Yesterday, I wrote that “Your Clients Are Not Your Friends.” It’s a lesson that many of us have had to learn slowly, painfully, and repeatedly.
Many veteran gym owners weighed in with their own stories. But some also shared the other side of the coin:
“You still have to be friendly to everyone.”
Your gym attracts people by promising to solve their fitness problem. It keeps people through operational excellence (your systems) and strong relationships (the 1:1 coaching relationship, and the relationship with your other members.) Some call the latter their “community”.
All of those relationships flow from your example.
If you greet everyone with a smile, they’ll turn around and greet the next person with a smile.
If you hover behind a desk with your hood pulled up, and point people at the whiteboard to warm up on their own; or show up late, looking tired; or punish people who are two minutes late for class–well, they’ll just go and have a better experience somewhere else. Giving a client the best hour of their day means pulling them out of their funk, breaking through their boredom and cheering them up.
No one quits a gym because their coach doesn’t know enough. But plenty of people switch gyms because their coach is tired, or cranky, or not engaged. Hell, I don’t want to spend time around negative people either.
If you’re tired in the mornings, do the right thing for your clients: bring a bubbly part timer who will shout “GOOD MORNING!!” from the rooftops at 6am. If your days are long, replace yourself in the evenings. Find a part-time coach who’s not tired; not stressed; not distracted. (Read: The Case for Part-Time Coaches here).
Many Microgyms don’t survive. When they fail, it’s never because the owner lacked education. It’s almost never because the owner didn’t care enough. But it’s often because the owner didn’t smile, hug, or high-five. Trust me: I’m a natural introvert. Friendliness is the skill you need to develop most.
What kills gyms in their first year? A lack of clients. That’s why we build marketing mentorship into our Incubator now.
What kills gyms in their seventh year? The owner. The owner is burned out. The owner is exhausted. The owner is stressed. The owner is unhappy, and it shows. They can’t force the smile anymore. And there’s no “backstage” area in their gym; nowhere to hide their mood. If they’re still overworked and underpaid after five years of gym ownership, the owner is going to have a tougher time making a comeback. Usually, they’ve had hundreds of people walk through their doors by that point–more than enough–but haven’t kept those people. So they look for some marketing magic tricks, pump more strangers through, fail to bond with them, and just get more tired and stressed.
The difference is in your smile.
If you can’t smile at people, replace yourself. Put someone else in front of them. Work on attracting more people into their sticky web of joy. Or take a nap. Put your best face forward!
“I’ll let people try my service for free, and then make it up on the back end.”
“I’ll pay my staff a salary and then pay myself when we’re profitable.”
“I’ll take some money out of the business when we reach 100 members.”
Entrepreneurs open a gym for all the right reasons: they want to help people. They want to share the gift of fitness. And they want to tear up the old myths about health and food. They’re passionate. And they’re usually generous to the point of hurting themselves.
They tell themselves that “leaders eat last” and that they’re “playing the long game”. They keep kicking their success down the road. And most never, ever catch up. I was that way too.
Here are some of the methods we teach to help owners get profitable NOW:
- Profit First. Listen to the episode with Mike Michalowicz here. Paying yourself first means you’ll pay yourself, period. My favorite “profit first” analogy is the toothpaste tube. When the tube is new, you’re pretty loose with the paste. If you spill some, it’s no big deal. If you use more than you need, no problem. But at the end of the tube, you’re squeezing every last drop out. You’re rolling it up; folding it; pressing it against the sink. That’s how money works, too. If the rent is due, you’ll hustle to pay it. But if it’s your own pay on the line, you won’t. Pay yourself first, and you’ll always have the money.
- The 4/9 model. Every staff person should generate 2.25x their pay. Instead of shouldering all the risk with a salary they might not even want, give your staff opportunity. Work always expands to fill the time you give it. The old industrial model of a 40-hour-week for a fixed check is demotivating; gets far less work accomplished; and caps your staff’s potential. It also puts your cash flow at risk. In short, it puts the owner LAST. In an owner-operator business, that can be deadly. Pay your staff 4/9 on group classes, PT and specialty programs. Show them the opportunity to make more money. Slowly move other roles onto their plate, and pay them separately for those roles.
- Collect up front, but pay your staff on delivery. Some owners sell personal training packages, and then immediately pay their trainers their share before service has been rendered. This is very demotivating, because the money will be spent long before the sessions run out. What happens when the trainer wants to take a vacation? They keep the money and the owner provides the service for free. What happens when the trainer does a bad job? The owner is forced to keep them around…at least until all of the sessions are fulfilled. What happens when the trainer leaves, or just stops showing up? It’s always the owner who gets caught. Collect from your clients in advance, but never pay ahead of delivery by your staff.
