Mike Warkentin: (00:02)
This is Run a Profitable Gym. I’m your host, Mike Warkentin. I talk to gym owners every week to get their stories for one reason. I wanna help you run a profitable gym too. Corey, did your business double since August of 2020?
Corey Lapell: (00:15)
Yes, it did.
Mike Warkentin: (00:16)
Like members and revenue, the whole deal?
Corey Lapell: (00:18)
Membership almost double, and the revenue, a little bit more than doubled.
Mike Warkentin: (00:22)
Wow. Would you be willing to share that with our listeners so that they can find the same success you’re having?
Corey Lapell: (00:27)
Absolutely. I would love to.
Mike Warkentin: (00:29)
I appreciate it. Great. Today I’m here with Corey Lapell of Empower in Vancouver, Canada. Corey, thanks so much for joining me today.
Corey Lapell: (00:35)
My pleasure. Thank you for having me.
Mike Warkentin: (00:37)
I can’t wait to dig into this. I always ask the biggest questions first. How the heck did you double everything? Tell me the story, what happened?
Corey Lapell: (00:46)
Yeah, if I can lay some groundwork, some of the history. So my partner and I, pre-Covid were working very, very hard. 60 hour weeks, sometimes 17 hour days. Our business model, we were focused on those CrossFit group classes. That was our thing. We did some PT, but the PT was with the intent to get people in the group classes. Eventually, we had one specialty program that was kind of an afterthought. There was a budget offering and it had a very high churn rate and very low profitability. But we’re CrossFitters so CrossFitters don’t mind working hard. So we just worked harder.
Mike Warkentin: (01:28)
Nose to the grindstone.
Corey Lapell: (01:30)
Yeah. Yeah. That’s what we’re good at. So we were going okay, we were making a little bit of money, working really, really hard for it and probably would’ve stayed on that track. We knew about Two-Brain. We’d been following Two-Brain for about two years, just reading the emails, reading the books, but didn’t make a big impact for us. And then in March 2020, we were shut down for two months suddenly. And we made a quick pivot immediately to Zoom classes. We didn’t miss a beat, didn’t miss a day. And we’re very lucky. Our membership stuck with us. Our group class membership, we lost one person. That’s it. Everybody else stayed with us, continued to pay their membership rates. We did not think about continuing with the PT or our little specialty program. Those were not our priorities. And our coaches took those two months off ’cause my partner and I were running the Zoom classes, so our coaching pay dropped to zero. Our facility costs dropped to next to nothing. Our membership income didn’t change much at all. And we lost money in those two months, which was a wake up call that our business model focusing on group classes was not working for us.
Mike Warkentin: (02:48)
Something smells bad. I get ya.
Corey Lapell: (02:51)
Yeah. So that was a wake up call. And that was the time that we realized that working harder maybe was not getting us where we wanted to go. And we lined up a call with Two-Brain.
Mike Warkentin: (03:03)
I had a similar experience to you except I made a huger mistake. I didn’t even offer PT. We ran group classes and tried to get lots of people in there, didn’t do any PT, and wow. Can you think about how much money I lost on that deal? ?
Corey Lapell: (03:15)
Yeah. No kidding.
Mike Warkentin: (03:17)
So talk to me about- You’re connecting with a mentor. You look at the price, you’re like, we’re losing money. There’s a price tag here. Talk to me about that whole decision.
Corey Lapell: (03:26)
It was a very hard time to justify taking on additional expense when you realize that you have a crippled business. So we had a lot of hesitation around it. I think the sales rep for Two-Brain was fantastic. He asked the most important question. Which was, all our material is free. You’ve been following it for a couple years. You’ve read the books, you got the daily emails. Why do you need us?
Mike Warkentin: (03:53)
So what was the answer? I gotta know that one.
Corey Lapell: (03:56)
Well, that’s why, because we’ve read all the material. It hasn’t made any difference for us. So the problem is we’re willing to work hard. And that’s what attracted all of us to CrossFit, is you do CrossFit, you train really hard, you get results. The problem is, if I program for myself in CrossFit, I’m a power clean, handstand pushup kind of guy. I’ll do those all day every day, but I’ll never do cardio or L-sits.
