Chris Cooper (00:02):
Joe and Alessandra, welcome to “Run a Profitable Gym.”
Joe Venuti (00:05):
Hey, thank you for having us, Chris.
Alessandra Bisalti (00:06):
Hello.
Chris Cooper (00:07):
Yeah, it’s so awesome to have you guys. I mean, I get to hang out with you guys in person at Tinker meetups and Summit and stuff, but our audience doesn’t know you yet. And you know, just as a funny story, the first time I ever met Joe, I was down at CrossFit MASS, and we were doing this “Fight Gone Bad” workout. And part of the workout was you had like a CPR dummy.
Joe Venuti (00:29):
Yep. Yeah. Rescue Randy.
Chris Cooper (00:31):
Yeah, Rescue Randy—that’s it. And so, one of the stations was you had to backward carry Rescue Randy through this kind of shuttle run. And I have never wanted to throw up after a CrossFit workout more in my life than frigging Rescue Randy.
Joe Venuti (00:46):
Yeah, yeah. You did it right. If you felt like that.
Chris Cooper (00:50):
Alright, well guys, I’d love to get into—and thank you so much for generously offering to share this story—what brought you to the point of doing guided access in your gym? What were you doing right before, and what kind of triggered the transition? And then we’ll get into the specifics of what it is later.
Joe Venuti (01:08):
Yeah, so real quick, we were doing sort of the typical CrossFit thing, pre-pandemic. You know, we had group classes. That was our main offering. We did privates; we did specialty classes—you know, the Two-Brain kind of model. But one of the specialty offerings we had was individual design. So, if someone didn’t really fit into a group class model, they had a condition that didn’t allow them to participate, or they had a goal that was really specialized, we’d spin them off into this individual design model.
Chris Cooper (01:40):
Yep.
Joe Venuti (01:40):
When the pandemic hit, the government said, “Hey, everybody, go home.” Right? And that wasn’t cool. So, we took our entire client base—privates and group clients—and we put them all into the piece of software called TrueCoach. And we started programming for them remotely based on what they had at home individually. And then when we were allowed to reopen, we continued that, and we never really let up on that.
Chris Cooper (02:06):
That’s really interesting. And we did the same, but when we came back, we tried to bring everybody back to the original kind of group class model. And there were a number of reasons why that just didn’t happen. But for you guys, the problem actually got compounded a little bit more. So you brought people back?
Joe Venuti (02:24):
Yep.
Chris Cooper (02:24):
And then staffing?
Joe Venuti (02:26):
Right. So, it was just the two of us. When we initially brought people back, you could only have so many people in the building. So, we divided the gym up into separate zones, and everybody came in and would work out in their own zone, and there’d be a coach on the floor. So, she would take the mornings some days, and I would take the evenings. And so, you’d still get coached even though you’re all doing the individual programming. But there was more flexibility there in that. And yeah, so that’s how we managed that for a while. And then recently we came across the staffing issue again because we had built some staff back up, and then things have changed. And so, we’ve introduced something called “enhanced access” where the clients can come in during off-hours—non-coached hours—and utilize the gym then.
Chris Cooper (03:16):
That’s awesome. And Alessandra shared her schedule with me yesterday. We’re actually going to walk through it, but what I’d like you to do is just kind of describe this. So, I’m a new client walking in: What is your program? What are you selling me?
Alessandra Bisalti (03:29):
Well, we do a formal consult, sit down with Chris, and ask you your past experience—any goals that you have near or far. We also ask you if you have any previous injuries. Right? So, we get a full scope of who you are coming in. We go over different types of programs that might fit your goals and your budget. So, the predominant buckets are individual design or private training to some extent. Then what happens is, if you choose the individual design route, we go through that whole process. Right? We set up your three one-on-one sessions that we’ll go through. Um, we’ll also walk you around the gym and make sure you kind of get an idea of where you’re going to be, where you’re going to park, different things like that. And then once you’re ready to get going, we just set you up on the backend and give you some little trinkets—or not trinkets but drips in your email—of what to expect. And we each show up for your first day, and we have at it on those three one-on-one sessions to see how you move and what areas we can improve first to help you towards your goals.
Chris Cooper (04:32):
Okay. And then the next step is you write me a program, and I come in and do the program. How’s that done?
