Mike (00:02):
It’s fun to buy cool stuff, but you know what’s better for gym owners? Not spending your hard-earned money on stuff you don’t need. Stay tuned to Two-Brain Radio for money-saving ideas.
Chris (00:11):
Chris Cooper here with a word about Arbox. This business management platform is designed to take you from a fitness expert to a successful gym owner. Arbox offers a full suite of tools, including a dashboard and report with the top metrics that we prioritize at Two-Brain Business. With a glance, you can see length of engagement, average monthly revenue, new versus lost members and more. Arbox will also help you drive engagement with a members app that allows clients to interact with their friends. So here’s the special deal for Two-Brain Radio listeners. Save up to 50% for the first year using Arbox. Visit arboxapp.com/tbb to register to a free 10 day trial and schedule a demo with one of Arbox’s experts.
Mike (00:56):
This is Two-Brain Radio, and I’m Mike Warkentin, your host. One of the easiest ways to make more money as a gym owner is to reduce your expenses. Not every expense is bad. Let’s be clear about that. The expenses that generate income justify the old saying you have to spend money to make money. However, some expenses that don’t generate return on investment need to go. Custom-branded sandbags, I’m looking directly at you. Josh Thorn of Vashon Strong in Washington state is here to offer more tips to lower expenses. Josh Thorn of Vashon Strong in Washington state is here to offer more tips to lower expenses. So Josh, when we dug into our April data, we discovered that you do some pretty creative things to keep expenses down. Here’s the trick question right off the bat. Tell me about what gym management software you use, how much does it cost and why do you use that software?
Josh (01:43):
Yeah, so, we just use Acuity, it’s the scheduling software that, Two-Brain kind of recommended when I first got started and I think it’s 50 bucks a month or something like that. And yeah, just the way we got started with it, it was like I just kinda got started, I rolled into like gym ownership and opening a gym. I’d never really done anything business related before and that’s all good. So I was just kind of like, learning curve as we go. And yeah, just the gym management software, it’s always kinda seemed like a big step. And I guess it kind of seemed like, what are the things that you’re really looking for out of a gym management software, scheduling billing and keeping track of your members. And I don’t know, maybe it’s just me, but I just feel like I can do all those things with Acuity just fine. Acuity has, we have all our recurring billing set up through them. So they integrate with square. I can do all our group memberships, all our hybrid memberships, all our personal training memberships, everything like that.
Mike (03:00):
Just saying, I’m amazed like Acuity does all the stuff that you would often look at, like Zen Planner, Wodify, MindBody, all that stuff. Acuity can handle that for you?
Josh (03:08):
I think so. Like I haven’t been on the backend of Zen or MindBody or anything like that. And actually, it maybe it’d be good for me to do so, but yeah, I mean, Acuity handles all of our billing, don’t have any problems there. Handles all of our scheduling. So the calendars all integrate with, I mean, I’m sure everybody knows if you do your no sweat intro calendars through Acuity, like we just do the same thing with our group classes and then with our personal training clients, we have, personal training relationships are generally close enough that you can schedule those one-on-one. So, scheduling is taken care of there. And then the other interesting thing I think about Acuity is a lot of times, you’re thinking about your client journey, right?
Josh (03:56):
And Acuity can actually handle like a lot of that stuff. If someone schedules a no sweat intro, with me or one of my coaches they get a follow-up email and then like, I have like a six-email series that goes out over the next two weeks, that follows up with them. And a lot of it’s like, it would sound very familiar to you or Coop or any of the mentors, it’s like, like, Hey, thanks for coming in. Like, we’re really excited to talk with you about your goals, what brought you into the gym, you can integrate forms into Acuity. So you can do a lot of stuff like that, you know?
Josh (04:41):
So if the first day after they schedule a no sweat intro, they get a follow up email, the third day after they schedule a no sweat intro, they get a follow-up email, with just like some different directions. So you can kind of set up email campaigns through Acuity too, and tailor them to your client journeys. Like, yeah, no sweat intros, goal reviews, nutrition consults, even you can set up separate email follow-up systems for personal training clients, the day after their personal training session, they get a how to recover email. And then the third day after their training or their personal training session, they get a, I dunno, whatever it is.
Mike (05:26):
Your campaign’s just loaded in there. If you say sell a six month membership or something like that, is that trackable in there as well?