Mike Warkentin: (04:19)
Well, I’m coming to work out with you.
Corey Lapell: (04:21)
CrossFit works because it makes me do the things that I don’t want to do. And that’s what Two-Brain was going to offer is, going to push us to do things that we were uncomfortable with doing. And then having that, I think it was around $500 per month at that time, with the exchange rate hanging over our head, there was no way we weren’t going to do the work.
Mike Warkentin: (04:45)
So it becomes an accountability thing.
Corey Lapell: (04:47)
Oh, very much. Very much.
Mike Warkentin: (04:48)
Yeah. Yeah. And honestly, I’ve heard this from other people as well. And there are a couple different types of gym owners I’ve spoken to. I spoke to one just yesterday from Australia. He is like a “by the numbers”, tell me what to do, all in, let’s go kind of guy. I’ve also talked to other people who kind of wanna go their own route and don’t like that instruction thing, but they recognize they need the accountability. So there’s various types of people out there. We have mentors that work with all different kinds. And for example, the gentleman in Australia, he works with one of our mentors who’s in New Zealand, and she is direct and she’s the perfect guy for him, or perfect girl for him. Pardon me. Because she is super direct and tells him do this. He’s like, okay. And we have other mentors who take a different approach. It’s like coaching, right? Every coach needs a coach, we find the right one. So talk to me then about you. You’ve made this commitment. You’re nervous as heck because you’ve got these expenses. The Covid stuff is still dragging on. Canada, we got hit pretty hard with restrictions and so forth. What happens? How do you start rebuilding this thing? He said as a crippled business, how do you fix it?
Corey Lapell: (05:47)
Well our mentor first kicked our ass really hard. Uh, Jeff Larsh, great guy. And it was a great mentor for us. I think my partner said, after one of our coaching calls with him, he said, I think he used nicer words, but I think he just told us, Corey, that we need to pull our heads out of our asses, . So he really held our feet to the fire and made us take on some things that were uncomfortable for us. And I think that laid the groundwork for everything that was gonna come. So there were several steps that we were required to take. If you wanna want me to go through some of them, I can.
Mike Warkentin: (06:23)
Well, so what happened? Basically in a nice way, he told you, you gotta unscrew this mess and then gave you the tools to do it. So yeah. What were some of those tools? What kind of steps? And I’m particularly interested in the stuff that you didn’t wanna do that you did anyway.
Corey Lapell: (06:36)
Yeah, the thing I was most resistant to at the start, which he made me do, was doing automated online billing and Zen Planner . With a membership of under a hundred at that time, I had always done it through Moneris and tracked it manually, month after month. And it gave me a sense of control, which was a false sense of control. As it turns out, there were missed membership payments and all that, that as a human, I failed to catch. So I’m not tech savvy, Mike. I don’t love technology. I don’t love dealing with that kind of stuff. No. So it’s very hard for me and it was hard for many of our coaches and getting them to buy in on that as well. And it was a fair amount of work for me, learning the Zen Planner system fully in the backend.
Mike Warkentin: (07:27)
It’s not fun.
Corey Lapell: (07:28)
No, no. But the ability to track those metrics at the click of a button and see them day to day, I can tell you exactly how many members we have today. I can tell you how many outstanding payments I have today. I can tell you the forecast for this month. The power of that is, and he tried to sell me on this, and I was very resistant to it, but Jeff was right. So that really helped for scalability because now with 173 members today versus about 95 pre-Covid, being able to track them on that automated billing system, if I had to do that payment every month on Moneris for 173 people, I couldn’t manage it.
Mike Warkentin: (08:11)
And you realized that, sorry to interrupt, but I had a similar experience. I started with a spreadsheet and that was just an unmitigated disaster. I know some old school gym owners who literally had the envelope on the door of the office for cash payments and cheques, things like that. You realize when you move to these systems, even though none of them are perfect and they are a pain in the ass to use, a lot of times you realize that even finding one missed payment pays for the cost of the software. Right. And all of a sudden it becomes very clear what you need to do.
Corey Lapell: (08:39)
Hundred percent. Hundred percent. And then later on down the road, Mike, later stages, I was able to bring on a membership manager who manages all that Zen Planner for me, manages all client payments, and he just reports to me. And so the part, I had to set it up first and I had to train him. So I had to know the system, but now all of that is off my plate, and that represents a good, back when it was under a hundred members. That’s 10 hours of my week.
