To achieve virtuosity in business, you must do simple things at an elite level.
That’s harder than it sounds. Everyone wants to level up fast and try new things. Fundamentals? Boring!
You’ve seen this in your gym, I’m sure. And I know you’re tempted by distractions all the time because I am, too.
But if you read on, I’ll give you a very simple way to measurably improve your business. If you learn how to use this tactic, you can employ it regularly to improve your gym—and you’ll have it in your toolbox forever.
Only Great Gym Owners Do This
Small group classes are costing you money. You probably sense that.
But I know it because I run the numbers.
Here are the steps:
1. Add up the total revenue you receive from group training each month (your CrossFit groups, your bootcamps, etc.).
2. Divide that by the number of classes you run at your gym per month. That’s the average value of each class.
3. Go back to your total group-training revenue. Divide that by the number of people paying for group training in your gym. That’s your average revenue per group-training client.
4. Divide the number above by average attendance. How many times does the average client attend a group in a month? This will tell you the value of one person attending one group.
5. Pull up your attendance-tracking sheet and look at each group you run. Multiply the average attendance for each group by the average value of a group-training client. That will give you a specific value for each group you run.
6. Compare the average value of a class (from Step 2) against that of each class on your schedule. Which classes are pulling you up and which are pulling you down?
7. Compare the average value for each class against your personal-training rate. Are there any spots where you’d make more money taking a 1:1 client instead of running a small class? What about if you delivered high-value personalized programming to two, three or four people in an hour (we call this “semi-private training”)?
Example:
- Stacy has 100 clients and grosses $10,000 per month in group revenue.
- She runs 40 classes per week, or 172 classes per month (40 x 4.3 weeks per month).
- Her average revenue per class is $58.14.
- Stacy’s average client pays $100 per month. Her average client attends 15 times.
- The average value of a class attendee at Sarah’s gym is $6.67.
- That means her average group size is about eight or nine people. (Simply divide Stacy’s revenue per group class by the average value of an attendee.)
Here’s where the rubber meets the road:
- If Stacy runs a class for eight people, she makes $53.36 an hour. If the class has nine people, she makes $60.03 per hour.
- Stacy charges $65 per hour for personal training, so she needs to get 10 people in a class to earn $66.70 and beat her PT rate.
- If fewer than 10 people show up for her class, she’d make more doing a 1:1 session in that time.
- If 11 or more people show up for a class, Stacy makes more than $73 per hour.
Keep in mind that our annual “State of the Industry” report always reveals that average group-class attendance in microgyms is about 7. It’s never 12.
Data-backed industry fact: Almost no one is consistently running classes with more than 10 attendees all the time.
An important note many gym owners ignore: Building your business on the target of running large classes all day is just not a good idea.
Another data point: Our report shows the average price of a 60-minute PT session is $75. Stacy is undercharging for PT. If she charged $75, she’d need 12 people in class to beat that.
What would you rather do: Acquire and retain 12 group-class members or learn to sell one PT session a week?
Virtuosity: Take It Further
Many gym owners have done this calculation over the years—then done nothing beyond hope more people show up to group classes.
To become a masterful gym owner, you need to act and optimize. A mentor would help you figure out exactly what to do in your unique business, but I’ll lay out a few general options for you here.
1. You could cancel poorly attended classes and sell more PT sessions instead (we give clients a step-by-step plan to acquire more PT clients).
2. You could increase your group rates to ensure each class generates more revenue (we have an exact template for rate increases).
3. You could sell hybrid memberships to increase client value (we have a plan for this, too).
4. You could start using semi-private training to generate more revenue per hour and give clients personalized service (we have instructions and a subject-matter expert who helps owners scale semi-private training fast).
The Master’s Path
This exercise should be repeated regularly.
A poor gym owner will ignore this advice and blindly chase more clients to fill group classes.
A good gym owner will do the calculations and realize there’s a problem.
A great gym owner will run the numbers on a schedule and then take swift, targeted action to improve the business.
If you’re chasing virtuosity in business, you’ll choose the last option.
So what are you going to do today to improve your business?
