Chris Cooper: (00:00)
“I need money!” This is a question that I get every couple of weeks in my Facebook DMs from people outside of Two-Brain, and I just got it again this week. And so I want to share with you exactly how to make money fast, using a secret list that we keep on hand in our mentors group. This is Run A Profitable Gym. I’m Chris Cooper, the founder of Two-Brain Business, and if you want to talk about this or other ways that you can make money fast without killing your gym long term, go to GymOwnersUnited.com. That’s our free public group where I and mentors from the Two-Brain team volunteer our time to help gym owners in crisis like this.
Chris Cooper: (00:39)
So today we’re gonna talk about how to make money fast. This actually happened to me in 2007. I had lots of clients, I was working pretty hard and I just ran out of money. I had people who were paying on accounts receivable, so they would come and do all their training all month and then at the end of the month I’d give them an invoice. And some paid on the spot, but more likely they were paying the next week or even a couple of weeks later. And eventually I just ran out of runway. I had $12,000 in accounts receivable and $0 in my bank account. I had loans to pay, I had my rent coming due, I had staff pay due on Friday. And worst of all, I wasn’t paying myself enough to pay my groceries for my family. And so I called people for advice and they said, oh yeah, run a short term sale or sell discounts.
Chris Cooper: (01:30)
And I realized that’s just gonna hurt me long term. But I kept them in the back of my mind as a worst case scenario action. Then I called my banker and asked her advice and she said, oh Chris, you just need a cash flow loan. Everybody does this, don’t worry about it. I had built this thing up in my brain where I thought she was gonna tell me I was a failure, or she was gonna say, you need to declare bankruptcy, or something like that, or even recall their loan once they found out that I was in trouble. But instead she gave me reassurance and said, this happens to everybody. Don’t worry about it. We refinanced my original purchase loan for my equipment. We brought that price down and something amazing happened from that, I suddenly had less pressure on me all the time.
Chris Cooper: (02:15)
I was less stressed. I wound up getting an extra hour of sleep a night because I wasn’t tossing and turning. I felt better, I felt more confident. There was this little tiny margin of a couple of hundred bucks a month, but I knew that that would build over time even though I was paying all my bills. And eventually that confidence led me to marketing my business better, to selling my business better, to serving my clients better and keeping them longer to raising my prices. And we spread that loan out. But I wound up actually paying it off earlier than I would have if I kept the original term because this little tiny margin gave me breathing room to grow and recover. And so today I’m gonna talk about four ways that you can raise funds fast if you need them in your gym business without hurting yourself yourself, or taking the bad advice that I was getting about offering pre-sales and discounts and crap like that to your clients.
Chris Cooper: (03:05)
There’s really four ways that you can get cash fast. The first is from your partners, if you have partners or if you’re tempted to sell. I’m gonna go through the pros and cons of either. The second is from your staff. Some people are actually tempted to sell a share of their company to their staff to make money fast. And I even thought about running a co-op. Here’s why I didn’t, I’m gonna share pros and cons to that. The third place to get money fast is your bank. I know we all hate borrowing from banks because we hate paying interest, but sometimes it’s the best option. I’m gonna share why. And the fourth place to get money fast is your clients. Now there’s good ways and bad ways to do this. There are definitely cases where businesses have just destroyed themselves and actually bankrupted themselves by giving discounts and deals to their clients.
Chris Cooper: (03:51)
I’m gonna walk through the pros and cons there and I’m gonna actually share our top secret five quick wins that Two-Brain Business mentors share with their clients in our program, if a client has a short-term struggle that they need to get through before they can really build and compound and scale and grow later. So let’s get into it. So first I want to talk about raising money from partnerships, from staff investment and from banks. After that, I’m gonna tell you how to raise funds from your clients without doing discounts or paid in full deals. So first, let’s talk about banks. Nobody likes paying interest on loans. And the the big myth in our industry, especially in gyms, but really in any service-based business, is that you need to bootstrap. You need to self fund everything. You should pull money out of your savings or out of your 401k to pay for the gym.
Chris Cooper: (04:41)
But that’s actually a bad idea because you are short circuiting, long-term compounding gains for this short-term investment. It’s actually cheaper to get the money from the bank in a lot of cases. The great thing about the bank too is that they eventually go away. And that’s not true with partnerships, where you’re either going to keep paying the partner forever or someday you’re gonna have to buy their equity back or sell the whole thing. You know, this baby that you never want to sell. So most gym owners take a partner at startup if they’re gonna take a partner, or they take a partner when they need cash. And then they exchange equity, which is long-term value for cash, which is short-term value. And when they do that, they give up the freedom to make decisions and they often wind up feeling like they’re an employee in their own business.
