Chris Cooper (00:02):
Imagine having a $37,000 profit from your gym this month. What would you do with it? Would you reinvest in your gym? Would you do something for your family? Would you pay off some debt? Would you hire more coaches? Now imagine that happening every month. I’m Chris Cooper. This is “Run a Profitable Gym,” and this is our monthly leaderboard show. When I share what the best gyms in Two-Brain are doing, exactly how well they’re doing, and then I interview them and ask them, “How’d you do that?” and share it with you. Look, when you’re making decisions about how to grow your gym, you need to start with bedrock truth. You need to go to the people who are actually doing the things, can prove it, and then ask them what they’re doing instead of just believing all the hype and the ads you see on Facebook about flooding your gym with leads.
Chris Cooper (00:49):
This is how we do that. Every single month we track six metrics in Two-Brain. We look at who’s doing the best with those metrics and then say, “How’d you do that?” and we then we teach it to everybody else. This is what it means to base decisions on data, and this month is one of my favorite leaderboards because we’re talking about net owner benefit. That’s how much you take from your gym—profit, salary, those two things added up, but also the things that your gym pays for, like your car, your cell phone, et cetera. This is really why you open a business instead of just coaching for somebody else. You want to have this leverage of entrepreneurship to create these opportunities for wealth for your family, to create opportunities for your staff, to make better gyms for your clients, and maybe to even open up more gyms.
Chris Cooper (01:36):
To do that, you need profit, and that’s why we want to hear from the best people in the world. So, let’s start with the leaderboard, and then I’m going to share with you exactly how they got there so that you can do it too. I’m going to go in reverse order through this leaderboard as I like to do. I like to kind of build the suspense. The number 10 gym in Two-Brain last month took home $16,215. Now, we take all of these currencies around the world, and we put them all into USD so that you know that we’re comparing apples to apples. This gym is from Norway, and the owners took home $16,215 U.S. last month. Now, these are not the big flash-in-the-pan things, but if you’ve been around the gym industry for a while, especially 2018, you would see these gym owners doing these six-week challenges and super membership launches with ad agencies, and they would have one big month and then the next month would be kind of mediocre again, and by the third month, all those gains would be gone, and they’d be struggling again.
Chris Cooper (02:35):
This is not that. We use a rolling three average to make sure that the gym is consistently making this much money before we ask them for advice. The number nine gym on our Two-Brain leaderboard is $16,530 net owner benefit. They’re from the States. That’s a personal training gym. Congratulations. Number eight: $16,823 in one month of net owner benefit. That’s a CrossFit gym also from the States. Number seven: $16,858 U.S. in profit, net owner benefit, in one month. Congratulations. Number six: yay, Team Canada—but this is in U.S. dollars, remember—$18,330 last month in net owner benefit to the owner, a husband-and-wife team. So proud of them. Next in fifth place: $19,116 U.S. This is a CrossFit gym too. Number four was $22,206 U.S. This is a CrossFit gym in Switzerland, which has a slightly different model than the CrossFit gyms would in the States because that’s what we mentored them to do.
Chris Cooper (03:43):
Number three: $22,696 U.S. take home for the owners last month. Number two: go Canada; this is $23,262 U.S. take home from their gym last month. So awesome. And number one: 37,935 USD last month in net owner benefit. That’s salary and profit to the owner. Congratulations. That’s a strength training gym by the way. So amazing and also amazing that you’re willing to share your lessons with everybody else. So, I’m going to get into those right now. Now keep in mind that this is take home. This is not top line revenue. There are people out there who will say, “Oh, I have a successful gym because I’ve got $50,000 a month in revenue coming in.” But what really matters is what’s left over at the end. What’s the bottom line? If you’ve got 50 grand in revenue coming in and you spend it all, you can still go hungry.
Chris Cooper (04:40):
What measures the efficacy of your business is profitability because that’s the number that lets you hire more people or expand or open more locations or help serve other people. That’s the measure of your business’s fitness. And so that’s why these are so important. When you see somebody online trying to sell you something, their ad agency or whatever, and they’re talking about their revenue or even worse, their MRR, their run rate, those are imaginary and sometimes even irrelevant. What really matters is how much they’re actually profiting, and that’s what we want to help you focus on too. So, let’s look at their advice. OK, first off, we ask each one of these owners, “Is this your normal, or is this kind of a one-off deal?” Because again, we don’t want to take advice from people who have had one good month ever and then just expect that to continue forever.
Chris Cooper (05:28):
You know business is up and down. We want people who are doing this consistently. We want to get advice from them. So, this guy said that this month, his NOB was a little bit higher because he had a bigger draw. He had a really amazing few months previously, but his average every single month would still put him in the top four. That’s amazing. And this actually does happen. Like what’s really important is not how often you have these really peak months; it’s what you fall back to on average in between these peak months, right? Your business is not as good as your best month. It’s as good as your worst month. And so, when you’re falling back down and you’re winning the leaderboard this month, but you fall back down to top four every month, you’re doing great.
Chris Cooper (06:15):
Another person said, “This is on par with our yearly average. It used to be higher, but I hired a GM, and that brought our net owner benefit down, but I’m not in the gym as much, so it’s a trade that I would happily make every time. I believe this will increase as we go.” Fantastic advice. Get your net owner benefit high first; then, hire a manager if you want to because what you’ve done is you’ve proven that your business is successful enough to support at least one person, you, and based on what you’ve built, it can grow to support another person. Too many people hire a GM before they’re even paying themselves a good salary, which means that you’re asking somebody to risk their career on an unproven model. It’s crazy. Like get yourself a high net owner benefit, prove you can do it, and then think about hiring a GM to buy back your time.