Joe Venuti (04:38):
Yep. So that’s delivered to you on your phone. We have software. You get video previews; you see your whole workout for the week on Sundays with video previews and instructions from your coach. You are able to talk to your coach through the software. So, if your schedule doesn’t line up with your coaches—you’re in there with another coach; you’re in there during the extended access time—you can still communicate verbally and visually with that coach. Right. You record your data, so they can track your progress through the software to make sure you are making progress, and we don’t need to pivot. So yeah, the software has really been great for us to act as a lever, right? It lets us be there more without actually being physically present. Right. We can, we can project our coaching across broader times.
Chris Cooper (05:23):
Okay. So, when I show up to do my program and I’m a client, is there any coaching going on while I’m there?
Joe Venuti (05:30):
Uh, yeah. So, what we did was we used the old “Chris Cooper Model.” We’ve done it twice now since the pandemic. We opened for two weeks at a time, seven or 7:30 in the morning to about seven at night. And we just see when people come in, and we heat map it. And so, we’ve determined when the times are that are most popular for people to come in, and we put coaches on the floor during those hours—they’re coached floor hours. So, you know, we might have a half dozen people on the floor at a time doing each doing their own thing. And the coach is just working the floor like a party going around making suggestions, tweaking things a little bit. So, there’s probably about 20 to 25 coached floor hours spread across the week. And then there’s other times that the staff is in, but they’re teaching privates, and you’re welcome to come in at those times. But the latest addition to the program—was it March? End of March we added it?
Alessandra Bisalti (06:25):
Yes.
Joe Venuti (06:26):
There’s electronic access to the door to the gym. So, you can use your phone, you can access the gym, and then you can come in and get your work done from six in the morning to about nine at night too. And those are not necessarily coached hours. Right. But there’s the flexibility. So, you have kind of three phases of coming in: coached hours—about 20, 25 of those. Study hall hours where there’s a coach in the building, but they’re not necessarily dedicated to being on the floor. Right. They can still help out a little bit, but they’re not really dedicated to being on the floor. And then there’s this enhanced access where it’s kind of wide open for you to come in and get your work done.
Chris Cooper (07:03):
Okay. Now when we were talking about this yesterday, we were talking about the mistakes that some gyms are making and just offering 24/7 access because, you know, the tech makes it really, really easy. And the problem is that that kind of devalues your coaching product. You guys have a very interesting bridge here. So, let’s talk about access and how that actually works. Like you’re not open 24 hours a day with my phone app, right?
Joe Venuti (07:27):
Correct. Yeah, that’s correct. We decided on six to nine based around the fact that most people should be asleep from 10 at night until about six in the morning. Right. If you’re getting up at five o’clock or you’re getting into the gym at five o’clock, there’s a good chance you’re not getting a good night’s sleep on the regular. Right? And since the main thrust of our clients and our programming is health and longevity right now, yeah, we want you to be asleep. When we switched to that model after the pandemic, we actually saw injury rates go down. We dropped the 5:30 class because we knew it wasn’t sustainable, and we forced rest days on people too. We were running initially—we only ran three days a week for the first few weeks, and yeah, injury went down. Injury rates went down, and PRs went up.
Chris Cooper (08:12):
Wow. Okay. That—we’re coming back to that. That’s news. Yeah. Alessandra, maybe you can walk me through like a daily schedule at the gym. So, at 6 a.m.—I’m a client—I can go in, but is there a coach in the building?
Alessandra Bisalti (08:25):
No. So from 6 a.m. to about 7:15, you’re by yourself. And then I show up around—like today’s Wednesday—I showed up around 7:15 to do my opening tasks. You know, some might have waited to ask me questions, but I’m getting myself set up for more people to then come in. So for example, this morning we had six or seven people already in there, which was great. Yeah. Being led through their app. But this morning we were open 7:30 to one, and again, people float in. There are coached hours; there’s study hall hours. Some have questions, but people mostly know what to do.
Chris Cooper (09:01):
So, during the coached hours—when are those, and how many?
Alessandra Bisalti (09:05):
So today, the coached hours were 7:30 to 8:30. I did a couple privates in between because we found that 8:30 to about 11:30 is sparse. Some people come in—people with different schedules. So, I completed three privates during that time and then coached hours again from 11:30 to one.
Chris Cooper (09:23):
Really Cool. And then Joe, you go in in the afternoon?
Joe Venuti (09:26):
Yep. Yeah, I’ll open up around—well today’s Wednesday—I’ll roll in there around 4, 4:30 for study hall, and then I’ll be on the floor about 5:30 to seven coaching people actively.
