Chris Cooper (00:02):
As we put the “State of the Industry” guide together this year, a few things stood out that are very important to gym owners. I’m going to share a few highlights today, and you can get the full guide by clicking below. I’m Chris Cooper. This is “Run a Profitable Gym,” and I’m the founder of Two-Brain Business, the largest mentorship practice in the fitness industry. Every year, we collect data from 12 to 15,000 gyms around the world. We compile it all into a very simple-to-understand guide, and we send that to you for free. Today, I’m going to be talking about a few of the things revealed in that guide, and I’m going to be highlighting some of the key takeaways that I found this year while I was going through the dataset. Now, we publish this guide every year to arm you with real information. I want you to have information to help you make decisions about your gym instead of just trusting what people online are claiming or telling you or trying to sell you.
Chris Cooper (00:56):
Data tells us what’s really happening out there. Without data, everybody is guessing. So, here are some cold, hard truths about the gym business in 2023. First, expenses are going up a lot, and revenues aren’t going up and keeping pace. So, check out page 39 of the guide for a comparison of gym expenses in 2023 versus 2022, and then jump to page 21 for a comparison of revenues year over year compared to last year. Now, don’t skip page 22 because that’s where we show you the average Two-Brain gym revenues for comparison. Gyms who work with a Two-Brain mentor do a lot more in revenue, but they don’t have a lot more expenses. In fact, many have less. The second big takeaway this year is that staff are being paid more, but owners really aren’t.
Chris Cooper (01:45):
So, check out page 45 for a breakdown of the average pay per class, how many staff the average gym has, and what the highest paid member of staff makes. Then flip to page 47 to see what owners are making compared to last year, which is about the same—except for in Two-Brain gyms in which owners are taking home about $800 more per month than they were last year. Gyms are less dependent on group coaching revenue than ever. This is the third big takeaway. So, check out page 35 to see where they are making more money. Gyms are also smarter about their group coaching offerings, so they have a few great group coaching options, but they don’t have a dozen different options anymore. They offer fewer classes, but they have more people in those classes, which is great. So, check out page 23 to see how many classes the average gym offers now compared to last year and the most popular times worldwide. Then you can turn to page 36 for a very deep analysis on group coaching and where we think that’s going. Next, gym owners are doing more personal training, but less nutrition coaching and kids coaching than they were last year. So, turn to page 35 of the “State of the Industry” guide to see the trends in selling supplements, kids’ classes, nutrition, online coaching, uncoached access, and everything else.
Chris Cooper (03:02):
You can see what everybody else out there is doing because I know it seems like everybody else is doing everything and killing it, and maybe you’re not. Here’s the truth. Next, the average gym still has around 159 members. So, build your business model around 150 members first because at 150 members, the owner should be able to pay themself a hundred thousand dollars per year and pay a full-time staff person. If you hit those targets, then you can think about scaling to 200, 250 members, and you can see that whole breakdown on page eight. Now, one little tidbit hidden in the back of the “State of the Industry,”—and this is one of my favorites, so you should read all the way to the end; this is on page 59—are some of the trends that we see in the data as we go through it.
Chris Cooper (03:46):
So for example, gyms in Eastern Europe and Spain are enjoying that early adopter wave for CrossFit and HIIT-style training that we had in the States and Canada back around 2015. In Western Europe, they saw it in 2019. So, you can see this trend of early adoption marching from west to east. On the other side of the world, though, commoditization is ringing some alarm bells in Australia, New Zealand, and you know, moving westward into the Western U.S. now with low price group training entering the market from trusted brands like Nike. So, you’ve got some tidbits here; I hope you download the guide. It’s yours for free. It costs us probably about a quarter million dollars every year to build this because I just want to arm you with this knowledge. What do you do with the knowledge? Well, it’s up to you; it’s your gym, but you should do something with it.
Chris Cooper (04:36):
As Jim Rohn used to say, “Don’t let your learning lead to knowledge. Let your learning lead to action.” Now, the mentors at Two-Brain Business will never force a specific business model on you or tell you there’s only one way to do things, and you have to follow this exact recipe to be successful. It’s your gym. We’re going to teach you how to read a P&L and help you make decisions that will grow your gym to be the way that you want it to be. Now later on, in a moment or two here, I’m going to tell you how mentors use data to make decisions so that that can help you use this data too to make better decisions for your gym. Okay? But first, go ahead and download the full guide. It’s free to you. We use this data to help you make real decisions and actually grow your gym instead of just guessing or believing what everybody says in Facebook groups.
