Chris Cooper (00:00):
If you wanted to make millions from the gym business, what are the paths you would take? I’m Chris Cooper. This is “Run a Profitable Gym.” And today I’m answering questions from the editor of my new book. That book is called “Millionaire Gym Owner,” and it’ll be out toward the end of the year. My editor, Robert Greenshields, had some amazing questions for me as we went through draft after draft of writing this book, and we thought this might make an interesting episode for you as I walk through the questions that he’s asking. They’re so good. I think you’ll love it. If you have other questions about owning a gym or getting outta debt or just starting a gym, you can join gymownersunited.com to get those answered for free. So here we go. If you wanted to make millions from your gym business, what are the main routes, the main paths that people have taken in Two-Brain Business to get there?
Chris Cooper (00:48):
So the first one is to build and scale the gym business that you have. You’re good at the gym business. You’re not good at investing, right? If you’re at this point and you’re asking this question, you might be in the top 10 percent of gym owners worldwide, but you’re still in the bottom 1 percent of stock-market investors or Bitcoin buyers or real-estate flippers. And so for many of us, the fastest way to actually make a million in the gym business is to just scale what we have, to duplicate the systems and the processes and the staff and the pricing and the marketing into a second location or a third location. Or maybe we buy out another gym and save it. So the first option is to build your gym business. Now can you do this in one location? Yeah, absolutely. But from visiting Sweden this last weekend, what I saw there was gym owners taking the “150 model,” so 150 clients, about a hundred thousand dollars in in net owner benefit a year, and just duplicating that over and over and over again.
Chris Cooper (01:44):
Some of these gym owners have plans to open up 10 gyms following the 150 model, becoming an amazing community local gym for people with great coaching, and just becoming multimillionaires that way. Also providing amazing opportunities for staff and benefiting from economies of scale. I’ll get into that more in a moment. The second way that you can become a millionaire in the gym business is to reinvest your profits in other assets. And this is what I did. So when my gym was successful, it was paying me as much as I needed—about $100K a year, and a little bit more than I needed. It was also giving me back a lot of my time after I fixed up my gym. I didn’t need to work a 40-hour week anymore, and so I could spend that time doing other things. One of the things that I learned was buying real estate.
Chris Cooper (02:33):
And so after a couple of years of looking, I found a commercial building. I put my gym in it first, and my gym became my first tenant. After that, I bought other buildings and put other tenants in them, and now I collect rent from a lot of different tenants in a bunch of different buildings. You can reinvest your profits from the gym in other assets. So you could buy Airbnbs, you could invest in crypto or art or REITs, or whatever you want to, but that’s another path. A third path is to start another business. And so, for example, maybe your gym is really, really successful at nutrition challenges, let’s say. And now you can start a nutrition company that helps other gym owners. Maybe your gym is so good at supplements that you could start a supplement company. Or maybe you’re so good at like merch or the customer journey or gifting that you could start a company like that.
Chris Cooper (03:22):
There’s a bunch of different ways that you could do it here. The first is to scale the business that you have, that you know and that you’re really good at. The second is to take the profit outta that business and reinvest it in other assets. So these are not other businesses necessarily. They’re things that pay you passively. And the third option is to start other businesses. So let’s look at each one more closely. So starting with this option: to first build the gym that you have, expand your fitness empire, scale it up to multiple locations or add a management layer, and double the size of your gym right now. So first, when we say building your gym business, what we actually mean is you can make $100,000 a year with about 150 clients and if you own a microgym—like a CrossFit gym or a HIIT gym, S&C, martial arts, whatever. You can do that, right?
Chris Cooper (04:15):
And then your choices are this: “We can go to 250 clients, which will require more space, equipment, maybe a manager, but definitely some other admin staff.” You know, maybe like a head coach, maybe like a client success manager, maybe a general manager, admin, payroll—somebody like that. Or you could just duplicate your systems, and you could open up a second location or buy another location. So the attractions of this approach are that you’re getting into a business that you already know. As I said earlier, you might be among the top 10 percent of gym owners around the world. If you’re making $100,000 a year on 150 clients, that’s a great indication. But you’re like in the bottom 1 percent of real-estate investing, right? You’re starting from scratch with another company. Even if you make a point to buy boring businesses—like I do with self-storage businesses—there’s still a learning curve there that you’re gonna have to invest in.
Chris Cooper (05:09):
And that learning curve is expensive. The longer it takes you to run a good business, the longer it takes until you make money back and it actually becomes an asset. And you know, there really are no such things as fully passive businesses. Even the self-storage business or like a laundromat is gonna require some of your time and attention. For me it’s about an hour a month, but for you it could be more, too. The other thing, too, is like if you’ve gotten this far by learning the business yourself and you’re gonna go somewhere else and think “oh, I’m just gonna learn that myself, too,” that learning curve is gonna be long and painful because you haven’t gone through it before. You’re a brand newbie in that business, so it’s attractive to build another gym or buy multiple locations because you already know this business.
Chris Cooper (05:55):
Another reason is economies of scale. So while you will need separate staff for that second location, you don’t have to replace everybody. For example, if you’ve got somebody who’s doing marketing for your first location, you can probably duplicate that marketing for the second location. If you have somebody who’s doing sales at one location, you can use them for sales at both locations. You know, if you have a head coach at your location, you can use them at both locations. You can move coaches back and forth. If you’ve got some coaches who would love to make this a full-time career, but you’ve only got about 20 hours available for them per week at one location, this might actually open up a way for them to become full time. It might also create opportunities for people on your staff who’ve been around for a while—they’ve got experience in marketing, sales, retention, coaching. Now they’re like a managerial role. There might be an opportunity for you to partner with them and open up the next gym instead of them eventually opening up as your competitor. OK. Robert’s next question is “in what circumstances or for what type of person is it a good idea to follow this approach?” If you’re passionate about fitness, especially the business of fitness, I think it’s a great idea to follow this approach. If you’ve got systems working already, meaning you could take a month away from the gym, have no contact with the gym and it would continue to grow and keep people, then you might pursue this approach. If you’re still coaching 10 classes or more a week, if you still have personal training clients that you serve yourself, if you’re still the one doing payroll, if you’re still doing all the No Sweat Intros yourself or all the trials or whatever, you’re probably not ready to open up a second location.