Josh (05:36):
Six months like of the paid in full kind of stuff?
Mike (05:38):
And I’m asking that without knowing how your packages go.
Josh (05:41):
Yeah, yeah, yeah. Normally they’re monthly billing cycles, so for group and personal training, but yeah, but you’re right for like paid in full membership. So if you say a year of training this is like, so I don’t set those up to be recurring, so yeah. They would take a calendar note or something like that.
Mike (06:01):
But a recurring membership would go automatically?
Josh (06:01):
Oh yeah.
Mike (06:08):
Let me ask you this, just for perspective here, you can give me a range if you’re not comfortable with exact numbers, how many members are you managing in that system?
Josh (06:16):
We have let’s see, actively paying 83, if you include our part-time coaches and stuff, about 89.
Mike (06:27):
- The reason I ask is because when I started our gym, like in 2009, I was using like a spreadsheet, just like a straight up Excel spreadsheet. Right. And I realized that I think the number was like 12 members, or it was 19, it was 12 or 19. I realized I was screwed. And I was just like, and then of course I had to get a gym management software and I won’t tell you who I use, but I’ve been stuck with that system since 2009, because it’s so painful to change, I don’t want to change it. Yet I can’t stand the system. I don’t think anyone else can stand it either. So that’s why I was so curious to hear about what you’re doing, because again, $50 price is cheaper than a lot of these systems and you’re able to manage close to a hundred members now through something that I don’t think a lot of people have thought of.
Josh (07:13):
Yeah. I think the like, I haven’t really sat down and talk and nuts and bolts, but I know what you mean. Like I hear a lot of those not complaints, but I hear a lot of the things that people say about, the main gym management softwares and they all kind of strike some similar themes. Like I don’t know what they are right now, and so yeah, when I read those, I just kinda think like, is this worth it right now? Am I accomplishing what I want to accomplish with Acuity at least the things that are important to me, which to me is, yeah, client journey, reliable billing, recurring stuff.
Josh (08:02):
You can definitely make arguments for gym management softwares that maybe provide more in-depth reports. Right? Like I did a trial with Arbox, and their LEG or their ARM reports, like they just kind of have more financial reports that Two-Brain kind of uses and those are definitely nice. So I hear those arguments. I mean, as far as taking a small software and making it go a long way, there are definitely some things that work.
Mike (08:40):
That’s kind of the theme of the show here is like, we looked at revenue and we found some gyms with huge revenue. We also looked at expenses because Chris Cooper wanted to figure out like, are there gyms that are running really lean and generating lots of revenue, meaning like you’re getting the best of both worlds. And so that’s what we really wanted to speak to you about that. And, just as an aside, I believe it was CrossFit Malibu, I believe just recently they went from like, literally, I think it was like an envelope taped to a door or something like that. And forgive me if I’ve got this one wrong, but I know the story was out there, I believe it was CrossFit Malibu, which is an old school affiliate where they just like, you put your membership fees in the envelope and it was cash or check or whatever.
Mike (09:20):
And it was kind of just, what ‘evs. I think that’s hilarious. You’ve got a better system, but it’s a system that works for you. And I love that you referenced your client journey in there. So like, you’re not just doing this because it’s cheap, you’re doing it because it’s your clientele and your business. Side benefit. It’s not as expensive as the other systems. So we’re going to dig into more stuff. So I’ll ask you this question. I’ll self-confess, I tend to be a bit of a miser. Are you like a cheap guy by nature? Like me?
