Two-Brain Radio: Good Debt vs. Bad Debt With Clay Ferrer

Two-Brain Radio: Good Debt vs. Bad Debt With Clay Ferrer

Greg: 00:00 – Hey, it’s Greg Strauch of Two-Brain Media, and on this week’s episode we talked to Clay Ferrer. He’s the owner of Rigquipment Finance. You guys have probably heard some of the ads on here before of us talking about an amazing partner that we work with that has done phenomenal things with gym owners through financing. Even myself, I’ve utilized them in the past. We jump into good debt versus bad debt and really the differences between the two so that we can educate you more if you don’t know the difference between good debt and bad debt, and really, hey, as a business owner, what’s the first step I should be going towards if I’m acquiring good debt? Subscribe to Two-Brain Radio for the very best ideas, tips, and topics to move you and your business closer to wealth.

Greg: 00:48 – Two-Brain Radio is brought to you by Two-Brain Business. We make gyms profitable. We’re going to bring you the very best tips, tactics, interviews in the business world each week. To find out how we can help you create your Perfect Day, book a free call with a mentor at twobrainbusiness.com. We would like to thank another one of our amazing sponsors, UpLaunch. Over the amount of time that you’ve had your business, how many people have come through your doors and never signed up for a membership? When I first opened, I remember getting everybody’s name and emails because that’s what I was told was the best way to start the conversation with potential new members. The big problem was I never knew what to say. Over many years, I spent countless hours developing plenty of emails to send to these new members or people that are thinking about signing up for a membership. This took a lot of time, probably way too long, and could have been spent on more productive things. If you’re in the same situation I was, don’t waste any more time and book a free session with UpLaunch. UpLaunch has over a hundred prebuilt emails to convert new leads into members. And when your members decide to take a break, they have a whole campaign to get them back through the doors. You have the ability to text message members from the app, and with integrations like Google calendar, Facebook and over a hundred more via Zapier, UpLaunch has you covered. UpLaunch was created by gym owners for gym owners. Head over to www.uplaunch.com today to get the conversation started with your future and past clients.

Greg: 02:20 – All right, on another amazing episode of Two-Brain Radio with Clay Ferrer. He is the CEO of Rigquip. You guys have probably heard their ads on our podcast here, but welcome, Clay. How are you?

Clay: 02:34 – I’m doing well, I’m doing well, Greg. Thank you for having me.

Greg: 02:38 – Happy to. So I want to dive into some things. Of course, I’m going to give a little bit of background that maybe some people don’t know and kind of talk to you about the whole fitness side of things that you kind of have brought out in your bio and that kind of stuff. But then we’re gonna really dive into educating people that are listening and really educating people on good debt versus bad debt. I think a lot of us have heard that term before, but not many of us understand fully what good debt is in what bad debt is. I mean, I’m sure people could say, oh, credit card is bad debt and a loan could possibly be bad debt. But nobody has really gone into details about those things so I’m hoping that we can really educate people out there so they can understand those two. But before we do that, a little bit of background about you that I learned was you are a CrossFit Level 2 Trainer, is that correct?

Clay: 03:32 – That’s correct.

Greg: 03:34 – And you found CrossFit in in 2011, I believe, and you also coach at a gym or are part of a coaching staff?

Clay: 03:43 – I am. It’s funny. I actually was out at the Two-Brain Summit a few months ago, it was like the more and more conversations I hear and you know, every year as it continues to evolve, I realized that I end up, I think, coaching more classes on a weekly basis then than most of the owners that were in the audience. Which is kind of a funny way things have evolved over time.

Greg: 04:03 – No, I definitely understand that feeling. When I first showed up at the first Summit, I felt like I was the only one that was still coaching classes. And then that changed over time. With you owning a financing company, what kind of—where did you start from that kind of led you down that path to opening up Rigquip?

Clay: 04:26 – Yeah, absolutely. And you know, part of it and I think a big part of the reason why I’m still coaching is, you know, it’s something that I truly love. I’m truly passionate about it. You know, not only from a business perspective, obviously, but just from the perspective of the way, you know, it helps people change their lives. And I think I’m a actually a really great example of that. So my professional background, from before finding CrossFit was in the financial services sector. I had always been entrepreneurial by nature, very much interested in learning about business, about how businesses work. So, you know, as I was working on a college path, I knew I wanted to get into business in some form or fashion. I didn’t really know what it was. I did business school as OK that’s a great opportunity to learn, undergraduate business school, that is, you had to learn a lot about business in general and, you know, I’m gonna find my path along the way. And so as I kind of worked through that, I was really drawn towards finance in particular because I think the numbers are something that, you know, are very cut and dry in a lot of ways. It’s almost like, to a certain extent, putting puzzles together And then, you know, kinda crafting stories based on what those numbers are, and that led me down kinda further a path into investment banking. And this was, you know, I guess when I started in banking, it was, you know, 2007, 2008, at kind of the peak of the last boom, on the cusp of the great recession, the meltdown, which all occurred, you know, really starting in the financial services sector.

Clay: 06:12 – And you know, when I started down that path I viewed the financial sector in general as really the engine. Or it’s the gasoline, it’s the lifeblood of the broader economy And then, you know, what we went through in the great recession is a really good example of that When the banks and lenders and Federal Reserve and Treasury and FKC When there are issues there, that really ripples throughout the entire economy. And so I’m like, you know, I’d always viewed it as, again, at that point I still didn’t necessarily know what I want to do in business, but I viewed financial service sector as something that would allow me to learn, you know, a lot in banking in particular, learn a lot in really compact amount of time. And so, you know, the company that I went to work for, we did predominantly M&A advisories or merchant acquisitions. So effectively if you think about like a, you know, the way you hire a real estate broker to market and sell your house, it’s kind of the same thing except to sell companies. And we did M&A as well as capital raising. So helping companies, you know, raise money from institutional investors, both in form of debt and equity. And I really thought that this was, again, another way of learning a lot in a really short amount of time because in order to sell something or to raise money for something, you really have to understand it at a truly fundamental level. So really, you know, starting with the numbers And then kind of reverse engineer into how a business works, discussing with management, you learn a lot about a lot of different types of companies and services in particular

Clay: 07:46 – The companies that we worked with lent money to other businesses or to individuals. So not only are you learning about the business that lends the money you also have to learn about how they view or how they understand and analyze the people that they lend money to. Just again, viewed it as a really efficient way to learn a lot about a lot of different areas of business. And so ultimately that kind of dovetails back into where we started in 2011 when I found CrossFit, and it was one of those things where—I mean I’m a firm believer, Greg, everything in life happens for a reason. And so, you know, it was like New Year’s Day The unfortunate byproduct of banking, or at least the lifestyle was, you know, after I graduated from college, put on a bunch of weight, had a largely sedentary lifestyle, you know, didn’t quote unquote “have time” for health and wellness. And as I’m laying there, January 1st, you know, hung over, kind of at the, at the total bottom of the health spectrum. You know, there was a miracle, the CrossFit games came on TV. And I ended up like sitting there with my wife Chelsea, who’s a business partner and another huge component of Rigquipment Finance today, we got sucked into like five straight hours of like old Games reruns. And you know, again, as like serendipity or luck or whatever the case may be, the very next day I’m at the grocery store and I get a flyer on my window shield that there’s a new box open and like down the street. And so this was, you know, Tucker Jones’ handiwork of passing out these flyers in the parking lot where I come out of the grocery store, this flyer’s on the car and I was like, OK, someone’s—you know, this is a sign.

Greg: 09:36 – A sign to go ahead and make some changes in my life and get signed up. I ended up being in like the very first foundations class at Ballston CrossFit got to watch that community, you know, grow and thrive and started to learn more about the coaching side of things and the business aspect of things from Tucker and that ultimately led down the path of going through the kind of coaching development and training program and then starting to coach some classes at Ballston CrossFit. At that point, I’m now five years into banking, and always wanting to do something more entrepreneurial, and I realized like, wow, like not only am I super passionate about this and kind of view this as like the way of the future from, you know, health and wellness perspective, but there’s a massive need in this market for someone that, you know, can, can understand these small business owners, understand their business model, and then provide capital to help them grow and expand their businesses to help them, you know, build their community and help a ton of other people the same way CrossFit helped me. That was the kind of long-winded way of, you know, marrying professional background with this kind of newfound personal passion, and ultimately creating Rigquipment Finance as that vehicle that we can help, you know, ultimately a lot of people, both owners and their customers, you know, change their lives for the better.

Greg: 11:00 – Agreed. And I’ll tell you, I mean, you’ve helped me a few different times with financing. One of those things was our InBody and a few other things within the gym because I didn’t have the upfront capital and when I did have it for certain things like the InBody and I had that capital ready, I would much rather be able to personally mitigate my risk of losing all that money and then say something happens within the gym if I took that account down to zero and not having any cash on hand. So you helped me mitigate some of that risk by allowing for a, I would consider a short-term loan. It’s only a few years to have that paid off and still be able to provide value to our members and our staff with having that InBody.

Clay: 11:47 – Absolutely. And I will say, and this is definitely something I want to get to later, Greg, but you know, on one hand, certainly keeping that extra cash on hand, that cushion for inevitably we all know in business things are going to not go as planned or going to go wrong, and having that cash you might have otherwise spent in reserve is a huge safety net, and could get a lot of times be the difference between make or break for a business owner. But two, and again this is where we’re really talk more about it later is really just how financing that upfront purchase has changed the return on investment profile for you as the owner of the gym. Instead of coming out front for the full amount and then having to not only recoup the cost, but also then create profits, it stretches out the timeline significantly versus when you look at, let’s say a $200 monthly payment relative to how much additional income you generate to create a healthy return on that investment, it totally changes the math and definitely we’ll spend some more time on that later.

Chris: 12:46 – Hello my friends. It is Chris Cooper here. Since 2009 I have been writing daily blog posts, producing podcasts, videos, all kinds of stuff on social media with one mission in mind: to make gyms profitable. I came to that mission because I was an unprofitable gym owner. It almost ruined my finances and almost ruined my career, my marriage, everything. And since that day, since I made my recovery, I have wanted to help other gym owners become profitable, too. It’s part of my mission to the world because if you’re profitable, you’ll be here changing lives of thousands of your clients for the next 30 years. I think together we can have a tremendous impact. When we started mentorship, I did every single call myself. I was doing up to a thousand free calls a year and I was doing 10 calls with people who signed up for our early mentorship program, but the Incubator has been updated and improved a dozen times since then. Now the Incubator is really the sum of all of our experiences with over 800 gyms worldwide. In the Two-Brain mentorship program, we can now learn from everybody. We can collate data, we can see what’s working where and when and what the new gold standards are as they emerge. When somebody has a great idea, we can test it objectively and say, “Will this work for everyone or will it work for people on the West Coast or on the East Coast?” We can do that with little things like Facebook ads. We can also do that with operations and opening times and playbooks. All the questions that you have about the gym, we can answer them with data and with proof now. That’s the Incubator. It’s more than what I wrote about. It’s more than my experience. It is the best standard in the fitness industry, period. And I hope to see you in there.