Chris Cooper (09:41):
So, study hall: You are in the building, but you’re not on the floor coaching, right?
Joe Venuti (09:47):
Correct.
Chris Cooper (09:47):
So what are you doing during study hall time?
Joe Venuti (09:49):
Uh, it could be anything. It could be privates like she did earlier today. I could be taking consults—either Zoom, or via the phone, or just be on a Zoom meeting. Like there’s a regular Tinker Zoom meeting, right, from four to five. There it is. So that’s what I’ll be doing today if can manage it. Right?
Alessandra Bisalti (10:07):
Or sales.
Joe Venuti (10:08):
Yeah. Sales. Yeah. Basically anything, but I’m in the building, so if there’s an emergency or someone doesn’t have access yet because we don’t just give people access to the gym when they sign up. Usually we have a 12-week initiation process; we call it the jumpstart. And somewhere in there, usually by the end, we’re like, “Hey, Chris is okay to work out by himself, so we can give him the electronic access; he can execute these workouts safely on his own.” We still encourage you to come to the coached hours because it is a coach facility, right. We want to have you in front of us; we want to help you. But we understand that not everybody’s schedule is perfectly regimented, and you’re going to need more flexibility. And that’s what the enhanced access really is. It’s more flexibility. It means we don’t have to worry about shutting down on a holiday because you can still come in if you need to get your workout done. We can take a long weekend once in a while with just two of us running the gym, and we can take vacations every now and again—maybe someday.
Chris Cooper (11:05):
That’s amazing. Yeah. Congrats guys. I mean, I really think you’ve got a working model here. So, in my mind, the client passes through a few stages. First, they’re doing three privates with you minimum, right?
Joe Venuti (11:18):
Correct.
Chris Cooper (11:19):
Then it’s kind of up until the three-month mark. They’re still in Jumpstart, so they can only come to coached hours in the gym.
Joe Venuti (11:26):
Correct. Yep.
Chris Cooper (11:27):
And then after that, as long as they’re moving well, they have access, so they can start their work at any time between six and 9 p.m. and also some weekend times.
Joe Venuti (11:38):
Yep. Correct.
Chris Cooper (11:39):
Wonderful.
Joe Venuti (11:41):
Yeah. Nailed it.
Chris Cooper (11:42):
Okay, well, hey. Yeah, that’s all I’ve been thinking about since we talked about it 24 hours ago. So, I’m glad that I’ve got a really good concept of it. So, there’s a couple of things that I think gym owners would probably be asking about this model. Number one: It seems like you guys went to this model in phases. You had regular group classes, then you were shut down, you pivoted to one-on-one or ID, and when you came out, everybody was already on ID, so they knew what they were doing. Do you think it would be a lot harder to pivot from “I’m just running a group class model with some personal training right now” to this model—enhanced access?
Joe Venuti (12:16):
Yeah, a hundred percent. Because there’s a mind shift when someone comes in, and they’re like, “I’m working out in a group and I’m doing what everybody else is doing.” So, we got—lucky is not a way I would ever describe the pandemic, but it was a good time to do it because everyone understood that we were changing these things to benefit them and to keep their fitness uninterrupted. And then once that was established and we saw the benefit to giving someone—instead of having someone come in five or six days a week because they have workouts on the schedule, and they wanted to get the most out of their membership, they appreciated the fact that: Hey, if I can work out hard on Monday, Wednesday, Friday, and take the rest of the days off or be active outside the gym—walk, do a little yoga or something like that, get some sleep in, get some food prep in, and actually get better results. Right? I don’t have to come to the 5:30 a.m. class five days a week to get the results I want and smash the heck out of myself.
Chris Cooper (13:18):
Right? Yeah. That is a really common problem. And I think a lot of gym owners are actually at odds because they hear like, “Wow, the more times your clients show up, the longer they stick around.” But deep down they know that high intensity five days a week is not going to be a long-time sustainable solution for the client. I think you guys are maybe more attuned to that than any—than a lot of people. But you’re also better at analyzing human movement than most people and also better at programming than most people. Where does that background come from?
Joe Venuti (13:50):
So, I have done a lot of classes with Poliquin, which is actually a local—Poliquin group is local; they’re down in Rhode Island. And OPEX had a lot of great classes on individual design and programming that I could take from, and they drew a lot from Poliquin as well. So, a lot of that comes from there. And we pair that up a lot with some of the CrossFit-type methodology as well—you know, the big compound lifts and that sort of thing. So, it’s really a big mishmash over the last 14 years or so of those techniques. But what we really do a lot of—and what Alessandra alluded to a little bit in the three privates—is we test 35 points of performance when you first get on the floor, and yeah, over those three privates, we pump it into a tool we’ve created.
