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What Are We Selling?

Two months ago, I was sitting in CrossFit Bolton with two primo gym owners and three HQ staff. While the cameras were off, my friend Tyson Oldroyd was asking us about nutrition programs in our gyms. He had just successfully coached a client to lose over 100lbs with mostly dietary changes. He said something like, “We’re in the results business.” It led me to ask, “Are we selling exercise here, or fitness? Can we really sell fitness WITHOUT a nutrition prescription?” Yesterday on 2BTV (our private weekly webinar for TwoBrain mentoring clients) my guest was Nicole Aucoin, who helps gyms build nutrition programs. Most of us are adding a nutrition layer on top of the exercise program we sell. But Nicole is also in the process of opening her OWN CrossFit gym. And with a blank slate, she’s making nutrition the base of the fitness pyramid…as we all should. Starting from a blank slate, and selling fitness, let’s consider these questions: If 80% of our clients (that was the statistic from my gym in 2016) are seeking some sort of aesthetic goal first and foremost, what’s the best way to get them there? What tools are available to us? How will we measure progress? What equipment will we need to deliver this service? How many clients can we help? What if some of them were in a group? What will our prices need to be to make a good living at this? Remember: blank slate. No sunk costs, like pre-existing equipment. How will this change your perspective on business in 2017? Are we selling fitness, or exercise? What OTHER pieces are we possibly missing? – and – What opportunities do those pieces create? (You can hear Nicole’s full interview on Monday’s podcast.) The “Opportunities” module and discussion in our Incubator helps gyms see the “big picture”, add revenue streams, and help their clients get more fit.
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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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