- Build an annual plan. If you’ve been tracking your metrics, you’ll know where the peaks and valleys are in your business. Bridge those valleys with specialty programs, events, or other cash spikes. Use our free tool here.
- Don’t be scared to carry a balance. Many gym owners think it’s wise to bring every credit card to zero every month; to buy things only with cash; to impoverish their business instead of carrying a loan balance. It’s not wise; it’s a starvation diet. Years ago, when my bank account hit rock-bottom, I was making maximal payments on my loans and paying off my credit card balance every month. Finally, when I couldn’t starve my family any more, I reached a point where I didn’t have enough money to cover payroll. I called the bank and asked them to refinance my little $15,000 loan.
The loan officer said, “Yeah, sure. You’ve never done this before? Everyone does this!”
I spread my loan balance out over 5 years, cut my payments in half, and breathed easier. Of course, I paid off the balance before it was due. But giving myself that little breathing room helped me sleep at night, be less distracted with my clients, and keep my staff paid on time. I needed that short-term win to get me through the bigger battles ahead. Read more about Good Debt and Bad Debt here.
- Finally, remember that your business exists to serve your family first; your clients second; and your staff third. Read “How Much Suffering Is Enough?” here. You didn’t open a business to be a fundraiser for the government or Rogue or CrossFit HQ. You did not open a business to take a vow of poverty. You opened a business to eat. People who don’t own successful gyms often don’t understand this: your martyrdom doesn’t make your clients fitter. Your starvation doesn’t keep them around longer. You’re not helping anyone by working a 15-hour day, and you’re definitely hurting your family. Keep that perspective at all times.
Someday your ship will come in, right? You’ll just keep doing the things and doing the things and showing up, and somehow things will get better.
Nothing changes until you change. You tell it to your clients, and it applies to you too.
Click here to get a free hour of mentorship from our team. No sales pitch, ever.
By Josh Martin, Two-Brain Mentor
Note: Our Two-Brain Coaching Group on Facebook is public! Add your coaches!
My favorite check that I write each month is to the lawn company that takes care of our yard. And while the size of that check grew when we moved to our new house, it still puts a big smile on my face.
Growing up, I did lots of yard work. I hated every single second of it.
But when it came time to earn some money one summer, I literally went door to door with my lawnmower and asked everyone if I could mow their grass for twenty bucks. I heard plenty of no’s, but some took pity and appreciated my hustle, and at the end of that summer I bought my first pair of skates. That was the beginning of my speed skating career, but that is a post for another time.
Mowing lawns was actually not that bad if I’m being honest. The worst part was pulling weeds in the garden. It seemed never ending. And when we got done with one flower bed, it just looked all tussled about, bare, and a bit pitiful.
As a gym owner, losing members is the same way. Making tough choices for the betterment of the business can even be a catalyst for some to leave on their own or to start questioning if they still fit.
It never feels good when it happens. Even if it’s someone that is choking the life out of you or your staff, it’s never fun (or easy) telling someone that you think they’d be better served elsewhere.
Like the garden, when the weeds are gone, things can appear quite bare. You start to wonder if the choices you’ve made are the right ones.
But just as pulling weeds in a garden are necessary for growth of the beautiful roses, its necessary as a gym owner too. Your roses, your seed clients, deserve the very best of you and your staff. If you are constantly worried about the weeds, you’ll never have time to develop those who really matter.
I get it – we all want to help everyone. Owning a gym is a noble endeavor. But we can’t help everyone all the time. Our time is best spent on those that want our help and appreciate us for why we do what we do.
After I’d finished pulling weeds, it wasn’t until a lot of rain and sunshine came that we saw the fruits of our labor. It took time. But if I hadn’t pulled the weeds, they’d have soaked up all the water–and all of my sunshine.
Be patient. Tend your garden.
Many service professionals build a “book of business”. Financial planners, investment salesmen and insurance agents use the term often. These are all licensees: they pay a small fee or percentage to use a larger brand (like an insurance agency or real estate business) but mostly operate autonomously. They might get some small benefit from the brand for lead generation or a discount on signage; they might share office space or administrative staff. They’re not entrepreneurs, but they’re mostly responsible for finding their own clients. And they also keep their clients for a very long time, even if they leave their agency to work somewhere else.
For a client list to have value, the agent must be reasonably sure they’ll keep the client for decades. For example, when a financial planner retires, they can sell their “book of business” to another, because most people stay with their financial planners for life. They’re transferring value to another agent because their clients are locked in.
This is not true in the fitness industry.
When you enter the Farmer Phase of entrepreneurship, other fitness coaches build careers on your gym platform. Your role is to find them clients; provide booking, billing and scheduling resources; cover their insurance; pay for the lighting; give them access to equipment; keep your space safe…and a dozen other responsibilities.