Chris Cooper (07:32):
You have to replace the person—that’s you—that owns the gym with systems or else you’ll just be buying yourself a second full-time job. If you’re working 60 hours a week at your gym right now, do not open up a second location because both will struggle. Robert’s next question is “are there people or situations where this is not a good idea?” Yeah, so I listed a few, but another one is if you’re not making a hundred thousand dollars a year from your first gym, don’t worry about opening a second gym yet. Optimize your first gym. Every gym owner goes through this path of systemization, optimization, growth and then scale. Buying a second gym is the scale phase. If your gym is not paying you $100K a year at least, or you’re working more than about 20 hours a week, your gym is not optimized yet.
Chris Cooper (08:19):
You do not wanna copy a process or a business that hasn’t been optimized. Like the last thing that you want is two suboptimal businesses. So while it might be tempting to buy out that person who’s selling right now, take six months, systemize everything, test your systems by taking a week’s vacation. Optimize your systems by letting other people run them for you and proving that they work, and then commit to opening the second location. The other option that I mentioned was just scaling up. And so what you need to do in this case is make sure that you’re making $100K a year, that you’ve got space to expand. You probably should not expand your space or even think about working with more than 150 clients unless you are making $100K a year. I keep coming back to that because it’s such a good indicator.
Chris Cooper (09:08):
If your systems are good and your staffing are good and your retention is good and your sales are good and your ROI and your expenses are good, that’s when you make a $100K a year. If you’re making more than that, yeah, you can definitely look to expand, but still, another limiting factor might be that you’re making $100K a year but you’re working a 60-hour week. You don’t have time to expand, right? You don’t have a replicable business. Do not take what you have and apply that somewhere else. Five years ago, it was actually pretty common for gym owners to make 30 grand a year at their gym and then buy out their competitor because they thought “well, the way that I make 60 grand is to have two businesses that each pay me 30.” What actually happened in both cases was that the golden goose got killed because the gym owner would go spend all their time trying to quote-unquote “fix the second location.”
Chris Cooper (09:56):
I could do an entire episode on buying and selling a gym. I’ve done that a few times. If you want a great guide on how to buy or sell your gym, just show up in gymownersunited.com and ask for it and I’ll give you the step by step. Robert’s next question is “are there people or situations where this is not a good idea?” Yeah, if you’re bored of the gym business, then it’s probably not a good idea. If you’re in a very small town and you serve a small population, you have a nice community gym and there’s only a couple thousand people in your town, you probably don’t need a second location. If your clients drive more than 20 minutes to get to your gym, you probably don’t want a second location because you’ll just take half of the clients from your first gym and move them to your second gym, and you’re not really gaining anything there.
Chris Cooper (10:44):
If you’re in an extremely expensive or highly transient market where you’ve gotten busy really, really quickly over the last six months to a year, you probably don’t wanna open up a second gym because the marketing that’s doing that for you now is not gonna work forever. So you really wanna make sure that you’ve got consistent cash flow, a consistent form of lead gen—like a strategy for marketing—you’ve got a consistently high close rate—you know, well above 60 percent or at least above 40 percent for cold leads—you wanna make sure that you can take time off and the business will operate without you, that your clients are not depending on you to be coaching. And if those things are true, then yeah, it can really work well to duplicate what you have over and over again. What is the best way to get started with this approach?
Chris Cooper (11:30):
The best way, there’s two schools of thought here. So the first school of thought is you’ve got the template—it took you five years or whatever to build that template. You start from scratch with another gym, and this time that gym is gonna get way more profitable way more quickly because you’re not gonna have to go through the bumps and the turns to get to the right process. This is what I saw in Sweden was gym owners had figured it out in one location. They opened a second location and applied the exact same systems there. Within nine months, that location was doing extremely well, and they started looking for their third location. And so now the system is the same, the process is the same, the playbook is identical, but the speed increases every time because they just get better and better and better.
Chris Cooper (12:15):
What they’re not doing is starting a brand new type of gym, OK? They’re not starting from scratch. They’re applying the same system consistently, but they’re doing it faster because they’re getting better at the system instead of changing the system. Another way—and there are advocates for this, another way to do it—is to buy another gym. I’m not a huge fan of this, especially in the CrossFit space. If a CrossFit gym is failing or any microgym is failing or any small business is failing, there’s a reason. And it’s not because the owner wasn’t trying hard enough or the owner was dumb. It’s because the owner made insurmountable mistakes that time alone will not fix. For most gym owners, if they make mistakes—which, you know, I did more than anybody—but they fix the mistakes, then time is on their side. And the longer they wait, the better their gym will do.