Joe Venuti (14:35):
It’s a spreadsheet; it color codes everything. I was doing it in my head for years, and I realized I needed to make it accessible to the staff. But basically, if you only can hold a hollow hold for 27 seconds, that’s well under the threshold we want to see, and that’s going to light up red, and we’ve got to do more ab work for you. Right? Do your ankles flex enough? Do you know how to use your glutes? Shoulder health, aerobic capacity, some VO2 max stuff. It all gets kind of put together, and then the coach bases your workouts, your programming, around that data. And we retest that constantly because you’re putting your workout data right into the software as you’re going along during your workout. And we can look back at it and go, “Oh, Chris is making some good progress,” or “Chris has stalled up for the last couple of weeks. What’s going on?” “Oh, he’s got all kinds of meetings with the accountants and acquiring businesses” or something like that. “His stress level’s super high. We’ve got to take him off of his two high intensity workouts and give him extra recovery workouts.” Right? So that’s the game we’ve been playing for the last three years. It’s three years now; it’s crazy.
Chris Cooper (15:36):
Wow. Last week, the only weird HRV score that I had was when a cube van backed into a liquor store in a building that I own.
Joe Venuti (15:47):
Oh my God.
Chris Cooper (15:48):
That actually hurt my sleep. Yeah. Anyway, so you know, it’s amazing that you guys track this because I know even a lot of gyms are interested in this type of data, and their clients will go out and they’ll buy a WHOOP, or a Garmin fēnix or whatever, right?
Chris Cooper (16:01):
And then the coach is like, “How do I get that data from them, and what do I even do with it?” So, it’s amazing that you guys are doing it, and I’m sure that’s part of the reason this program works.
Joe Venuti (16:09):
Yep, absolutely.
Chris Cooper (16:10):
But, you know, this is really a business podcast, and so Alessandra, maybe you can just walk me through like when you are doing an hour on the floor and you’ve got a dozen people in there—like that picture you sent me of 9:30 a.m. yesterday—like what are you actually doing as the coach?
Alessandra Bisalti (16:27):
So, one of the first things I do is I check who has actually RSVPed and open up their TrueCoach programming. So I can just look it over real quick and get understanding of what they’re doing. And then also because I have relationships with these people, I know sort of where they’re at, and as they come in the door, I greet them, ask them how things are going, if there’s any weird things that have happened in the past 24 hours. They get moving.
Chris Cooper (16:50):
Like the van hitting the liquor store.
Alessandra Bisalti (16:51):
Right? Yeah. You know, so it’s sort of—again, you’re greeting everybody. You’re making sure everybody’s in good spirits, or you know, analyzing if maybe already I need to make some adjustments to their program. And Joe and I work closely enough that I can make adjustments based on maybe his thought process as well. So, after everybody’s moving, you’re moving around to each person making sure that whether they’ve been with us for 11 years or they’re within their first 90 days with us, they’re still getting the same amount of attention. There’s always something to work on. So just making sure you don’t spend too much time with maybe somebody who has a million questions. We always try to encourage them to look at their programming in advance, ask questions to their coach, or if they don’t understand something to clarify. But I’m there also to give a quick answer to that question as well. So, making sure that everybody gets the time and attention that they need.
Chris Cooper (17:44):
Yeah. Really cool. I mean, honestly that’s what I just experienced in our noon group during the lifting portion only. You know, the coaches are told, “You go around and give everybody about 60 to 90 seconds of one-on-one attention; give them one cue to improve.” We were doing Split Jerk today, and that’s what happened. And it sounds like you’re doing that, but through the entire hour; it honestly sounds like a lot of fun.
Alessandra Bisalti (18:05):
It’s fun; it is fun because you get to really connect with people. It’s very relaxed as opposed to, you know, the group that you used to run where it was like, “Okay, do this” because stuff is moving so fast. This is more like, “Is this feeling funny because of that thing you told me about in the beginning of your session? So, we kind of get to open up a little bit more about their movement and what’s going on.”
Joe Venuti (18:29):
It’s more social too because you’re not herding 15 cats at once, right?
Chris Cooper (18:35):
Yeah.
Joe Venuti (18:35):
It’s almost like you’re working the room like a party, right? Where you’re just moving around person to person and just checking in on them. It doesn’t drain you like a group class does.