Greg: 14:29 – Agreed. And that’s actually a perfect segue into jumping into it. So Clay, if I’m asking, I mean, for the community, anyone that’s listening, what is your definition of good debt and what is your definition of bad debt?

Clay: 14:42 – Absolutely. And I think, you know, I’ll use an analogy that I think a lot of people will be able to resonate with here ? I think you know, debt in any context, you know, particularly in the case of a business, you know, I kind liken it to a kipping pull up. Like, it’s a specific tool to accomplish more work in a shorter period of time. It can be something that can create a lot of issues if you don’t have the requisite, you know, strength and mobility and understanding the pull-up side of things before just trying to do it. But in a specific situation such as, you know, a a testing scenario or a competition where you have to complete as much work in as short amount of time as possible, or otherwise do more with less, it’s a very important tool. And so debt I think is, you know, a lot of the same way. And so when you start to think about that in terms of good debt versus bad debt, I think the best way to think about good debt is you know, utilizing other people’s capital to purchase assets that will ultimately earn you more money in the future. Bad debt, I think a lot of times is, would be debt that is used to purchase, you know, a depreciating asset or a non-cash-flow asset or kind of more separately or specifically, you know, other forms of debt that can be more punitive than they may appear on the surface. And speaking a little bit in generalities there, but a couple examples of that would be like, you know, merchant cash advance, or you know, very, very short-term, you know, working lines of credit or working capital lines, things that ultimately end up starving the business of cash to cover, you know, near-term operating expenses, which sometimes will be important but ultimately create more issues down the road than there were.

Clay: 16:37 – So, you know, I think even taking a step back and like good debt versus bad debt, I think a lot of times, business debt has this like, you know, I think mischaracterization as just being bad, and it’s like nowhere else in the world is like—so you see someone like buys a house and everyone celebrates it. You know, very few people are buying a house or buying their first house like cash only They’re using debt to purchase something they might not otherwise be able to afford if they had to finance it entirely with their own cash And then you know, or going to college You know, and you know, if you had to save your entire life enough money to go to college, and then pay it forward and then try and recoup that, it changes things That allows you to again, accomplish more in a shorter period of time. And so, but for whatever reason, you know, business debt a lot of times it’s kind of thought of as well, if they are taking on debt, they must be in trouble. And in reality it’s the exact opposite. And certainly there are cases where that might be true, but you know, more often than not, in order to even qualify for secure debt financing, that means you have a very successful and thriving business. And if you take it a step back from, you know, the micro gym, the boutique fitness space and look at all businesses, or the most successful businesses, in the broader economy or in the stock markets or otherwise, every single one uses debt in some form or fashion. It’s not a bad thing if it’s applied appropriately and with the proper controls and cushions in place. So I think there’s this kind of general misunderstanding of debt in a business context as always being bad. And that’s, you know, very much not the case.

Greg: 18:26 – No. And I will say for me personally, I mean I always thought if I have to get a business loan after being in business that that’s bad. I should have been able to generate the revenue to not have to get a loan to do that. And it sounds like from what you’re saying is getting a business loan or even student loans or as you put it, even like a mortgage for a house, those are things that are going to generate value or generate a higher net worth, it sounds like, so that those would be considered good debt.

Clay: 19:01 – Absolutely. There’s a million examples out there of people that are, you know, unhappy with their student loans and not utilizing their college degree and so there’s plenty of bad examples within those broader categories, you know, but by and large, things that are effectively an investment into your future ability to earn, whether that’s personally or a business or your ability to have cash flow generating asset or value appreciated asset, like a house. You know, oftentimes they’re going to be very smart uses of debt. Now taking, you know, buying—what’s a good example; buying a car with a car loan, not necessarily bad, but then taking a high interest credit card and putting a new set a wheels on there and a speaker system, you know, now you have paying more in debt service than ultimately the cost of the car is worth because you drive a lot and it’s worth, you know, 30 or 40% less right away. And that’s not going to actually generate any sort of income for you in the future.

Greg: 20:06 – OK. So I mean like you said, car loans, credit cards, I mean those high interest rates, those kinds of things, definitely. I could see—and I’ve had it in my personal life. I know when I originally opened the gym, I had a business credit card and there was times where I would throw equipment on there cause we need more equipment. But I would never pay off the balance completely. And I’d constantly have that interest rate going up and up. And I remember at one point I maxed out that credit card, and it was all business purchases of course, but it still was maxed out. And if we need more equipment there is no more, no way to do that. But that interest kept accruing and I had to find a way to get out of it. And of course, I mean now I’m at a point where I have it but it’s completely of course paid off and I still just have it in case anything comes up. But it’s definitely not utilized like it used to be. And those would be definitely cases of utilizing bad debt.

Clay: 21:01 – It’s good to have a safety net, like there are times when you need to rely on that and it’s good to have it. The only other thing I’d say about the credit card, you know, example is I think a lot of times people will get themselves in trouble because they get their monthly statement. They see minimum payment due, some really small amount. On one hand at least always make sure you make the minimum payments There’s no reason not to. And it will have really bad effects on your personal and business credit if you don’t make at least that minimum payment. Usually that’s like, you know, somewhere between 20 and 100 dollars a month. But I think a lot of times people misunderstand that as oh, as long as I’m making a minimum payment, you know, I’m going to be paying this thing off. The reality is that somewhere in the fine print will show you if you only made the minimum payment on a $10,000 credit card balance, it’s going to take you like 20 years and you’re going to pay like 40 grand to actually get it paid off. So credit cards and forms of revolving credit like that, you know, that minimum payment may only be sufficient to cover the interest component of the balance and maybe small amount of principal and then the next month, interest is recalculated on, you know, the same or a higher balance. So ultimately it’s not actually paying down the balance or not paying down as quickly as people may think. Particularly when you’re making just that minimum payment.

Greg: 22:20 – That makes perfect sense. With being a gym owner or gym owners that are listening, even business owners, really we can go generic with it because I think the principles that are the exact same whether they’re a service-based business or a product-based business for good debt and bad debt. What are—if a gym owner or business owner who’s just starting out, what are the forms of good debt that you would say, hey, these are the things if you don’t have the cash to just start out with it, what are the forms of good debt that you feel like people should be going towards? And then what are the ways of bad debt that people should be avoiding?

Clay: 23:00 – Absolutely. And I think the first thing that I’ll say is, particularly if they’re just starting out or maybe you’re going to go through a relocation or some sort of transition in your business. You know, anyone that’s been in business for any amount of time is going to be able to attest that things don’t happen exactly as you plan. And they don’t happen as fast typically as you plan on them to have them to happen. There are unperceived delays or unforeseen expenses. Things are—they’re more expensive and they take longer than even your worst-case scenarios, more often than not. As entrepreneurs, we tend to be optimistic or even overly optimistic people in general. And so, you know, we may make this assumption that things are going to go phenomenal from day one. It’s all going to go according to plan and just the reality is that’s not the case. Having those additional cash reserves that additional safety cushion, that additional working capital not only will help keep you out of trouble, it’ll also keep more money available for things that you can use to generate more revenue. So when you think about good debt at an onset or smart uses of debt or things like equipment purchases. Hard assets, you know, and the beauty of functional fitness, you know, business is the equipment, it’s built for durability, it’s build for longevity, you know, and by and large it can resell in the secondary market a very quickly and be at a pretty good percentage relative to the original cost. I can attest to that because we’ve resold a lot of it. Versus you know, a bad debt example in that same situation would be maybe taking debt in order to pay your coaches or pay your rent. Because those are things—they don’t have any assets backing. And so if there’s ever an issue it can’t be liquidated and there’s really nothing there, and while those things will help ultimately grow your business, that’s the kind of stuff that you should be using your equity, your investment towards to make sure you’re maximizing that return on investment and not be running up a high credit card with a bunch of operating expenses since you’ve spent all of your money to initially outfit the gym with equipment, finance the equipment and then conserve your cash to invest into the operations of the business, to growing it by paying your staff marketing, et Cetera.

Greg: 25:21 – OK. So using your cash or like you said, assets, to pay rent, to pay your coaches to pay marketing, even that kind of stuff. But to leverage a loan or business loan to help kind of make sure that you can utilize that cash that you’re using.

Clay: 25:44 – Absolutely. And I think the other way to think about it too is again, getting back to that return on investment. So whether you’re starting up or you know, whether you’ve been in business and you know, I think InBody, you know, is a good example, a sort of tool that you know, is a . So let’s say just to make numbers round, you have a $10,000 piece of equipment that you want to save up to buy and then put it into service to help grow revenue. And based on your budget, you’re able to save $1,000 a month. It’s going to take you 10 months and then you can make that $10,000 purchase, put it in service in month 11 and then start returning investment on it. That means every month for 10 months, you have $1,000 of cash that can’t be spent on coaches, that can’t be spent on marketing, that can be spent on rent, that can be spent on any other thing that will help improve the business. It’s just sitting in an account earning next to nothing. You have 10 months where you’ve been putting this money away earning you no additional return. Then you buy the equipment and you start to put it in service and let’s say that you’re able to then generate $1,200 a month going forward, so now you start to get a very small relative to $10,000 cost return on that investment, which has already happened 10 months in the future. Compare that to at day one you finance the cost. You have a small up-front investment. You finance the bulk of that $10,000 purchase. You then have, let’s say 10 one thousand dollar payments to pay it off. You’re still earning that $1,200 a month, except you’re doing it right away in month one instead of in month 11. Now, that same thousand or 1,200, $1,000, you would have been just putting into a bank, you’re paying towards the equipment and earning $200 on top of that at day one.

Clay: 27:42 – So now by month 10, not only have you paid off the cost of the equipment you’ve generated, what an additional $2,000 in profit and now from month 11 on, that $1,200 a month is going right the bottom line. That kind of changes things where you can from the very beginning start to make a 20% return on that actual cost of the equipment. And by the way, that, you know, $1,000 is not, you know, entirely interest, there’s some return of principal or paid out on the balance on the, you know, the equipment asset. But you’re able to use a much more efficient way to generate a return on that same $10,000 investment, even if it costs you more from a borrowing perspective in order to do so, you’re able to make so much additional ROI so much sooner that then when you repeat that 10 months from now, that’s where you start to really get the benefit of compound interest, and that’s compounding the return on capital, which over the course of a longer horizon, when you start to pull back and look at the next five, 10, 15, 20 years of your business, that ability to earn return on excess capital and then earn a further return on that return is where you really start to think about exponential growth in your business or in your financial assets. And that can be for you personally, you know, as the owner of the business, that could be for the business itself. You’re in the driver’s seat in terms of how you utilize that extra money.

Greg: 29:21 – So, I mean like with me having that InBody and having a loan through it, once I get that paid off, I still not only am generating revenue like you talked about earlier with your example of the $1,200 and a thousand of it going towards a payment and still coming up with $200 in profit, but after you get done paying off that loan, now I have that InBody as an asset. I can still, I mean, I could sell it if I wanted to. Now I’m not going to probably make the same amount that I did when I bought it originally, but if I take into account that profit plus however many years I have where I’m making $1,200 a month off of it, compared to just the $200, it definitely extremely paid for itself. And then plus many, many more. So it sounds like if you took that into a bigger scope, you’re saying, I mean, this could be even, a purchase of a building if you’re owning a business that you’re putting this business in, and with ownership of that building, once that gets paid off, it would be kind of used in that same example if we kind of grew it out to a mortgage payment and the ownership of a business building.