Chris Cooper: (05:28)
Some partnerships in a small business like a gym can work, but these are actually very rare. In my experience, less than 10% of the time is there enough money and an appropriate balance between two partners for it to actually work out. I started my gym with two partners. They were investors. I didn’t understand that I should have just taken a loan instead of giving up equity, they took 25% of the business. They loaned me $16,000. And even though they were amazing guys, after I had paid them back more than double their original loan, so like 35 grand, I said, wow, I’m gonna have to keep paying these guys forever. I could have just gotten a loan. And I eventually bought them out and everybody’s still friends. I love these guys still. But that could easily have gone south if these guys weren’t generous enough to just let me buy them out.
Chris Cooper: (06:16)
So a good tip to start off with is, don’t try to save on a small interest payment on a bank loan by giving up long-term equity, which is gonna be worth multiples more over time. So in general, when you’re taking a partner, and I covered this in my book “Start a Gym”. A partnership should bring either significant capital that you couldn’t get from a loan, or significant knowledge that you don’t have. Like, they’re actually gonna be the operator or the ability to do a task that you don’t have, so they can code and you don’t know how to code or something like that, right? So for example, in a gym, they should either provide all of the funding at startup because you can’t get a loan anywhere else, or they should possess business knowledge that you can’t buy from a mentor or they can work in the gym and you can’t.
Chris Cooper: (07:04)
So one of those three things, I’ll repeat them. You can’t get a loan, so you have to go to somebody who wants equity. Or you can’t find a mentor, so they’re going to give you business knowledge that you can’t buy on a short term basis. Or they can work in the gym and you can’t, so you are actually the investor. So the pros of taking a partner are that when you run out of cash or you hit a short term snag, it’s easier to go to a partner and say, Hey look, we need reinvestment. Instead of going to a bank and getting a new loan. Of course, if you’ve got a loan and you’ve already paid some off, it’s really easy to extend that loan. But I’ll tell you a place where a lot of partnerships go south. So let’s say that you and I own a business together and we each own 50% and the business runs out of money for some reason. There’s been a flood or a fire, or we’re shut down and we need $10,000 to make it through.
Chris Cooper: (07:58)
Well, we’re both on the hook for $5,000. That’s called a cash call. And when the business needs money, it’s the responsibility of the shareholders that put money in. Now, a lot of owners, they’ll give their staff 10%, 20% of the company to motivate them, but they don’t realize, and the staff doesn’t realize that they’re also taking responsibility if the business runs out of cash. So they get to this crisis point, the business needs money and suddenly, oh, by the way, not only are you not getting paid this week, but you’ve gotta put money in. Now, I came close to actually selling shares in my gym a couple of years ago and I thought it was really important that I share this knowledge with my general manager at the time. I was willing to sell them 20%, 30% even of the gym. But I said, Hey, I gotta warn you. If anything bad happens, and nothing bad ever has, but if something bad happens and the gym needs money, you are going to have to put money in too.
Chris Cooper: (08:55)
They walked away from the deal and literally six weeks later, the government shut us down for Covid. And we never reached a point where I had to reinvest. But if we had, that family would’ve been without a paycheck and on the hook for reinvesting in the business. It’s really important that all partners understand what’s gonna happen here if there’s an exchange of equity and the business ever runs into trouble, okay? So in most cases in a gym, you’re running an owner-operator business. A partner might feel like a security blanket and looking back, that’s really what they were for me. But it’s actually a lot cheaper and more effective to take a bank loan to invest in mentorship and to hire staff almost a hundred percent of the time. I’m gonna come back to this in a moment, but I want to talk about the staff option here.
Chris Cooper: (09:40)
So years ago when gyms were failing a lot, like 50% of CrossFit affiliates were really struggling. And I mean to the point of bankruptcy honestly, transparently. A lot of them or a few of them had this idea to sell a co-op. So what they would do is they would let clients buy a share of the gym and clients would get a key and they could work out whenever they want. And so they’d wind up with between two and sometimes 30 investors. And all of these gyms are gone now. So it’s hard to point to an example, but that is the example in itself. It just didn’t work. And so some would sell shares to their staff, some would sell shares to clients, and none of these gyms are still around. One gym in my city luckily tried to do it with six co-owners and they did this before I thought of it.