Chris Cooper (18:45):
Yeah. And I imagine a lot of the distractions aren’t there either. I mean, it used to drive me absolutely bananas when somebody walked in seven minutes late. I mean, it shouldn’t throw me off, but it would, you know. And I’m sure you’ve got people coming and going and starting and ending at all different times.
Alessandra Bisalti (19:01):
Right.
Chris Cooper (19:02):
So next question: What do you guys charge? Like what is your kind of base membership for this guided access or enhanced access program?
Joe Venuti (19:10):
Yeah, so we’re starting, right now, people at 275 a month to come in six days a week, depending on if they want to work with a specific coach. We have tiered coaches’ prices out before, but right now it’s just the two of us, and so we’re sticking with that for right now.
Chris Cooper (19:25):
Yeah, and it wouldn’t go lower than that, right? Like it would only go higher.
Joe Venuti (19:28):
If it was a brand, brand new coach and you were trying to build their base up, I might take them to 265 a month, but I wouldn’t go any lower than that in the past.
Chris Cooper (19:38):
How long do you think you can run this model? I mean, you know, years ago I was talking with Greg Glassman and Dale Saran, and we were talking about why the affiliate model was set up the way it is, and the affiliate fees are so low. And he said it’s because it’s an owner-operator model, and it was always supposed to be one passionate coach, a couple of part-timers, and that’s all they’re doing. And of course, the realities of business dictate that usually we need more staff than that, but it actually seems like you guys are actually leveraging technology instead of leveraging human bodies.
Joe Venuti (20:13):
Right? That’s actually exactly what we’re doing.
Alessandra Bisalti (20:17):
He has it written on his paper.
Joe Venuti (20:19):
I wrote notes, and we’re using technology a lever or a force multiplier, right? So, media: We shoot videos, or we find videos to deliver like, “Hey, this is the movement pattern I want you to be familiar with for the day.” Right? And communicating with that, using the electronic access. “How long can we do this?” is a really interesting question. And that was one I asked myself when we were allowed to reopen from the pandemic, and that’s part of the reason we dialed the hours back a little bit. Because it’s not sustainable to ask somebody to open a gym up 5:30 in the morning for three years in a row, five days a week.
Chris Cooper (20:54):
It sure isn’t.
Joe Venuti (20:54):
Right. It’s not healthy for the coach; it’s not really healthy for the clients either. You know, once in a while you’ve got to pop in there early. I get it. But you really should be sleeping until 6 a.m. for health and longevity, right? We know that dementia numbers go way, way up when you’re not getting seven hours of sleep a night or more. So, it’s kind of built to be run for the long term, right? That’s the way—yeah, hopefully, you know, the hiring thing will change sometime soon, and we can get some help in, but we could be—I think we could do it for a long time because we’re able—with the electronic access to the door—we can go away, like I said for a long weekend, the 4th of July, Tinker trips, Tinker meetups, and we can let the gym sort of run itself for a few days and still have a life. And we did a wedding too.
Alessandra Bisalti (21:40):
Yeah.
Joe Venuti (21:41):
And we shut down for an extra day and a half. So, we’ve done it a few times since March, and we’ve had zero problems, which is good.
Chris Cooper (21:48):
You know what’s amazing is: Anybody who’s listening to this other than a gym owner, they’d be like, “Big deal. You can take a day off.” Gym owners are like, “This is revolutionary. What? A wedding? You guys went to a wedding? Tell me more.” And, and so that’s, that’s really remarkable. Joe, yesterday, you were talking about like a quote from Naval, and he was talking about leveraging humans or leveraging—what was it?
Joe Venuti (22:12):
So, he has got four ways you can—was it create wealth? It’s in “The Almanack …” Right? You can either—you can either leverage people, which is have employees and lead them, which is the most complicated. You can leverage capital—real estate or he says programming or media. And I just think of that as any technology that you can sort of set up, and go on your own, right? Not talking about AI, but AI probably works in there too.
Chris Cooper (22:41):
Yeah.
Joe Venuti (22:41):
Because you could say, “Hey, do these things,” but you still have to coach behind it, right? Just because there’s a lever doesn’t mean there’s not somebody on the other end literally working the lever and directing—putting the direction in. So that’s what I was looking at when things kind of weren’t really working out for us, hiring people the last year or so. And I said, “Let’s run in that direction.”