Their role is to train the client on the stable platform you’ve built for them.
They do NOT own the client. Whether as employees or contractors, fitness coaches are not building a “book of business”, because the client shouldn’t leave the gym to follow a coach elsewhere.
The coaches and personal trainers at a gym are there to serve the gym’s clients.
What’s the difference between an intrapreneurial coach and a gym owner? The whole world.
An intrapreneurial coach maximizes the opportunities created by the gym owner. A gym owner creates enough opportunities for their coaches to build a meaningful career.
But a gym owner can’t create a stable home for their coaches if each coach “owns” their client.
I’ve seen this case play out over and over:
Gym owner offers a coach a part-time job.
Coach is thrilled, and gets even more passionate as time goes on.
Coach wants to make fitness her full-time career. But how?
Gym owner tells the coach: “find some personal training clients”.
Coach finds one or two, but it’s not enough.
Coach thinks, “The only way I can make this my career is to open my own gym.”
Coach leaves. If the coach has built a personal “book of business”, her clients leave with her.
Gym owner says “Never again!”
Gym owner goes back to the floor full-time.
How do I know? Because I was that coach!
Your clients must associate their training relationship with your brand; not with one specific coach.
Even if they primarily train with one coach, they should sometimes train with another. And receive nutrition advice from another, and also interact with your Customer Service Manager often. Forge their relationship with your brand to be a stronger one than their relationship with your coach.
I’ve also been on the other side of this, and lost long-term clients when a long-term trainer left.
I’ve lost sleep over those clients. I had to resist the strong impulse to bad-mouth the coach they were following. But in the end, I knew it was my fault. They had built a stronger bond with that coach than with my brand. I could have avoided the problem, but didn’t.
Now Catalyst has one dedicated staff person responsible for client relationships (in my books, this person is called “The Joy Girl”, the name a previous person gave themselves. Our new expert prefers Customer Success Manager.)
He follows our the Client Journey Map we built in the Incubator. He represents the brand. He keeps improving our LEG. He knows that every client is “our client”, and “our chance” to make a difference.
The “book of business” term is used to place a value on a client caseload. Investment portfolio managers and lawyers sell their “book of business” when they retire. But in the fitness industry, the term creates confusion and stress. Every client should have a relationship with the gym, not with a single coach. None of us is as good as all of us.
Further reading: https://twobrainbusiness.com/channel-conflict/
Your culture is the sum of your 1:1 relationships.
Your gym culture is the sum of your 1:1 relationships with your clients.
Your staff culture is the sum of your 1:1 relationships with your staff.
Your “culture” is not how often your clients visit a bar together. It’s not how long they stick around after a workout, or even what they’ll wear to get bonus points in the Open. Your culture is relationships, and every relationship is 1:1.
You measure your culture by the LEG (Length of Engagement) of your clients. Great culture keeps clients longer.
In the Founder Phase, your culture is the sum of your relationships between yourself and your clients. You’re delivering your service yourself; if you build trust and empathy with your clients, you have a good culture.
A good relationship is a balance between friendship and objectivity. Your clients are not your friends, but your relationship must be friendly. You must stay professionally distant enough to charge money for your service; you must stay close enough to demonstrate your care. It’s not easy.
In the Farmer Phase, your culture is determined by your clients’ relationships with your team, and your team’s relationships with you.
Your team must understand your vision (we call this “The Owner’s Intent”.) They must also know that you care about their career and have a plan in place for them (we use the Career Roadmap exercise in TwoBrain.) They must see the horizon and know they can achieve their career goals on your platform.
Then your team must deliver 1:1 relationships with your clients the same way you would. This is the most challenging part of being a Farmer: handing over the responsibility for client relationships. Every staff person will have different personalities, strengths, and weaknesses. For example, one might be incredible at creating workouts for clients; but might not have a strong sense of empathy. Or one might be creative but not quite organized enough. For this reason, we always build a safety net into the Farmer Phase: we add a Client Success Manager role for 2-4 hours per week.
In the Tinker Phase, your clients’ relationship should be with your brand. This means they have to align with your company’s values and vision. Now you have six relationships to manage:
Your client’s relationship with your staff
Your client’s relationship with your brand
Your staff’s relationship with their manager
Your staff’s relationship with your brand
Your relationship with your direct reports
Your relationship with your brand.
In the Tinker Phase, we tell entrepreneurs to build a managerial layer (usually a COO or General Manager; a CFO; and a CSO, or Sales Lead.) These should be the owner’s three direct reports. In turn, they translate the owner’s intent, vision and mission with staff. Good Tinkers should be removed from daily operations, but still available to staff who have unique situations. For example, the CEO shouldn’t be the one with the key to the supplies cabinet, but should still be available to listen to a staff member with concerns about their career.