Clay: 30:28 – Exactly. And you know, that can be the difference of having spent that money up front to get the initial equipment or initially outfit your facility versus saving that money, leveraging the capital more efficiently, where instead of, you know, being 20 years down the road before you’ve accumulated the cash flow to buy the business, maybe you are able to do it in five to 10, you know, based on a more efficient use of that same exact original investment.

Greg: 30:54 – Yeah, that makes perfect sense. Now, bad debt. I mean, I think most people can understand definitely credit cards. But what are other forms of bad debt that you would steer entrepreneurs and business owners away from so that they can make sure that hey, these are the things, I heard Clay on a podcast talking about them. I need to make sure that if I’m just starting out or even if I’m in business, how I can correct some of the actions that I’m currently taking and maybe even the behavioral changes. Because I know with me when I had a credit card for the business, it was just like my personal credit card. I can use it for whatever, and not being really mindful of it, but what are the debts, the bad debts that you feel like people should be steering clear of?

Clay: 31:37 – Number one, first and foremost, is what’s referred to as a merchant cash advance. So, you know, the company that actually processes all of your membership billing on a monthly basis, a lot of those companies offer a separate, you know, loan product where they will lend you based on your track record of generating X thousand dollars per month, some amount, and then they will then repay themselves by taking a small amount every single day out of the payments that come into the business And then they send you the remainder thereafter. What happens is a lot of times people tend to rely on these at the most difficult point from a cash flow perspective in their business. So they’re behind on some obligations, you know, rent or utilities and they need access to quick cash. And this solves that problem, but it ends up just becoming a BandAid, because without that money being invested into something that’s gonna generate additional revenue, now they just have an additional payment that’s coming out of their account and ultimately ends up strangling a lot of businesses or accelerating the downfall of a lot of businesses. So, these short-term merchant cash advances are like the number one thing that I would encourage people to stay away from, which is like another reason why it’s always best to try and secure debt when things aren’t going well, the business looks better, you may secure some sort of form of debt, you know, and you don’t necessarily need it but allows you to A, keep your own cash in the bank and then gives you this additional, you know, reserve versus trying to then find debt at a point when you know, the businesses not in a good position necessarily and needs it most. And that’s what tends to be most costly, as well as, you know, the most difficult to obtain. The other thing, that you know, I’ve seen more recently with a lot of the online based lenders is you know, these kind of short-term working capital loans. And some of them function similar to the way merchant cash advances in terms of like daily paybacks. But what here’ll be a lot of times is like access of you know, a relatively large amount of money that has to be paid back in like six months’ time. And first kind of comment on these is when you look at the interest or how it’s calculated, you know, a lot of times what’s not clear is that, you know, at a shorter payback time, the effective annual rate is much higher than, you know, just the amount that you’re paying on a monthly basis relative to what you borrowed, so the annual percentage yield or the effective annual rate could be in the 20s, 30s, 40s, 50s. I’ve literally, no joke, seen something as high as 98%. And it’s just because, you know, a lot of times it’s not that clear and you have to really have a good understanding of what you’re signing up for, which most people don’t. And that’s, you know, not just gym owners or small business owners. That’s like the vast majority of America or the world. Financial literacy is just not something that’s, you know, strongly promoted in schools. So you’ve got to kind of learn it on your own.

Clay: 34:46 – So you know, a lot of times with these kinds of hidden rates or hidden fees that are buried in, but what happens with these kind of short-term working capital lines is you’re making, the interest payments or some diminimous payments and then the entire balance comes due at the end of that six-month period. And that’s a lot of times where people haven’t generated not only enough excess cash flow, but have not generated enough excess cash flow to cover the interest, but also the entire return of the payment and then at month seven, they find themselves in a really bad position because they have a large balance that needs to be repaid, which is why I’ll, you know, almost always encourage people to take, you know, term debt, and I think you mentioned at the beginning, a couple-year, you know, term loan where you pay down the balance over time, seems in the grand scheme of things relatively short, but actuality for business lending, it’s a pretty long period of time to get, you know, three or five years. You know, term debt is not necessarily an easy thing in the broader context of you know, lending or small business lending particularly.

Clay: 35:55 – So, whereas we have the merchant cash advance or these short-term working capital lines, the alternative is you know, a term obligation where you have fixed payments over a fixed period of time and once you come to the end of it, nothing else is owed. And so I think that’s one of the things that’s most important for people to understand is do my payments change at all over the course of time? You know, is there any obligation at the end? And that’s one of the big reasons why we’ve structured, you know, our two key financial products at Rigquipment Finance as term-debt obligations. On one hand we do the finance of equipment purchases. We use what’s called a full payout direct finance lease. It’s kind of a long-winded way of saying, you know, rent to own, but the gym owner knows day one, exactly what the stream of payments is going to look like. Once they make that final payment, they own the equipment outright thereafter. They don’t have that large upfront cash investment. They have a manageable stream of payments over the life of the lease, and then they own it afterwards. The other that we have as a more traditional term loan and that’s going to function for all intents and purposes the same way. It’s a fixed number of payments. It fully amortizes the original amount that’s borrowed so that once the obligation is over, there’s, you know, no balloon payment or no additional amount, anything that was financed with that term loan is then owned outright. And with both of these, the additional benefit for the gym owner is that, you know, they get to recognize an ownership position for tax and accounting purposes. So you’re going to get to write off that depreciation of the asset that was purchased, you get to write off the applied interest component of it. So it really goes a long way into actually lowering your effective cost to borrow.

Greg: 37:40 – That definitely makes sense. And I’ve utilized you guys before, and I hope more people out there, if they are listening to this, definitely reach out and have the ability to utilize. Now I have a unique ability that I get to work with the Free Help call. And I know one of the options that when a gym owner gets on the phone, or a business owner and we’re talking about their business and we’re talking about the Incubator and how it could possibly help where they’re trying to go and their Perfect Day and getting ’em there and showing them the path. Sometimes they don’t have the money upfront to be able to pay for the Incubation outright. And I know that we’ve talked about it in the past with utilizing Rigquip for certain things. But we’ve actually been able to really work with you guys and you guys actually allow us another option now. So if people are wanting to—if they don’t have the upfront capital and they want to finance, you’re giving them that ability. Can you kinda go into a little bit of detail of what that structure kind of looks like for gym owners if they are not knowing that hey, this is an option if they are going into the Incubation process or wanting to within Two-Brain?

Clay: 39:00 – Absolutely, Greg. And I’ll, to a certain extent, you know, kind of put my foot in my mouth relative to one of the things I said earlier, which is, you know, in our business, we typically only finance hard assets. Things that go into capital investments that go into the actual infrastructure of the business. This is the one example in our entire history where we’ll finance something that is not hard asset based. And the reason for that is, you know, we’ve work with Two-Brain for many years and we fully we believe that the Incubator program, you know, is going to ultimately result in improvements to the business and helping make the gym, you know, more profitable. So we do view it as an expense that is in the best long-term interest of the business. And so even though there’s not necessarily a specific piece of equipment that’s getting purchased in exchange for this, it’s a tool and in the same ways of helping gyms, you know, ultimately become more profitable. Something we kind of kicked around with the Z team at Two-Brain for a couple of years but ultimately what we have is, you know, a six or 12-month payment plan, you know, well-qualified applicants which is kind of a general catch-all term. But you know, meeting certain requirements, it can be 0% financed. For anyone that qualifies, it can be 0% for the first six months. I have a slightly different criteria to get to the 12 months. But you know, again, we view it as a way to help offset that initial investment, which in the grand scheme of things is, you know, is pretty small in terms of what it can generate for your business in the future.

Clay: 40:47 – But again, getting back to that return on investment, you know, Two-Brain, you guys already offer a guaranteed ROI. If you have a guaranteed ROI on a $5,000 up-front investment, think of what kind of guaranteed ROI you can really generate, you know, with a payment of, you know, 400 bucks a month, 415 to 430 at 12 months or 830 on the course of six months. So then, that return on that initial investment, you know, gets really significant in terms of, from a financial perspective, you know, let alone helping, you know, potentially save or really grow your business and all the, you know, subsequent benefits that come to you as an owner of doing that.

Greg: 41:34 – And that kind of what you were talking about earlier, too, of good debt. I mean, you’re generating value. We know—me and you know what the Incubator can definitely do. People that have never gone through it may not understand what it is of having a mentor be able to work with you one on one so that we can build the systems and get you closer to Perfect Day and understand the metrics that you’re supposed to be tracking. I mean, just overall everything, so that you’re a better business owner and the business is running a little bit smoother than you could ever expect. But it’s generating value. I mean, you could put new systems into play that is going to generate more value. It’s going to provide you with the numbers to look at so you know what to track and how to track it and how to make it better if it’s not going in the direction. So, overall it’s a loan process that’s going to bring more value to your members, to your coaches, to you, and it’s definitely something that people can utilize now, which was not really an option in the past, which is phenomenal for—I know if I was a new business owner that was starting out a gym, this was never an option when I started with Two-Brain. So it’s really nice to be able to have a partnership with you guys to be able to offer this to those gym owners.

Clay: 42:50 – Yeah. I think you know, you really hit the nail on the head, Greg, is, you don’t know what you don’t know. And a lot of times people either don’t realize that quick enough or realize it when it’s already too late. And so, you know, we wholeheartedly believe in the Two-Brain family and the benefits that gym owners get as a result of going through the Incubator and that ongoing one-on-one mentoring because at the end of the day, you know, and you talked a little about numbers and tracking I mean, there’s no value in a number. The value as the owner of a business is in knowing what to do about it. And being able to work with someone that’s seen these experiences, that has either lived it themselves as a gym owner or is currently working with a lot of other clients that are going through the same issues. Because you know, they vary in degree now in terms of—no issue that you run into as a gym owner, you’re the first one to ever run into. If you have the ability to leverage someone else who’s gone through it, how they responded to it and what was most efficient is hugely valuable. Because as an owner or operator of a business it’s on you to make the decisions about what sort of activities, what sort of products or services that your business offers and those activities and products and services results in financial output. They result in numbers which you then have to turn around and not only understand, but then be able to reapply those into making better decisions about different activities or more or less activities, which then results in a different financial output, which you then need to understand and analyze and continually improve and evolve your business method, the key, to long-term success, long-term growth, long-term sustainability in your business, we’re still ultimately going to, you know, serve you as the owner and your family well and allow you to continue to serve and help hundreds of thousands of people in your community on their path towards health and wellness, which is the exact reason that we’re all in this business.

Greg: 45:11 – Agreed and I definitely could not say it better myself. So Clay, thank you so much for being able to jump on Two-Brain Radio and sharing your expertise and kind of talking about the differences between good debt and bad debt so people could really understand, and hopefully this has brought value to them and educate them. And if they decide, hey, you know what, I want to reach out to Riqquip, whether it’s for a loan or even more information from them, what’s the best way for them to contact you?