Chris Cooper: (10:27)
So what would happen is on the bad months, everybody had to pump more money in. So they had money, but they were working day jobs and they’d have to keep pumping money into this gym to keep it going. On the good months they took money out, but they never made money back on their original principle, let alone any return on their investment. They could have made money by investing somewhere else, but in this case the pie was just sliced too many ways. And so there was never enough work for all six people to contribute. So they were paying all these dividends to the owners, but they couldn’t afford to hire any staff, or the owners were getting paid way too much to do really basic jobs. And so the owners wound up working a ton, making no money, and some of them were like, I can’t work.
Chris Cooper: (11:13)
And the other ones would hate them for it, friendships got severed as a result. Nobody wins without a clear leadership structure in place. And the the business went under, they got sold. And that’s typically what happens with these co-ops. So when you need cash fast, unless you want to do something to get cash from your clients, which I’ll cover in a moment, the best place to get it is actually the bank. Let’s say that you need 20 grand, right now, today. And if you borrowed $20,000 today at 6%, which is the going rate this morning when I checked, you would pay $386 and 66 cents per month for five years and then that loan would be gone. You’d never have to think about it again. You would wind up paying $3,199 and 36 cents in interest. Okay, that sucks. But that’s just the price of getting the money right now, right?
Chris Cooper: (12:01)
That’s how the banks earn money, that’s their business, that’s the price of the loan. But if you traded $20,000 for 20% equity in your company and the company grew, even at a 5% rate or 10% rate, let’s say over five years, in five years that $20,000 would be worth $30,000 and you would wind up paying $10,000 to the partner over the same timeframe where you could pay 3,100 to the bank and you’ll keep paying that forever. If you wanna get that partner out, you’re gonna pay the 30 grand, but the longer you wait, the more expensive that 20 grand becomes. And if your gym actually becomes successful, it gets really expensive. That 20 grand could easily wind up being worth $200,000 in the long term. So if you sold 20% of the equity in your company to your staff to raise 20 grand, you’d have the same problem too, right?
Chris Cooper: (12:56)
But you’d stop growing because you’d have all this infighting of no clear leadership of everybody voting and making a democracy. And then eventually people saying, Hey, I can’t afford this. I need my money back. Or you run into a bad month and Jimmy can’t contribute to the pot, what do you do now? It just doesn’t work in a service-based business. Sometimes stock options and stock purchases are motivating. If you’re running a product company with big margins or where the cost of production decreases towards zero, the longer or the more production you make, it can make sense. In a software company, it can make sense. But in a service business, an owner-operator business, it is very hard to split ownership beyond just one person, right? Because the shareholders are generally buying themselves a job. It’s really hard to scale when you have multiple share owners and an owner-operator business because all the money goes to the partners.
Chris Cooper: (13:52)
So as the business grows, you either get the partners doing the work of employees and getting paid way too much for it, slowing your growth, or they become really expensive anchors because now you can’t afford to hire anybody else, no matter how low the pay. So when you sell equity, you lose agility and that’s your number one tool. Your biggest advantage in owning a small business is your ability to pivot. You lose that when you sell equity. So now I’m gonna tell you a better way: how to raise money from your clients without sacrificing your business in the long term. So let’s say that you’re tempted to do a short term discount deal or sell some paid-in-full options ’cause you need 10 grand or 20 grand right away, okay? You just gotta bridge this gap, right? That’s what you’re telling yourself.
Chris Cooper: (14:39)
If I can just get through August, I will grow my business after that and this won’t hurt me. And I’ve heard that so many times, even from big flagship CrossFit affiliates with multiple locations. And so they would sell this paid-in-full deal and their deal was like, you pay for a year in advance, no discount, and you get two months free, still kind of a discount. And so what would happen is they would do this, let’s say it was in January, just for the sake of interest. First they would sell the year paid in full. Great, you’re fine for the first year, you get all this cash upfront, you spend the cash ’cause that’s what happens. You get back to January and uh oh, all the people who bought the paid in full deal have two free months.
Chris Cooper: (15:23)
So all the revenue that you’d be making from them in January is deferred until March. You’re not making that. Crap. Now we’ve got a really lean month, we had a lean month last year. We solved that problem by selling a paid in full deal. Now we’ve got a lean month and less revenue coming in than we did even back then. What do we do now? Offer the same deal again, I guess. Okay, so one of two things happens. Either you give these people a discount, so next year the problem is even worse. Or you offer people another two months for free. You kick the can down the road, you can see this cycle happening. Where really, growth should be this circular upward trajectory. You’re actually entering the death spiral by doing this. There’s a better way. And so I went to the mentors on the Two-Brain team.
