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How To Level Up

In 2007, I faced what many would call a “good problem”: my gym was full. I owned a Personal Training facility, and we simply couldn’t take any more clients. We had people training in stairwells. At peak times, with 5 trainers and 5 clients in 4 PT rooms, we had huge lunge-a-thons up and down the hallway. At that point, we started to consider group training. Because we HAD to. The same thing happened to Greg Glassman, remember? He started pairing people up because his book was full. Then he put them in small groups. When I moved from 1:1 to small-group training, my revenue per hour went up. The value of my time increased. So far, so good. If you want to level up your personal income, fill yourself with 1:1 clients first. Make a living. Then add 2:1 training, and then small groups. Jump to group training ONLY when your client base is secure. Here’s how I screwed it all up in 2008: I opened a second gym. Instead of starting with high-value use of my time, I sold Open Gym memberships to people who really needed coaching instead. I started working 16-hour days for a couple of bucks per hour. My landlord made more money. I didn’t. The value of my time decreased. In fact, it bottomed out: I probably could have made more at a call center. I just kept working MORE until I couldn’t. And here’s how I started to fix things again: When we ditched Open Gym and regained our footing as a coaching business, the value of my time went back up. But I was still working a 16-hour day. And it was full: coaching, cleaning, writing blog posts. I had to climb back out of the hole. I was trying to do everything, but I simply couldn’t fit everything in. So I replaced myself in the cheapest possible role (cleaner, back then.) …

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How To Sublease Your Space

You’ve taken a big leap: committed to rent and loans and time. You’ve dedicated yourself to attracting people to one little spot. You’ve painted the walls, assembled a desk, plugged into the Internet. You haven’t built a gym. You’ve built a platform. On this platform, you’ll build your living. Every square inch exists to buy your groceries. It might not be a blank slate—you put up that big rig, after all—but every little corner should be used to generate revenue. One way to leverage unused space is to sub-lease to a massage therapist, dietitian or other pro. Here’s what you offer: Physical location: heat, lights, cleanliness, parking, snow plowing (maybe that one’s just me) Business costs: lights, insurance (maybe), internet access, transaction setup (debit machines) booking and billing automation Business processes: cleaning is covered, staff can book appointments, Prescriptive Model includes multiple services Branding: access to a pool of trusting, high-earning clientele Space: furnished or unfurnished. The opportunity you’re presenting is FAR more than just space. It’s practically a turnkey business. All those business setup headaches that YOU’VE already figured out have been solved in advance for your tenant. That’s very valuable. Keep those in mind for the next step. Here’s what you charge: Start with the bare-bones math to determine the minimum value of the space. I’ll use an example from the Two-Brain Group this morning. Gym size: 4160sqft at $10.96 per square foot (includes NNN) Rental room size: 108 sq. ft. Rental rate to break even: $1183.68 per year ($98.64 per month) But the room is part of your business platform. You’re not renting it to break even. According to our 4/9 model, you need to cover your fixed costs (2/9, including all physical location and business costs listed above) AND protect your profit margin (3/9). The only thing you’re NOT providing is the labor. Your base rent is $98.64 plus 5/9 – that’s the opportunity cost to …

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The Cyclical Nature of Business

Every business goes through cycles. First, growth. The tree expands outward. The business grows its revenues through new clients, new products, or higher rates. It reaches new levels of profit. Second, consolidation. The business stabilizes at one level–hopefully a higher one. What triggers the “growth” phase? Marketing, introduction to new people, new service offerings, heightened awareness, improved interest, removal of a barrier…many things can trigger a period of growth. However, every growth period will eventually end. And when it DOES end, the business will drop to its level of consolidation. Here’s an example: a gym has space, equipment and coaches for 50 athletes. Classes start when everyone arrives, because the owner and coaches know everyone’s name and schedule. All the clients know to take off their boots at the front door. New clients don’t do an OnRamp program of any type, because there’s plenty of 1-on-1 attention in a class of three people. There’s no option for personal training, because none of the original 50 members asked for it. Now let’s drop 50 NEW members onto this platform. First, class size doubles. Newcomers aren’t taught to arrive on time, so they trickle in…and class starts late. There’s a scramble for equipment. New kids get all the attention, because their technique is poor compared to the veterans. They break a thousand little unwritten rules, like wearing wet shoes into the gym, because they don’t know better. Some quickly leave because they don’t feel ready for CrossFit. To help, veterans start coaching the newcomers. The coaches aren’t sure how to enforce the rules. The clients don’t know how to behave, because they’ve never been told. The owner might be making more money, but they’re definitely doing more work, and stress has gone through the roof…and then things start to go really wrong. A new member objects to the gangsta rap at the 6am class. The 3 people who have been coming at 6am have …