Clay: 45:37 – Absolutely. Show ’em you always access us through our website, www.rigquipment.com, that’s R I, G, Q, U, I P M W N T.com. You’ll find a bunch of helpful information right there on the homepage, including a payment calculator and calculator where you can start to explore at various amounts, finance over various term lengths. What does that mean for you or mean for the average company that’s approved for financing in terms of monthly payments. So it’s a good kind of quick litmus test, you know, in terms of, OK, I want to purchase an InBody or I want to purchase you know, 10 new rowers or Airbikes, you know, what does that really gonna require on a monthly payment basis? You can use that quote calculator right on our home page. And from there you can always connect with us via email info@rigquipment.com. You can apply directly through our website or you can find us on any one of our, you know, partner pages. Two-Brain is a great example, but all the big equipment vendors, Rogue Fitness, you’ll find us on their websites as well. Because you know, we’ve come from within this community and we work, you know, exclusively with boutique fitness businesses so typically anywhere you run into someone that can help you grow your business, you’re gonna find us. Website, email and phones are always available, 571-933-8339 and we look forward to hearing from you, learning about your business and learning about how we can help you, you know, grow and expand your community,

Greg: 47:14 – Thank you for listening to Two-Brain Radio. Make sure to subscribe to receive the most up-to-date episodes wherever you get your podcasts from. To find out how we can help create your Perfect Day, book a free call with a mentor at twobrainbusiness.com.

 

Greg Strauch will be here every Thursday with the Two-Brain Radio Podcast.

Two-Brain Marketing episodes come out Mondays, and host Mateo Lopez focuses on sales and digital marketing. 

On Wednesdays, Sean Woodland tells the best stories in the CrossFit community on Two-Brain Radio With Sean Woodland.

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Two-Brain Radio: Matt O’Keefe

Two-Brain Radio: Matt O’Keefe

Sean: 00:00 – Hi everybody and welcome to another edition of Two-Brain Radio with Sean Woodland. Today I speak with president of Loud and Live sports, Matt O’Keefe. But first, are you a stressed business owner who’s working too much and still struggling to make a profit? Do you want to grow your venture and reach the next level? Two-Brain Business is here to help with a free 60-minute call. This is not a sales pitch; just an opportunity for you to get real, actionable advice from an expert who’s built a successful business. For one-on-one guidance on how to take your business to the next level, book your Free Help call today at twobrainbusiness.com. Matt O’Keefe has really made a name for himself on the business side of the CrossFit Games and not only is he Mat Fraser’s manager, but he also helps run one of the most high-profile Sanctional events of the Games season, Wodapalooza. Matt and I talk about how he got involved in the business of the CrossFit Games, why Loud and Live decided to expand from one to five sanctioned events in 2020 and what needs to happen moving forward for the CrossFit Games season to not only be successful but to also grow. Thanks for listening everyone.

Sean: 01:13 – Matt, thanks so much for joining me today. I know you are super busy there in Miami. How are you doing?

Matt: 01:18 – I’m great, Sean. Thanks for having me. Obviously it’s great to spend some time talking with you, but things are good. A little hectic coming off the Games, but you know, we’re into the preparation for the Sanctional season.

Sean: 01:32 – Yeah, we’re going to get into that in a second. But I know your name is, I think familiar to a lot of people. They might not just know exactly who you are, but let’s go back a little bit. How did you find CrossFit?

Matt: 01:42 – Yeah, it’s a great question. You know, I played some sports in college, you know, looked to stay fit after and was rolling around in the yoga, TRX, and you know, boot camp world and got bored and a coworker of mine when I was in the insurance industry said they found this cool thing called CrossFit, I should try it. And I stumbled to gym with him back in 2013 in Danvers Mass, which is just north of Boston, which funny enough, ended up being one of the original affiliates in the world, North Shore CrossFit. And I started my journey there and like most completely fell in love and wanted more. And you know, that sort of has brought me to today. You know, I had a really a life-changing event in there. You know, and I think obviously most of us with the whole community idea, you know, I just was hanging around working out with like-minded people that loved CrossFit and, you know, doing it together and people who suffer together stay together. And, you know, I loved it and you know, really wanted to get more involved with it and on the business side. And you know, dove in in 2014, you know, when we started a company called Red Line.

Sean: 03:06 – Yeah. I want to ask you about that. What was your first foray into the business side of things, because that’s how most people know you.

Matt: 03:14 – Yeah, you know, again, I started and loved it and was bored with my job. It was like perfect storm at that point and I’ve always had an entrepreneurial spirit and never really stepped outside of that, you know, cookie-cutter corporate structure and I, you know, loved it and it was time for me to really try something on my own. And I started a clothing company, Red Line Gear back in 2014. And that was, you know, sort of my first sort of delve into the business side of things in the CrossFit World.

Sean: 03:47 – That then leads you to becoming Mat Fraser’s manager. How did that whole process unfold?

Matt: 03:52 – Yeah, that was, you know, Red Line introduced me to Mat. I worked out with a very close friend of Mat, who lifted with him in the national lifting program at the Olympic Training Center. And she, you know, went to watch Mat compete one weekend at what was the ECC prior to the ECC we even knew it. And I met Mat, I was starting a business and wanted to sponsor a or some athletes. He didn’t really have a whole lot going on at the time, so I asked him if he wanted to be sponsored by Red Line. So when I met Mat, really the start of that was, you know, on the sponsorship side and you know, quickly blossomed into more, you know, he was getting a lot of attention from brands. You know, I always had an attraction to the management, marketing side of sports and you know, I asked if I could help him a little bit and just sort of, you know, almost watch over him, and that quickly kind of moved to him getting very busy. And I urged him to, you know, think about an agent and, you know, he asked me to do it. And that really is how I started as a agent management space was, you know, he really, you know, had the trust in me from the personal level, didn’t necessarily want to hire somebody that was, you know, maybe formal in that side of things. And, so that, you know, that started our relationship as agent/manager and that, you know, sort of blossomed from there. You know, a lot of people asked him who was doing that for him and you know, quickly we managed, you know, 15 to 20 athletes within the next couple of years.

Sean: 05:36 – Obviously Mat is in great demand given all of his accomplishments and his fame. What’s it like helping him navigate his way through all that?

Matt: 05:45 – Man, it’s amazing. It’s, you know, I’m so proud of him. I think, you know, whether I was involved or not Mat was going to be successful because of the way he’s wired and how hard he works. You know, it’s been so fun to be a part of that. And, you know, be allowed to be a sort of keeper of his business and, you know, sort of how he is marketed. It’s fascinating, you know, he’s always stayed very true to who he is, you know, no matter what and never really—one of the things I learned a lot through Mat is that, you know, I guess the best way to put it is like he’s never forced marketing. It’s never been about being a marketable product. You know, he’s done it organically and stayed very true to himself and true to his values and who he is as a person. And that’s boded very well for him from a marketing perspective and it’s been very, very fun to be a part of that. He offered me opportunities that I would have never been given in the sports marketing world. So I’m very fortunate to have the experience with him, but it’s a lot of fun. He’s a super smart, shrewd businessman. And I’ve been able to learn a lot with and through and for him.

Sean: 07:12 – People may have heard the name Loud and Live Sports because of the involvement that that organization and your organization has with Wodapalooza. But before we get any deeper, what exactly is Loud and Live Entertainment?

Matt: 07:24 – Yeah, so Loud and Live, before the sports division was born about 18 months ago, Loud and Live is an entertainment and marketing agency. So they do very similar to what we do on the sports side we do. Loud and Live owns, operates, promotes events, which are music events. So we are promoting concerts. We operate music festivals. We manage talent, so we have music talent, very Latin-focused that we manage. And we provide marketing services for brands. You know, my partners, Nelson and Marco, we’re part of a festival venture prior that was acquired. And it was a very heavy marketing-services business. So we do a lot of work with a lot of the big brands in the world. Walmart, Dr. Pepper Snapple, McDonald’s, like they’ve done a lot of marketing work for brands like that in the past. So that’s sort of the structure of the agency from the Loud and Live Entertainment side. So we’re very, you know, cookie-a cutter agency. We have marketing, manage talent and we promoted events.

Sean: 08:37 – How did you get involved with Loud and Live Sports?

Matt: 08:41 – Yeah, it was really a funny sort of scenario that played out. I think Nelson and Marco prior to me even being involved attended an event in Miami called Wodapalooza. They’ve always been event promoters. They’ve, you know, and they immediately fell in love with the culture and the action that Wodapalooza provided and wanted to be a bigger part of it. They have done a lot of business in the Miami market. And they were introduced to the founders, Steve and Guido, and they wanted to get involved and felt that they could enhance it. And Steve and Guido at the time were looking for partners to help take the events to the next level. So Marco and Nelson, Loud and Live, bought a stake in Wodapalooza about three years ago now. And they operated that for about a year with the founders. And I got asked to consult on the business. They were looking to get more involved with athletes and brands and they were introduced to me by the founders as someone that was very connected to that world. So I met those guys in January of 18 on a consulting agreement. And, you know, it just kind of went from there. I fell in love with those guys and what they were doing. You know, we wanted to get better on the management side and they provided an awesome platform and opportunity to really do a better job for our clients, the athletes. And you know, we had made a decision to merge forces shortly after this 18 Wodapalooza event. And you know, a part of that you know, was going to be, you know, launching a sports division that would operate fitness events and Wodapalooza was the start to that for me.

Sean: 10:27 – And even before it became the sanctioned event that we know now, Wodapalooza was always viewed as one of the best competitions out there out of the season. How were you guys able to build that up to the event that we now know today?

Matt: 10:40 – Yeah, I think, you know, and a lot of that has nothing to do with me really. You know, I feel a high sense of responsibility to continue what a lot of other people have built. Wodapalooza was a phenomenal event when I arrived. We’ve worked really hard to make it, you know, better and enhance what has already been built. But you know, prior to sanctioning, prior to Matt O’Keefe, prior to Loud and Live, you know, Wodapalooza was, you know, what I always marked on the calendar as really the off-season event that I wanted to be at and athletes wanted to be at. It was this phenomenal, annual touchpoint for the masses to come and party and express their fitness in Miami annually. You know, we feel very honored and privileged to be a part of now the season, but I think, you know, it’s really important that Wodapalooza is obviously a lot more than just that. You know, there’s 2,000-some athletes that compete at Wodapalooza annually. It’s really analogous to the 5k in marathon crowd that would run or triathlon. This is a point on the calendar every year that the everyday man, like you and I, Sean, might train to be a part of expressing our fitness. So it’s an unbelievable event. It’s an unbelievable community in its own right. You know, people love—whether they spectate, they volunteer or they compete, there’s a group of people that identify heavily with the Wodapalooza event and brand. And you know, it’s really taken on a life of its own. And again, it’s very important to point out that, you know, we’re facilitating that and we’re, you know, now a part of that. But that’s something that was born a lot longer before we ever arrived.

Sean: 12:33 – You’re going from one sanctioned event in 2019 and I believe it’s five that you’re going to be running, coming up here for the 2020 season. Why did you guys make the decision to sort of expand that quickly?

