2019 LIABILITY COVERAGE IN THE DIGITAL AGE EXPLORING FINANCING OPTIONS A FITNESS PROâ&#x20AC;&#x2122;S INSURANCE FAQ
APPLY TODAY TO BE A 2019 TRAINER OF THE MONTH!
The 2020 PFP Trainer of the Year (TOTY) will be selected from the 2019 Trainer of the Month (TOTM) winners. Apply at www.personalfitnessprofessional.com/toty
Choice of any NSCA Certification Exam and associated textbook by NSCA ($575.00 value) Premium Certification Package by NFPT ($400.00 value) 1-year membership to FiTOUR Total Access: receive access to complete each of the FiTOUR in-home certifications with online study materials ($300.00 value) A complimentary full conference registration to any 2019 Medical Fitness Tour event courtesy of the MedFit Education Foundation ($299.00 value) Featured profile in the 2020 Winter issue of Personal Fitness Professional magazine Winner will be recognized during a live webinar in December and will receive an award and opportunity to share their story!
TOTM PRIZE PACKAGE VALUED OVER $3,600! TOTY PRIZE PACKAGE VALUED OVER $8,500! Functional Aging Institute (FAI) Education plus Business VIP Package ($2,600.00 value) includes: • Functional Aging Specialist Certification ($399.00 value) • Functional Aging Business Mastermind meeting ($1,200 value) • Two (2) VIP tickets to the Functional Aging Summit in Albuquerque, NM June 14-15th ($600.00 value) • APT Training Package and Training Course from Anchor Point Training ($299.00 value) • Your choice of a 4 to 8lb ActivMotion Bar ($109.00 value) 1-Year Lease of the BodyMetrix Professional System Ultrasound Body Composition ($1,895 Value) $1,000.00 Power Systems gift certificate PowerBlock U50 Club Set ($795.00 value) Lifetime membership to The Academy online resource and community for fitness business owners by Fitness Revolution ($599.00 value)
Functional Aging Institute (FAI) Education plus Business VIP Package ($2,600.00 value) includes: • Functional Aging Specialist Certification ($399.00 value) • Functional Aging Business Mastermind meeting ($1,200 value) • Two (2) VIP tickets to the Functional Aging Summit in Albuquerque, NM June 14-15th ($600.00 value) • APT Training Package and Training Course from Anchor Point Training ($299.00 value) • Your choice of a 4 to 8lb ActivMotion Bar ($109.00 value) 1-year membership for each Trainer of the Month to The Academy online resource and community for fitness business owners by Fitness Revolution ($399.00 value) Standard Certification Package by NFPT ($249.00 value) MedFit Education Foundation one-year professional membership ($169.00 value) $100.00 Power Systems gift certificate One in-home certification from FiTOUR ($99.00 value)
JANUARY: JUAN MEDRANO
FEBRUARY: RYAN CARVER
MARCH: JENNIFER WALLER
APRIL: KERRY KEANE
Let It Move You.
“If you want to go quickly, go alone, but if you want to go far, you must go together.” – African Proverb
SUCCESS RARELY HAPPENS ALONE Lindsay Vastola
n this special issue, we’re focusing on the power of partnership because meaningful success rarely happens alone. The challenge, however, is finding those important partners you can trust to honor and respect your best interests. Chances are, you have high standards for yourself and expect the same from others; this is probably one of the reasons why you have experienced success. It’s also likely that you’ve been burned by someone you trusted, or disappointed by someone who fell short of your expectations. Maybe an employee broke your trust, or a company you hired didn’t follow through as promised. If you have experience with a business partner, there are pretty good odds there may have been a falling out of some sort. When we get burned or experience disappointment, it changes us; it actually changes our brain. Our brain is designed to protect us from pain, including the pain of disappointment. As a result, in future situations, our decision-making process is driven by skepticism and distrust. Think of past dating relationships. The outcome of those relationships influences how you approach future relationships. What about when you hired that web designer and he didn’t deliver what was promised? You probably became apprehensive and skeptical to hire another one.