Chris Cooper (13:05):
They’ve just gotta survive. But if a gym is closing, that usually means that time is not on their side, that things are getting worse, that things are going downhill. They’re winding up the month with fewer clients than they started with. They’re making less revenue than they were three months ago. And usually if time is not on their side and the gym is actually going downhill, that’s when they look to sell. The problem is that the mistakes that they’ve made that are sending them downhill are very hard to change. So in some cases, a new gym owner can turn it around by fixing the rates. However, usually that’s gonna mean they’re gonna lose some clients. Or maybe the new gym owner can come in by showing a lot of value, making a big investment in this new gym, cleaning it up, making it better, and bringing a lot of energy in, and that turns it around. Now this is rare, but I have seen it happen three times in the last year within Two-Brain. So I know it can happen. A new gym owner came in, they bought a gym that had been around for 10 years, and they were running virtually the same systems. They didn’t really change the equipment very much, they didn’t do anything to the facility—maybe cosmetics; they cleaned it up or maybe threw a coat of paint on it. But the energy of the new owner is what actually turned the gym around. And in these three cases that I’m thinking of right now, we knew the previous owner well. They had made mistakes, they were correcting the mistakes, but they just ran out of energy. You know, hey couldn’t make it through the dip. They decided to exit, and that’s fine.
Chris Cooper (14:42):
That was the right move for their family. The person that they sold it to brought new life into the gym, and with the same staff, systems, procedures, equipment, they actually turned the gym around. So it can be done, but it takes a ton of energy, and it usually requires further investment. So if you’re buying a gym for 30 grand, you should expect to like invest another 20 before you can really raise rates. You have to show a difference in value. I go through this a lot in my book “Start a Gym,” so you can see the pros and cons of each more there. If you’re planning to build your gym a little bit more, who should you seek advice from? If you’re going this route, you should seek advice from a mentor who’s done it, right?
Chris Cooper (15:25):
Not somebody who started their gym and grew it to a level and then sold their gym and became a consultant. You should talk to a mentor who has actually gone down this route. So when somebody comes into Two-Brain and their first location is doing well and they say, “I want to open a second location, a third location, a fourth,” we pair them with a mentor who has done that. OK, that’s not me. If somebody has their first or second location going well and they say, “OK, this is great, but the fitness industry’s boring for me now I want to go open up a ninja gym for kids or a dance studio,” we would pair them with a mentor who has actually done that. We have enough mentors right now that we can cover all those bases.
Chris Cooper (16:08):
If they say, “OK you know, my gym is doing really well. I wanna get it to 500 people in this one location,” we pair them with a mentor who has done that. If they say, “My gym is doing pretty well. I love having 200 clients. I wanna buy my building,” we pair them with a mentor who has done that. And the key here is you need to find somebody who has actually done it, not just somebody who has the book knowledge on doing it. I haven’t done everything in the fitness world, even with gyms, even with all the mistakes that I’ve made. I haven’t done everything, but we have somebody on our team who has, I’m sure. OK, what are the drawbacks of choosing this approach? There are a couple things. Number 1, it’s capital intensive, so it can actually be tough to invest in other things.
Chris Cooper (16:49):
If you decide that you are going to go all in on expanding your gym or expanding locations, then that’s what you’re going to be working on for the next two to three years, and that’s it. You’re not going to start another gym and also be investing in crypto. You’re not gonna be starting another gym and also buying a building more than likely. You, really have to be all in on this approach. Any time you start a second business, even if it’s one that you already know and can execute really well on, it is very time and labor intensive to do that. And so it’s not like the rubber-stamp approach. The opposite of this would be buying bonds. The other drawbacks are that this is a fairly risky investment. Even when you’re an expert, even when you’ve proven that you can do this over and over again, any small business is riskier than buying a bond or something, or gold—like something really stable. We tend to take “the barbell approach” to investments. So instead of spreading out your investments across five or six different areas—you know, one Airbnb and one gym and one set of bonds and a little bit of crypto—we say to “take a barbell approach.” And so that means very little in the middle, heavy on one end, OK? Like a high-risk investment, which is like your business—your business is your high-risk investment—heavy on the other end, which is your conservative, passive asset, right? Like a recurring investment in real estate or gold or whatever. And really just do those two things. Another key to remember here is that any business is always a higher-risk investment, alright?
Chris Cooper (18:24):
What should you do before going down this route? Like what should you do to prepare? You should talk to a mentor who’s done it, and you should identify exactly why is this the best route for you. So you work through the math, like “what would happen if you added a hundred clients at your current location? What would that do for your revenue versus what would happen if you bought out a gym that’s losing money but has a hundred clients? What if you bought a gym that was breaking even and raised your ARM by $5 or $6?” So what you wanna do is you wanna look at all of the metrics from the second location and you wanna say, “Is it feasible that I bring their metrics to match mine?” Not just client headcount, but also ARM and LEG.
Chris Cooper (19:06):
You know, you wanna look at your own metrics and say, “Am I really ready for this?” And then you wanna look at the metrics of the other gym and say, “How hard is it actually gonna be to raise, you know, their metrics to mine?” Where I’ve seen a mistake here before is a gym with 150 clients, very high-value clients, the owner buys a gym with 200 clients, but they have very low-value clients. It’s a different model, and they think that like, “OK, I’m just gonna fix it by raising rates on everybody,” and then they lose all the clients, and it torpedoes them. You want to buy gyms that are already running a similar model to you or one where it’s very easy to apply your model to that gym. If even if it’s a CrossFit gym and you’re a CrossFit gym, they could be running a completely different business model than you, and that makes it a different business, which makes it a much higher risk.
Chris Cooper (19:57):
So what should you learn? You should learn how to read a P&L. The things that make you good at your business will take you a long way at deciding whether you should open another business or buy another business or not. But you would definitely wanna talk to a mentor who’s done it. You wanna talk to people who have tried it and screwed it up—like failed at it. You wanna talk to people who have done it successfully and compare them, right? Like maybe the successful person just got lucky or maybe the unsuccessful person just got unlucky. You wanna talk to multiple people. You don’t just wanna take a public opinion poll on Facebook. All right? How do you measure success in this area? It’s year-over-year growth. So if you took your money out of your company and you put it like in a very secure asset, a bond, you would probably get about 5 percent growth from that bond.