Matt: 12:45 – Yeah, I think we looked at immediately when I arrived at, you know, how do we expand the Wodapalooza brand, you know, is there opportunity to do that? Which I still think there probably is, you know, in key markets, but we love the sport. We love being a part of that, you know, creating platforms for people to express their fitness and also really love the elite side of the sport. We’re heavily invested with athletes, with sanctioning coming and the reality of this being more of a tour-type style season, we wanted to be more involved, and you know, we jumped at any opportunity that came our way. We strategically placed ourselves in some markets that we have a lot of involvement in like Mexico and Spain. We had, you know, prior to even me, looked at possibly doing an event in California with the Wodapalooza brands. So that West Coast event made a lot of sense for us because I believe and we will see that this year as it plays out, that market really needs and wants something big from a festival component with functional fitness. You know, the answer overall to that is we love CrossFit. We love the sport of fitness. We wanted to be more involved and we want to be even more involved passed where we are now. So, we’re excited where we’re at. We have a big year, a lot of work to do. We obviously just acquired Granite Games, which is another amazing event that, again was born with, a whole other group that we now feel a huge sense of responsibility to facilitate and grow and add value to. But yeah, we love this sport and wanted to be a big part of it and wanted to do more.

Sean: 14:37 – How do you duplicate the success that you’ve had with Wodapalooza with these other sanctioned events while helping them sort of keep their individual identities that they’ve been able to build like the Granite Games?

Matt: 14:48 – Yeah, I think that’s exactly it. What you just said is that they’re, you know, they all have to have their own identity, right? I think that, you know, what we do know is that we want them all to have a very, key community component. We want those local communities to participate in those events, and we want to give access to those local communities. So I think it’s really important that those events are culturally sound and contribute to the local community. So, you know, we’re looking to just honestly facilitate that. I think the success of each of those events is that they have their own identity. You know, Wodapalooza is its own thing and West Coast Classic can’t and shouldn’t be that. That is an event that the California and West Coast community—we want them to wrap themselves around, invest in and be a part of and we want it to be very targeted to how they feel that event should look and feel and run. And the same goes for any of those events, you know, in Spain and Mexico and Granite Games. Those events need to be, you know, about those local communities. You know, I think it’s easy to get wrapped in the sanctioned piece and being these global properties that, you know, attract the superstars, which I think there will always be a component of. But I think the real lifeblood of those events has to be the local community, the local gym that helped either grow the ones that are already established or will help grow the ones that we are now establishing.

Sean: 16:27 – We’ll be right back with more from Matt O’Keefe after this.

Chris: 16:31 – Hello my friends. It is Chris Cooper here. Since 2009 I have been writing daily blog posts, producing podcasts, videos, all kinds of stuff on social media with one mission in mind: to make gyms profitable. I came to that mission because I was an unprofitable gym owner. It almost ruined my finances and almost ruined my career, my marriage, everything. And since that day, since I made my recovery, I have wanted to help other gym owners become profitable, too. It’s part of my mission to the world because if you’re profitable, you’ll be here changing lives of thousands of your clients for the next 30 years. I think together we can have a tremendous impact. When we started mentorship, I did every single call myself. I was doing up to a thousand free calls a year and I was doing 10 calls with people who signed up for our early mentorship program, but the Incubator has been updated and improved a dozen times since then. Now the Incubator is really the sum of all of our experiences with over 800 gyms worldwide. In the Two-Brain mentorship program, we can now learn from everybody. We can collate data, we can see what’s working where and when and what the new gold standards are as they emerge. When somebody has a great idea, we can test it objectively and say, “Will this work for everyone or will it work for people on the West Coast or on the East Coast?” We can do that with little things like Facebook ads. We can also do that with operations and opening times and playbooks. All the questions that you have about the gym, we can answer them with data and with proof now. That’s the Incubator. It’s more than what I wrote about. It’s more than my experience. It is the best standard in the fitness industry, period. And I hope to see you in there.

Sean: 18:13 – You’re going to have five of, I think, what are nearly 30 sanctioned events next year. How is there enough bandwidth or how are there enough eyeballs or fan interest for all of these events to succeed?

Matt: 18:29 – Yeah, that’s a great question and I think, you know, a lot of that will play out. I think what we do know is that the global community wants this, right? Like the competitive side of CrossFit, the participation side of CrossFit and functional fitness is real. You know, people want to get out, they want to volunteer, they want to spectate it, they want to see Mat Fraser on the floor, Katrin Davidsdottir, Tia-Clair Toomey. They want to interact with that crowd, but they also want to move barbells and do gymnastics on the same floor that they’re doing. And I think, you know, the nice part, the cool part, which I’ve been able to see even with the 15 this year is it looks different and it feels different and it’s expressed in different ways in different communities. And I think that that’s really what the life of this thing is, is that, you know, Egypt will express this in a certain manner that a lot of people will be attracted to and that community we are super proud of and I think the global community will wrap themselves around. And I think, you know, it’s the same for all of these events. I think that on paper it looks like a lot of events, but you know, we see it annually through the Open, right? There’s so much participation globally and there’s so many people that want to compete. You know, I think there’s some sort of number, that like there’s 5,000 CrossFit-style events that happen annually around the world, you know, and these are just 30 that are being propped up to be a little more significant in that realm. And I think that you know, it’ll be interesting to see from a sanctioning perspective how that all plays out, what the participation is. You know, are the athletes gonna run around the world or are they going to stick to some key events, you know, that have more prize money. I don’t know sort of how that will play out, but I do know that the world wants more access to this. The world wants to participate in this and spectate this, and you know, I have high expectations for how this plays out over the next year.

Sean: 20:42 – Along those lines, and this may be getting too much into the weeds, so I apologize if it is, but in order for these events to be successful, like they got to find a way to make money. How do events like this make a profit?

Matt: 20:55 – Yeah, it’s a great question. I think that, you know, for us, I can only really speak to kind of how we operate. I think it’s a great question and it’s obviously something that I think everybody in the market is concerned with is the sustainability of an event. Events are really hard, you know, it’s a tough business model and I think the idea around that is value. I think there are so many components to it. There’s volunteers. There’s athletes, there’s brands and there’s consumers and you have to provide a really quality experience to all of those components to be successful. And you know, there has to be a return for each of them. A volunteer has to have a very good experience. There are very big components to operating an event like these and you know, the same goes for all the other pillars, you know, the athletes have to have a phenomenal experience. I think that you have to build those things from the ground up and you have to be very cognizant of creating an awesome opportunity experience for all of those components in order to be successful. I think the long-term value for all of this as an event organizer is, you know, people watching, right? In the end, if people want to watch this, if you’re putting a good product on the floor that eyeballs are on, then that’s the ability to sustain yourself in the long-term, through either media or on-site participation.

Sean: 22:27 – What, if anything, are you going to be doing differently with not only just Wodapalooza but your events in general this season that maybe you didn’t do last season?

Matt: 22:36 – Yeah, I think that’s an awesome question. Like, I think we’re always looking to get better. People will look at Wodapalooza and think like, you know, we grew so much last year, so many people came down and participated, watched, you know, we’re tweaking that, you know, we’re launching three new properties. We have a new property we acquired that we’re gonna move to a new venue to hopefully, you know, give more access, better access to people that want to come and participate in it. I think, you know, each of them has, you know, sort of key goals that we need to accomplish for each. But, you know, yeah, I mean, Wodapalooza, we’re adding a stage. The biggest criticism we get is access. Right? You know, it looks like the most accessible event in the world, but it’s honestly the least accessible because, you know, people get told “No.” When people do the Open, they’re doing it for fun and their gym. When people do our online qualifier for Wodapalooza they want to go there, right? So we’re trying to find ways to put more people on the floor because, you know, we have tens of thousands of people that want to participate in it. So we’re working on that. You know, when it comes to the other properties, we’re trying to make them different, right? Like, we want to, you know, like Madrid for instance, we’re going to try to really focus on the elite side with making that the world’s biggest opportunity for teams to participate in, from a prize-money perspective. So we’ll try to attract the super teams in Madrid and, you know, put huge money up on that side. So guys like Mat and Tia put a team together and Pat and his Deca team come and want to participate in. It’s not necessarily a opportunity for them to qualify for the Games, but they’re looking at that as an opportunity to just do something fun and maybe make some money.

Matt: 24:25 – You know, we’re looking in Madrid at making something fun on a beach. We’re looking to diversify those events and opportunities and you know, and then the current events, we’re looking to get better. Granite Games, I mentioned a move, you know, we’re gonna move to a major city with Granite Games. It’s in St. Cloud, Minnesota, now, we’re gonna try to move to either Minneapolis or Chicago. And you know, again, that’s another event. Try to give more access to it. There’s people that get told “no” by that event. So how do we build more opportunities for people to get on the floor? In the end, the overarching theme for us is how do we give as many people access to the floor as we possibly can. That the biggest opportunity for the community in general. People want to compete, right? We’ve got to build, you know, the ability for people to get on the floor. It’s hard because you can’t take 10,000 athletes at Wodapalooza or Granite Games. But we’re trying very hard to build more and more opportunity for people to go on the floor.

Sean: 25:37 – You mentioned the Wodapalooza online qualifier, you are currently working on the international online qualifier. What exactly is that?

Matt: 25:46 – Yeah, it’s an exciting, you know, test really. As people who are, you know, super invested in the sport side, the elite component, we’ve identified that there’s a lot going on with, you know, the qualifying world. You know, if there’s 30 events, there’s 30 people that are asking for an athlete to qualify through a different component, you know, and as sanctioned owners, we’ve talked a lot about, you know, that being a really painful barrier of entry. And so what we’ve tried to do is test this year with four events, you know, ours, South Fit, Filthy 150 and Atlas Games, what it looks like for people to do one qualifier and have access to multiple events. And I think, you know, we’ve already had a ton of success and great feedback from the market. And I think, you know, what we would love to do is see how that works moving forward. Is it all people doing one? Is there multiple touch points on the calendar that athletes qualify through for sanctioned events? You know, and by the way, I will always say this and I’ve said it in prior interviews, like we love the Open and believe in the Open and we’re having certain events qualify through that as well. I think that we’re all ready to work together as the answer to that. This is the first expression of that to try and solve the problem of, you know, athletes doing 10 qualifiers for 10 events. You know, and I think this is the test for it. I think I would say I’d give it like a B+ right now in execution. I think we’ll get better with it. And I think, you know, we’ve been able to talk to a lot of other sanctioned owners about it and I think, you know, you’ll see in the years to come that a lot of us will try to work together so that we can solve that problem.

Sean: 27:36 – Looking forward to 2020, what do you think absolutely needs to happen for the CrossFit Games and the surrounding season and the sanctioned events to not only be successful but to also grow?

