products, and our launch parties very soon!

I was speaking to a well-respected executive from the franchise industry today. I really enjoyed our call, and I thought I would share some of the conversation with you – it really shows the process of buying a franchise from the other side of things…..

In business, you can either let or make things happen. Successful people make things happen, and are confident in the decisions and choices that they make (both in business and in life). This conversation became especially relevant because, as the end of the year approaches, many aspiring entrepreneurs will be following their dream of owning a businesses a reality this year. And other will not… they will blame the economy, the holidays, their jobs, family, or a whole host of other factors which will cause them to procrastinate their decision making until next month.

Why is January a better month to make a decision than December? What will change between now and then? If an entrepreneur is at the point where they have collected all the information, it is very unlikely that anything will materially change within the next months. In fact, going through the notes and checklists they have developed along the process should confirm they have all the information you need to make a sound decision.

In business, it is important to identify what it is that holds you back. If it is the fear of the unknown – recognize that this is entirely normal, as with any big decision. There will always be reasons not to buy, not to invest, or not to grow, but if you are serious and have a passion for businesses, it is important to look for reasons to buy as well.

From our seat, many prospective franchisees do not realize that delaying their decision without good reasons sending the wrong message to the franchisors, who are evaluating you as a potential Developer. Franchisors (your partners) are looking for passion for the model and business savvy which includes decisiveness.

As an entrepreneur, you want to be in the position of having options. In other words, you want to be awarded the franchise and have the option of saying No. Delaying in decisions often removes that option for the candidate. As December approaches, elements will be announcing several great new club locations, and new Regional Developers – we are proud that our new partners understand that success comes from within, and possess the drive and determination that come hand-in-hand with success.

]]> http://www.chrispalumbo.com/2008/11/28/happen/feed/ 0 http://www.chrispalumbo.com/2008/11/26/leisure-growth-fund-2/ http://www.chrispalumbo.com/2008/11/26/leisure-growth-fund-2/#comments Wed, 26 Nov 2008 05:36:25 +0000 elements http://chrispalumbo.com/?p=371

elements group began a limited sale stock in our parent company last month, allowing outside investors, franchisees, as well as our own members to share in the impressive growth of the international fitness and lifestyle brand. A private stock offering is different from the publicly traded kind, each investor must meet certain financial criterion, and receive a several hundred page prospectus, which details the brands extensive growth strategy over the next 5 years. An integral part of the worldwide expansion of elements involves acquisitions as well as the development of company-owned locations, strategically creating one of the strongest fitness brands to date. We have also created (to my knowledge) the only fitness-oriented investment fund, with our Leisure Growth Fund product.

Over the past 4 years, we have positioned elements as a lifestyle – more than just a fitness club, elements is about a healthy, balanced way of life. The brand offers a complete experience to consumers, including popular fitness centers, diet and weight loss centers (BalanceD), acclaimed online magazine and media channel, All Star Fitness Advisory Board, and supplement /product line. Each quarter these offerings get further developed, and new additional announced, such as our soon to be launch “elements Broadcast Network” and “Channel Fit” launching in all club locations in 2009.

Our position as a lifestyle brand, and leading franchisor allows us to always be monitoring acitivities within the fitness industry, and give us a unique advantage in acquisitions – as we can carefully select only the best most qualified location to acquire and convert to elements clubs.

The stock offering and Leisure Growth Fund allow elements and our partner companies to pursue an aggressive acquisition and “rollup” strategy. One unique advantage we hold in this arena, is the value of the company-owned locations to further strengthen the performance of our franchised locations, using our core “hub and spoke” development approach. The far reaching effects of this model allow the company to be significantly stronger in operations than many others in the space, and allow a diverse scope of opportunities for our investors and partners.

I like reading interviews… for me they provide a great insight into the mind of the subject. While an article is generally the opinion of the writer, an interviewer is almost like having an actual conversation with the person. I was interviewed for a fitness business magazine several months ago (I remember it being extremely warm that day). I thought it might be nice to re-publish the interview here, as these are questions which are asked of me frequently…

Catching up with elements brand director Chris Palumbo

Chris Palumbo, founder of elements fitness | diet | lifestyle has a compelling startup story. From humble beginnings in an NYC office, the brand has since transformed into an international sensation and the leading fitness brand for women. elements currently includes 54 upscale health clubs under development, an online magazine and media channel, a multi-million dollar interactive online diet portal, and an All-Star Fitness Advisory Board.

We caught up with Palumbo in his Miami Beach home to discuss the rapid success of the elements brand, his take on franchising, and general tips for startups.

How did you get started with elements?

