Managing cash and people through rapid growth – the key to Pure Gym’s success

 

Pure Gym founder Peter Roberts, reveals the challenges in reaching the top of his industry’s tree and crucially, how he intends to stay there.

Peter Roberts is the founder of low cost fitness centres, Pure Gym, which recently became the UK’s biggest gym operator. Prior to that he developed and managed a range of businesses including hotels, pubs and nightclubs.

 Peter Roberts

AT A GLANCE: Pure Gym is the UK’s biggest fitness operator; Profits increased by 82% over the last year; Building strong financial foundations has been vital to growth; Creating a culture of buy-in from employees has been crucial; A balanced approach to risk has supported decision-making; Pure Gym sees further potential for growth. Source: Pure Gym

“When you get to the top of the tree, everyone else wants to knock you off your perch,” says Peter Roberts, founder of Pure Gym. “You need to continually ask, ‘what do I need to do to keep the business on the up… how do I stay ahead of the competition?’”

As Pure Gym celebrates an 82% increase in annual profits in 2015, driven by over 150 sites and more than 800,000 members, it’s a constant pre-occupation for Peter, who holds regular think tanks to generate ideas.

Spotting a gap and testing the concept

So what are the secrets of Pure Gym’s success? Initially, it was spotting a gap in the UK fitness market.

“I’ve never believed in being a pioneer in business,” says Peter. “I think it’s probably better to be number two or three, but when someone mentioned the low cost gym concept in America and Germany, I literally jumped on a plane to go and have a look.”

“My concern at that stage was: ‘why haven’t they come to the UK?’ And I still haven’t got to the bottom of that,” admits Peter. “It seemed to me to be a complete no-brainer.

“The model was to develop low cost, accessible gyms with flexible no contract memberships, which was a new concept in the UK. I approached a group of investors that had backed me before and we raised enough cash to do four sites in four different areas. So we had one in a retail park, one in a residential area, one in a corporate area and one in a commuting zone to see which was the most likely to succeed. And ironically they all did, which is pretty unusual for a start-up.

“We hadn't got it 100% right but I think we got it 80/85% right. We went back to the drawing board, made the alterations and then started a roll out.”

Pure Gym infographic 1

Out and out entrepreneurialism

Supportive investors and a clear funding strategy have allowed Peter to pursue growth beyond his wildest dreams. “I recently dug out my original business plan, which stated that we would do 20 gyms over a four-year period. It made me chuckle – most business plans overrate the business and then underperform. Ours did the opposite.”

Securing market dominance has been a major factor in Pure Gym’s success, but according to Peter, the catalyst for growth has been “out and out entrepreneurialism”, with the push for dominance emerging as a product of that passion.

“Once we knew we had a real tiger by the tail, my view was that we needed to dominate the market, because I knew there would be other people coming along behind us,” he says. “To some degree we model ourselves on companies like easyJet or Premier Inn, who've got into a market, taken a lead position and then been able to hold it.”

Finding the right people

“I’ve been fortunate to have a very good board who allowed us to go ahead at full steam and invest in people ahead of our expansion so we’re always ahead of the game. With a previous business we were caught on the hoof – we didn’t have the right people in the business and that was regressive for expansion. I learned my lesson.”

Getting the risk balance right

Other lessons Peter has learnt along the way include a refreshing attitude to risk and a clear focus on the financials. “You have to have the get up and go and be prepared to take some risks to drive the business forward,” he says.

“However, as I’ve got older I’ve been much more careful about putting the funding together. In my early days, I was much more rash. Whether you’re funding through debt or equity, that is the key part of your business. If it isn’t there or it gets withdrawn or slowed down, it can make a fundamental difference.

“Very rapid growth, which has been accelerating as we've gone on, brings its own challenges, both in terms of managing your available cash and managing the increasing number of people you employ. You have to be able to take advantage of being able to grow the business quickly without making a hash of it.”

Harnessing people power

“You have to have the get up and go and be prepared to take some risks to drive the business forward.”

Named as one of the best companies to work for last year, getting the right people in the business has also been one of the pillars of Pure Gym’s success. Although, as Peter points out, it can be both challenging and rewarding: “Making that change from raw entrepreneurialism to running a more structured business is quite a difficult thing, but it’s important to get the right people in and empower them.

“Our COO has been instrumental in engendering a culture where people are proud to be part of the business, they’re giving 11 out of 10, they feel that it is their business – and that I think, is completely fundamental in making a successful business, especially as you go through the middle part of any growth pattern”.

Further potential for growth

2015 was a huge year for Pure Gym. The acquisition of LA Fitness brought 43 new clubs into the fold and strengthened the Group’s presence in London and the South East. £5m was invested in re-branding and major partnerships were announced with Sir Chris Hoy and The Great Run Company. So has the business reached a plateau?

“Absolutely not,” says Peter. “There’s still plenty to go at. We’re focused on maintaining our position as number one and continuing to expand throughout the UK.”

For Pure Gym, Government initiatives to address the rising tide of obesity and health challenges will also hopefully bring new opportunities.

“One of our challenges is increasing the percentage of people in the UK wanting to get fitter. In terms of penetration, around 14% of people in the UK go to the gym to exercise. In some of the continental countries, that figure’s up in the 20s.

Pure Gym infographic 2

Moral and commercial objectives

“You know, someone wrote to me the other day to say he'd lost eight stone being a member. When you see what you've done for people and how one's changed their lives, it’s extremely gratifying. So I think the moral element of all that is very pleasing, but also obviously, it's following through commercially. I think there's a lot still to go.

“If we can get the penetration rate up in this country from nearly 14 to 20% then there's a lot more people out there who a) will become members of our gyms, and b) hopefully will be healthier and lead a better lifestyle.”

Securing the number one spot

Being named the UK’s biggest gym operator has been a huge personal achievement for Peter, who, aged 70 and on his eighth business, is the epitome of the serial entrepreneur.

“I am pretty proud that in six-and-a-half years we have gone from being a start up to number one, which for a capitally intensive business like ours is quite an achievement.”

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