Chris Cooper: (16:08)
There are over 50 of us now, people who actually have successful gyms proven by metrics. Over half are CrossFit affiliates, but there are over 20 who aren’t and I said, Hey guys, if you had to make cash fast without having a negative long-term impact on your business and you had to get that money from your clients, what would you do? Here are the answers they gave me. Okay? So first, and this is the caveat, this is not one of the ways they said. You need to know exactly how much money you need to make fast. Don’t have a goal like “I need to make more”. Okay? So you should know down to the dollar how much money you need to make fast and stop there. Because even though these won’t hurt your business long term, you can get into this mindset of get cash fast, get cash fast, and eventually you’ll be willing to sacrifice some long-term gains for short-term solutions.
Chris Cooper: (16:59)
We don’t want you to do that. So first suggestion, add a short-term challenge to help your current clients. So this is usually a nutrition-based challenge. Unfortunately, it’s very hard to get people on recurring nutrition coaching. While nutrition coaching is good and every client should have it, what typically happens, and we’re seeing this from the data, is that gyms struggle to sell it because it’s not fun, it’s not sexy, it’s boring, or they struggle to keep people on nutrition coaching long-term. So after 2, 3, 4 months, those clients are gone. This is where a kickstart can help. While it’s not gonna solve their problems long-term, it can get them interested in their nutrition and you can transfer them into long-term nutrition coaching later. So typically what you wanna do is just run a six week or an eight week challenge. You wanna charge between 99 and 199 for it.
Chris Cooper: (17:50)
You wanna give them very specific, very clear goals, get off sugar, whatever that is. It could be habits-based if you want to, but of course if you’ve been around for a while, you’ve seen this work with paleo, keto, right? You probably named 10 different ways to do it. If you’re in Two-Brain, we have full templates, scripts, recipes, everything that you need to do this. Just go into the Toolkit, click on the nutrition challenges button, set this up and go. And it’s not hard to make two to $3,000 just doing this. Next, next one is to run a retail pre-order. So your clients wanna wear your stuff, right? That’s why I wore my Catalyst hoodie. So I would remember this as an example. They want your stuff, they love it, they love your gym, they wanna talk about it with their friends, but you don’t have money to put into inventory.
Chris Cooper: (18:34)
And so in my original book, “Two-Brain Business”, I said don’t do retail because back then 13 years ago, there was no way to set up a pre-order. Now there are, we have partners like Forever Fierce and Thorne who can set up a pre-order for you really, really easily. And so the way that you do this if you’re a Two-Brain client, you go into the Toolkit, you download the step-by-step instructions and you just execute. There’s a checklist and everything in there, it’s easy, no money upfront. You make the order, the clients pay in advance, you deliver them beautiful, awesome merchandise later on and everybody wins. But if you’re just kind of trying to figure this out on your own, what I would suggest for supplements is that you set up a tasting night and you bring in a couple of different flavors of three or four different supplements that you yourself would take so that you don’t feel weird about recommending them.
Chris Cooper: (19:27)
And you have, like, a party. The intramural Open is a great way to do this, but any event will do. You let people sample it, they write down their names on an Excel sheet, they pay upfront. The next day you go in and you order all the stuff. Okay? Again, you could probably make about $1,200 doing this high side. And of that, you could probably make four or $500 in profit. But if cash flow is really the goal here, that $1,200 is gonna be in your bank for three weeks until you have to pay for the supplements. Okay? The third thing is to do goal reviews. So a goal review is an opportunity to refocus a client on getting results by doing a better program. For gyms that just sell group training, this is actually hard because clients can come in, do a free trial or something, jump into the group, and then you do a goal review with them and you’re like, oh crap, they’re not getting any results.
Chris Cooper: (20:23)
And so now you actually make a good prescription. If you’re doing a No-Sweat Intro, it’s easier, but still the second prescription that you make them is going to be better because you had a chance to sight-in your rifle, determine what’s gonna work for them and what’s not. So when you do the goal review, it’s not a deliberate upsell. However, we find that by correcting and focusing the client’s prescription, about 30% of clients will upgrade their membership by about 30%. So if you need a 9% revenue boost, the fastest way is to actually book a lot of goal reviews. Again, you’re not trying to upsell anybody. Sometimes you even tell people to do less, but because most people don’t have a perfectly focused plan when they come in, building a better plan will often result in the client buying more things, right?
