Ben Ludwig details the importance of creating predictable revenue and how to sustain revenue-generating programs.
When I look at the recreational landscape, I often compare it to commercial fitness. Not because it’s the same, but because our consumers often look at us through the lens of fitness instead of community. Why does this matter? Because to meet the needs of our consumers, we need to understand how they think and provide them with the experience that makes them want to come back. The only way we can do this well is to have a sustainable business model. So, what if we stopped thinking about pushing programs, and started treating our center like a portfolio?
Let me explain. The tension within our centers is we’re often busy, but rarely stable. Most centers have more programs than you can count and feel very busy when you walk in: full schedules, packed gyms and even high participation in many seasonal activities. The problem is this rarely equates to high predictability financially. So why is that? Well, revenue is tied to seasonal programs, availability of instructors, registration cycles and even the weather.
You may feel like you’re doing everything right but are still financially guessing month to month. Many rec centers run their revenue the way people pick workouts — random effort, no progression and hope it works. What if we stopped treating programs as the goal, and started treating them as assets in a revenue portfolio?
The Shift in Thinking
Programs are assets, not events. When we put together our annual plans, our programs shouldn’t be thought of as only an engagement tool. They should be evaluated by predictability, longevity, margin and risk. The idea behind changing this thought process is giving you peace of mind in the long run.
When we think programs, we ask questions like, “did we fill all open slots?” When we think asset, we ask, “what role with this program play in our financial growth over the summer?” Now before you push back on this mindset, the goal here is not to eliminate the mission. It’s to protect it. A program that loses dollars every summer will likely get eliminated when times get tough, but a sustaining one will be around for years to come.
The Rec Revenue Portfolio Framework
Now let’s look at how you can break down your revenue in four ways to better understand the role each plays in your sustainability:
1. Anchor Revenue
These are dollars that are highly predictable and can be measured to grow simply. Think monthly memberships, family passes, annual commitments or wellness activities. These can easily be measured as to what’s needed to grow these line items. These programs are often underpriced and underleveraged in wellness centers. The key question to ask as to whether this revenue is in a viable range is if you stopped launching programs all year, would this revenue sustain you?
2. Growth Revenue
Growth revenue are offerings that expand lifetime value of your members. Things like small group training, adult leagues, specialty wellness programs, or digital add-ons. Growth revenue models still have some predictability, but require sales conversations and are often limited by staff confidence, not demand. If these programs aren’t growing, it usually can be attributed to the staff not presenting with confidence, and the program all together being undermanaged.
3. Seasonal Revenue
Easily defined, these programs are tied to the calendar, typically very high volume, and should not be leaned on, but seen as additional revenue.
These are programs such as summer camps, swim lessons, youth sports seasons and even holiday programming. These models have a high upside when modeled properly but are also highly volatile and labor-intensive. Such programs must be reviewed annually on staff needs and margins as they can easily eat away at profit if not managed properly.
4. Experimental Revenue
These are low-risk pilots designed to test future demand. Some examples are pop up programs, corporate partnerships or new age brackets previously not focused on. The great part about these programs is they typically have short feedback loops and can be clearly defined as successful or not when criteria is set out front. This should always be experimental and never mission critical. The key to this category is finding the balance: not offering too little experiential programs out of fear of failure, yet not offering too much and watering down your offerings to your consumer.
Portfolio Balance
The reason most rec centers struggle is a simple imbalance of revenue. They depend much too heavily on seasonal sign-ups, and not nearly enough on anchor revenue. Some centers treat growth revenue like the extra and never experiment. One of the major faults is launching new programs without any kill criteria. Most rec centers don’t have a revenue problem; they have a revenue mix problem.
How to Think Portfolio
If you’re wondering how to shift your facility, here are a few simple steps to take:
Step 1: Inventory everything. List all your programs, and revenue streams and put them to one of the four categories. Be honest, even if it hurts.
Step 2: Strengthen the foundation first. Improve your new member onboarding process, reduce friction into recurring growth options, and train staff on enrollment conversations, especially overcoming objections.
Step 3: Elevate one growth lever. Pick just one scalable offering and give it clear pricing, a team member that owns this offering, a monthly target and assess progress every month.
Step 4: Contain seasonality. Pre-sell programs with exclusivity and seek to convert seasonal participants to members. We like to think of this as building bridges, not cliffs between seasons.
Leadership Implications
This is a culture shift and must start with you. This will shift thinking from “What should we add?” to “What should we protect, grow or sunset?” This helps team members understand why decisions are made.
Predictability serves the community. Remember, predictable revenue allows for better staff retention, better facilities and better community outcomes. Don’t worry — this shift won’t turn you into a wall street trader. It will allow you to make an even deeper impact in your community. When revenue is predictable, leadership becomes calmer, decisions become clearer and the mission gets the consistency it deserves.