Chris Cooper (23:02):
So, if you guys were pivoting to this today—four or five months after you did, you know—is there anything that you would do differently from the way that you started doing this in March?
Joe Venuti (23:11):
Oh, what would we do?
Alessandra Bisalti (23:12):
Marketing sooner.
Joe Venuti (23:13):
Yeah, yeah, good point. We’ve got to talk to more people about the fact that we have this enhanced access, and everything’s customized and—because we’re still a CrossFit, but we’re doing more than that now. So that’s probably the toughest thing, right? Because I can individualize for you; you could be doing strongman; you could be doing just bodybuilding stuff depending on your goals. You know, because we’re programming individually for everyone. So yeah, that would probably be the same. Marketing. Yeah.
Chris Cooper (23:41):
I think there are a lot of CrossFit boxes jumping into the access game. The challenge though is that they’re not making more money on it, and in fact, it’s probably costing them money because as clients just get access, they come to get less coaching, and then it’s like, “Wow, I could get cheaper access somewhere else.” Right? It’s not actually their service. What I like about this is it compliments your coaching service. You know, it serves your coaching instead of just kind of selling access and competing with Gold’s Gym.
Joe Venuti (24:13):
One hundred percent. Because if you just start selling access, you can go find someone that’s going to push you a template for $20 for a program that’s perfectly good. It’s not built for Chris; it’s not built for Alessandra. But you can get away with that for a while, right? But you’re not getting feedback, you’re not getting course corrections on the programming as you’re going along, right? To keep you progressing and keep plateaus from happening.
Chris Cooper (24:37):
Yeah, high intensity training is really commoditized. You can buy it anywhere for, like you said, 20 bucks a month. And some of it’s really, really good for that price. Like, you’re not going to compete on programming anymore unless it’s absolutely tailored and done this way. So, guys, really love this model. Thanks a lot. I know that your ARM is actually much higher than that 275 because some people buy privates on top of ID or instead of ID. Congrats, and I hope that you guys can find like one staff person, so that you can take a month off, but I’m really happy to know that if you don’t, you’re okay. You’re good.
Joe Venuti (25:13):
Thank you.
Alessandra Bisalti (25:14):
Thank you.
Joe Venuti (25:14):
Thank you very much Chris.
Chris Cooper (25:16):
Alright guys, thanks so much for generously sharing all these details with people. I think it’s going to open up a lot of eyes. So guys, Joe and Alessandra were very generous in sharing with you how their guided access model works. Like a lot of us, they’re struggling to get staff right now, and when their last staff person took their full-time job and left the gym, Joe and Alessandra said, “How can we do this by ourselves?” And so now I want to actually show you with mostly hypothetical numbers, how this could actually work for you. I want to give you an actual P&L. I don’t just want you to think, “Oh that’s an interesting idea.” I want you to see the actual math behind how this model could work in your gym. So, I’m going to bring up our model P&L that we share with owners in Two-Brain to walk them through tests and how a model could work for them.
Chris Cooper (26:04):
Now, this is not a lesson on how to read a P&L. I just want to highlight a couple of things here because I want you to see where I’ve used Joe and Alessandra’s numbers and where I’ve used data from industry-wide averages. So first off, you heard them say that their average price is 297 bucks per person per month. And expenses: I took an industry average because I don’t know their actual expenses. Retention rate: I took an industry average, but I’m betting their retention rate is actually higher. On-Ramp average price: I took an industry average, but I’m betting theirs is actually higher than this. They have a three session On-Ramp that they spoke about in the interview, and then I started them with a salary of $5,500 a month. It’s probably higher, but what I want you to see here is how the profit line changes.
Chris Cooper (26:52):
So, they’re guaranteed the salary every month, but they also take home the extra too. So, this net income here, that’s profit, and net owner benefit is this total of that salary plus profit. Okay? So here we go. First of all, we want to know: How many clients does it take for them to break even? And so, because we’re not changing the salary—like, I don’t want them to work for nothing, so if they’re not getting paid a salary from their gym, it’s not a successful gym; they’re not actually breaking even. So, let’s start with this. I put in 59 clients here because I know that’s pretty ballpark to what they would actually need to make this gym viable and pay themselves at least the salary of 5,500 a month even if there’s no profit. So, if I drop this down to 55 clients, okay, and I keep their average membership price the same, I don’t sell any personal training and nothing else, what I’ll find is that they’re losing about 461 bucks a month.