Chris Cooper: (21:11)
Upgrading to personal training because that’s best for them. The fourth thing is a bring a buddy day. And by the way, if you’re a Two-Brain client, just go into the Toolkit, click on goal reviews, and you’ll get the step-by-step scripts, exactly how to do it, roll it out, et cetera. But the fourth idea is a bring a buddy day, look. Free trials are not effective. And in the past, I know people have done free community workouts every Saturday, those don’t work. You have to set these up as special events to maintain their specialness. You can only do them three, maybe four times a year. But what you want is for your clients to actually bring their friends in. Just posting, Hey, we have a free trial workout on Saturday. That doesn’t work. If you’ve done it for a while, you know exactly what happens.
Chris Cooper: (21:54)
You have people who only show up for the free trials on Saturday, or the people who just come in, try it, leave, you never hear from ’em again. You have to set this up as something really special so that your best clients are bringing their friends, pre-selling your service for you. They know what they’re gonna be paying, they know what to expect. They’re just gonna have a fun little workout, and then you’re gonna sit down with them and do their goals. But bring a buddy day, when done right and infrequently, is pretty effective at bringing people in. So if you’re in Two-Brain, there’s step-by-step instructions on how to do this. Really fun. You can set it up as like a wine and WOD. People have done it a dozen different ways. There’s lots of really fun things. The key is that the clients come in, you know who they are, you’re gonna have a conversation, and you’re just focusing on fun for them, okay?
Chris Cooper: (22:40)
And that they have somebody who’s already in the gym. That’s so important. All right. The fifth one is to approach groups or teams. So what you do, and this is part of Affinity Marketing, is you look at your clients and you say, do I have five clients who play a sport outside the gym? Or even in your kids program, do I have five kids who are also on a sports team? And then you approach that client or the parent of the kid and you say, look, it’s been so amazing having your kid in this gym. I know that they’re on the swim team, I know that they’re on the ski team, the hockey team, basketball team, football team. We would love to just do a fun night for the team. You could call it a combine, you could call it a skills competition, call it whatever you want.
Chris Cooper: (23:21)
Bring them all in. And then when they’re in and they try something and you can make an offer to train them all for eight weeks. You know, we do this with cross country running teams. Earlier in the spring when we hit this cash gap, we went out to a university and we said, Hey, let’s bring the coach in. We did a metabolic test on the coach. He loved it. We went back and said, you’ve got 12 kids on your team. Here’s the price for us to do the testing on the 12 kids, and bam, there’s $3,400 in revenue right there. It’s really just having the mental bandwidth and the time to think through this and say, what are my easiest, quickest connections? How can I actually solve problems for people? And that’s how you make money fast.
Chris Cooper: (24:02)
Here’s the key. If your strategy to make money fast from your clients is something that you wouldn’t normally do, discard it. There’s a better way. If your strategy to make cash fast is the same strategy that you should be doing all the time, but you’re just gonna prioritize it, you’re gonna do it faster or sooner or more urgently, that’s when you’ve got a winning strategy. So here’s the five strategies that I shared with you here. Short-term challenge. You might wanna put these on your calendar three times a year anyway, but if you’re not doing it, it’s a short-term strategy to get you cash. Run a retail pre-order. Again, you wanna be doing this stuff three, four times a year anyway. But if you haven’t done it for a while, do it now to make fast cash. Do goal reviews. You should be doing these every single month.
Chris Cooper: (24:49)
But if you’re not doing it, start now and make some fast cash. Bring a buddy day. You should be doing this maybe three, four times a year. I do it twice. If you’re not doing it, do it now and you’ll make some fast cash. And finally, approaching corporate groups or sports teams extending through Affinity Marketing. You should be doing this anyway, but if you’re not doing it, it’s a good way to make fast cash. The secret to making money fast from your clients without sacrificing yourself in the long term is to just do what you should be doing, but do it now and do it faster. That’s how you make fast cssh. I’m Chris Cooper. This is Run a Profitable Gym. If you wanna talk about these strategies or others, you can join our free group. It’s called Gym Owners United. It’s just for gym owners who own brick and mortar locations, who want to grow and expand their scale and their impact and earn more money from it.
Chris Cooper: (25:37)
Hope this helps you. If you really need help long-term, do one of these strategies, make a little bit of money, and then talk to our team about mentorship so you don’t get in that position again. Take care. We created the Gym Owners United Facebook group to help you run a profitable gym. Thousands of gym owners just like you have already joined in the group. We share sound advice about the business of fitness every day. I answer questions, I run free webinars and I give away all kinds of great resources to help you grow your gym. I’d love to have you in the group. It’s Gym Owners United on Facebook, or go to GymOwnersUnited.com to join. Do it today.
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