Chris Cooper (20:46):
So you took a hundred grand from your company and you put it in a bond, you would make $5,000 from that next year. When you’re thinking about scaling up, you have to ask yourself, “Can I get better than a 5 percent return doing this? So I could scale to 200 members, I could scale to two locations, I could scale, I could double my size—would I make at least 5 percent more money?” Because you gotta remember the key is not who has the most clients or who has the biggest gym or who has the most equipment or who pays the most staff. The best entrepreneur is the one with the highest net owner benefit. So if expanding your gym will get you more clients, will get you more staff, more space, more prestige, man, that’s not really a win. If it increases your net owner benefit by at least 5 percent quickly, then it probably is a win.
Chris Cooper (21:37):
And you have to apply that same metric to any investment that you make. You have to learn to think like an investor, whether you’re opening a second location, building on your current gym or taking your money out and buying stocks and bonds, OK? So the way that you measure success in your second location or scaling up is “will it get me a better return on my money than I would get somewhere else?” Because there’s always something else I could do with my money. Finally, how do you decide your long-term strategy in this field? Every single business that you own should pay for itself. What you don’t wanna do is say, “OK my first gym’s breaking even. That means it feels solid.” A break-even business is not solid. It’s not sustainable; it’s extremely fragile. One bad month will tank you. You wanna have a business that’s paying you well, and then you want to take the strategy of opening up an identical second business that will pay you as well, but faster.
Chris Cooper (22:32):
So if you’re getting a $100K a year from your first gym, your second gym should pay you $100K a year, but it shouldn’t take you five years to get there. It should take you one. OK? So that’s your long-term strategy. What you don’t wanna do here is go from one gym to five gyms, even if your first gym has got it figured out. Every new gym that you acquire or open will have its own unique problems that will require your time to solve. We saw this: A gym owner had two gyms. Both were doing pretty well, you know. Each was paying him well. He bought out three neighboring gyms with tons of problems, and he couldn’t solve all the problems fast enough. And so it actually took his earnings back to zero. Like his successful gyms were funding the failing gyms, and then he just couldn’t get rid of them fast enough.
Chris Cooper (23:16):
So you really wanna go one gym at a time. You wanna make sure each one is successful, sustainable, profitable before you move on to the next. If you’re building your gym empire by doubling your space or whatever, then you wanna make sure that you are successful in your current space. A lot of people think like, “OK, well, I’m not making enough money. I need to expand so that I can get more clients.” But that doesn’t increase their profitability. It might increase their revenue. It’ll definitely increase their workload, but it might not actually make them more money. So make sure that you’re successful and profitable in the space that you have before you expand your space or double your footprint. The second path is to reinvest your profits. So if your business is paying you a hundred thousand dollars a year and you need $95,000 to live, then that extra $5,000 can be reinvested elsewhere.
Chris Cooper (24:04):
And this is where that barbell strategy comes in. So the barbell strategy is this: Instead of spreading out your investments across five or six different places like a gym business, a sign business, an Airbnb, some stocks and crypto, what you actually wanna do is make investments in the shape of a barbell. So heavy on one end—your high-risk investment is your business. Heavy on the other end—your passive investment is like a very conservative, predictable asset like a bond. OK? Every high-risk investment that you make requires a lot of time and energy and learning before it can really pay you. For example, if you’re gonna get into Airbnbs, you have to learn a lot about Airbnbs before you’ll earn anything. Learn before you earn. If you want to reinvest your profit in something else, we usually suggest that you put it in something conservative that will just pay you over time.
Chris Cooper (25:01):
What are the conservative approaches real estate that you can rent out? Again, there is a learning curve there. And just bonds. So if you’ve got lots of money that you can spend, real estate’s probably for you. If you’ve got just a little bit, I would put it somewhere secure, like a bond that will pay you 4 or 5%, especially right now. The attractions of this approach are that usually it’s more passive, right? The last thing that you need is another passion project. When I was thinking about where to invest some profits last year, I was thinking like, “Hey, you know, I’m gonna buy this building, and I’m gonna open a second gym or a third gym, or I’m gonna do this or that or start another coaching company or whatever.” And my CFO said, “Chris, like, you have a passion project. You have the thing that wakes you up at 3 a.m. You have the thing that makes you excited already. You don’t need two of those—because both will suffer.” And so one attraction of reinvesting your profits is just that you can take your money outta your company, put it somewhere secure, and it will grow without you spending more time or stress on it. So that’s really what’s attractive about it, and it’s more secure. If your first business is a high-risk business, you don’t know what’s gonna happen to it really within 10 years. But if you’ve got this asset that’s growing, it’ll pay you forever. Now, I learned this from “Rich Dad, Poor Dad.” When I bought my first building, my thought was, “OK, my gym will pay the bank a mortgage instead of paying a landlord some rent.” It was kind of a wash.
Chris Cooper (26:32):
But if anything happens to my gym, or if 20 years from now I wanna retire, I can just rent out this building for about $3,500 a month, and that’s retirement income for me. I don’t have to have a bunch of other investments. And so that was the attraction of my first investment outside of my gym, which was real estate. Robert asks, “In what circumstances or for what type of person is it a good idea to follow this approach?” I think it’s somebody who is very passionate about the gym business and they wanna be in the gym. I think it’s a mistake for them to go out and open a different type of business, even like a remote-coaching business because that’s gonna distract them from what they really, really love. OK? So this is a good idea for a type of person who’s passionate about their primary business, the gym, but they have an eye on the future.