Chris Cooper (27:44):
So that tells me that to make this viable with no other personal training, it’s just selling guided access for 297 a month, they need two more clients than that. So, they need about 57. So with 57 clients paying 297 a month, they can pay themselves a salary of $5,500 and really have nothing left over. Okay? So, this is a viable business. This is a business that is treading water. Quick sidebar here: If your business is breaking even but not paying you anything, it is not a viable business because you’re volunteering, and you can’t do that forever. You will personally run out of money. So, 5,500 bucks is not enough for them to make a living here, but it’s like the barely acceptable minimum. What happens, though, to our bottom line when new clients come in? This is what’s interesting about the guided access model to me.
Chris Cooper (28:36):
So, let’s say they get three new clients. They just walk in off the street; they don’t normally get new clients, but here they are, and they all sign up, right? So now they’ve all gone through On-Ramp or whatever, but that’s not going to be reflected in our bottom line for that month. We just want recurring. So now I look at this, and it’s like: Okay, not only are they making their 5,500 a month in salary, they’re also making $987 a month in profit. Aha! So that actually boosts us up quite a bit to $77,000 take home, which is about double the industry average with 60 clients, right? Pretty good because none of that money is going out to staff. They’re covering their expenses, and once those expenses are covered, they’re good, right? So next: What happens if we bring that number up to 75 clients? Okay?
Chris Cooper (29:24):
Clients are the same. They’re not selling any additional services; it’s just the guided access membership. We’re not counting on new clients coming in and paying for On-Ramp or selling personal training or anything like that, but our expenses also don’t go up and our coaching needs don’t go up because we’re still showing up the same number of times in the day. We don’t need help right now. Suddenly, our profitability goes through the roof. Like just adding 15 clients takes our profitability from around 77,000 a year to 129,000 a year. Okay? So that’s interesting—just adding 15 clients. So hypothetically, and again, like the only numbers that actually came from Joe and Alessandra here are what they charge per month. And I know their ARM is 297. With 75 clients, retention rate of 95%—and this should be higher—these guys could make $129,962 take home per year, right?
Chris Cooper (30:16):
And again, there’s two of them, but they’re partners in life and in business. They live together, so they share some costs there, and they’re not paying any coaches, right? The other interesting thing too is that while they are working most days, they’re not working weekends. They can take a long weekend if they want to come to our Tinker meetups. They can take a vacation if they want to, and you know, it’s not costing them anything to do that. Let’s take this a different way. Okay? So now, let’s say that we’re back to 60 clients, but we know they’re going to get maybe three new clients a month, okay? And I’m being super conservative here. What that does is it means that’s another $900 in On-Ramp time because people are paying for those three sessions when they start. So that brings the average client revenue per month, ARM, up to 312 now.
Chris Cooper (31:06):
Very interesting. And if our retention rate is still 95%, that means that our total client headcount is growing by at least two people per month. Well just doing that—bringing in three new people a month—that brings their average income, their net owner benefit up to $83,000 per year. Okay? That alone, just three clients a month on this model, alright? So good. But what happens when they start selling personal training opportunities on top? So, you know, you can come in at 9 a.m. Your buddies are going to be there; you’ve got your program. You’re working out; it’s kind of a “group-class” feel. It’s awesome. There’s a coach circulating to correct your form, to tell you when to go up, when to go down, when to scale, when to change exercises—all of that is great. What happens if you want more one-on-one attention? Then that program buys you.
Chris Cooper (31:54):
What if you want to come in once a week and work one-on-one with Alessandra? Some people do that. So, if what I’m doing is selling—you know, 10% of my clients want that. That’s six people, and they just want to buy one more session per month at, I don’t know, 70 bucks a session. Okay? Then that’s, 420 extra dollars right there. So that’s secondary revenue. Six people buying one session for 70 bucks a month—very conservative. What happens now? Well, you know, our income is up to 86,312. So that’s super interesting. The other thing that happened here is that we put down a coach taking those one-on-one classes or those one-on-one sessions, but actually Alessandra is doing that. So, all that money is now going to go to them, and that’s why we’re now at $93,282 per year. Okay? So, she’s doing about, you know, seven PT sessions a month, and it’s bumping them up that much because again, they don’t have to pay another coach.