Chris Cooper (05:23):
Alright, so let’s talk about additional revenue streams because that was one of the big standouts from the guide this year. Not everybody that comes into your gym wants personal training, but not everybody who comes into your gym wants group training or nutrition coaching, but some want each one of these and some want all three, right? Some clients want everything. If you don’t offer these options though, clients might not join, or they might go buy the option somewhere else. Your ARM, which is your average revenue per member per month, is the total of all revenue that you collect divided by the number of clients that you have. Some of your clients want more than the average, and the best gyms in the world have these options available to them. So, for example, some people might want to do CrossFit but not do it in a group setting.
Chris Cooper (06:14):
Some parents might want their kids to work out with their basketball team, and some people might prefer to buy their supplements from their coach who they trust instead of the teenage bro down the street at the gear garage. ARM is a measure of value; the amount of value that you provide to your clients reflects and is reflected by the value they provide to you in money. So, here’s what the top gyms in the world do to help clients more and boost their own ARM: personal training. Top gyms give their clients a one-on-one option. When they’re paying for one-on-one, a client is buying scheduling flexibility, they’re buying customized programming, and they’re buying a high level of accountability. They’re also buying a relationship with the trainer. Many of these clients don’t want to sign up for CrossFit groups or bootcamps, but they do want high intensity workouts. Many clients also want to start one-on-one in any new program from CrossFit to BJJ to Pilates.
Chris Cooper (07:13):
And on page 35 of the “State of the Industry” report, you can see that personal training accounts for a large percentage of top gym’s revenue regardless of sector—even CrossFit, even group training. People want one-on-one. So, if you’re a CrossFit gym or a HIIT gym or a martial arts gym, this is your biggest opportunity—at least four times more important than any of the other options that I’m going to talk about. Group coaching: Almost all gyms offer some kind of group coaching option. When priced appropriately, group training can be a good way to scale personal training. As an add-on option to an access gym, group training can guide clients with some coaching or even some novelty. Gyms offering group coaching alone, though, usually have a very low ARM because of competitive pricing pressure. Best case seems to be semi-private training, which is three to six clients paying personal training rates at once and doing their own programs or small group training, which is up to six people paying a premium, but they’re all doing the same program.
Chris Cooper (08:15):
Group coaching as a percentage of total revenue has declined 26.7% in the last two years. That means the same number of gyms are offering group training, but they’re making more of their revenue from other places than they were before because of decreasing price pressure as well as offering personal training options. Hybrid programs are a combination of group training, online training, one-on-one training, and/or nutrition coaching. These programs are sometimes called high ticket, but for most clients they’re just a tailored solution to what the client actually needs to be successful. Using a prescriptive model to solve client’s problems, make this an easy way to boost ARM.
Chris Cooper (08:54):
You just tell the client what they need; you add the services together to come up with the price. That’s it. And like everything else on this list, hybrid programs are for anyone, but they’re not necessarily for everyone. Nutrition coaching is another option—a guided nutrition plan, accountability plan, or a diet. Depending on their location and credentials, gyms can add short-term nutrition challenges or long-term recurring memberships to their offer. However, the revenue that they get from nutrition coaching is small compared to these other options, and declining. Access is another option. So, this is open gym time accessible to clients through key card entry basically. While access-only gyms—people who only sell access like Golds and the Globo Gyms—they have the lowest ARM. Selling guided access as an add-on in a coaching gym is a growing ARM booster for personal training studios, for group coaching gyms, and some other types of gyms too.
Chris Cooper (09:54):
But the key is to sell it as an add-on instead of as an alternative to coaching. That’s a big screw up that I made early on. Give your clients homework to do on their own instead of just allowing these open-gym free-for-alls. Kids’ programs are another way to boost ARM. This category was down significantly as a percentage of revenue from last year. The exception would be in sports-specific gyms or strength and conditioning gyms—and in martial arts gyms, which are shifting their focus towards kids more and more. What’s interesting is that coaching gyms that focus solely on kids—like cheer gyms, gymnastics gyms—they often have a higher ARM than coaching gyms that focus on adults and have a kids’ program on the side. Another way to boost ARM is supplements. So, while the same number of gyms seem to be selling supplements as last year, less of their revenue comes from supplements as a percentage.
Chris Cooper (10:46):
For me, the value of supplements in my gym is not a huge ARM booster; it’s just providing my clients with quality options instead of sending them to see the teenage bro at the supplement shop down the street. Another ARM honorable mention that wasn’t in the “State of the Industry” guide is over-55 groups. While we didn’t break this out specifically in the guide this year, many Two-Brain gyms have been noticing that their over-55 groups are growing really quickly. At my own gym, this is a great demographic that reminds me of the early days of CrossFit, really. They all want to recruit their friends, they all want all the T-shirts and all the hoodies, and they pay more than the average group rate. They’re also very, very fun to coach. So, here are the numbers as a percentage of total revenue, and you can see that on the screen.