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It’s important that we use these inevitable situations as opportunities to learn so we are more likely to make more informed, confident decisions in the future. Partnership has many meanings, not limited to contractually-binding business interests. It means aligning with people or organizations who are skilled where you are not, like your attorney, banker, accountant, and insurance broker, to name a few. Partnership also means finding people who hold you accountable and with whom you can share openly and honestly in order to realize your full potential – mentors, coaches, teammates, managers, family members, significant others and trusted friends. The following pages highlight insight from a handful of the
many critical partnerships that play a vital influence in your professional and personal success. From understanding professional liability and financial planning, to keeping up with the most relevant and current technology and legal requirements, it’s nearly impossible to know it all and be able to do it all well. Embrace the power of partnerships, because success can’t happen alone! We are grateful for your trust in Personal Fitness Professional as a partner in your goals to prosper and succeed! Your partner in success,
The Power of Partnership
INSURANCE FAQ FOR TODAYâ&#x20AC;&#x2122;S FITNESS PROFESSIONAL Important answers to important questions
Jennifer Urmston Lowe Sports & Fitness Insurance
THE PERFECT FINANCING COMBINATION Understanding the options for funding your business
Paul Bosley 6
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WAVE OF THE FUTURE
Protecting yourself beyond the gym floor
Eric Mitchell Philadelphia Insurance Companies
LETTER FROM THE EDITOR Success rarely happens alone
MULTIPLY YOUR GYM'S GROWTH WITH LEADGENERATING WEBSITES Kinnick McDonald Zen Planner
INSURANCE FAQ FOR TODAY’S FITNESS PROFESSIONAL Important answers to important questions Jennifer Urmston Lowe | www.sportsfitness.com
ports & Fitness Insurance Corp. (SFIC) has exclusively served the fitness industry since 1985. They offer general liability insurance including professional liability, property insurance, umbrellas, workers compensation and surety
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bonds for health clubs and fitness studios, as well as yoga and Pilates Studios, dance studios, martial arts schools and personal trainers and group exercise instructors in all 50 states and Canada. Jennifer Urmston Lowe shares some insight into three of the most
relevant insurance questions and answers for today’s fitness professional. Q: Am I covered for insurance by the health club where I work? A: This question is the single most important
and most common question that fitness professionals ask. The answer is determined by the contract that the fitness professional has with the facility where they are working. The employment contract with the health club or studio should state whether the personal trainer or group exercise instructor is an employee or an independent contractor and whether the individual is covered on the facility’s insurance. Due to changes in state laws, many more health clubs classify their group exercise instructors and personal trainers as employees now than in the past. A fitness professional hired as an employee should be covered by the facility’s policy. This should always be verified because insurance contracts are different. Some general liability insurance policies exclude professional liability coverage. Per-
Q: Do I need extra coverage for the new classes I am teaching?
sonal trainers and group exercise instructors must always verify that they are covered by the insurance policy of the facility where they will be working and that it includes coverage for professional liability. Most general liability and professional liability insurance policies for health clubs will exclude coverage for independent contractors. Any fitness professional working as an independent contractor should carry their own professional liability insurance policy to protect themselves. An individual professional liability policy typically costs less than $200 per year and covers an individual everywhere they train clients or teach classes. A facility will usually require an independent contractor to provide proof of their own individual insurance coverage via a certificate of insurance. Fitness professionals who teach any private clients outside of the health club where they work must carry their own professional liability insurance policy because they are not covered by their club for private clients, whether they are an employee or independent contractor.
A: As the fitness industry expands to reach more people with different needs and interests, the fitness professionalâ&#x20AC;&#x2122;s job is evolving to include more diverse teaching. It is important for fitness professionals to make sure that their insurance coverage will provide coverage for all of the new opportunities that they want to pursue. Whether adding new classes or working with new populations, a group exercise instructor or personal trainer should verify that their insurance will cover the new activity. Additional coverage or higher limits may be needed when working with special populations or when teaching new classes. In order to provide more coverage, some insurance programs will want to verify that the fitness professional has received any special training needed to teach a new type of fitness class. Almost all carriers will want to verify that a personal trainer has received the appropriate training to work with a special population. Special populations could include people with specific medical conditions or special needs that could put that group of people more at risk for injury. The movement of the fitness industry towards inclusion for special populations is growing and is highly commendable. Fitness professionals need to keep in mind, however, that they should only work within the scope of their own training and refer clients to qualified trainers if they are not trained to work with them themselves. Keeping client safety first is always the primary consideration for all fitness professionals. Q: Do I need to be concerned about any impact of the increasing headlines for sexual
them and on all fitness professionals in the facilities where they work. Additionally, a fitness professional can protect themselves, their business and their clients by doing everything possible to keep the words that they say and the things that they do with their clients professional at all times. Overly-familiar communication or touch can be misinterpreted by another person or can be offensive to another person. It is not appropriate in a professional setting today. Fitness professionals that work as independent contractors or own their own business should be aware that their own intentional acts are usually not covered on an individual general liability or professional liability policy. This means that their insurance policy that includes coverage for sexual abuse and molestation would pay to defend them against a claim of sexual abuse, but it would not cover them for damages if they are convicted of an intentional act of wrong doing. Most general liability including professional liability policies in the fitness industry include a sublimit for sexual abuse and molestation coverage of $100,000 per occurrence. There is usually additional premium charged for higher limits, such as a $1,000,000 limit. The higher limit may also require additional questions to be answered regarding protection for clients. In the past, the underwriting for higher limits for sexual abuse and molestation coverage were focused on protecting minors. Today there is great emphasis on protecting adults as well. Taking steps to protect themselves and their clients from sexual abuse will elevate the professionalism of the fitness industry and benefit fitness professionals and their businesses in the long run.
