Investing In A Downturn

It’s hard to predict the ultimate economic impact of COVID-19. It seems that most people believe a global economic reset is upon us. 


If you are considering starting a Fitstop, keep in mind that economic downturns offer start-ups certain advantages. Market uncertainty tends to reduce new entrants into the market, meaning you have a less flooded market.

In 2008 - 09 in the last recession, we saw discretionary spending plunge however the community continued to invest in their health and fitness. Through this time, we saw the rise of the 24/7 franchise model dominate the industry and saw a lot of investors making a lot of money. Between 2008 - 2011, Anytime Fitness launched in Australia and added 100 new franchises to their network. How you ask? Through this time they were able to negotiate significant rental incentives, meaning the upfront capital investment was less.


There are certainly a lot of advantages you can capitalise on through this time:

1. Better leasing opportunities

With the economy going through a dip means that businesses are selling off assets and businesses are opting not to enter into new agreements or exit out of current agreements. This presents a huge opportunity for a new entrant (you) in the market to snag a bargain. Your typical overheads such as rent deals are reducing and/or landlords are providing more cash incentive or rent-free periods to secure your business. Vendors are more likely to discount prices to move stock. 

2. Top talent in the market

Due to market conditions a lot of talent has been laid off and are out there looking for work. The Australian Government predicts that by September, 1 in 10 Australians will be out of work. We feel for those people but we also see the strong opportunity it presents for you to gain top talent in the market who otherwise would have been your competitor.


3. Lower interest rates

During downturns the Reserve Bank of Australia generally starts to drop interest rates to keep consumers spending. This means that money has never been cheaper and it makes sense to loan at 3% rather than using all of your cash reserves to start your business. Of course, you will need a strong deposit but it’s an opportunity to loan cheap money.

4. Less competition in the market 

COVID-19 has been a test for a lot of organisations systems, structure and customer loyalty. We are seeing a lot of independent functional gyms and chain gyms fall on hard times and sadly, there will be a lot who won’t reopen. We will also see less businesses emerge in the market. This is a massive opportunity to take members of gyms who would have been competitors or of local gyms who have mis-managed their member base and have not communicated effectively with them.

Since reopening our doors Fitstop got back to 100% pre-COVID membership base within one month of operation. We have since opened 5 brand new locations who have all opened very solidly, with 4 out of 5 locations opening cash flow positive.

If you are interested in having a conversation about how you too can make the most of this opportunity. please contact me on rebecca.hull@fitstop.com



Rebecca Hull

Franchise Recruitment Manager

Fitstop Franchise Recruitment Manager, Rebecca, combines her love of fitness and experience as a Senior Recruitment Consultant to help progress passionate people into owning their own successful fitness business.