Chris Cooper (27:20):
They know that they’re gonna need a way to retire someday or a cash-flow asset. Maybe they’ve got a little bit of extra money a month and they don’t know what to do with it. They’re not super thrilled about Airbnbs or other types of investments, and they just need to put it somewhere, so they go and put it in like a bond. Of course, another investment that you could make is something kind of passive, like a self-storage business or a laundromat or somebody else’s business. But again, the more complicated the investment is, the more time, effort and energy are required to learn what to do before you earn anything from it. OK? So I think for most people in the fitness industry, I actually prefer this option. You know, run your gym, be close with your clients, get them amazing results, be profitable, and then just take that profit and put it somewhere where it’s gonna earn you a little bit of money.
Chris Cooper (28:13):
If you are more fiscally conservative like I am, this is probably the great approach for you. If you like learning brand new things and you know you’ve got a lot of time on your hands and you’re really super-duper interested in crypto, then you know you could do that, too. Are there people or situations where this is not a good idea? Yeah, so for me, like reinvesting your profit is not a good idea if it puts your business at risk. Like if you’re pulling a lot out of your business because you’re gonna reinvest it somewhere else and then your primary business fails, it might be tough to get that investment back. You know, stocks and bonds that you buy through an online app or a broker, those are fairly liquid assets. You can get your money back within two or three days just by selling them, even if you have to sell ’em at a loss.
Chris Cooper (28:56):
But if you’re buying a building, that is not a very liquid asset. Technically, the bank will say that it is, but you know, you could be out of pocket for months. Another good indicator that this is not for you is like if your gym is just barely breaking even. You know, we see this with some gym owners who are actually not making a hundred thousand dollars a year from their gym, and they think “I need to buy this gym.” Buying your building will not help you increase your income. You’re not just gonna save money on rent because you’re gonna spend that in other places on the building. And then what happens is if the business has a bad month, now you can’t pay the mortgage, and your business is in trouble, or you’ve got this massive mortgage bill and nobody to negotiate with, like a landlord, and now it hurts your business.
Chris Cooper (29:40):
So you’ve kind of spread your attention too much. You need to be making a little bit more than you actually need to live before you pull money outta the business to reinvest somewhere else. If you don’t do that, it’s just a big distraction. What’s the best way to get started? Or what determines how closely to get involved in day-to-day aspects? Honestly, it’s how much time and passion you have. I am attracted to the idea of owning an Airbnb. I’m not passionate enough about it to learn how to do it well, and so I don’t do that. I am attracted to the idea of owning boring businesses like self-storage. I have a good person who can manage those things. And so I buy self-storage units because it’s really just a matter of cash. I’m attracted to the idea of owning a café and so is my wife.
Chris Cooper (30:29):
You know, we’d love to own a coffee bar, but I’m not attracted to the idea of getting up at 4 a.m. to bake the muffins and grind the coffee and serve customers. And so we’re not gonna do that. There’s so many different investments that are attractive to you, but what you wanna realize is you can only have one passion project. What’s the best way to get started? Honestly, it’s just getting in the habit of pulling some money out of your business and then placing it somewhere else. A lot of financial advisors will tell you that you just want to have a recurring payment into something every month instead of saving up and making a lump-sum buy. So let’s say that I was buying index funds, for example. It would be tempting to save up until you’ve got a hundred grand and then just invest a hundred grand in index funds.
Chris Cooper (31:14):
But what most financial investors would recommend that you do instead is put $5,000 into an index fund every single month. You’ll get the benefits of dollar cost averaging, but you’ll also establish the habit of just always putting that money in without thinking about it. So that’s probably the best way to get started. Even if you’re thinking long term–“I don’t wanna just have index funds. I don’t just wanna own bonds. I wanna own a building someday”—the best thing that you can do is start taking money out of your business now and putting it in someplace conservative and safe. That’ll give you a bit of interest. I screwed this up. So what I did was just try to save money in my business savings account until I had $70,000, which is what I needed for a down payment on my building. But that account is leaky.
Chris Cooper (32:00):
You’ll always spend that money. You’re actually better off just taking the money, putting it into a bond for a year while you’re looking for a building, making a little bit of money, but having it set aside for you. So that’s the first thing that I would do is get into the habit of saving money and reinvesting it. Even if it’s small investments and you plan to make a bigger investment later. Who should you seek advice from? If you’re going this route, the person you wanna seek advice from is an expert in that space. So if you’re thinking about buying real estate, you should seek advice from somebody who invests in real estate. If you are looking to reinvest in index funds, then you wanna seek advice from somebody who’s an expert in that. In our Tinker Program at Two-Brain, we bring in these external experts all the time, and they come in and they do a seminar on crypto or investments or real estate or whatever, and then they usually run their own program.
Chris Cooper (32:54):
So they teach enough to get somebody to start, and usually the person can make a decision on whether this is something that they wanna pursue, and then the Two-Brain client can join their program if they really want step-by-step mentorship in doing it, right? So I think that’s like the best way to actually do it: You meet people, you talk to experts just enough to figure out if this is something that you’re really interested in. You might have to say “actually, I’m not interested” seven or eight times before you find your thing, and then you go all in with an expert. What are the drawbacks of choosing this approach? It does tend to tie up your money. So most investments mean that you’re taking cash that’s pretty liquid—you have access to it—and putting it somewhere that’s not liquid—like they’re putting it away for you.