The idea for an upscale, national women’s fitness brand began with some consumer research we were doing in the fitness industry, back in 2003. We noticed that there was a void in the important full-service women’s gym category. As a student of branding, I began to assemble a small think tank to discuss what a new, international fitness brand for women might look like, and how we would be different from current offerings. Once we felt that we had a solid concept with much growth potential, I began to recruit industry experts to help engineer the operations and software platform, the back office of the system. Putting the pieces together, complimented by a very slick consumer marketing presentation, and elements was born! We began with one club in Atlanta, and have grown steadily and quickly for the past 4 years.

Did you ever envision the brand growing the way it has?

The simple answer is yes. And no. Every entrepreneur has aspirations and dreams for their idea to thrive and grow, and many entrepreneurs even plan for this. However, the doing part is the toughest, as we know. Truly getting ahead in startup business is always 5 parts hard work, and one part luck.

Why did you decide to launch elements from Miami?

There is a saying that “geography builds credibility” with a brand. Having a Miami Beach base allows us to infuse more culture and credibility to our fitness and lifestyle offerings. We set up our headquarters on the busy and very stylish Lincoln Road, amidst restaurants, shops, and theaters. It is a great, very friendly pedestrian atmosphere which is great for hosting meetings and potential franchisee visits.

Miami is also an important gateway market to Latin America, where we plan heavy expansion. We are one of the few fitness brands to maintain a multi-lingual staff.

How much travel do you log in a year?

I am very lucky to be surrounded by a great team. Many brand directors travel far more than I do. I mostly toggle between Miami and NYC, and have frequent stops in Chicago and LA. Most of the work I do is with higher-level strategy ideas, small group training, and media relations so I am lucky to be able to focus purely on those areas.

Our team logs in thousands of miles, traversing the country (and now the world). We are very hands-on with the brand and locations.

You recently hired Nike/Warner Bros Executive Bruce Fabel to be the CEO of elements. Was it a tough decision to give up the reins of your company?

You know, I am a true believer in team building. My vision was never to sit on top of a mountain and direct the company. My style is much more organic, and I love working directly with all team members and mentoring. Bruce brought a top-level corporate background and structure to the company, including our much-coveted “human resource planning” model. I also believe having a Nike Exec on the team has opened many doors for our lifestyle brand.

The fitness and weight loss marketplace is pretty crowded. How do you make your brand stand out from the others?

elements for women started as the only full-service fitness brand for women. We still remain the only full-service fitness brand, meaning members can get a variety of amenities such as workouts, personal training, diet coaching, classes such as yoga and Pilates, and much more, all in one location.

A brand is distinct when it offers a unique consumer experience. The experience is the cornerstone of any business, and any brand that doesn’t engineer its systems from the consumer upwards is going to have a tough time with sustainability. elements has a full-time team to do consumer modeling and testing, prior to us rolling out a program at the clubs. It definitely translates into a better consumer experience and a distinct fitness brand.

One of the things which really defines elements is your All Star Fitness Advisory Board. How have you been able to attract such a high level of fitness and health celebrities to the company?

I think people know a good thing when they see it. Not only have we attracted great experts, but we have been successful in attracting and hiring real leaders, such as our CEO, a former VP from Nike and Warner Bros, as well as top executives from other fitness brands, such as Gold’s Gym corporate. We have also had great success with attracting experienced, highly-qualified franchisees who add tremendous value to our operations and training with the insight and experience they bring to the system.

We have created a very organic brand, which by its very architecture fosters interaction, creativity, and celebrity. The elements brand itself is becoming a movement.

Can you elaborate on that point?

At some point, you want your brand to become “sticky” with consumers. Our tagline for elements is “Make it Happen!” This can relate to everyone associated with the brand – consumers can make it happen with a new outlook, a new diet, or a new body, franchisees and team members can make it happen with a new career, new opportunities. It’s a strong message of empowerment that works to create a robust community, one that continues to grow each day.

I notice elements gets quite a bit of media attention in almost every fitness trade magazine. How does your team generate so much media placement?

It’s true, we do generate a lot of buzz. I learned the power and importance of the media early on in my career, and it is something we teach to each team member in the brand. We are always looking to create unique experiences, classes, programs – and the press likes that. We have had several of our trainers nationwide showcased in top women’s lifestyle publications such as Woman’s World, and the investor community has taken note also with a recent article in Investor’s Business Daily.

Neutrogena founder Cristin Bardin has recently been invited to join your Board of Directors. Can you tell us more about this?

I can say that our mission is to have the best team in the industry, bar none. A brand is only as great as its people, and this holds true for our corporate team as well as our franchisees and local club staff. We have been very lucky to be positioned as a category-leading brand in the fitness and wellness industries, and have certainly caught the attention of the right people.

What do you think are the most important factors in the relationship between a franchisee and franchisor?

Trust and confidence.

How do you think franchising has changed over the past 20 years?