Matt: 27:48 – I think that we need to work together. Like I think that that’s, you know, we all love this, the sport, we love the CrossFit Games, you know, it’s the pinnacle of our season. We have a really cool group of sanctioned owners that have that mindset of togetherness, community. We want to provide awesome platforms for people to express their fitness, whether it’s elite or not. I think that we just need to stick together, continue to work together. You know, nobody’s arrived. We’ve got the opportunities to facilitate something great. Like CrossFit has gotten over a million humps from becoming this like mainstay sport, and there’s still work to be done. But people love this. People love to watch this whether they’re in a CrossFit gym or not. And we all need to work together to you know, continue to grow. I think that’s it in the end. I think, you know, the Games made a huge change this year to how it functions and I think it’s on the right track. I think that, you know, even they’ll make some changes to that. Again, I don’t know what those will be and how they will come to the market. But you know, I think that allowing more access to the globe is a great opportunity for the sport in general to globalize, not only through sanctioning but at the actual Games. We all just need to work together and I think we all have that mindset and we all feel a huge sense of responsibility to see this thing through. I just always think personally, and I know a lot of people in the sport do, even down from CrossFit HQ that if we continue to think what this looks like 50 years from now, I think we’ll be OK. I think if we keep that as our responsibility as you know, as sort of what our role is in this, I think that how we change and how we move forward and the opportunities that we create for the community and the environment will reflect that.

Sean: 29:52 – You mentioned globalization. One thing that Loud and Live was able to do is that you are able to do the first Spanish language broadcast of the CrossFit Games. How did that go for you?

Matt: 30:02 – Oh man, I’m so proud of that. I’m an Irish kid from Boston that doesn’t speak a lick of Spanish so it’s interesting for me, but it’s such a big part of Loud and Live. A lot of my partners are Cuban and El Salvadorian. We have a lot of involvement in LatAm and Spain. To bring that to the world and be the first to do that was a huge sense of pride for us. And the results were phenomenal. It speaks to the community and how strong that side of it is. Our numbers were staggering and we got a lot of feedback. We need to get better. But I’ll tell you that to me was fascinating, not just in Spanish and French and Portuguese and Russian, no matter what it was, the fact, the numbers that were put out and the involvement and the engagement on that. I mean, more people watched the CrossFit Games this year than ever in history. And I think, you know, we were really honored to be a small part of that.

Sean: 31:04 – What do now the sort of next couple of weeks, couple months look like for you and what you’re putting together here?

Matt: 31:12 – Busy. The Sunday of the CrossFit Games is, you know, a celebration. It’s exciting. You know, we have so many athletes that we celebrate with because of our involvement on that side. It also marks the transition into our time of the year. Wodapalooza is always, you know, on our shoulder, looking at us, telling us it’s time, right. But this is really time, right? We’re in deep in the planning phase of that. We have four other events. We’re just getting really organized to operate February through July for our five events. You know, we have the Open upon us, you know, which is new this year in October. We have our online challenge. We’re just gearing up and getting ready to execute and make sure that we really bring something the community is proud of in each of those communities right now.

Sean: 32:07 – Matt, I really appreciate you taking the time to do this, man. I know you are super busy and I know I speak for a lot of people when I say we cannot wait to see what you guys have to bring with your events in 2020.

Matt: 32:18 – Well, I appreciate that. Thanks for taking the time and we’re proud of all the stuff you guys are doing. I think just to echo what I was saying before, like we all keep working together and keep loving this thing and what we’re doing and I think the results will be phenomenal.

Sean: 32:34 – All right, Matt. Thank you so much again. I really appreciate it.

Matt: 32:36 – Thanks, Sean.

Sean: 32:38 – Big thanks to Matt O’Keefe who is seriously one of the busiest men in CrossFit, not only right now but always. You can follow him on Instagram. He’s @okeefmr. That’s O K E E F M R. For more information on Loud and Live, you can head to loudlive.com or follow them on Instagram @loudlivesports. Whether you’re an aspiring entrepreneur or a seasoned business owner, “Founder, Farmer, Tinker, Thief” by Chris Cooper will show you what to do and how to avoid mistakes that can sink a business. Reader and gym owner Brendon Collins says, quote, “If you’re a business owner in the service industry, you must read this book,” end quote. Get your copy of the bestseller “Founder, Farmer, Tinker, Thief” on Amazon today. Thanks for joining us everyone. We’ll see you next time.

 

This is our NEW podcast. Two-Brain Marketing, where we’ll focus on sales and digital marketing, runs every Monday. Your host is Mateo Lopez!

Greg Strauch will be back on Thursday with the Two-Brain Radio Podcast.

Thanks for Listening!

To share your thoughts:

 

To help out the show:

  • Leave an honest review on iTunes. Your ratings and reviews really help and I read each one.
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How To Survive The August Dip

How To Survive The August Dip

I remember August 2008 all too clearly.

I had cancellations. I had unforeseen bills. I had clients who wanted to put their membership on hold; staff who wanted to take time off; and PT clients who weren’t showing up for their sessions.

I remember no money, no sleep and mounting pressure. I remember saying, “I’m never going through this again.”

I knew I had two choices: close up the following July, or make a plan. I’ll share it below. If August isn’t the worst month in your fiscal year, that’s okay: just replace “August” with your worst-performing month.

The best step YOU can take is to think about August back in January. Work with your mentor through an Annual Plan. Schedule some revenue-boosting activities in July and September, and schedule expenses around it. Plan to take a little vacation in August yourself, and schedule your staff some time off too!

Here’s how I bridged the gap the following year, and every year since:

  1. Plan an event for the first weekend of September. Charge enough to keep people committed to training through August.
    The Catalyst Games were born for one reason only: to boost August revenues. But they also improved adherence (people trained more through August so they weren’t “wasting” their $50 entry fee.) We just completed our 11th year.
  2. Sell prep courses for your event. Release events slowly, Castro-style. Run workshops or short courses to help people succeed at your event.
  3. Run a no-risk apparel order in July. We use the Forever Fierce preorder system.
  4. Run a no-risk supplement order in July. We use the Driven preorder system.
  5. Ask clients to be realistic about their 1:1 bookings in August. “I want to see you succeed. How realistic is it to expect you to make your Friday at 3pm appointment time?”
  6. Focus on nutrition. Book goal reviews for July.
  7. Schedule staff meetings and time off. You might as well rest: September is coming!

Here are some other options that gym owners in Two-Brain are using:

  1. Bingo challenges – clients are rewarded for adherence and other tasks in August
  2. Nutrition challenges – clients pay to enter and earn prizes
  3. Teachers’ Week – invite local teachers to try a class before the school year kicks off
  4. Corporate challenges – focus more on delivery of your services outside your daily clientele
  5. Sport-specific training for preseason – it might be too late for football, but winter sports should start doing their strength and conditioning work now
  6. Increasing ad spend – not EVERYONE stops exercising in August. Balance out lower attendance with the opportunity to onboard more new clients.

In my city, high-earners “go to camp” in August. It’s the end of the kids’ summer vacation; it’s the warmest time of year; and many Catalyst clients like to spend as much time on the lake as possible, or taking vacation. If you plan for lower adherence (and possibly lower revenue) that’s GREAT. If you don’t plan for either, August can be CATASTROPHIC. You’ll wind up sitting in an empty gym, hating life and stressing over your bills.

No matter what your plan, August is a critical month for mentorship. The best time to plan for August was back in January; the next best time to plan for NEXT August is NOW. And if you’re panicking about your bills, this is actually a great time to think ahead. Tell yourself, as I did back in 2008:

“I’m never going through this again.”

Then take steps to make it so.

Which stage of entrepreneurship are you in? Take our 20-question quiz to find out and get the exact steps you need to take your business to the next level.

Two-Brain Radio: Jesse Topp

Two-Brain Radio: Jesse Topp

Mateo: 00:00 – Hey, it’s Mateo of Two-Brain Marketing. On this edition of the Two-Brain Marketing podcast, I’m talking with Jesse Topp from Topp Performance. You’ll learn about his experience transitioning from being a competitive Brazilian Jujitsu fighter to a personal trainer and then to a martial arts and CrossFit gym owner. You’ll also learn about his paid advertising system and how last month he spent $180 on ads and made $5,000 in front-end sales. So you don’t want to miss this. Make sure to subscribe to Two-Brain Radio for more marketing tips and secrets each week.

Greg: 00:41 – Two-Brain Radio is brought to you by Two-Brain Business. We make gyms profitable. We’re going to bring you the very best tips, tactics interviews in the business world each week. To find out how we can help you create your Perfect Day, book a free call with a mentor at twobrainbusiness.com.

Greg: 01:00 – We would like to thank another one of our amazing sponsors, UpLaunch. Over the amount of time that you’ve had your business, how many people have come through your doors and never signed up for a membership? When I first opened, I remember getting everybody’s name and emails because that’s what I was told was the best way to start the conversation with potential new members. The big problem was I never knew what to say. Over many years, I spent countless hours developing plenty of emails to send to these new members or people that are thinking about signing up for a membership. This took a lot of time, probably way too long, and could have been spent on more productive things. If you’re in the same situation I was, don’t waste any more time and book a free session with UpLaunch. UpLaunch has over a hundred prebuilt emails to convert new leads into members and when your members decide to take a break, they have a whole campaign to get them back through the doors. You have the ability to text message members right from the app and with integrations like Google Calendar, Facebook and over a hundred more via Zapier, UpLaunch has you covered. UpLaunch was created by gym owners for gym owners. Head over to www.uplaunch.com today to get the conversation started with your future and past clients.

Mateo: 02:11 – Hello. Welcome to the Two-Brain Marketing podcast. I’m your host, Mateo. I’m one of the digital marketing mentors at Two-Brain Business. Thanks for joining us. This is your weekly dose of digital marketing magic, and in today’s episode, special guest Jesse Topp, owner of Topp Performance. You’ll learn more about his experience and how last month, he spent $180 on ads and he was able to generate $5,000 in front-end sales. So we want to hear all about that. Jesse, how are you?

Jesse: 02:36 – I’m good, I’m good. Thanks for having me.

Mateo: 02:38 – Topp with two P’s, huh?

Jesse: 02:40 – That’s my last name. Yeah, Topp Performance, two P’s made the name. If I had to do it again, I would not use my name in the business but—

Mateo: 02:46 – Oh really, why?

Jesse: 02:48 – Well just for the long run.

Mateo: 02:50 – Yeah, I gotcha. You don’t want to have that icon problem. Probably having your name in the brand is tough for that. So tell us a little bit about, you know, who you are, where you’re from and a little bit about your business.

Jesse: 03:06 – I’m 37 I live in Port Elgin, Ontario, Canada. I have a martial arts business. Jiu-Jitsu’s my total 100% passion. And then in the midst I used to compete a lot. I’m 37 now. In the midst of competing, I was trying to find the right strength and conditioning regimen. I’d obviously trained on the weights for years, but the bodybuilding wasn’t working much for me anymore. When I was on the mats, I was putting on too much size. So I was fighting at a heavier weight. And so a friend introduced me to CrossFit. I was not an advocate of it at the time. And then once I trained for about three months in CrossFit, I went back to the competition scene in Jujitsu around Ontario, Canada, and it was like I had a secret weapon. Just like with the explosiveness of my hips and my cardiovascular system, my recovery time was better. And then I just totally bought in. So I had the martial arts gym and then I started a strength and conditioning center, affiliated with CrossFit, which is a amazing brand, and here we are.