Mike Warkentin: (09:11)
Ooh, okay. And that’s kind of the cool part about the system here is that yeah, you gotta do some work to do some stuff. And the example that I use is creating roles and responsibilities for hiring plans. So you’ve got your client success manager, your bookkeeper, however you wanna divide these roles up, all coaching, all this stuff. It is awful to write those roles and responsibilities down. But once you do it, you can then put people in place, they’ll have success. And then you got 10 hours back. And here’s the question. What did you do with those 10 hours?
Corey Lapell: (09:42)
Well, in the initial stages, more work.
Mike Warkentin: (09:45)
Higher value work, right?
Corey Lapell: (09:47)
Yeah. Well, Jeff had other tasks for us in that initial Ramp-up. So we have two owners, and at that point in time when the business is struggling, that means two mouths to feed. Jeff was very clever in finding out how to make that a strength for us. So he had us split our roles, so we weren’t duplicating roles. So my partner Leon, ended up managing our coaching team. He got the fun part. I get to work on all the finance, all the Zen Planner, all the billing, all the backend stuff, and all the bigger picture external work that nobody wants to do. So that helped because it really leveraged the fact that we have two owners and we can sprint quite a bit quicker if we split up the tasks and don’t duplicate each other’s work. And that has turned out over time to be incredibly key to our success.
Mike Warkentin: (10:45)
That’s roles and responsibilities again, right? Policies, procedures, roles. You do this, I do that. We don’t double up. We get further ahead.
Corey Lapell: (10:51)
Yeah. Yeah. And so, that helped us. Then part of the things that I did, I took time to write our SOPs, so go completely through. I actually booked a hotel room for two nights and locked myself in for two days and just wrote SOPs. Nothing but.
Mike Warkentin: (11:09)
Did you actually do that?
Corey Lapell: (11:10)
Yeah. Again, on Jeff’s advice.
Mike Warkentin: (11:11)
What was the name of the hotel? Do you remember?
Corey Lapell: (11:13)
It was actually accommodations at UBC, the university right up here.
Mike Warkentin: (11:16)
Yeah. That’s amazing. I haven’t heard anyone do that. I’ve heard people say, oh, you know, I did this over a weekend. I haven’t heard anyone actually sequestering themselves at a hotel. Good for you.
Corey Lapell: (11:25)
Yeah. I think I was dragging my feet on it. Jeff said, look, you need to take two days off work. Go lock yourself away and get this done. So I did, we did. On top of that, I wrote our team playbook. I wrote our member handbooks, which are fairly complete, very, very useful for the membership, especially onboarding new members. We wrote all our contracts for our coaches. We created a hiring process that we’re now using as we go, and hired- so our coaching team has gone from about six pre-covid to today. We’re at 13 people on our team, and we have four more at various stages of the hiring process right now, as well as the coach evaluations, implementing Uplaunch CRM, so automated just following up with leads and customers. So there’s been a lot of background work that I now had time to work on.
Mike Warkentin: (12:30)
Wow. And you know, I say this, listeners may get sick of this, but I’m gonna keep saying it till everyone understands. Systems are the basis, they’re the foundation of a successful business. No one that I’ve spoken to, and I talk to lots of gym owners like Corey, who have amazing stats. They’re the double, five times revenue, all this stuff. Not one of them says, I didn’t put any systems in place. They all tell me exactly what you are saying. I did this foundational stuff. And it comes in the Two-Brain Ramp-up, and then they move on to the Growth program where we’re doing targeted tactical stuff to help you grow your business right now with this thing that you need. Exactly. So you literally locked yourself away. Put this stuff in place. Like, I love this story. I’m gonna tell this to people forever now, this is great.
Mike Warkentin: (13:12)
And then after that, you’ve got this template that you can replicate. When you hire your first coach on that template, you can just hire 17 more on that template. Correct? Yeah. So you’re saving tons and tons of time as you’re starting to get some momentum and this thing is starting to come back online. What happens then? Like you said, you’re almost doubled your revenue now. Or sorry, you’ve doubled your revenue, but your members have almost doubled. Where are these people coming from and how are you filling that gym?