Chris Cooper (33:42):
And that’s what a conservative investment means. The other drawback is it’s not very sexy. So if you’re talking with a bunch of other entrepreneurs and they’re talking about like their Airbnb in Switzerland and their crypto stock going up 60 percent, you might be tempted to do that. Instead, you know, you’re gonna be bored. You’re gonna be tempted. And there’s also this kind of “gap thinking” that goes on where you see people making these investments and getting these crazy returns in the short term, and you start to second-guess your conservative investments, too. Or, even worse, you start to second-guess the investment that you just made. You pull your money out and you reinvest it somewhere else. Another big drawback of choosing this approach is people tend to spread things around. So rather than making a meaningful investment in one place, they put $5,000 here and $5,000 there and $5,000 over there.
Chris Cooper (34:32):
And the nature of investing is that sometimes you win and sometimes you lose. And when you spread things around too much, you lose what you gain and you don’t get that long-term compounding effect. Another drawback is you’re very good at gym ownership. You’re probably in the top 10 percent of gym owners but the bottom 1 percent of real-estate investors. So the drawbacks of taking money out of the business that you know and has treated you well and putting it somewhere else is that there is a learning curve and you might not do as well at it. What should you do before going down this route for preparation or learning? I think it’s join a mastermind program like Tinker—which is set up for people who are ready to take this step, ready to go from making a good income to actually being a millionaire—and taking a year, exploring all the different options, deciding which ones you don’t like, and then going all in on the one that’s most promising to you instead of dabbling or fooling around or trying to figure it out on your own or spreading yourself too thin or burying yourself someplace with a massive learning curve.
Chris Cooper (35:36):
How do you measure success in this area? If you’re making money while you sleep; if your investments are creating a dividend without you putting your hands on them, thinking about them, doing research, reading financial charts, watching the market, hitting refresh on your stocks app 10 times a day; then you’re being successful. Ultimately, it’s “are you making money while you sleep?” Your passion project? Your gym will always take work. When you take money out of your gym and put it somewhere else, it should be in a place that makes you money but doesn’t require work. How do you decide your long-term strategy in this field? Your strategy will differ depending on where you are in your career. If you are close to retirement, then your strategy might be a little bit less conservative. You need to make some money now. Or it might be more conservative.
Chris Cooper (36:25):
You know, depending on your age, you don’t wanna fool around. You just want to get across the finish line. You might take a more conservative approach. So the strategy is really determined by where you are in your entrepreneurial journey. You know, in my mid-, my early 40s, I was taking more risky gambles. I was starting other companies. I was reinvesting in real estate for which I didn’t have a really good plan. You know, I was buying retirement plans that weren’t really paying off. In my late 40s, my investment strategy is different. I wanna keep my one passion project—my gym—and I wanna reinvest everything else somewhere boring that’s not gonna distract me. OK? That’s how you decide. Your long-term strategy is really like where you are in your entrepreneurial journey. Now the third path is really to start another business. So a lot of entrepreneurs, they make their gym really successful, and they wanna take that knowledge and experience and success, and they want to transplant it onto something else.
Chris Cooper (37:23):
Maybe they’re passionate about coffee. They wanna start a coffee shop or whiskey distillery or a construction business, or they think like, “I wanna buy my wife’s dental practice,” right? Or it could also be they want to just ascend from serving their clients in their gym to serving other gyms. So maybe they have created a supplement line that’s doing really well at their gym and they wanna sell it to other gyms. Maybe, like me, their gym has been successful and they want to mentor other gyms or sell business coaching to other gyms. Maybe they’ve developed a piece of software that’s really helped them, and they wanna sell that to other gyms. Or maybe they have created a line of apparel themselves—I know a gym owner who had bought a heat press—and they wanna start selling that to other gyms.
Chris Cooper (38:05):
So there’s a few ways to start other businesses. There’s the other business that you know nothing about that’s gonna become a new passion project. There’s the other business that builds on top of the business that you currently have, or there’s another business that you’re buying for some other reason. You know, you and your partner have always wanted to open up a café, all right? The attractions of this approach, start another business, is really attractive to people who are early in their entrepreneurship journey. As they start to get some wins, make their gym more successful, they’re still attracted to novelty, but now on a bigger scale. And so they’ve got some extra money and they’ve got some knowledge and some experience, right? Some tattoos, some scars, and they think, “Wow, I would love to apply this to a surfboard shop.” The problem with that, and I’ll get to this more in a moment, is that while you’re a top gym owner, you’re a horrible startup skateboard shop owner. You know, café owner, whatever.
Chris Cooper (39:01):
Just because you’re good at one business doesn’t mean you’re good at another. However, the skills that you developed in this first business will translate to other businesses, too. So the attractions are mostly novelty. There are other times, too, when you might want to start a complimentary business. So, for example, the supplement company is one example of this, too. Or if you see like, “Hey, everybody that’s going to my gym also needs to have their cars’ oil changed and detailing done, and there’s an oil-change shop right next door, maybe I should buy that, too.” OK? Something like that. This happens a lot with physicians who think, “I should also buy a gym and attach it to my physician’s office.” But then they realize they have no idea how to run a gym, and so they call us. It happens really often with chiropractors, but it also happens with gym owners who want to go in the other direction and like open up a therapy clinic next door or open up like a recovery clinic or open up a massage-therapy clinic.
Chris Cooper (40:02):
Where it works really well is when you have like a gym business and you’re gonna open up another type of gym business. So you’ve got a CrossFit gym and you can open up a ninja warrior gym. And in some cases, people actually ascend two different businesses. So, for example, you own a CrossFit gym, you’re making lots of money, and so you buy into a bigger franchise that requires more money, that sort of thing. People do kind of climb that scale, and it’s happening more and more, too. So the attractions are mostly just novelty and excitement and feeling like you’re still doing the entrepreneurial journey, right? It’s fun, but in what circumstances is it a good idea to follow this approach? If the other option is—boy, oh boy, this is a tough one—because, to be honest, it’s rare that you should follow this approach.
