By the Numbers: High Speed, Low Drag

By the Numbers: High Speed, Low Drag

Big revenue, small expenses. That’s how you build a successful business.

But in the service industry, we’re dependent on people. And we want the best for our team. How do we balance the need for profitability with the need to take care of our people?

In the first post in this series, I shared data from the gyms with the top revenue in Two-Brain—at a single location (many had more revenue because they had multiple locations, but we only reported revenue for one). I also shared data from the gyms with the lowest expenses.

As a math nerd, I wanted to know who had the best ratio of revenue to expenses. In other words, who’s doing the most with the least? Who has the highest speed and the lowest drag?

Who can stretch a small space or low headcount the furthest? Who’s crushing it in a tiny space or shooting the moon and obliterating expenses with a larger gym?

Here’s what the high-revenue, lower-expense gyms have in common:

  • They all started small and upgraded space later—or the owner started in a larger space but subleased a portion to cut expenses until the gym could afford to use all the space.
  • They have good locations but none are paying retail-area rent.
  • They have some revenue diversity, with 10-20 percent of revenue coming from personal training, nutrition coaching or some kind of specialty program.
  • All spend time coaching or mentoring staff.
  • All give their staff members opportunities to grow the pie for everyone (intrapreneurship).
  • All are either in the Tinker Phase of entrepreneurship or just about to make that leap.
  • All are either in our Top 10 for net owner benefit (how much they pay themselves) or very close.
  • Here’s our video on how to improve NOB:

What can you learn from the people with high revenue and low overhead?

That this combination is possible. That you don’t absolutely need a 30-station rig or 20,000 square feet of space or many of the “toys” you want to buy.

Those things don’t attract clients, and they won’t make you more successful. Grow after you’re successful instead of building and hoping.

Finally, don’t starve yourself by giving your staff a bigger slice of a small pie. Teach your staff how to grow the pie for everyone.

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