Corey Lapell: (13:37)
Well, we also rebranded, and I forgot to mention, we also went through the process of rebranding. We had been CrossFit Empower. We still are CrossFit Empower. We still are a CrossFit affiliate and proudly so. But we realized the group class model was not going to pay for where we are. And so while we keep group classes running, because that’s what I love to do. I love coaching group classes. I’m a CrossFitter through and through, we rebranded so that we can market to personal training and to specialty groups. And instead of discount specialty groups, they’re premium specialty groups. And we have some coaches who are fantastic. They have fans who hate CrossFit, but love their specialty program. We brought on personal training coaches who are not CrossFit coaches. They’re strictly PT. And that’s a very scalable thing in our space and with the times we have available. So we can easily scale PT and specialty group classes in a way we can’t do with the group classes. And so the rebranding was designed around that because it was hard to sell PT to people who searched us by looking for CrossFit.
Mike Warkentin: (14:46)
I didn’t know at my gym, this is embarrassing and humiliating, but I didn’t know that you could actually run PT and group sessions. I was focused, like you, on group classes. And my goal was to fill ’em and put as many in as possible. And my ideal gym was gonna be wall to wall from 5:00 AM to 9:00 PM, giant glass, group classes. Crushing it. Yeah. And I couldn’t do it. I could not fill those group classes. I was losing money. I had too many classes, not enough people. I was chasing members. I didn’t need that. When I finally actually said to someone, and it was because of Two-Brain, I said, Hey, you’re really bad at double-unders and I know you’re angry about it. We can fix that in two hours. You wanna book some PT? The answer was an overwhelming yes. And a light bulb went off and I’m like, holy crap, I just sold a hundred dollars to this gentleman. And his ARM is now, average revenue per member, goes 150 to 250. He’s happier. I’m happier. Everybody wins. Did your average revenue per member go up as a result of all this?
Corey Lapell: (15:40)
Yes. Yes. I think it went up from something like 150 when we started to, we now hover around 250, and we have had months that were higher.
Mike Warkentin: (15:50)
And it’s like magic, right? Because you’re not doing anything really differently. You’re still passionate about group classes. You’re still running them, you’re still crushing them with the clients who love that. But you’ve kind of made a realization that I had that group classes are a discount option and there are higher value services that you can offer that people want. Right. So you’re doing these, tell me about the premium. You said you shifted to a premium specialty service program. What was specific about that?
Corey Lapell: (16:14)
So we have one coach who, she’s probably our most popular coach, and she runs a very cardio intensive type of workout. It is in a little bit like CrossFit, but no technical lifting, no technical gymnastics. People love it. So we called it Fit over 40, because that is really our demographic, and that’s how long the workout takes. People who are under 40 come and play too, and people are willing to pay a premium to see her twice a week, and she gets paid far more per hour than I can pay her in a group class to coach a group class. And so we have coaches now bringing in that. They brought in a mother-daughter program, a barbell club, and so we can pay them at a higher rate of pay because we’re charging a premium for these programs. So it’s good for the coaches. People love these programs, and that is good for the business.
Mike Warkentin: (17:11)
So what you’re doing there is you’re creating what we call entrepreneurial opportunities for coaches. And if you’re out there listening, you’re not sure what that is, the quick version is you help coaches figure out what else they can offer to clients, and then there’s different ways to pay them. Two-Brain recommends the Four Ninths model where you pay the coach 44% of the total revenue. So this is all new revenue coming in. You’re not saying here’s $25 to coach a class that you have to fill and you lose money. You’re saying you get 44% of all the revenue that comes in, and let’s say you’ve got a great weightlifting coach, that person starts a program, you help that person market it, people sign up and the coach makes 44%, which in almost every case is greater than the group class wage. So now you’re creating careers as opposed to just coaching jobs and eating into your profit margin. Is that how it went for you, what I just described?
Corey Lapell: (17:58)
Yeah, exactly. Like that. Exactly like that. And there’s a couple other things that I definitely wanna make sure that we mention, because if there’s any other coaches or owners like me who are wondering about this, prior to taking on Two-Brain, I was paying myself a thousand dollars a month. Okay.