Mateo: 03:55 – Wow. So is it Brazilian Jujitsu or just normal—.

Jesse: 03:59 – Brazilian jujitsu. We’re under another affiliation, Mestre Sylvio Behring from Brazil. Heavy in self-defense, awareness, self-awareness and Brazilian Jiu-Jitsu for sport.

Mateo: 04:09 – Wow, that’s pretty hardcore, man. So when you were competing, I imagine yeah, CrossFit probably helped a lot with the power and getting mobile, too, and yeah, it’s great. Awesome. So you have two gyms then? They’re connected, physically or—

Jesse: 04:24 – They’re connected; I have martial arts on the top floor. It’s like a 7,000-square-foot facility. Martial arts on the top floor. And then underneath is CrossFit and personal training.

Mateo: 04:34 – Nice. And so how long has the—maybe you already said, how long has the facility been open?

Jesse: 04:39 – So I’ve had the brand or I’ve had my business, you know, we scaled up accordingly in the last three years. I started out in like a 450-square-foot spot. I was renting off another martial arts club in a town over. I built up a personal training client list and then opened another location. I had a trainer running that for me and then I decided—it was doing quite well, so I decided to go all in on the second location and I closed the first one. I hope to go back there in the near future. And then, yeah, we started the personal training, martial arts, and then it took right off with the CrossFit and strength-and-conditioning program.

Mateo: 05:08 – Tell me a little bit more about that if you can. Cause I didn’t experience that where, you know, I’m kinda subleasing my own space or an existing space trying to build my own PT book, I never did any of that. But I know there are a lot of people who listen to this who are or were in a similar boat. Right, where you’re kind of trying to build up a book within an existing business and then hoping to at one point off shoot on your own. What was that experience like and do you have like any advice for people who are trying to build up that book enough so that you can go and open your own practice?

Jesse: 05:40 – Great question. I really just did it because I was passionate. And like I said, I was competing, I was a broke fighter, so you know, people would ask me, hey, can you strength and condition me or can you do privates with me? So I was doing that just to basically get by and compete. It’s expensive, the decision to compete. And then it just kind of blossomed something more. I like helping people, my passion shined through, I think, so I’m told. If I had any advice it would be 100% the game-changing thing for me was I hired a mentor. It was my first mentor I hired, it was about three years ago and it totally just—it opened my eyes to another level and then since I joined with Two-Brain Business, it’s like blowing up.

Mateo: 06:17 – Wow. And how would you approach, like how do you get your first couple of sales and your first couple of PT clients when you’re just starting off like that?

Jesse: 06:24 – I just used awareness on Facebook, so I made like these just kind of shoddy-looking ads on Canva. Actually I don’t think I was using Canva, I think it was just like some app on my Samsung, and it looked okay to me at the time and now I look back at these ads and I’m like oh man, they were weren’t ads. They were just like, they were just graphics with my name and a phone number on it. But you know, people—I learned since what I did was I solved a problem, right? So people want to lose weight and feel great. I would write that in there because that’s what I knew I could offer. And before—it didn’t take me very long. Within a year I had a pretty full client list and had to bring on another trainer.

Mateo: 06:58 – And are you just approaching people who walking around or you just have these images and you’re putting them out and people are just kind of finding out about you or?

Jesse: 07:05 – I’ll be transparent. So now I really target market with the help of Two-Brain and past people. But at the time it was just basically like picking up a can of paint and throwing it at the wall and seeing what would stick. And it worked for that situation. I could never do that now, but it worked for that situation.

Mateo: 07:22 – Gotcha. You had a little less responsibilities and so you could kind of hustle a bit more and just kind of ride off the—I got you. I totally got you. All right. Awesome.

Jesse: 07:35 – One other piece of advice starting out, would be sales. So a lot of—I know for me like as a personal trainer, I help people, I teach them how to defend themselves. I didn’t know how to sell. I read a few sales books, “Sales First,” and that was a game changer to realize like sales, if you look at it the right way, you’re helping people, you’re not being like that used-car salesman, you know, for lack of a better term.

Mateo: 07:55 – Well and you have no choice, too, at that point, right? You’ve got no one, if you’re trying to build up a book of private clients. You have to be able to sell. And I think you’re totally right. Like you just approach it with you’re helping first, that’s it. You know you’re painting that picture. You’re helping first and that’s all it is.

Chris: 08:13 – Hello my friends, it is Chris Cooper here. Since 2009, I have been writing daily blog posts, producing podcasts, videos, all kinds of stuff on social media with one mission in mind: to make gyms profitable. I came to that mission because I was an unprofitable gym owner. It almost ruined my finances, it almost ruined my career, my marriage, everything, and since that day, since I made my recovery, I have wanted to help other gym owners become profitable too. It’s part of my mission to the world because if you’re profitable, you’ll be here changing the lives of thousands of your clients for the next 30 years. I think together we can have a tremendous impact. When we started mentorship, I did every single call myself. I was doing up to a thousand free calls a year and I was doing 10 calls with people who signed up for our early mentorship program. But the Incubator has been updated and improved a dozen times since then.

Chris: 09:08 – Now the Incubator is really the sum of all of our experiences. With over 800 gyms worldwide in the Two-Brain mentorship program, we can now learn from everybody. We can collate data, we can see what’s working where and when and what the new gold standards are as they emerge. When somebody has a great idea, we can test it objectively and say, will this work for everyone or will it work for people on the West Coast or on the East Coast. We can do that with little things like Facebook ads. We can also do that with operations and opening times and playbooks. All the questions that you have about the gym, we can answer them with data and with proof now. That’s the Incubator. It’s more than what I wrote about. It’s more than my experience. It is the best standard in the fitness industry, period. And I hope to see you in there.

Mateo: 09:56 – OK. So it sounds like you’ve had some mentors in the past. It sounds like you’ve gone to a lot of changes just in the physical space and adding on these different services. What was life kind of like pre-Two-Brain for you?

Jesse: 10:12 – No systems, to sum it up perfectly. It was me in the business, not really wanting to spend money on staffing, no systems. You know, we always use that thing like if I was gonna get hit tomorrow, or I was gone, my business would collapse, 100% it would collapse at that time. Now, it wouldn’t. Now I have systems, you know, we talked about the marketing stuff. I don’t just like throw the thing at the wall, it’s all targeted. I know exactly how much ad spend I’m putting in and what I’m going to get in ROI or hopefully get in ROI. As far as managing people, my timetable, how I allocate my funding, the list goes on and on. It’s calculated.

Mateo: 10:44 – Nice. And what was kind of like the biggest struggle you were facing, kind of leading up to saying, “Hey, you know what, I’m gonna try this Chris Cooper guy out,” you know?

Jesse: 10:52 – Yeah. I started reading, actually I started hearing this podcast and I ordered all of his books. I’m an all-or-nothing person. I ordered them all, I read them all, I listened to the audiobook, and I just liked the way Chris like, you know, presented it, about helping people first. You know, like you have something to offer the community, we just have to realize it. So the mindset shift.

Mateo: 11:07 – What made you decide to finally pulled the trigger, what was the biggest problem you were kind of facing? What was the pain point for you?

Jesse: 11:13 – Scale. Scaling. I want to scale the business, I wanted to grow bigger, I wanted to help more people. I wanted to grow my martial-arts team. I had targets in my mind. I wanted to hit like long-term goals and I knew that I needed some sort of scalability, systems being the biggest one.

Mateo: 11:26 – Nice. And I know you said you work with Brian and then Kaleda; since then, what were kind of biggest changes you started to see after the first couple months in mentorship?

Jesse: 11:36 – An increase in revenue, for sure. I lowered my stress; the stress is just allocated differently. Now I’m able to spend my time doing other things. My staffing, how to manage my staff a lot better.

Mateo: 11:47 – Yeah. How many people do you have on staff?

Jesse: 11:49 – Now I have four full time. And between the CrossFit and martial arts, 15 contracts coaches.

Mateo: 11:56 – Right. I imagine with the two kind of facilities or the two levels, you probably have a good amount of staff. What was that process like trying to get people on board with the new vision once you started to try to implement some of these new systems, what was that process like trying to get everyone on board and on the same page with so many bodies?

Jesse: 12:15 – It was difficult. So I started bringing it in, you know, one piece at a time. Next piece, next piece. I was met with some resistance. Some of those people are no longer with us and that’s okay. I wish them well, but I know I just had to keep on like, clarity, like pinpoint focus. This is where we’re going. If I can bring my staff with me too, I always make sure I always refer to it like our business runs with me behind the scenes where some companies and corporations run with like the CEO up front. I like to stay in the back because without people beside me or in front of me, there really is no me, I’m back to personal training, you know, subleasing space.

Mateo: 12:48 – Right. So you had some tough conversations, but it sounds like you were able to eventually get everyone—the right seats on the bus filled.

Jesse: 12:57 – Yup. For sure.

Mateo: 12:58 – And I’m curious about this next question because I know you have these two kind of pieces to your business. So in your own words, what do you sell and then how do you sell it?

Jesse: 13:07 – I sell lifestyle change. So I myself had under—I went through a large lifestyle change about six years ago. I quit drinking. I gave up that whole party lifestyle at the end of my twenties. I’ve been sober now just over five years. And I never knew how good I would be able to feel, so I to pass that on to other people. Now the people that come into the gym, they find their lifestyle change through health, fitness, martial arts, body awareness, confidence, you know, feeling good in their skin. That’s what I sell.

Mateo: 13:34 – That’s awesome, man, that’s beautiful. Let’s get into the weeds a little bit now with the work you did with Kaleda. Walk us through, if you don’t mind, your paid advertising system. How do you structure it ? Is this just for the strength-and-conditioning folks downstairs?

Jesse: 13:48 – Yes, so we just started it with—I had done it before for a little bit of martial arts, but nothing in real like targeted manner. And then Kalita guided me through with the Two-Brain system, how to set up my ad account, how to set up my campaigns, my ad sets, create ads, my copy, how important the image was, and then how to track that. So just like having the spreadsheet to track it and knowing exactly where my money’s going, not just, you know, again, not just throwing money out the window and seeing what comes back. That’s what I did for a while and it adds up quickly. Like if you’re putting in money into Google Adwords and Facebook marketing, you know, before you know you’re into a thousand, two thousand, three thousand dollars, so just the structured, the way it’s laid out, like the structured videos and you know, the explanations. And then the mentorship to follow-up with.

Mateo: 14:31 – Awesome, man. So a lead comes in for you guys. Lead comes in. What happens?

Jesse: 14:36 – Oh, I love this system. Lead comes in, it instantly gets zapped in my Google Sheet. Once it goes to Google Sheets, Google Sheets zaps it to my phone, so I get a text on my phone saying, you’ve got a new lead. It’s this person. This is the phone number. I used to call them right away, but now I have my front desk. I send a screenshot to my front desk once a day. When she gets in or if she wants to do it from home, she bills me the hours. She calls the person, hey, let’s get you booked in for the No-Sweat Intro. Usually eight times out of 10 we find, 7-8 times out of 10 they already book in through the funnel software and then it books right into my Google calendar and I get a notification every day, these are the people you need to meet, this is what they’re coming for. They come down and sit down and sit with me and I sit at my desk and I lay the paperwork out, what I can do for them, if I can help them. If I can’t, then I tell them I can’t. I’m completely transparent about it, but if I can then we go from there.