harassment claims? A: Insurance carriers are seeing sexual abuse claims growing at a tremendous rate in the United States across industries. Rather than worry, fitness professionals should take steps to protect themselves and their clients. Personal trainers and group exercise instructors can protect themselves by purchasing sexual abuse and molestation coverage on their general liability and/or professional liability insurance policies. They can protect their clients by making sure that background checks are performed on any trainer that works for
Jennifer Urmston Lowe graduated from the University of North Carolina with a degree in Business Administration. She managed personal training and corporate fitness centers for many years. Jennifer joined Sports & Fitness in 1998. Presently she is their underwriting supervisor, national account manager, and marketing manager. She is a founding board member of AFS and a member of WIFA. She is included in the 2018 Insurance Business America Elite Women. 2019 PROFESSIONAL PARTNERSHIP | 9
THE PERFECT FINANCING COMBINATION
Understanding the options for funding your business PAUL BOSLEY | www.businessfinancedepot.com
hen an entrepreneur is first considering purchasing a business or franchise, various financing options are usually considered, and the most appropriate financing product(s) should be selected. For example, an equipment lease is often chosen for financing new equipment needed to run the business. Another option is to finance the entire business with an SBA 7(a) loan. A third
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option is to self-fund using funds saved in the entrepreneur’s retirement account using the R.O.B.S. program established by the IRS. It is very unusual when two financing products are complementary and can be selected jointly to finance a new business. With the introduction of the SBA Express loan, this is no longer the case. An SBA Express loan complements an equipment lease for financing a new business and the expansion of an existing business.
In 2014, the Small Business Administration (SBA) introduced the Small Loan Advantage loan program some lenders refer to as the SBA Express loan. After the “The Great Recession,” many homeowners lost their real estate equity which is used as collateral requirement for a SBA 7(a) loan approval in most cases. Consequently, many perspective borrowers were unable to secure financing because they lacked the equity in their home required to collateralize their loan request. The SBA Express loan caps the loan amount at $150,000 to limit the lender’s risk since the borrower’s real estate collateral is not required. Instead,
the business assets are used to collateralize the SBA Express loan and the main approval requirements are good personal credit and some liquid assets. Since the collateral used to secure an equipment lease is the equipment being financed and the collateral for the SBA Express loan is the other business assets, these two debt financing products are totally compatible. Furthermore, since the underlying concept of the SBA Express loan is to provide working capital, financing the equipment needed to run the business provides the owner more working capital so the underlying reason for both products is the same. CAPITAL LEASES – LEASING EQUIPMENTTO-OWN The most common financing option available for businesses using equipment leasing is a capital lease. The main purpose of a capital lease is to finance the equipment purchase while preserving the owner’s working capital. Business owners can finance the purchase of their proprietary equipment, security systems, computer hardware and software, flooring, outdoor signage and other tangible items needed to run the business using an equipment lease. The owner(s) will be required to personally guarantee the equipment lease unless the business has been established and profitable over many years. The required down payment ranges from one lease payment up to 20% of the amount financed. Lease documentation fees may range from $95 to $495. Repayment terms typically range from 12 to 60 months. All payments made are tax deductible so the payments will lower the business’s taxable
income and, in turn, tax liability. Since most owners plan to keep their equipment long term, a typical capital lease offers a $1 end-ofterm purchase option. In short, an equipment lease is used to finance the purchase of all equipment needed to manage the business, thus preserving working capital. SMALL BUSINESS ADMINISTRATION (SBA) EXPRESS WORKING CAPITAL LOAN This government-backed loan is designed to provide working capital ranging from $20,000 up to $150,000 for start-ups and existing businesses. The main purpose of this loan is to provide the funds necessary to support the company until the business generates positive cash flow. The loan process takes 60 to 90 days to complete on average before the loan is funded. The SBA loan process does require an attention to detail to complete the application and contingency requirements. If the use of the loan funds is to finance a new location, the loan can be approved in advance, however the funds will not be distributed by the bank until the new location has received a certificate of occupancy. This ensures that the money will be used to operate the new business and will not be used to pay for build-out expenses. The interest rate for this loan is calculated by starting with the prime rate as published in the Wall Street Journal. The bank then charges a 2.75% risk premium on this loan. This is a variable rate loan which changes quarterly when the Fed Board of Governors decides to raise or lower the prime rate. The repayment term is 10 years and there is no pre-payment penalty so if the business