Chris Cooper (07:03):
Another person said, “Even though I was in the top three this month, this number is actually lower as I didn’t need to take a distribution,” so for tax purposes, he left more money in his business. And this is a Canadian business where the tax rate is slightly lower for the business than it would be for a person, which is different in the States and different in other countries too. So, keep that in mind. And another quote was, “This has been our run rate for a couple years.” She takes from the business what she wants to make from the business, reinvests the rest or invests in other things through the business, and again, when you’re making this much money, the number one thing that you can do to grow your profitability and grow your wealth is keep more of that money by optimizing your tax strategy.
Chris Cooper (07:47):
So, what’s interesting is what these guys are actually reporting as net owner benefit could be higher, it’s just they’re doing things to leave money in the business, reinvest in other things, and defer tax payments basically. So, how did you do it? This is maybe the most important part of the show today. How did you get to that high net owner benefit? First, our leaderboard people said, “Systems. We focus on consistent client success processes, standards, and high-quality staffing and coaching.” The next person says, “Systems and mentorship. We haven’t really done anything different from what Two-Brain teaches. We’ve just been operating for a long time and have been able to refine our systems and processes.” The third person says, “Systems and mentorship.” I’m seeing a theme here. “We don’t really do much different than what Two-Brain teaches.” The fourth person said, “Systems and mentorship.”
Chris Cooper (08:37):
“We are pretty simply following Two-Brain business.” The fifth person says, “Systems and investment in staff.” They said, “We do have online training modules that help us ascend our newer staff, providing them with pretty good level of base knowledge so that we can maximize the time we spend training them in person.” How do they get time to train their staff in person? By having good systems and probably mentorship; they’re mentoring their own staff. That means they’re receiving mentorship from a business coach. The next person said, “We focus on our avatar. I don’t do any nutrition work, and we’re very anti-competitive athlete. So, we really focus on bringing in beginners and folks that haven’t felt at home in more competitive gyms.” Huge. Another theme that we saw in the responses was that these gyms did not focus on client headcount. Their model is not “get 400 clients in a group training program.”
Chris Cooper (09:28):
They really focused on high value services to high value clients. That’s ARM, not headcount, and while they have to have both to get the revenue that creates the profitability that we’re talking about here, they prioritize that high ARM because you’re going to have lower churn, you’re going to have better margins that can be used to pay coaches and be able to buy back the owner’s time to focus on growing the gym. So, there’s a massive correlation here between the ARM of your clients. The worst thing, the thing that you never hear from people who are doing really well is, “I have 500 clients at a very low rate for my coaching program.” That just doesn’t happen. Here’s what the leader said, “This month I focused on ARM and climbing the value ladder. I’m most focused on climbing up the value ladder. That means buying back your time and focusing on high value uses of that time and increasing ARM.”
Chris Cooper (10:24):
“By doing this, I’m only performing high value roles and a high ARM gives me a better net owner benefit.” What they mean specifically is that they are not cleaning their gym. They’re probably not coaching their group classes. They might not be doing the billing or the payroll. They are probably still doing sales for their gym, and they’re working on marketing and getting a great return. I happen to know that this owner is still doing personal training just because they like it. The next person said, “We focused on ARM through a lot of personal training and nutrition. We focus on high value services like personal training and nutrition to make sure we have a high ARM. We are super consistent in delivery in all areas. The third person said, “We sell high ARM, valuable services. We added higher level services to maximize our gym utilization via individual design.”
Chris Cooper (11:13):
Again, you’re providing the value that clients want to buy. They’re not tricking people into buying a high value service. They’re finding out what their clients want and the problem their clients want to solve and solving that for them. Instead of just saying, “We’re selling group training,” because all of the other gyms on your street are saying, “We’re selling group training We’re selling group training. We’re selling group training.” That creates commoditization, and the client just picks the lowest price. It’s a race to the bottom. These leaders in net owner benefit are the opposite. They’re anti-commoditization. They’re setting themselves out by serving a narrower niche better with more value. The next person said, “We have a high ARM. We are in the process of moving all of our personal training clients to a membership which will create consistency and predictability and revenue. We got rid of packages.”
Chris Cooper (12:02):
Hey, if you’ve got a personal training studio or you’re selling personal training, it’s time to stop selling packages. OK? Most of us stopped doing this years ago. I wish I had never sold packages, and get people onto recurring memberships. When you’re in Two-Brain in the mentorship program, this is one of the things the mentor’s going to tell you, and it’s such a simple fix, but there’s multiple steps involved and you have to be guided through that process if you want it to work effectively. Look, the reason that you opened a gym was to help people get healthy and fit, but the measure of success of your gym is how long you can stick around and help those people. If you’re just running crazy ad strategies once a year, once a quarter, you might boost your revenue for a month, but you’re going to damage yourself long term.
Chris Cooper (12:49):
The real measure of your gym’s fitness is the net owner benefit that you receive in profit. That can be reinvested for staff, it can be reinvested for wealth, it can be reinvested for impact, and you can help more people. You know my mantra is, “Make lots of money and give it away.” When gym owners make lots of money, that’s what they do with it. And that’s why I’m so proud of these gym owners for leading the way and giving back to you so that you can do it too. I’m Chris Cooper. This is “Run a Profitable Gym,” and if you want to talk more about this, just go to gymownersunited.com. That’s our free public Facebook group. It’s helpful; it’s productive. Everybody in there is positive. There’s no sarcasm and stupid names and waste of your time. You can get in there, you can learn something today, you can act on it for free, and improve your business. Thank you for serving humanity, and I hope this serves you.
