Can you have a successful microgym with 500, 700 or even 1,000 clients?
Yes.
But it’s really hard.
I recently spoke with a Two-Brain client who has more than 1,100 members across two locations.
Below, I’ll tell you what I learned from him.
Daniel Dobbs Brown runs Accion CrossFit Providencia and Las Condes in Santiago, Chile. Those gyms took the first and fourth spots, respectively, on our leaderboard for client count in August.
Daniel joined me on “Run a Profitable Gym” to talk about his huge numbers, and a few things stood out.
Huge Client Counts Require Huge Teams
Daniel told me he has 50-55 people on his team, including about 30 coaches.
Imagine that for a minute: You probably opened a gym because you liked teaching people how to squat. I did that, too. But it’s a long, long way from leading a team of 50 people.
If you want to run a gym with a lot of clients, you will need to evolve from fitness coach to CEO and leader of people.
Retention Is a Challenge
Daniel’s an inspiring, passionate guy who wants to help as many people as he can. I was fired up after hearing him speak, and I was amazed at all the programs he has and ideas he’s working on to improve health and fitness in Chile.
One of his challenges in accomplishing his mission is getting people to keep working out, and Daniel’s got a plan to address churn and retain clients longer so he can change their lives.
But the reality is that clients leave, and a few percentage points have a huge effect when you’re talking about 1,100 members. Daniel told me his monthly churn rate is between 12 and 13 percent—he’s working to bring it into the 5-7 percent range with the help of a new client success manager (and a mentor).
But if you do the math, you’ll realize that even at 5 percent churn, Daniel would still need to acquire 57 clients a month to maintain his headcount.
Which brings me to my next point.
You Must Be Good at Marketing
Daniel is very good at acquiring lots of clients every month.
Are you?
If not, you must become a marketing master if you want to have a huge number of clients. You’ll have to replace the clients who leave and you’ll have to acquire many others to grow. Some gym owners can do that, but others can’t. That’s understandable: Sales and marketing require a new skill set, and usually a number of talented team members.
It’s certainly not a mistake to want to help a lot of people become healthier, but it’s a mistake to try and do it without realizing clients won’t just show up in droves. You’ll have to work very hard to acquire them—and keep them.
Retention and Value Are Huge Multipliers
With any group of clients, length of engagement (LEG) and average revenue per member (ARM) are multipliers.
Consider increasing your ARM from $200 to $205 if you have 150 clients—that’s $750 in new revenue each month. And if each of those clients stays just one extra month and pays $205 because you’re better at retaining them, that’s another $30,750 in revenue.
Wow, right?
Daniel’s current ARM is about US$85-$90, which is actually double that of other gyms in the area.
He’s working hard to improve the value of coaching in his market, and this is his next target: $120 ARM. A $30 jump in ARM with 1,140 clients is $34,200 a month.
And if each clients stays a month longer at $120, that’s $136,800. These are big numbers.
Start Small and Build
I’d suggest Daniel is an outlier—a rare entrepreneur who can operate at large scale.
My head was spinning at the end of my chat with him. At peak, I had about 230 members in my gym, and I found even that number overwhelming. So it was inspiring to talk with a guy who can manage team of 50, help more than a thousand clients and use large-scale marketing systems to reach even more people.
But I know that I don’t have the skill set to serve that many people—and that’s OK. With my skill set, it was much better to focus on providing huge value to fewer clients who stuck around for a long time. That model worked for me, just as Daniel’s finding success going big.
The best plan? Whatever your goals are, start by acquiring 150 clients who pay you $205 a month and stay for two years or more. If you hit those numbers, you’ll earn $100,000 a year as owner, and you’ll have a strong business.
At that point, you can increase any or all of those numbers slowly without overwhelming your team or your business systems. For you, it might be 200 clients with pay $300 a month and stay for three years. Daniel wants 5,000 clients eventually!
Whatever your ultimate goals are, start with these targets—150 people at $205. First build a strong gym that will allow you to scale up with confidence—if you want to. At that point, and with the guidance of a mentor, you can do whatever you want.