owner is extremely profitable, the loan can be prepaid to save interest expense. The purpose of using SBA loans and equipment leases is to access other people’s money (OPM) and preserve capital. The goal is to borrow the money at a cost that is less than the business profit percentage. For example, if a $100,000 equipment lease provides a 12% return to the lessor and an $150,000 SBA working capital loan has a 6.5% interest rate, the business owners will be borrowing $250,000 at approximately an 8.9% blended interest rate. Assuming the business operates at a 15% profit margin, the franchisee is using OPM at a cost that is much less than the anticipated return on capital. Equipment leases and SBA Express loans are complementary products that will enable an entrepreneur with good personal credit to finance the opening and expansion of a business. The best part about this financing combination of an SBA Express loan and equipment lease is that the collateral is your business assets — not your home — just your business assets!
Paul Bosley has worked in the fitness industry for 45 years as a multi-chain club owner. Twelve years ago, he transitioned into financing fitness centers primarily using equipment leasing. Paul volunteered for SCORE, a division of the Small Business Association of the federal government and began working with select banks and SBA lenders packaging SBA loans for clients. Paul is a contributing writer and speaker at IHRSA, Athletic Business, SCW Mania and Club Industry publications and trade shows.
Equipment leases and SBA Express loans are complementary products that will enable an entrepreneur with good personal credit to finance the opening and expansion of a business. 2019 PROFESSIONAL PARTNERSHIP | 11
WAVE OF THE FUTURE Protecting yourself beyond the gym floor Eric Mitchell | www.PHLY.com
here are a lot of things to consider when becoming a fitness trainer. Where to train, what to teach, when to teach, how to promote a brand and build a loyal customer base... these are all important questions that need answers. Equally important (and yet, occasionally overlooked) is the insurance coverage you purchase. Specifically, ensuring you are covered given where, what, when, and how you ultimately decide to train and inspire others. A prominent factor affecting how and where trainers conduct business is the fact that we now live in a digital age. Although hands-on, in-person training is (and will continue to be) the most reliable way to deliver consistent feedback and application of proper movement; the fitness industry is not impervious to this new digital paradigm. More and more, trainers are recognizing the necessity of building and refining their
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digital presence in order to market and deliver their services. Social media is an important platform that enables fitness professionals to advertise their expertise and showcase their results. Additionally, trainers can now record and demonstrate a workout circuit instantaneously through social media. What was once an onerous, multi-step process now takes only minutes; whether it is through a live stream on Facebook or an Instagram story, the process is as seamless as ever. More and more, there is a demand in the marketplace for these on-demand, online services. People are busy and often cannot allocate time to get to the gym. The millennial demographic (who are more inclined to use social media) often cannot afford the rising costs of gym and studio memberships, especially when these costs are laid against a backdrop of increasing student loan and rent costs. What is more, consumers in the digital age have a skewed perception of what should
and should not cost money. Content generally is as accessible as ever, and most donâ&#x20AC;&#x2122;t see the sense in paying for something they feel like they can get for free on YouTube. Despite these factors that are collectively affecting demand, aspiring workout enthusiasts still desire a fitness routine that is designed by a knowledgeable professional, tailor-made to the individual based on goals and current abilities. Perhaps more importantly, they recognize the extra motivation and accountability a trainer can provide. The solution for many is to workout at home but with the help, support, and guidance of a trainer who is delivering their fitness instruction online. Still, a robust online presence carries with it some unknowns for the fitness trainer. Namely, will my insurance policy cover me if my online services lead to a lawsuit? Trainer insurance coverage is important to begin with for a myriad of reasons. One
obvious reason is a goal of prudent risk management, generally, to preserve continuity of business operations despite a sudden and accidental loss. Or, put simply, the ability for a trainer to continue doing what they love despite the fact that something, whether it be a loss of property or someone getting injured, has gone wrong. Even more importantly, however, is the fact that fitness professionals are typically training as an individual and have not set up a separate legal entity for the business. As such, personal assets (bank accounts, cars, houses, etc.) can become exposed if someone were to file a lawsuit for damages arising out of the operations of the individual trainer. For these reasons, it is vital for trainers who deliver services online to be sure their insurance policy does not exclude training advice or instruction delivered digitally. If, for example, someone was to get injured while working out at home, because of a fitness
program or exercise routine designed and delivered digitally, they could file a lawsuit alleging negligence. In another example, someone may file a lawsuit alleging infringement upon copyrighted or trademarked content during an online advertisement. Both of these scenarios can easily be covered by adequate insurance. However, some insurance companies may exclude coverage by limiting coverage only to specified premises, excluding advertising claims, or simply by excluding claims arising out of online services outright. Adequate insurance coverage will not only encompass online training services, it will provide coverage for in-person services as well. For the latter, not having the proper coverage can act as an impediment to conducting business, as most gyms and health clubs require trainers to furnish a certificate of insurance, evidencing adequate coverage was purchased with an acceptable insurance carrier.
