National Business Awards Entrepreneur finalist focus: John Treharne, Founder The Gym Group

Describe your background and journey into the business world
A former accountant and England squash player, my fitness industry experience spans 25 years. In 1991 I started my first gym business, Dragons Health Clubs, which floated in 1997, with 22 clubs. I founded The Gym Group in 2007, the very first 24/7, low cost gym operator in the UK, with funding from Bridges Ventures. I recognised the opportunities offered by the low-cost sector and pioneered the concept of a low-cost gym in the UK.

The Gym Group is one of the fastest-growing companies in the UK, earning it 13th place on the Sunday Times Fast Track 100 and was also named runner up in the Outstanding Achievement Award category.

In 2011 it was named Budget Gym of the Year at the National Fitness Awards and is the only group operator in the fitness sector to be accredited by Investors In People, being especially commended for high motivation and energy levels displayed by the staff. In March 2013, The Gym Group achieved 15th place in the Sunday Times 100 Best Small Companies to Work for, gaining the top Three Star Accreditation standard. In May 2013, I was named CEO of the Year in the South East by the British Private Equity & Venture Capital Association (BVCA).

How did you fund your business?
When setting up the business I took inspiration from the low-cost sector in Europe and America. The model demonstrated members did not have to sign up to long-term contracts. I saw an opportunity to bring the concept to the UK and take advantage of huge cost savings made possible by intelligent use of technology.

In 2007 The Gym Group was founded with funding from Bridges Ventures, which has committed £17.5m to date. From £1m sales in 2008, the company leapt to £13.5m in 2011 and achieved 13th place in the Sunday Times Fast Track 100 list of the country’s fastest growing companies. In June The Gym Group secured £50m of venture capital to help drive the future growth of the business and extend its leadership in the sector. Following a refinancing process to attract new investment, Phoenix Equity Partners invested alongside current stakeholder Bridges Ventures to fund The Gym Group’s accelerated
rollout programme.

How are you managing the challenges associated with starting up your own business?

Managing your own business is not without risks and securing backing was a challenge. In 1990 I re-mortgaged my home and borrowed £600,000 from Midland Bank (now HSBC) when I started Dragons Health Clubs. I was very confident it would work and clearly there was an opportunity to take squash
clubs and to add other facilities to make them significantly more appealing, turning them into family-based racquets and health clubs.

Opening the first gym is always difficult as there’s so much pressure on it to be a success. If it isn’t, then the concept never goes any further. Opening our first gym was great fun, we were selling in a portakabin outside the 24-hour Asda in Hounslow and we opened it with 6000 members, so it was a great success. It was the cornerstone that then built the confidence to roll out the chain.

The company is now the most successful and fastest growing operators in the sector and in terms of the future, we plan to open a multitude of sites predominantly in the UK’s major cities with a southern bias as well as consider opportunities outside the UK.

The key challenge for the business now is to remain totally focused on the brand offering and ensuring there has been no ‘product creep’.

Can you give any advice to others starting up businesses?

  • Do your research
  • Exploit technology to give you competitive edge
  • Remain innovative

How do you foster innovation throughout your business?
Innovation is at the heart of The Gym’s offering. Online registration allows people to join at any time of day and the automated door systems provide 24/7 access. Kiosks in every gym allow people to join in the foyer without the need for staff intervention. In the last 12 months more than 300,000 people have used the online joining process.

Increasingly complex technology gives The Gym a competitive edge; people who couldn’t complete the joining process are automatically retargeted with offers of assistance. Since launching in October 2012, the automated retargeting system has converted more than 2,500 people who had previously failed to complete the joining process.

Staff use technology to develop increasingly effective ways of growing the number of members and the length of their membership. Recent initiatives include structured weight loss programs that increase retention, improved sales processes to increase conversion, targeted emails that personalise the
member experience, and better induction processes to make the most of the critical early engagements.

Despite more than doubling member numbers since the start of 2012, The Gym Group continues to use cutting edge innovation to deliver an award winning product. The Gym has introduced a product called Myride, a 24-hour virtual spinning concept, and is also currently trialling virtual gym classes at selected sites. The company also has an arrangement with Aviva whereby they offer members discounts on private healthcare based on gym usage patterns.