Mike Warkentin: (18:19)
And Vancouver’s an expensive city.
Corey Lapell: (18:22)
Yeah, yeah, yeah. But our residential rent for my wife and I is 2,500. Yeah, so that’s not a lot. I was working about 60 hours a week, and now we track our metrics. So these are actual firm numbers. I’m now working about 35 hours per week, and my checks, I’m averaging about $4,000 per month. One of the things Jeff turned us around said, look, you have to pay yourselves for the hours you put in. So we now pay ourselves just for the hours we put in. And yeah, it’s going pretty well.
Mike Warkentin: (18:57)
So that listeners, net owner benefit and effective hourly rate are two critical metrics that we track at Two-Brain. Net owner benefit is everything you get for the business. It could be salary, wages, dividends, it could also be your cell phone bill, a car, things like that. Whatever it pays you. So net owner benefit’s a big one. Think of it as your wage, more or less. Effective hourly rate is that number divided by the amount of hours you put in. And if you have this number divided by 80, things get a little weird. If you have that number divided by 35, 25, 10, you start to get some big effective hourly rates. We have gym owners that making, like, $500 an hour because they only put three or four hours into the business. It’s incredible what you just said, Corey. I mean, that’s the life-changing stuff. Going from 60 hour weeks and not making as much money as you need, to making way more in less time. How did that change your life course?
Corey Lapell: (19:44)
It’s been fantastic for my health, for my family, and for the business because I’ve found I’m actually more valuable outside of the business. Yeah. And it’s something hard to wrap your head around. But when I’m walking up on my day off to the pool to go take a leisurely swim, not a workout, just a leisurely swim, my mind is free to think about things that need to be done in the business. And I come back and I more than pay for that time off.
Mike Warkentin: (20:12)
And I’m gonna guess that Leon, your partner, has a similar story. Am I wrong?
Corey Lapell: (20:17)
Yeah, yeah. He’s doing fantastic. It’s been really great to watch.
Mike Warkentin: (20:25)
Yeah. So I mean, that’s cool. So, you guys are long serving gym owners, passionate about everything. In a situation in Covid where you realize you’re in trouble. You’re not making the money you wanna make, you’re working way too hard. That sounds to me like someone who would be close to leaving the fitness industry at some point, either by force or by choice. Because I was there too when I was working way too much. I was like, I don’t have time to make no money. You know? And now you’re in a spot where you can actually sit back and think, how can I serve my clients better? And you get rewarded for doing it, right? So it’s not all about you. We’re all altruistic and trying to help our clients. So you help your clients, but then you actually get to spend time with, I’m gonna guess your family.
Corey Lapell: (21:02)
Yeah, no, it’s been great. And as coaches, we’re better coaches. We’re not tired out, we’re not burnt out. So we bring a lot more energy to the classes, which I really love. I feel like I can focus on being my best coaching self when I’m there, and I can pick which personal training clients I work with. And so the people I work with are people I love. And it’s very rewarding for me and for them.
Mike Warkentin: (21:28)
You have choice. You can choose to coach, you can choose to CEO stuff. You can choose to do whatever you want. Some people who are kind of at your level have chosen to start second locations if they want, expand current locations. Some have chosen to market sports drinks, invent things, run Airbnbs. We have a program called Tinker that helps people do that too. So there’s all sorts of options for people once you get a stable business underneath you. So people out there, again, Corey, are gonna be listening and saying, ah, I can never do this. What would you tell them if they’re where you were in March 2020? What’s their steps to get where you are?
Corey Lapell: (22:01)
I would say give Two-Brain a call. Check it out. I know as a business owner, over the years, there’s been a hundred different things that were promoted. They were gonna help my business. I was gonna try them out. And you pay a couple thousand dollars and find out it’s a dud, it didn’t work, and you’re flushing money away. I’ve done that many, many, many times. Two-Brain wasn’t one of those. So if you’re willing to do the work and if you’re able to make difficult changes in how you do things, and I was resistant, very resistant when we started with Jeff. He asked, what are the things that you will not do? And I told him one of the things I will not do is I will never drop the CrossFit name from our title. A year later, we dropped the CrossFit name from our title. So I certainly had resistance, but if you are willing to make the change and do the work, the Two-Brain methodology works incredibly well. And I don’t know if Chris told you this, Mike, but Leon and I, last month took the step of joining the Tinker program.