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State of the Industry, 2017 (And What I Learned in 2016)

My friends, I think we’ve begun to turn the tide. 2016 opened as a year of uncertainty for many microgym owners. Some doubted our brand; others doubted their ability to survive. We heard pleas, blame and–frankly–desperation. But in hindsight, most of this self-doubt and questioning of authority was just part of the maturation process. To put it another way, 2016 was the year many gyms grew up: from breakeven hobbies to profitable businesses with a real future. The most common theme we published in 2016 was this: if you want to help more people in the long-term, fix your business right now. I know other groups followed the TwoBrain lead. And now, happily, we’re entering 2017 with a new sound ringing in our ears: Success. We’ve all been successful at fitness for years. CrossFit has been a turning point in the fitness of many people, and it’s been the catalyst for launching thousands of small businesses worldwide. But a fitness model isn’t a business model. As 2017 dawns, so does the realization that the affiliate world needs models of success, and clear steps t get tohere. Sustainable business doesn’t come from great programming. It doesn’t come from data. Good business comes from good business coaching. Why do I think we’re turning the tide? Here are few reasons: 1. If I said the word “profit” in public two years ago, I’d have been skewered. “I’m not in it for the money” was the rally cry of the affiliate owner. It was once mine. No longer. Now we don’t confuse “profit” with “greed”. We know WHY we need money. Right? For stuff like this:   2. No one falls for the “projected revenue” story anymore. And no one takes gross revenue at face value. We’ve all figured out that spending is easy. People ask about net, or profit, more often than ever before. 3. We’re buying houses and cars and having families. …

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The “Free Trial” Is Over

In the last week, two separate gym “authorities” have told me – an actual owner of actual gyms – that a “free trial” is the best way to take in new clients. What do these guys have in common? Two things: they’ve been doing CrossFit for a LONG time; and they’ve never owned a gym. Ten years ago, a ‘free trial’ was a great entry point. Early adopters to CrossFit, novelty-seekers, and gym-hoppers just wanted to dip their toes into functional fitness. They had already jumped through several hoops: they had decided they needed to exercise,and were probably already exercising; they were bored with their current routine; they were adventurous enough to try something they knew nothing about; they had already done background “research” on CrossFit (they were pretty much sold when they walked in the door). And all those people DID a free trial. It was enough. Now it’s not.In 2017, a “free trial class” – or even a “free trial personal training session” – is no longer the best way to build a long-term clientele. Here’s why: We’re now into the third tier of client engagement with a new idea (the “Late Majority”.) They have preconceptions about CrossFit, but probably haven’t done thorough research. They’re less fit than the early adopters will. A ‘free trial’ workout is more likely to discourage them than encourage them. A ‘free trial’ doesn’t show they how you’re going to solve their problem. You’re overweight? Let’s make you throw up! Think about this: how did you choose your dentist/lawyer/accountant/wedding planner/tshirt printer? Through a “free trial”, or through a consultation? We’ve been tracking data for hundreds of gyms for years. The best way to meet a new client, help them plan their training, sign them up and keep them is the No-Sweat Intro. We even have data on the name! Mentoring clients get the full script, and training for themselves and their staff. They have the philosophy …

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Why We Don't Have Sales

You are not selling a product. You’re selling a service. Your goal is not simply to sell more because your most valuable resource (time) is finite. Product companies want to sell high volume because the cost of production decreases as they sell more units. They can buy parts in bulk, they can negotiate volume discounts with suppliers and they can streamline production. We can only sleep less. Or exercise less. This means it’s important to sell our service at the rate that will make us profitable, maintain a professional image and avoid problems that make our business unstable. Here are the reasons we don’t discount our rates, or have “sales”—from both sides of the coin:   1. Discounts attract the wrong people.   Because we don’t have unlimited time and attention, spending that same time and attention on a client who pays 20 percent less is robbing us of what we could earn in the same time. Our rent doesn’t go down 20 percent when we give a client a discount. All the “savings” come from our profit.   2. Sales teach the right people bad habits.   Who is most likely to purchase a one-year paid-in-full (PIF) membership? The client most likely to stick around for a year anyway. So why discount? A 20 percent discount for paying up front seems like a great idea in January: All. The. Money! But a discount of 8.5 percent is equivalent to a free month. A 20 percent PIF discount means your best clients—the ones most likely to stick around anyway—are attending for free after Oct. 15. Worse, it teaches these great people to wait for another sale before signing up again. When you cease the bad habit of “sales,” they don’t think, “Ah well, it was good while it lasted. I was getting a bargain!” Instead, they think, “Now I’m going to pay 20 percent more for the same service.” Discounts …

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