Chris Cooper (40:50):
If you’re making good money at your gym, you should usually either expand your gym, open another location, or take that money and put it into a passive investment. Opening up another completely different business—I mean, if your gym is doing well and you’re spending zero hours a week there and you’re really passionate about ice cream, OK, maybe you can open up an ice-cream shop just to kind of keep that entrepreneurial fire going. Or now you’ve got money and your spouse has always wanted to open up her own accounting firm. She doesn’t like working as an accountant for somebody else. OK, that’s great. You know, maybe that’s where you do it. Where you don’t do it is when you have like multiple interests. You love CrossFit, you love surfboards and you love coffee. So you decide you wanna open a CrossFit box, a surf shop and a café.
Chris Cooper (41:41):
All you’re doing there probably is killing your three favorite things. You know, you should really focus on doing one well and then having a good coffee and going surfing. Are there people or situations where this is not a good idea? Yeah, absolutely. Like if your gym has grown really fast, you’re brand new to being successful. Like you’ve earned $100K, but this is the first time you’ve ever done it in a year. That is not a good time to go start another business. If you recently gained 30 clients and now you’re at 150 clients or whatever, that is not a good time to start another business. If you own a business and it’s doing OK, but you’re not making enough money, that is not a time to go start another business. If you really like Asian food, and that’s why you’re starting another business, that is not a time to start another business.
Chris Cooper (42:27):
If your next-door neighbor is going bankrupt and they ran an art studio and you kind of like art, that is not a good time to start another business, right? Whenever there’s a timeframe attached, like, “Oh, this is a great idea. I need to act fast,” that is not a time to start another business. The time to start another business is when you can either leverage an asset that you have or your audience. So, for example, if you own a building and your gym takes up half and the other half is vacant, you know, it’s a good idea to start another business to fill that other half, OK? So you’re leveraging that asset. If you have like five coaches and three of them want more work, you have a great asset there. You should maybe start another gym so that those three coaches can get more work at the second gym.
Chris Cooper (43:16):
You know, the other is audience. You’ve built up a great audience in your gym, and now you’re gonna start a nutrition or a supplement company. You can leverage the same audience for both. That is a good time to start another business. But if you’ve got a gym and you’re thinking about starting a cannabis dispensary, there’s not much audience overlap. There’s no asset overlap. You know, maybe now is not the time to do it even though you love cannabis—whatever. OK? What should influence your choice of business to invest in? Again, like you either want overlapping assets or audience. I’ll give you another example of an overlapping asset. You’ve got somebody on your staff at your gym who’s extremely good at sales. that is a great asset, and you can use that same person for sales at two or three locations. Or you’re really, really good at marketing your gym.
Chris Cooper (44:05):
You can use that same marketing to work on another gym, for example. OK? However, just because you’re good at marketing gyms does not mean you’ll be good at marketing self-storage businesses. OK? I’m good at marketing for mentorship. I’m not great at marketing for self-storage. Don’t expect that your skill set will apply directly. One quick story here. When I bought my self-storage business, I was coming from the fitness industry. Nobody wants to do fitness, right? And when they start doing fitness, they want to quit. So you have to be really good at marketing. Every new marketing strategy is something that you need to learn and kind of jump on. And so when I bought this self-storage business, I found a group of self-storage owners and I started asking them questions like, “OK, what marketing is working right now? Is it Facebook ads? Is it more Instagram? Is it more like TikToks and reels? Should I be producing videos about what people store? Should I be telling the stories of my clients? Like, what’s working?” And nobody answered my question for about two days. And finally somebody comments, “Did you put up a sign?” And I said, “Oh, actually no. I didn’t put up a sign. I’ll go put up a sign.” And then two days later, somebody comments, “Did you put your phone number on the sign?” Oh, OK. You know, like in the ‘60s, that was the marketing that you did, but that doesn’t work in the fitness industry, right? It’s necessary, but it’s not sufficient in the fitness industry. But that’s all you need in the storage business. Do you have a sign? Does it have your phone number on it? Marketing’s done. So what you have to understand is what you know, might not apply to these other businesses.
Chris Cooper (45:43):
OK? So what kind of business should you invest in? I say boring businesses. You’ve already got your passion project. That’s your gym. That’s the thing that’s gonna get you up at 4 a.m. with excitement. That’s the thing that you know, you can respond to at 9 p.m. when the thing is flooding. You don’t want two of those. You know, if you have two passion projects, both will suffer and you’ll hate them both. Instead, you want a boring business. You want a laundromat. You know, you want like a passive investment like self-storage that basically runs itself. What determines how closely to get involved in the day-to-day aspects of the other business is really how much you’re involved in the day-to-day aspects of your current business. So a lot of people think “all right, if I’m working 20 hours a week in my gym and I buy another gym, I’ll have to work 20 hours a week there” because they think like, “You know, a second business will double my time spent,” but it actually quadruples it.
Chris Cooper (46:37):
So the new business will take way more. You’ll have to either fix the business, the gym that you bought, or you’ll have to start from scratch. So the first thing that determines how involved do you need to get in the day to day is how involved you already are in the day to day of your current gym. And I would suggest that if you’re working more than 20 hours a week in your current business, you should not be starting another business, especially not a different business. Also, how much can you afford to lose and for how long? So if you buy another business or start another business but you need to make money on Day 1, don’t do it because you’re just gonna kill your gym—like sucking money from that and putting it into the other business. You need to know that you can lose money for six months or whatever it takes while you’re getting this other thing up and running.