Chris Cooper (32:56):
What happens if they want to take a two-week vacation? They can’t really take that much time off. They’re going to have to pay somebody to be there. Well, we know that they’re working about six hours a day, and if they want to pay a coach even 25 bucks an hour times 30 hours a week, we can add that in here. So, let’s say that the average class rate is we’re going to pay 25 bucks an hour, okay? And per week, we know that we just said we’re going to pay somebody 30 hours a week. So, what would happen if Joe and Alessandra said, “You know what? I’m tired of working six hours a day, five days a week. I want to bring in a backup.” Or, you know, “We don’t like feeling fragile. What if one of us gets sick or what if we want to take a month off?”
Chris Cooper (33:36):
“What do we do?” Well, they could bring in a part-time coach—kind of a floater, right? So, this is somebody who can spot movement flaws. They’re not going to write the programming for any clients. They don’t need advanced knowledge, but somebody who’s like a CrossFit L1 or even an L2 is great. They don’t have to do any class management. You’re basically circling during study hall hours and saying, “Okay, let’s correct your form a little bit. Let’s add five pounds. Let’s take five pounds off. Let’s switch that sandbag carry to a farmer’s carry.” You know, or whatever, right? “Let’s scale you up, let’s scale you down.” That’s basically what they’re doing. They’re sharking during those study hall hours. You could pay that person 30 hours a week times 30 bucks an hour, 900 bucks a week, right? That’s a pretty good income for a coach.
Chris Cooper (34:23):
That does, of course, affect their bottom line; however, they can wait until they’re at a comfortable income level and then add that expense in. So maybe it’s like 3,600 bucks a month, okay? And you say like, “Well, how many clients do I need to actually get there?” Well, if you wanted to keep this person full-time, it would just be 3,600 times 12 months, which is $43,200 per year. And of course, that would bring our net owner benefit down because now you’ve got staff expenses—but how many clients do I need to get to actually carry that person? Well, let’s try it. Let’s go to 75 clients with a 95% retention, three new clients coming in a month, doing a little bit of personal training. There we go, right? We’re still at $102,206 per year in net owner benefit; we got one employee making about $43,000 per year.
Chris Cooper (35:14):
Maybe they’re making more if they’re also selling personal training too, but that’s also driving revenue for the business. So, you know, I get to 75 clients, I can have a staff person working 30 hours a week. What if I want to make that person full-time? What if I want to pay them more than $50,000 per year? Well, okay, let’s do that math really quickly. So now still, you know, an average of like 30 bucks an hour—which by the way, is way above the industry standard according to our data set. Also, according to hiring job sites like Glassdoor, 30 bucks an hour in the fitness industry, especially for 40 hours a week is really, really good. Okay? So now, what are we actually paying here? Well, 40 hours a week, 30 bucks an hour, 1,200 bucks a week, right? Times four—we make this 4,800, and we’re going to do that times 12 months, right?
Chris Cooper (36:03):
It’s going to be like a salary or whatever—$57,600 per year. Wonderful. Okay. But that cuts their—Joe and Alessandra’s—net owner benefit back to 87. So how many clients do I actually have to get here? Well, I’m just going to go up another 15 and say 90 clients. Okay? So here we are at 90 clients. They’ve got a full-time staff person for $57,600. Their salary stays the same, but their profit is over 6,000 a month. So, their net owner benefit is actually 139,929. So, okay, big picture here: Using some of the metrics that we know from Joe and Alessandra’s guided access program and metrics that we’ve drawn from “The State of the Industry” for industry average to calculate our expenses and staff pay and stuff, with 90 clients in a guided access program, gaining three new clients a month who pay 300 bucks for On-Ramp before they get going, doing like two personal training sessions a week on top, and having one full-time staff member making $57,600 per year, Joe and Alessandra could net owner benefit around $140,000.
Chris Cooper (37:12):
Now of course there are reasons—there are pros and cons to this model, right? 90 clients means that every client who leaves is kind of a big deal. However, their retention is a little bit higher. Also, maybe you want to hire staff; maybe you want to have a lot more coaches, or perhaps you want to run semi-private, or you don’t want to do access to your gym, or more than anything else, you’re probably scared about charging that $297 per month for guided access. Right? These are things that you talk about with your mentor when you’re making decisions, but these decisions should always come down to the math. What is going to be most viable to you? And if you’re an owner-operator or you’re struggling to get staff—and I get that—this might be a model that is worth considering. Talk to your mentor, open up your own P&L, do the numbers for yourself before you make any decisions, but it’s a viable model. I’m Chris Cooper, this is “Run a Profitable Gym.” Thanks to Joe and Alessandra so much for walking us through this. And I hope that you can make your gym more profitable, help more people, and impact your community even more.