Overall there is a greater push for credibility. Federal regulations, disclosure laws, and UFDD revisions have really made the industry stronger by weeding out the franchisors who were undermining the industry. I feel the industry now has the freedom to be a little less sales-oriented. I think a good system will sell itself…investors are always watching and researching.

What questions should potential franchise buyers ask when shopping for a franchise?

A good franchisor should be your partner, your coach, and your cheerleader. Track record is important. So is personality and flexibility. Potential franchisees are investing into the benefit of the years of experience, research, and forecasting that the brand should have built. Make sure you “click” with the team. Ask yourself the hard questions early on. Most franchise agreements last 10 years… Are these the people you want to do business with for that period of time? Where will the brand be in 10 years? Does that add value or detract value from what you are building today?

How do you train your franchisees?

We believe training, education, and growth is a continual process for a business owners, not a one-week gig. I would encourage any potential franchisee to really pay close attention to the training and ongoing support provided by your prospective franchisor. Site selection, construction advice, budgeting and building pro-formas are all vital for your early success. elements has one of the most robust training platforms that I know of. We begin with pre-training (concept, must-reads, meeting other owners, getting familiar with the vendors) then schedule owners or operators to come for our ELI (elements leadership institute), a 5-day hands-on workshop training.

We focus our initial training on teaching how to hire and staff correctly, how to run a business by the numbers, and community building/marketing. Once an owner has attended the initial training, they are assigned a personal business coach, and given a full set of 8 training manuals. The coach meets with them weekly (over the phone) to help guide the process of opening along, and to assess what other assistance might be needed. We find that this really helps to keep our projects on time and budget, and provides a complete support option for owners. Of course, there are other training tools, such as our owners online information library, intranet, ordering websites, and Advanced Phone Training conducted bi-weekly.

In both the short- and long-term, higher training and support levels directly translate to higher revenues and profits for a business.

What is your opinion of using Regional Developers to build a brand?

I think, if done properly, Regional Developers can be critical partners that can help support and foster total growth. Unfortunately, this industry has seen more than its fair share of franchisors who were not properly qualifying their developers, rather selling to anyone who came forward with a checkbook. RD development has to be done right. elements has a strict policy that each Regional Developer must first begin as a franchisee and develop a showcase club in their market prior to being named as the RD.

Are you concerned that the ramp up time might be too long to attract experienced developers?

We haven’t seen this to be an issue. elements has a great real estate and design team, and we are able to get units open fairly quickly. If we have a very experienced, qualified group who our Board feels very comfortable with, we might allow them to purchase an option which will hold those rights for a period until their club is open.

How much working capital do you recommend a franchisee to set aside for their new venture?

The general rule of thumb is to take your monthly rent and multiply by 7 to 10, depending on the level of competition in your market. This is a good measure to go by. We make sure each franchisee has funds set aside for working capital.

Does elements offer assistance with financing to its franchisees?

As a franchisor, I believe that you have to. I have seen many cases of people eager to get into business, and making poor financial decisions as a result. It is important to develop the business plan and the project costs with a franchisee, and then to provide them with a way to obtain the capital needed at a reasonable rate. elements has established a relationship with 2 private banks who handle the majority of the business loans for the brand. The banks are very comfortable with our model, and know the team is active with site selection and lease negotiation, which gives lenders a higher comfort level. In many cases we are able to offer a 90% loan to value, including working capital.

What do you see in the future for elements?

Given the momentum we have had, and the infrastructure that has been built, we are well positioned to dominate the women’s lifestyle category. We have built an exclusive platform of multimillion dollar web portals, magazines, and experts, complimented by well-placed, highly developed bricks-and-mortar locations.

Our 6 year growth objective is for 800 units nationally, and another 800 units internationally. Our recent stock offering has opened up several important investment channels, allowing us to own and grow more corporate owned showcase locations, and to fund expansion programs including our new online marketplace and consumer review blogs that compliment the consumer experience in the clubs.

What tips do you have for an aspiring entrepreneur?

Surround yourself with great people, listen to what they have to say – but make your own decisions. Just because something has not been done yet does not mean that it cannot be done.

Although much of the retail news these days is filled with doom and gloom scenarios, there is at least one industry which is gearing for a real surge in business …. lucky for us, it is the fitness industry

Fitness, weight loss and wellness see a real spike in sales for a 70 day period, beginning in early January. Savvy fitness retailers, such as elements for women, are learning how to extend this season earlier, with cleverly designed Holiday promotions, encouraging sales, membership reservations, and spikes in referral traffic in conjunction with the Holiday shopping season. I would love to be able to tell you exactly what strategy we are employing (however that is a secret reserved for our franchisees at this moment)!

We began the launch and integration of this pre-New Years/Holiday campaign work with our franchisees and partners in Atlanta this week, where we ran into a surprise guest, at the club….