Chris Cooper (47:26):
We tend to forget the labor pains that we went through birthing our original business, and we think like, “Oh, well, you know, I learned everything once. It took me three years to get my gym profitable, but now that I know, the next business will start profitable.” That’s not true. The farther the next business is from your current business, the longer it will take to get that profitable. You could be looking at another three years of delivery. Who would you seek advice from? I would find a mentor in that niche. This is one thing that I’ve learned over and over and over again: As soon as you’re looking at another business, you find the mentor in that niche. As soon as I bought a self-storage business, I went looking for like the best mentor in the self-storage business because what I’ve learned here is you can buy speed.
Chris Cooper (48:10):
When you buy mentorship, that’s what you’re buying is speed speed through the problems, speed through the sleepless nights, speed through the mistakes, speed to profitability. And so when I buy or start a new business, I wanna get profitable as quickly as I can so that it doesn’t drain me or drain my resources. And so I always find a mentor in that niche. If I was starting a martial-arts studio today, I would hire a mentor in the martial-arts studio space three months before I even found a location. I don’t wanna make mistakes anymore. So you find somebody in that niche. You know, if you’re if you own a dance studio and you wanna open a gym, you talk to a mentor in the gym space,. You do not think that your dance-studio mentor is gonna help you.
Chris Cooper (48:54):
You need a different mentor for every different business that you’re in. Be niche specific. The more niche specific your mentor is, the faster they can get you to profitability. What are the drawbacks of choosing this approach? Distraction and time. It’s exhausting. You think like, “OK, I love my gym. My gym’s doing well. I’m gonna open up a café because I also love coffee.” The reality is that you’re gonna get pulled in so many directions that you’ll hate coffee, and you’ll probably hate your gym, and you’ll resent all of it, too. Don’t torpedo what you’ve got because the grass seems to be greener on the other side. The drawbacks are that you could wind up hating the business that you have. I’ve also seen this go kind of in a different way. So, for example, some gym owners who become mentors for Two-Brain love mentorship so much that they wanna sell their gym.
Chris Cooper (49:41):
They’re like, “I just wanna do this now. I’ve done my gym. I’ve had it for a decade. I’ve learned my lessons. I’m earning more money from Two-Brain, and I love it. It fills me with energy. I’m gonna sell my gym.” But that’s actually a mistake. So you need to understand that when you change your business, when you ascend to another business, when you open a new business, you might wind up hating your current business. And that’s a big risk, too. You don’t wanna do that. What should you do before going down this route? Honestly, you should get a job working at the place that you wanna open. If you wanna open a surfboard shop, you should get a job. You should volunteer to work at that surfboard shop for three months. Tell the owner what you’re doing. You know, volunteer an hour away or whatever.
Chris Cooper (50:25):
Promise them that you won’t open within three city blocks—whatever it takes. But you should volunteer. That three-month investment of your time will save you 20 or 30 years of potential pain trying to get the business going. More than learning how to run the business, you just wanna learn if you like it. You know, volunteer for one day. You know, “Hey, I know that Christmas is coming up. You need to fill some shifts. Can I volunteer to work at your café?” “Hey, I’ve always thought about being a chef. Do you mind if I just volunteer in your kitchen for a day and see if it’s what it’s like?” “Can I volunteer for a week? Can I try it for a month?” Bullets before cannonballs. And the way that you fire bullets in business is you work in them before you own one.
Chris Cooper (51:06):
So I think that might be a really great process. The next thing that you wanna do is join a mastermind for that business before you even open it because that will immerse you. You’ll be able to talk to the other owners and see if they actually like it or not, right? And if they don’t like it, maybe you could even buy their business. How do you measure success if the new business grows faster than opening a second location would? So if you could open up a second gym, you know, following the playbook that you already have, using the systems that you’ve already built, the staff that you already love, and you could increase your income by 50 percent, or you could open up a café and potentially increase your income by 5 percent, then you need to pick the bigger bet.
Chris Cooper (51:50):
You know, the success is not just owning a mediocre gym and owning a mediocre coffee shop. Success is “I have made this investment of my time, energy and attention, and I’m getting a better return than I would’ve if I hadn’t made this investment.” Again, you have to think like an investor with your time and your money. And how do you decide your long-term strategy in this field? Basically, it’s “what is next for me?” Not “what can I add?” but “what can I replace in my life?” If you’re gonna open up a another business, it better be more profitable, more interesting, more fun, more restful than the one that you currently have because one is probably gonna replace the other. Either the two will compete for your attention and your resources and your time and your energy or you will love one and then start to resent the other because it will feel like wasted time.
Chris Cooper (52:39):
If your gym is paying you $100K a year and your coffee shop is paying you $20K, you will resent the time that you spend on the coffee shop because you know that you could be building your gym more. So there’s really three paths to becoming a millionaire in the gym business. The first is to build your gym to the point where it’s paying you a million dollars or building your fitness empire to the point where you have multiple locations and together they’re paying you a million dollars. The second way is to reinvest your profit, usually in boring, conservative assets that pay you while you sleep. And the third is to start another business by either ascending from your gym audience to a bigger audience or offering different things to your audience or taking what you’ve built and offering that to different audiences.
Chris Cooper (53:28):
All three have pros and cons. We usually teach a barbell approach in Two-Brain of a high-risk investment on one end and very heavy conservative, low-risk investments on the other. Your best bet is to join a group like Tinker, explore, see what attracts you, see which ones you don’t like, and then go all in on one when you’re ready. What you’ll find, though, among most millionaires, is that they’ve dabbled in a few but they specialize in one. I’m Chris Cooper. This is “Run a Profitable Gym.” If you wanna talk more about this or why you should even care about becoming a millionaire, go to gymownersunited.com, and when this book, “Millionaire Gym Owner” comes out, give it a read. I think it’ll change your perspective and your horizon.
