You started a business to stop trading time for money.
You wanted a way to scale: to earn more money in less time. And you were willing to trade less money and more time up front to reach that goal eventually.
So why doesn’t it seem any closer?
In this series, I’m going to teach you how to maximize your return on your investment in your gym: both your financial investment and your time investment.
First, I’m going to give you a tool to measure your success as an entrepreneur (it’s simple, and I use it every week).
Then I’m going to give you 10 ways to improve your return on investment (ROI) and 10 ways to improve your return on time (ROT). As you’re planning for 2021, I hope these two lists can give you a clear path forward.
Are You a Successful Entrepreneur?
First: the tool.
Your measure of success as an entrepreneur is the value your business creates for your lifestyle.
The value of your entrepreneurial skill is measured by a very simple equation: effective hourly rate, or EHR. Your effective hourly rate is determined by dividing the time you spend into the money you earn.
EHR = $ / T
Now, before you say “I’m not in this for the money, Coop!” think about this:
You started coaching people with a noble purpose—to save their lives, to reduce comorbidities, or, just (like me) to give people confidence. You found happiness and health through fitness, and you wanted to share it with them. Bravo!
But that’s not why you started a business. After all, you can help people while working for someone else. You can change lives and teach the squat and get paid an hourly rate in thousands of gyms around the world.
You started a business to scale your care and to scale your time and money.
Maybe you like being your own boss (you have the freedom of time or money). Maybe you just hate working for someone else (they control your time and money). Maybe you like controlling your own destiny, figuring it all out, having the freedom to fail. Whatever your exact reason for starting a business, your goal is still the freedom of time and money.
Entrepreneurs are more or less successful depending on their EHRs.
A very high EHR means you’re wealthy: You have total freedom of time and more money than you need.
A very low EHR means you’re desperate: You work too much for too little and you’re at risk of going to zero.
Effective Hourly Rates for Gym Owners
What should your EHR be as a gym owner?
Well, it should be higher than what you’d earn as a personal trainer or as your highest-paid group coach. Because there’s no sense taking on the risks and stresses of entrepreneurship if you can create more freedom by working for someone else, right?
So if I could charge $70 per hour for personal training or nutrition coaching, then my EHR as a gym owner should be higher than $70.
A couple of notes on the EHR equation:
$: You must calculate the net benefit you receive from the business, not just what’s on your check. If the business pays for your cell phone or your daily coffee or your supplements, include that in your income.
T: You must count all hours worked on your business, even if you’re getting up early on Sunday morning to blog. Even if you love the work (as I definitely do!), it’s still work. You have to be honest with yourself.
Finally, it’s most important that your EHR improves over time. My mentor improves my EHR by keeping me focused, but most mentors start by improving a gym owner’s EHR by making them more money. The equation works both ways.
In the next post in this series: how to improve your return on investment (ROI).