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The Salary Cap

How much CAN you afford to pay your coaches? How about yourself? It’s no secret that we teach the 4/9ths Model at Two-Brain. We pay our coaches 44 percent of the gross revenue created by CrossFit groups, personal training and specialty programs. Sometimes, coaches launch a program so large that it becomes a separate company. The model is supported by data from other industries, as well as accounting strategies like “Profit First.” And even though we get more granular with our breakdown, most consultants in the CrossFit industry copy this model, though they might rename it to make it their own. Or they might pay a higher percentage for personal training, but expect coaches to run classes for free. However you want to slice it, the 4/9ths Model is the most effective model for gyms: It’s better pay than a trainer will ever find at a Globogym. It creates opportunities to be entrepreneurial, without risk (we call that “intrapreneurial”). It allows the box to cover costs, and prioritize paying the owner. It removes the ceiling effect created by salaries. Here’s another way to think of the 4/9ths Model that doesn’t sound so “mathy”: Think of your team of coaches like a sports team, and your mentor as the league commissioner. You’re allowed, by league rules, to spend 44.4 percent of your gross revenue on payroll. This doesn’t include YOUR pay as an owner, or your profit. Those payroll expenses include taxes, healthcare, and all other costs associated with paying your staff. This is why I prefer to have contractors instead of employees: I want my crew to have the same taxation opportunities I have, without the entrepreneurial risk. But that’s another subject. Want to hire an admin staff? Great—as long as the expense of their wage fits under your salary cap of 44.4 percent. The industry average is below 25 percent. If you call a local franchise gym and ask, ...
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Episode 113: Working With Entrepreneurs

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Who Fits Your "Happy Zone"?

by Oskar Johed, CrossFit Medis “Everybody knows how to hit – but very few really do.” I don’t know too much about baseball, but I know excellence when I see it. Long before we became members of the Two-Brain family we were following Coop’s work. Just by implementing freely available tools and tricks, we increased our net profit with well over the $10.000 per year. We also slept better, served our members more professionally and felt happier. When we finally joined the Incubator the profit (and workload) increased in due fashion. The pattern was repeated when we joined the Growth Stage after examination from the Incubator. The collective wealth of knowledge in the group is quite staggering.  I started reading all the books that everyone was recommending; Purple Cow, Never Split the Difference, A Beautiful Constraint, Start with Why, The E-myth etc. Phenomenal books loaded with insights! However, I am not smart enough to discover something that another Two-Brain member had not already mentioned. If I want to challenge my own thinking as well as contribute I have to seek excellence and wisdom elsewhere.  “Excellence is obvious to everyone” – Coach Greg Glassman. Baseball legend Ted Williams’ excellence is obvious. He explains in his book “The Science of Hitting” his methodical way to become one of the best hitters in baseball history.  In short, he divided the strike zone into 77 cells each the size of a baseball. He then calculated his batting average per cell. Swinging at pitches of his particular preference would yield 75 percent better than swings at balls in the worst part of the strike zone. His so-called “happy zone” – think heat map – consisted of 18 cells or about 23 percent of the strike zone .  He tried to be patient and only swing at balls in the happy zone.  Before joining Two-Brain we were “swinging” at anything and everything, regardless if the opportunity ...
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Turtles All The Way Down

Why Most Businesses Are Just Houses Made of Cards   The scientist Bertrand Russell once gave a public lecture on astronomy. He described how earth orbits the sun, and the forces holding our galaxy together. At the end of the lecture, a little old lady stood up in the back of the theater and said,   “What you’ve just told us is rubbish. The world is a flat plate, resting on the back of a giant tortoise.” Russell asked, “What is the tortoise resting on?’ The old lady replied, “You’re very clever, sir. Very clever. But it’s turtles all the way down.”   When a gym owner books a free call with me, I spend the first ten minutes asking questions. I want to know their story; I want to see if I can help them. And I want to find their bedrock.   So I ask about their Perfect Day. I ask them to tell me the story of their business. I ask, “Who’s helping you with this?” But what I’m really trying to find is their foundation: the systems on which their business runs. When I discover a lack of systems, I want to know their goals. And if they can’t clearly state their goals–their giant, big WHY IN THE SKY–then I ask about their values. I’m looking for their foundation.   Knowledge–in science, in myth, and in your business–requires a foundation of absolute truth.   If I ask your staff, “Why do we open at 9am?” are they likely to say, “Because that’s the time we’ve always opened”?   If so, and I asked, “Why have you always opened at that time?”, what answer would they give?   “Well, that’s what time everyone opens on this street”?   And if I asked, “Why does everyone on this street open at 9am?”–what answer would I get then?   But if, to the first question, your staff answered, “We ...
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Episode 112: Where Should Your Focus Be?

 
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Come-And-Go CrossFit

How the wrong marketing can actually hurt what matters: your retention rate.   “Customer satisfaction is useless. Customer loyalty is priceless.” Jeffrey Gitomer   Plot twist: my parents own a tea house.   They sell carbs galore. Delicious carbs, for cheap. They host a lot of private events: birthday parties for old people, retirements, and sometimes wakes.     Because the guest of honor is usually old and tired (or dead and awkward), many of their invitations say “come and go” on them. They mean, “Have a short visit, but don’t stay forever.” So people wander in, have a drink or a tea, stop at the bathroom, and get home before Matlock. They don’t expect to stay for long.   Obviously, we don’t want new CrossFitters to stay only for a few weeks, and then leave. We don’t want them to have an exit strategy. Even when we advertise a six-week challenge, which has a clear endpoint, we try to convince them to stay at the end.   Here’s the problem: when you flood your gym with new people, you dilute the attention given to your current guests.   Greg and I both started as Personal Trainers. We worked with one client at a time. Then, eventually, we added a second client in the same slot. Now our attention was split, but the net benefit to each client was still positive, because they had some support and friendly competition.   When we added a third client, the support and competition became more anonymous, but some clients liked it even better. So the group model evolved.   But if you’re selling group fitness, and the group continues to swell, you’ll soon reach a point where each individual member of the group receives diminishing levels of 1:1 coaching. That makes coaching a one-way conversation (more like group choreography than coaching, really). The client doesn’t have a clear relationship with you or the coaches, ...
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