Chris Cooper (11:35):
What this should guide you to do is say, like, “Here is my top priority to boost my ARM in my gym, and then here’s my second priority,” et cetera. Now, these numbers come from our “State of the Industry Report.” There are over 12,000 gyms in that guide, and the trends are clear. Number one: Keep your group training rate high. Number two: Add personal training. Number three: Possibly add one other revenue stream after those first two are working well. To get the full guide, you can just click below this video, again, or this podcast, and we will give it to you. I mean, we spend months and tens of thousands of dollars putting this all together, and we just give it to you for free because I want you to grow your gym. Now, I want to tell you how mentors use this data to make decisions in hopes of helping you make better decisions too.
Chris Cooper (12:23):
Now, obviously the guide gives you real knowledge that you can use to make decisions. In fact, all the numbers that you need to make decisions are in there. This guide is a source of truth. It’s regarded by many experts and organizations as the best in the entire industry. And you can have it for free by just clicking below. But what do you do with the numbers once you have them? Well, that’s part of the training our certified Two-Brain mentors go through. And today I’m going to give you some of those skills. So first, you can use the numbers as your private report card. This report is broken into the six key metrics that you need to track. There’s client headcount, ARM, LEG (length of engagement), EHR, ROI, and NOB (net owner benefit). You can find the definitions of those on page four of the guide. So first, compare your numbers against the average.
Chris Cooper (13:13):
Are you doing better than average at a specific metric, or are you a little bit behind? Now, you know, given that the average gym owner has a net owner benefit of $3,967 per month, you need to be better than average to make a good career at this. But knowing that average gives you a good starting point. So, aim at the average first. Then ask, “What can I do to increase my net owner benefit?” Well, you look at the other metrics, and you increase those first, or you hire a mentor. Two-Brain clients, for example, make $800 per month more than the average, and that’s take-home pay. Then, you can use the numbers as an inspiration. So, if you’re way behind in any category, that’s okay. We’ve shown you what the gyms are doing who are ahead of you. Just do what they did to get there, and worry about passing them later on. And later, pass them.
Chris Cooper (14:05):
You know, we publish leaderboards every month, so you can see what the best gyms are doing in each category. We even interview the leaders on our podcast, “Run a Profitable Gym” and let them tell you exactly how to do it. So, use the numbers to determine what’s average. Beat that. Then, use the numbers to determine what your next goal should be, and then use the numbers to see what the best in the world are doing, and copy them. The next step is to use the numbers to determine your next best move. Compare your numbers in all six categories. Okay? If you’re about average, then that’s a C grade. If you’re below average in any category, then you’re getting AD. And if you’re above average in any category, then that’s a B. So first, work on your D’s. For example, if the ARM at your gym is under
Chris Cooper (14:50):
$150 per member per month, fix that first. You can increase your rates. You can add specialty programs, you can add an on-ramp—whatever. You have lots of options; just pick one and start. If your LEG (length of engagement) is over 13 months, then you’re above average, and you don’t have to chase the next retention-boosting idea. Focus on the places where you’re below average first. If you have 150 clients, but you’re not making enough money, then don’t focus on getting more clients. Focus on increasing ARM and profitability—and so on. Finally, you can use your numbers to help others. Every day in the Gym Owners United group at gymownersunited.com, people around the world are chipping in with tips and tactics. So often, I like to ask them, is this your experience, or is it an opinion? And while both are valid, real experience is priceless. If you’re outscoring the average in any category in this guide, help others by sharing what you’re doing.
Chris Cooper (15:45):
The best gyms in the world do this freely, and they do it all the time. So, if you’re feeling overwhelmed or just bursting with ideas, or you’re burned out and you can’t seem to find time in the day, or if you feel like you have no control over your business, use the numbers to show you the way out. Start tracking your metrics in each of the six categories. Find ways to improve one metric, just a tiny little amount to start. For example, give yourself a $20 a week raise. Even a tiny win will give you a little bit of momentum. And over time, that momentum builds and builds as the wins compound. And that’s really how mentorship works. So, to book a call with our team, just click the link below. Our mentors are trained to look at your numbers, find your best next step, build you a long-term plan, and hold you accountable for doing the work. Each coach—every coach—needs a coach. And our mentors are those coaches for your business. I’m Chris Cooper. This is “Run a Profitable Gym.” This is our “State of the Industry” guide. I hope you have it. I hope you use it. I hope you love it.