April
04
2018

The Salary Cap

By Chris 0

How much CAN you afford to pay your coaches?

 

How about yourself?

 

It’s no secret that we teach the 4/9 model at TwoBrain. We pay our coaches 44% of the gross revenue created by CrossFit groups, personal training and specialty programs. Sometimes, coaches launch a program so large that it becomes a separate company (like IgniteGym or UpCoach.)

 

The model is supported by data from other industries, as well as accounting strategies like “Profit First“. And even though we get more granular with our breakdown, most consultants in the CrossFit industry copy this model, though they might rename it to make it their own. Or they might pay a higher percentage for personal training, but expect coaches to run classes for free.

 

However you want to slice it, the 4/9 model is the most effective model for gyms:

 

  • It’s better pay than a trainer will ever find at a Globogym;
  • It creates opportunities to be entrepreneurial, without risk (we call that “intrapreneurial”)
  • It allows the box to cover costs, and prioritize paying the owner
  • It removes the ceiling effect created by salaries.

 

Here’s another way to think of the 4/9 model that doesn’t sound so “mathy”:

 

Think of your team of coaches like a sports team, and your mentor as the league commissioner.

 

You’re allowed, by league rules, to spend 44.4% of your gross revenue on payroll.

 

This doesn’t include YOUR pay as an owner, or your profit.

 

Those payroll expenses include taxes, healthcare, and all other costs associated with paying your staff. This is why I prefer to have contractors instead of employees: I want my crew to have the same taxation opportunities I have, without the entrepreneurial risk. But that’s another subject.

 

Want to hire an admin staff? Great–as long as the expense of their wage fits under your salary cap of 44.4%.

 

The industry average is below 25%. If you call a local franchise gym and ask, “how much do you pay your trainers?” they’ll give you a number between $15 and $25 per hour. That’s while they charge over $80 for personal training, in most cases, and don’t pay at ALL for group coaching.

 

See the pictures below for average pay in Canada and the US:

 

 

There are other models: paying coaches a referral bonus (but not teaching them how to sell); paying a flat rate for classes (even when the box owner is losing money); and paying a flat salary (rewarding people for being busy instead of getting important things done.) But those are slowly disappearing.

 

Also interesting is the average pay for a “gym manager”, “Strength and Conditioning Coach” and “athletic coach”. In this survey, “gym manager” seemed to mostly mean “sales manager”, with a commission basis. “Strength and Conditioning Coach” seemed to mean a CSCS-certified employee of a sports team, and “Athletic Coach” seemed to mean an employee of a University. The interesting part here is that these numbers haven’t changed since I was in college twenty years ago.

 

 

CrossFit’s REAL benefit to the fitness world has been the opportunity for passionate coaches to make a real living. I know dozens of TwoBrain family members making more than double the $40,000 ceiling paid to employees in our industry. There are too many CrossFit coaches at successful boxes (that’s key) making more than these numbers on the 4/9 model to name.

 

The real opportunity in fitness now is to work at a successful CrossFit gym. And successful CrossFit gyms pay their owners well; pay their coaches well; and pay their bills on time. But they don’t start by saying, “I need to make more money before I can pay my coaches.” They START by segmenting their revenues and leveraging their time.

 

(Yeah, we teach it all in the Incubator.)

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