Mike Warkentin: (23:06)
I didn’t know that. Congratulations.
Corey Lapell: (23:07)
Yeah, thank you. So for those who don’t know, that’s just about as frightening because the price tag on the Tinker program is very frightening. And it’s a big commitment. But based on the success we’ve had initially with the Ramp-up and the Growth program, if it returns the way that the original programs did, it’s a no-lose.
Mike Warkentin: (23:30)
So I gotta ask you this then. The Tinker program, there’s a lot of incredible stuff going on in there. Just whenever I’m in that room and I’m usually doing media, I hear just these unbelievable stories of quote-unquote “just gym owners” doing these unbelievable entrepreneurial things. What kind of stuff, you don’t have to give away any secrets. What kind of stuff are you thinking about?
Corey Lapell: (23:50)
Number one on our hit list is we would like to own our own building, be our own landlords. And on the Vancouver West side, that’s kind of critical. There’s not a lot of options for a CrossFit gym out this way. And our memberships are dear to us. They’re like family, and we would like to serve them for the rest of our lives. We work with them, we work with their kids, we work with all their family members and neighbors. So we’d like to remain in this neighborhood indefinitely. We’ve got a coaching team that we’re training up to take our places when we can’t keep doing this. So we need to own a building to do that. And that’s in Vancouver, we’re looking at 3 to 6 million for that. And our Tinker Mentor, on our first meeting, she said, okay, well that’s our six month plan. What’s your three year plan?
Mike Warkentin: (24:41)
So you go from having March 2020 crippled business to, this show is gonna air in just in the early part of 2023. You’re now looking at million dollars of real estate in Vancouver to create a legacy for your business and for your clients. Like, how cool is that to think about?
Corey Lapell: (25:02)
It’s incredible. I don’t wanna tear up here. I’m trying to hold that in. So all those unpaid hours that we put in, I didn’t pay myself in 2017, 2018 when we went to our expansion. So I went two years without a paycheque. Everything that we’ve done, we don’t do this for love, for money. We do this for passion, right? We built a an incredible community. And to think that we can make that a permanent fixture here, it makes all the sacrifice, all the hours worthwhile.
Mike Warkentin: (25:39)
It’s incredible because there are people like you who bleed out of the fitness industry. I’ve seen it happen. I watched them on Facebook doing other careers, and I wish these great people were still in the gym business. If you’re out there and you are struggling, there is hope. Corey is proof. Give us a call. You don’t have to sign up. Just listen, take a look. But guaranteed we can give you some ideas of what you can do better. And the cool part about Two-Brain, to blow our own horn, is that everything’s backed by data. So Corey, you talked about some of the pie-in-the-sky promises. I’ve seen them as a gym owner. I have gotten them, I’ve bitten into some of them. I didn’t like the way they tasted. The reason why Two-Brain works for me is because it’s backed by data. It’s tested. The stuff works. It’s not just a promise, it actually works. So let’s tackle stuff. Am I lying to people with that?
Corey Lapell: (26:19)
No. Do it. Just do it. Really. Your business would be better, your life would be better. It’s been worth it for sure.
Mike Warkentin: (26:25)
Corey, thank you so much for taking the time and telling your story. I don’t wanna stop you from improving your business. I want you to go to the pool, do a leisurely swim, think about how you can run your business. Thanks so much for being here today.
Corey Lapell: (26:33)
Mike Warkentin: (26:35)
That was Corey Lapell, and this is Run a Profitable Gym. I’m your host, Mike Warkentin. I’m telling the stories of amazing gym owners like Corey every week so that you can run a profitable gym too. Please subscribe for more episodes and if you’re on YouTube, I’d love it if you would hammer a like button on this so that other people can find it as well. Now here’s Two-Brain founder Chris Cooper with a final word.
Chris Cooper: (26:53)
Hey, it’s Two-Brain founder Chris Cooper with a quick note. 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 that group. It’s Gym Owners United on Facebook, or go to GymOwnersUnited.com to join. Do it today.