The Tinker must clearly define their brand’s values. She must answer questions like:
“How does our service fulfill our goal?”
“What will we NOT do?”
“Who is our perfect client?”
“What is the perfect delivery of our service?”
“How far will we go to solve a customer’s complaint?”
She must also define the language and behavior used by the brand. For example, the Tinker must have:
A Quality Control or Evaluation process
A Style Guide for brand media
It seems like the Tinker is too far removed from client interactions to influence company culture. But that’s not true: the Tinker’s role is to define and teach the company culture to their key staff, who reinforce the culture by tracking client and staff relationships.
At this level, companies must track LEG as a measure of their client-facing culture; and they must track length of employment as a measure of corporate culture. Many businesses make wild guesses about “employee culture”, adding pinball machines and free breakfast cereal. But they fail to measure the effect of their action on employee retention. That means they’re not taking their culture seriously; they’re just trying to be as cool as Google.
Like everything else in your business, culture is measurable. That means, no matter how poor your current culture, you can improve it. The key is to focus on one relationship at a time and measure your progress.
Maybe monthly pub crawls DO build a better culture in your business. It’s possible! But unless you’re tracking LEG, you’ll never know what’s actually helping your business.
By Anastasia Bennett, TwoBrain Mentor
Imagine you are driving a car and the dashboard stops working – what are you going to do? Stop and fix it, right? It’s pretty crazy how many business owners are driving their business without their dashboard working.
As a business owner, it’s your duty to understand your business’ financial position. You must use numbers to analyze what you need to work on, and what to develop to help your business thrive. You must get reporting and analysis reports on a monthly basis. If you don’t know where your business is going, you might end up somewhere entirely unplanned.
It’s surprisingly common that business owners don’t know how to translate reporting into real life. Good news! It’s not that hard and we are here to help you.
Accounting and financials do not have to be complicated and can be explained in simple language.
The most important reports that you need to track and understand are:
- Profit & Loss statement
- Balance sheet
- Cash flow
Profit & Loss
Your profit and loss statement is an accounting report that shows your income and expenses — and whether you made a profit or loss — over the financial year. It may also be known as an income statement.
There are lots of things that don’t show in the profit and loss report, things like:
- Debt repayment
- Loan repayment
- Lease on your car
- Tax payments
These things are covered by one of the following.
The balance sheet is a more detailed accounting report that shows what you own and what you owe at the time of the report. It’s the ‘snapshot’ of your business’ financial position.
Do you ever ask yourself where all money goes? Sometimes you look at your Profit and Loss and its showing that you made a profit but there is no cash in the bank!
Cashflow is money coming in, money going out and how much of it you have left in the bank at the end. Having a healthy cash flow means you are able to pay all bills when they are due.
Your Profit and Loss statement might be showing a profit even when there’s no money in the bank. That’s why we need to track cash flow as well.
A cash flow forecast is like a fuel gauge on your dashboard: it shows how much fuel you have and how far you can go before you have to get a refill. By the way, your savings account should have 2 months’ worth of expenses in it. If 2 months is a bit of stretch, try to start with 1 month and work your way up from there.
A cash flow statement should mean a lot to a business owner, because it shows how much money you had at the start of the month, how much you had at the end of that month, and what you did with the difference.
Here is how to track your cashflow every month. Get this information from your bank account:
- Starting balance
- Plus Income
- Less Expenses (including wages)
- Less personal drawings (wages to yourself through drawings and not payroll)
- Less Tax Payments
- Less Loan repayments
- End Balance
Financial statements can do more than report of the health of your business.
They can help you to see :
- what’s performing smoothly
- where you need to focus
- risks and opportunities
- potential nasty surprises
There are a few equations and ratios that are very helpful for making decisions within your business.
Knowing how to read financial reporting and being able to do bank reconciliations is beneficial if you need to reach out to the lenders or investors for your business or if you decide to buy a house or a building for your business. It’s also important for avoiding overtaxation. Ignorance costs you money. Overpaying taxes is the penalty for ignorance.
Numbers to track :
- Profit Margins
Your profit margin should be at least 10% after your wages are paid. Or, in the Profit First model, your profit margin should be 33% including your wages or drawings as the owner.
Expenses including staff wages and fixed costs $6,000
If you took $4,000 as drawings then your profit is zero
If your aim is to make 10% profit margin after your personal distributions then 10% of sales would be $1,000.
So , $4,000 less $1,000 = $3,000
Which means that you should only be taking home $3,000 for that month.
I can’t stress enough how important it is to understand your financial reporting. If you are not confident with your own abilities, hire someone who can do it for you and report to you monthly!
We recommend InciteTax, but if you choose to use someone local, that’s fine. Just get your dashboard fixed!