In summary, the world is changing and the fitness industry is changing right along with it. It is important for trainers to be nimble in how they deliver their products and services, and in some instances this means going digital. Good insurance coverage should empower trainers and provide them with not only peace of mind, but with the requisite flexibility needed to teach and inspire others to be the best they can be. For these reasons, it is important to review your policy carefully and only purchase insurance coverage from a longstanding, experienced, and trusted insurance partner.
Eric Mitchell is an underwriting supervisor at Philadelphia Insurance Companies (PHLY). PHLY specializes in insurance for the fitness industry across the United States. Our Fitness Instructor and Personal Trainer Insurance is specifically designed to meet the unique insurance needs of many categories of fitness instruction. 2019 PROFESSIONAL PARTNERSHIP | 13
MULTIPLY YOUR GYM'S GROWTH
with lead-generating websites Kinnick McDonald
ost fitness professionals understand the importance of a website, digital marketing and strong online presence when it comes to growing their membership base. With that, advancements in technology and rapid changes in customer behavior are directing these concepts to become even more advanced and cohesive. In fact, 52.2% of all web traffic is on a mobile device, making it even more important to design a website with the end user in mind. To address this, gym owners need a modern, lead-generating website that's easily searchable and designed to convert visitors into prospects.1 A website designed to generate more leads and multiply a gym’s growth has a few key pillars of success: responsive design, lead optimization and an integration with business management software. RESPONSIVE DESIGN Responsive design isn’t a new concept, but it has gone from being a differentiator to a must-have. This goes beyond simply making sure a website is “mobile-friendly;” the images need to look beautiful and the site needs to be easy to navigate on all modern devices. In addition to appearance and navigation, having a responsive design will help the website rank better in search engines, specifically on Google due to mobile-first indexing.
into a lead is through a call-toaction (CTA) and embedded lead form offering a promotional incentive, such as a free trial. To encourage website visitors to redeem the promotional incentive, it’s important to use effective CTAs throughout the website. High-performing CTAs include “Schedule Your Free Trial” or “Try a Free Week.” Embedded lead forms are also massively important for a website aiming to convert visitors into prospects. Lead forms allow visitors to request more information or sign-up for a specific offer by submitting their basic contact information like name, email and phone number. By optimizing a website for lead generation through a CTA, promotional incentive and embedded lead form, a clear path is set for a website visitor to become a prospect.
LEAD OPTIMIZATION While having a beautiful, responsive website is important, it's only as good as its ability to convert leads into paying members. The most effective way to turn a website visitor
INTEGRATION WITH BUSINESS MANAGEMENT SOFTWARE Integrating a gym’s website with business management software
is essential to a gym’s growth strategy. The integration codifies the branding, lead generation, marketing and sales processes of a gym - streamlining processes and ensuring no prospects fall through the cracks. If the software includes tools like embedded calendars, marketing automation and a prospecting funnel, it's important to leverage those additional features to engage leads and convert prospects to help multiply the gym's growth.
Kinnick McDonald is the Senior Director of Marketing for Zen Planner, a leading business management software suite that makes fitness businesses wildly successful. An industry thought-leader, Zen Planner pairs all-in-one business management software with premium integrated website management and digital marketing services. For more information about the Zen Planner Software Suite, visit https://zenplanner.com/.
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