Mateo: 15:26 – Yeah. Walk me through that a little bit more. I’m curious your perspective on this, coming from the personal-training background and coming from the martial arts background, that person walks in to meet you. What happens? Walk me through.

Jesse: 15:39 – I make it personal right away. I make sure I know their name. They come in and they sit down in my office. My office is a nice office. I put resources into it so that when people come in it’s like, wow, we’re not in the nicest building but this is nice. They sit down, it’s a good feel. I even go to the step of having like a Doterra diffuser on, like just for a scent, you know what I mean? And also because I love them. And then they come in and I say, OK, tell me what’s going on. I take them through the No-Sweat Intro, I’ve kind of customized it a bit myself. You know, like I go through what’s happening in their life, where I can help them, what they want to do, how they can accomplish it. And then I try to tie some sort of emotion to it. And I’m not trying to be like a snake-oil salesman. I’m just like, why is this happening? Like there’s a reason why you’re feeling this way. What is that? Rather than just what a lot of places do and what I used to do is, hey, come in and I’ll take your money, I’ll make you do a bunch of cardio, you’ll burn a bunch of calories and you’ll lose a bunch of weight and then you’ll go on your way. And then three years from now, or a year from now, or two years from now, I’ll see you and the weight will be back on maybe, sometimes. And then it’s not really successful in my eyes. Sure they’ve paid for my services. But at the end of the day, you want to see that person succeed, right?

Mateo: 16:44 – I think when you just said really important is tying it to a why, right? Because especially if objections do come up, you know, whether it’s about price or whatever it is like, or they’re just kinda like, ah, I don’t know. If you haven’t established that why, you’re probably not gonna be able to overcome those objections. The best way to do that is if you have that why, you’re able to tie it back in, bring it back up and say, well, you said, you know, you’ve got this wedding coming up and you’re and doing this other thing, or whatever it is. If you tie it back to the why, I think that’s super, super important for closing the sale, for sure.

Jesse: 17:22 – A hundred percent. A hundred percent.

Mateo: 17:24 – So it sounds like business is growing. It sounds like you’ve got staff on board. I mean, 180 bucks on ads, five grand in sales. That’s pretty awesome. What do you think has been—you kind of highlighted this earlier already, but what do you think has been the key to your growth and your success so far?

Jesse: 17:43 – 100%. Like there’s a lot of key if you want to know the truth.

Mateo: 17:46 – A lot of keys; yeah, I wanna know all of them.

Jesse: 17:49 – I get up at 4:00 a.m. every day. I always try to work my hardest. I make sure I get—one of the hardest things I find is getting myself rest and recovery. I do it for training, but I won’t do it in business. I’ll sit at my desk for hours on end. Now I’m really starting to like—and my wife is good at noticing this, like, hey, we need to take a break. Let’s sit back, let’s reassess this, shut our phones off, unplug. That has really put me into another stage. And then I mentioned it before, mentorship. It’s like I’ve grown this business—or we, sorry, not I. We, my whole team and I, have grown this business very rapidly and you know, a lot of businesses implode when they go that rapidly unless they have the foundation that they need. So how do I get the foundation? One, I either spend a lot of money making a lot of mistakes and it takes me a long time or two, I spend a bit of money in the front end, hire myself a mentor who’s done it in the past. They tell me what to do and how to do it correctly. I make the money back in a week with this one and you know, I’m going to have those systems and that foundation laid out for years to come. So that’d be my advice. Take time for yourself, hire yourself a mentor and just go for it.

Mateo: 18:50 – I haven’t heard that one on before here before and I think that’s awesome. That’s an awesome insight. If you’re serious about your training, you’re also serious about your recovery. And the same should be applied to your business. You know, maybe I need to go unplug now. I don’t know. But you make a great point. And I think especially if you’re coming up against some kind of challenge or hurdle and you’re like not able to break some kind of plateau, take a step back, take a break from it all and allow your brain to kind of breathe and come back a little bit with refreshed eyes. I think that’s really, really important insight. And then getting a mentor, you know, you would probably know better than I, being a top athlete, you need a coach, right? If you want to get to that level. And the same with a business, you know, you need a coach for that too if you really want to succeed. Well dude, it’s been a pleasure having you on. Really enjoyed this chat. If people want to talk to you or if they want to chat with you or if they wanna come grapple with you, where can they find you?

Jesse: 19:53 – They can find me on Facebook, that’s my biggest communicator. So Jesse Topp on Facebook, you’ll see my—I’m there with my arms crossed with my logo on. Or Instagram, Topp Performance or Topp Performance Martial Arts Academy on Facebook as well.

Mateo: 20:05 – Awesome man. Thanks for hopping on.

Jesse: 20:07 – Thank you so much for having me.

Greg: 20:09 – Thank you for listening to Two-Brain Radio. Make sure to subscribe to receive the most up-to-date episodes wherever you get your podcasts from. To find out how we can help create your Perfect Day, book a free call with a mentor at twobrainbusiness.com.

 

This is our NEW podcast, Two-Brain Marketing, where we’ll focus on sales and digital marketing. Your host is Mateo Lopez!

Greg Strauch will be back on Thursday with the Two-Brain Radio Podcast.

Thanks for listening!

To share your thoughts:

 

To help out the show:

  • Leave an honest review on iTunes. Your ratings and reviews really help and I read each one.
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The BEST Way To Learn Facebook Advertising

The BEST Way To Learn Facebook Advertising

Facebook advertising is possibly the most powerful paid advertising opportunity the world has ever seen.

Its power comes from data: for the first time, advertisers can see the direct results of their work, and invest in retargeting for people who show interest. That means the best advertisers on Facebook aren’t usually the artists; they’re the analysts. Good analysis means that your advertising spend actually gets more valuable over time. This magic is in the retargeting.

 

Here’s How Retargeting on Facebook Works

 

Let’s say you spend enough to put an ad in front of 1,000 people.

Now let’s say 80 of those people click through your ad, because they’re interested in learning more.

You record those 80 names—maybe through a Facebook pixel or an opt-in to your email list.

Your next ad is shown to only those 80 people who you know to be interested. This is retargeting, and it’s the important part.

Your ad to those 80 is less expensive, but far more valuable, because you already know they’re interested.

A few of the original 1,000 people might have taken some action. 3 or 4 might have booked a No-Sweat Intro. But a much higher proportion of the retargeted audience will take that same action. And you can retarget again and again, so ad spend goes down while conversions go up.

 

There’s No Secret Funnel Anymore

 

Facebook now has Page Transparency. That means you can can go to any business’s Facebook page and see every ad they’re running, including pictures and copy. That’s right: you can see who’s targeting YOU, and the exact ads your competitors are running.

Because Facebook knows: successful advertising is about the analysis, not the art.

You can copy your competitors. You can copy anyone. Facebook wants you to be successful so you’ll spend more money. And that’s great news.

 

Why Facebook Is the Most Powerful Paid Advertising Platform for Gyms

 

Let’s look at the alternatives.

In 2008, there were only 8 CrossFit affiliates in Ontario. We actually got every owner on conference calls to talk about marketing! Our best ideas were billboards, door hangers, newspaper ads, radio spots, and–if we could raise enough money–television.

Thank goodness we were too spread out to actually make any investment in these. Because “old” media advertising didn’t really work. Or maybe it did–but no one could tell. It was impossible to measure the effect of your marketing.

“Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” – John Wanamaker, around 1900

“Wanamaker was wrong – the vast majority of advertising is wasted.” – George Bradt, Forbes, 2016

Selling advertising in the past was really easy, because no one could prove that it worked. Undoubtedly, companies spending millions on half-time shows were measuring their ROI. But gym owners who purchased a banner at the local football field had no idea if their $250 got any return at all. So it probably didn’t.

Measured against any other paid advertising–newspapers, booths at the town festival, or banners at the football game–Facebook is far more powerful, because it’s measurable. You KNOW who has seen your ad, and who might want to see more.

 

The Future Challenges of Facebook Advertising

 

Your ad spend is going to go up.

If you’re in a major urban area, and there are people in your niche who are spending a lot on Facebook ads, you’re going to have to spend more.

If you’re in a small rural town of 5000, you can spend far less to make a meaningful impact.

But either way, your ad spend is going to go up over time.

You’ll have to account for advertising differently (for example, the 4/9 calculation for staff pay is calculated off gross profit instead of gross revenue if you have a high ad spend. But don’t worry about that–your mentor will explain it when it becomes important to your business)

You’re also going to get copied. If you can see your competitors’ ads, they can see yours. You need to decide if you’re okay with being copied; you need to stay ahead of the curve with new material; and you need to stay on top of changes.

 

The Worst Ways to Learn Facebook Advertising

 

Facebook Advertising can’t be taught in a book, because the book would be obsolete before the first copy was printed.

It can’t even be taught in a course, because the real value comes from analysis of the data.

It can’t be brainstormed in a Facebook group, because no one is going to share their copy or pictures with you (our Facebook Marketing group is the only exception–we share stuff in there all the time.)

 

The Best Way to Learn Facebook Marketing Is Through Mentorship

 

We have a separate team of trained mentors to guide you through Facebook Marketing.

In our Incubator program, you’ll do 1:1 calls with experts to set up your marketing, including your funnels and retargeting campaigns.

In our Growth program, you’ll participate in our Facebook group, get our updated materials, and book 1:1 calls each month.

 

Common Questions Gym Owners Ask About Facebook Marketing

 

“I spent over $100 already, and only got 10 leads! Why isn’t my Facebook ad working?” Because your first ad is only reaching a cold audience. Your ads will increase in value as you separate the interested from the not-interested. Stick with it. Retarget.

“I got 10 people to click on the ad, but only 1 showed up for their appointment!” You need to nurture them. Booking an appointment can be an impulsive activity. At 11pm, with their guard down and half a pint of ice cream melting in their lap, people can make big decisions easily. But in the cold light of dawn, they might rethink the appointment. It’s your job to call them, reassure them, encourage them and get them to show up. As mentor Kaleda Connell says,

“For every minute you spend on Facebook Ads Manager, you should spend 20 on lead nurture and sales.”

“I posted my first ad, but it’s not working!” Book a call with your mentor. Review the results of your first experiment. Try something slightly different, and measure the results.

“I got 7 people in the door, but none signed up!” Your ads are working fine. You need to learn how to sell. We teach the “help first” model (you don’t have to use bait-and-switch strategies or feel like a slime ball.)

“300 people clicked on my ad, but none of them booked an appointment!” Your website is bad…or something else is stopping them. Read more about “clogged funnels” here.

Facebook marketing has an incredible ROI. But almost no one gets it right on the first try. Just like top athletes learn to watch the tape and review their performance with a coach, top Facebook marketers all have mentors to help them analyze and correct. No one needs to guess what’s working anymore.

Need more advice on common problems? Click here to book a free call with a certified Two-Brain Business mentor.