How A Des Moines-based Yoga Studio is Surviving the Pandemic
(Bloomberg Businessweek) -- “It was probably one of the most challenging weeks I've ever had as a professional,” says Adam Geneser, recalling the time in mid-March when new and often conflicting information about — and recommendations for — Covid-19 seemed to come every hour. Geneser, with his wife Stephanie, owns Power Life, a small but growing chain of yoga studios in the Midwest. Before that he worked in private equity for nearly a decade in Denver. “I lived on the front lines of the financial crash of 2008 and 2009 and felt pretty confident that I could navigate this,” he says. “But the pace of decision-making was nothing like I'd ever experienced. I was really scared.”
The Genesers opened their first Power Life, in West Des Moines, Iowa, in 2012, after family had brought the couple back to their hometown. Iowa offers few opportunities for strategic buying and selling, and Adam was, in any event, ready to try something new. Yoga was an obvious opportunity — the couple practiced together and Stephanie occasionally taught it. “We were young,” says Geneser, 38. They figured they could do something else if the studio didn’t succeed.
Within three years, the company added three locations around Des Moines and then another four in Kansas City. Power Life is set to open a studio in Omaha, Nebraska, this fall, should public health conditions allow. Still, Geneser says, expansion was never their top priority. “In private equity, people are treated more like assets. And when they’re not needed, they’re tossed away,” he says. With Power Life, “we wanted to create an organization that was first and foremost about people.”
It was Power Life’s employees who prompted the Genesers to shut the studio’s doors on March 16. “People were uncomfortable coming in to teach,” Geneser says. “Looking back on it, it was the right thing to do, because ultimately they closed everything up anyways.” Iowa ordered non-essential businesses closed the very next day, and Missouri and Kansas followed within a week. Soon after, the company furloughed 185 of its 212 employees, all part-time instructors.
Two months later, on May 18, the Genesers reopened their yoga studios in Iowa and Missouri at reduced capacity, soon after those states lifted closure orders. (The two Kansas studios reopened on May 22.) On June 12, the state of Iowa eliminated capacity restrictions for fitness studios and other businesses that can keep customers at least six feet apart. BusinessWeek recently spoke with Adam Geneser about surviving the pandemic.
The interview has been edited and condensed.
How much did revenue drop while you were closed?
Over 60 percent, in a matter of like 15 days. It happened so fast. It’s really tough to prepare for that. There were people, over half our members, who chose to keep their membership active, who were invested in our ability to survive.
How did you keep things together?
Our saving grace as an organization was we had a business model that worked. If you've got a business model that works, everybody always says you just need to scale and scale. We had a successful, profitable business, and we’d been conservative with decision-making and growth. We had no leverage on the balance sheet, and we had a cash balance. I felt really confident about what we had. When you get the liquidity, you’re able to make the right long-term decisions for the business, rather than short-win decisions that. You don’t have that luxury when you don’t have liquidity or you’re highly leveraged.
We went into video production mode and we created about 100 videos within a matter of a couple of days. We did it on YouTube — it wasn’t a way to make money, we decided to keep our student base engaged. And by doing it for free, we can potentially increase our brand recognition within our markets. We had a YouTube page that had maybe a hundred subscribers, and within a matter of a week we had over 7,000. That content is still free today.
Did you put personal money into the business — to pay rent, or to pay salaries?
I did put personal money into the business, and thankfully that money hasn’t been used yet. My wife and I cut our pay to zero. There’s been government assistance that’s been available and we’ve been able to take advantage of that. I’m really thankful, but it’s a fraction of the revenue loss that we’ve experienced. Through this whole thing, we’ve kept the people who’ve relied on us for their income, about 30 of our employees.
We started working on reopening in early to mid-April. You have to balance the health and safety of employees and clients with survivability. Steph and I have put so much time into this, and as a small business owner, everything’s personally guaranteed. You don’t just lose your job, you lose your house.
Not only is physical health important, but mental health is really important right now. We’re not an essential service provider, but we’re providing a service to the community—yoga is great for mental health. There are some people who wanted this. We talked to our employees, and over 90 percent of them said, “We're with you.” I kind of expected 50-50. And most of our fitness instructors have a full-time job and they choose to do this as a service to the community—90 percent of them want to come back and do this. It gave me a lot of confidence in knowing we were making the right decision.
What precautions are you taking now to prevent the virus from spreading?
We flipped the business model upside down in the sense that it had been first-come, first-serve and we went to a pre-registration model. You have to register for classes, because we anticipated our capacity within our locations was going to be reduced. Historically, people weren’t six feet apart. Our classes were full. You’d come to a class and there’d be 40 or 50 people in it. Now we have everybody six feet apart and our capacity is cut in half.
It’s a controlled environment. We have set times for a class, so we can control that flow in. It’s touchless—everybody’s pre-registered. All the doors are open, they come in and take their spots, all marked out, six feet apart. Our instructors, who usually moved around the studio, are now in a single spot. Class is done, people filter out; the place is cleaned. We’ve eliminated our props, except for some hand weights, which gives us the ability to completely clean that environment after class is over.
We make masks optional. There was no local guidance out there that said masks were required. We’ve given our employees the choice, we’ve given our clients the choice. It’s been very divisive. People have been on both sides of it. And they’re very opinionated about it.
There’s been a lot of CDC guidance that people should be wearing masks.
We’ve gone back to all of our stakeholders within the organization and given them a choice on everything.
Do your instructors have the right to say, ‘If I’m going to teach a class, people have to wear masks.’ ?
No. They have the choice if they want to teach, and they have choice if they want to wear masks. We aren’t requiring our instructors to teach. Most of them don’t need the income. And our clients, our students, they’re making the choice to come in. I think it comes down to personal choice.
In early June, the Polk County Health Department reported some 592 new cases in Des Moines over the previous week, and explicitly attributed that to businesses reopening—even though businesses like yours are presumably following the government health guidelines. What do you think about that?
I think there’s a lot that goes into the headline of cases increasing. Testing more is one of the obvious answers. The number that I personally track is hospitalizations. It’s really hard to argue that one, at least relative to the other ones. In all of our markets, hospitalizations, regardless of being open, have continued to trend down. I look every morning. Today there are 78 hospital patients in our region; yesterday there were 89. Our states have given us really good metrics to track, so if we see a huge upward trend, you start rethinking your decisions, but right now we don’t see that.
Are you attempting to proactively track cases among your customers and employees—have you asked them to notify you if anyone gets sick?
Employees – yes. Clients, we ask not to come in if they are sick. We also ask for health information but it is optional. Nobody’s notified us.
Where’s your capacity right now?
We’re down about 40 percent. We closed with 300 classes per market; we’re now running 400 classes per market. Again, it’s a long-term decision here, which is our clients want to participate and because our classes have reduced class size, we’ll take on the extra expense so they can go do it. We’ve actually hired 40 additional people running 25 percent more classes. That’s unique in the industry.
Where is your revenue now compared to before?
We’re not even close. I’m hopeful that we bottomed out in May. For our industry specifically, it’s a slow ride out of this. The carnage out there is real. I get an email every day about a new fitness organization that’s shutting its doors. I mean, I could rattle off 20 of them right now. I think we’re going to be at significant reduced revenue for an extended period of time here. We’ve shored up our business to be able to do that, and if we need cash, I’m going to give cash. One of the main reasons I’m not taking a paycheck is it’s all fungible.
Do you get a good night's sleep?
A good night’s sleep has been challenging for the last couple of months. There’s a lot of things that keep me up at night, and I try to control what I can control and get my mind around that.
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