Josh (09:51):
I’m definitely a little bit of a miser. Like, it’s hard to let go of money on costs, but I mean, I guess I was just kind of ruminating on like, the psychology of spending money. Right. It’s like, we think we’re so smart and logical about money, but the way we spend our money, I think if you dug deep into it, it’d be very emotional. And I bet if you looked at the purchases that I made and but the story I tell myself about them, I bet it’d be like, you just never know what you’re going to find. Like I won’t buy any equipment and I’ll just be fanatical that like, what we have is totally good enough, you know? And then like a member will say to me like, oh, like, this would be so cool, and it’ll put a little bug in my brain. So like, I said, I mean, I try to be logical about it and everything, but I, that’s curious about how much you know about that spending stuff is, deeper, emotional, kind of buys than you really realize
Mike (11:04):
I can tell you exactly like my story. You hit it on the head. I was cheap at our gym in a lot of ways, like not foolishly where all our plates were broken. I personally invested too many hours. One of the examples is I literally spent five or six hours buying tools and trying to fish a broken key out of a lock when I should’ve just hired a locksmith for like, it would have taken the locksmith with the right tools, like five minutes, whatever it costs me to do, it wouldn’t have equaled the waste of time that I over those six hours. But my emotional attachment was that I wanted the gym to be profitable. So I was going to give every bit of my own time to do it. And the stupid part about it was I didn’t realize that I was like burning these super valuable hours that I could have spent growing the business. And it wasn’t until I started working with Chris and the Two-Brain mentors that I started to realize that. That’s why I was curious about asking you that question, tell me this because of the emotional stuff, that’s all involved in expenses and spending. Do you have a system for evaluating expenses when you take them on at the gym? Like, do you actually like go through line by line and say, OK, I got to look at this expense. Is it carrying its weight? No, it goes, yes, it stays.
Josh (12:08):
Not as regularly as I should. But I mean, that’s something that Two-Brain has, just so helped with. Right. I mean, it’s part of the conversation, on like, if not like a weekly, it’s like part of the conversation definitely monthly which yeah. I mean, yeah, I get Coop’s emails about, OK. Like we’re doing audit expenses this week. I’m like, fantastic. Like, like let’s look at them. So yeah, I’m very on guard about all the subscriptions, the recurring payments that the gym has and I can pretty much, I mean, shouldn’t be able to say that I can hold them all in my head, cause that’s the business owner’s small death is like trying to hold everything in your head. About like a year or two ago. So I had a coach come on, who is really good with data. And she put together like a really detailed spreadsheet that cataloged all our recurring payments and everything like that. And so that really helped me kind of visualize that. So I’ll revisit that spreadsheet once every two months or so, but like I said, it’s not as scheduled as it could be for sure.
Mike (13:31):
I think you’re way ahead of a lot of people in that you are aware of your expenses, you do look at them, at least regularly, and you are making some adjustments there, like you said, you’re aware of your subscriptions. Like, I mean, I guarantee you, there are gym owners right now, out there. That’ll listen to this episode. And if they look at their credit card statements in depth, they’ll find some subscriptions that they are not using, that they should just get rid of. And it’s probably some music service that they never use or something like that or whatever else it could be. Maybe it’s a mobility thing the members thought was cool for 20 minutes and no one used or whatever. You’re ahead of the game there for sure. How long has your gym been around?
Josh (14:06):
We have been open for four years now.
Mike (14:09):
- That’s good. So you’re way ahead of the game. Cause it took me like eight or nine, I think, to get really a handle of my expenses. Talk to me about some of the other expenses. Like I know that you’ve done some creative stuff with your gym build-out and things like that. Tell me a bit, few other.
Josh (14:24):
So I think it just kinda relates to like our particular start and in our particular location. So what am I trying to say? So we’re a small town, off the coast of Seattle, so it’s a small town vibe. And the way I started the gym, was in initially in my parents’ garage, which then moved to a spot in town, in 2017, which was like, and I definitely put a lot of work into it to start. So I think looking at the spot that we moved into, you wouldn’t have necessarily envisioned a gym there. So it was like this the good things about it were
Josh (15:26):
It was in town, basically on main street, not street front, but just behind and then it was half the size it is now. So it was yeah, so we got, it’s garage space basically. So the rent is going to be low. It was small. So the rent’s going to be lower there. And then yeah, we just put a lot of good work into it, walls, some installation, but a lot of the work we’re doing ourselves. And then as we moved in, there were all these other little studios that were connected to it that we gradually moved into. And as we moved into them, we took down the walls and replaced the flooring with mats and everything like that. So I kinda just feel like we got in in like in a really good location with low rent, and then we just kinda like slowly invaded the other spaces while the rent stayed really low.
Mike (16:26):
Yeah. It’s kind of like the story of Nirvana, right. Like, I mean, you start in the garage and stuff, right? Yeah.
Josh (16:33):
And you just got to realize it’s a small gym, like it is like 1500 square feet, you know? And so for being in a great location in town, but, kind of started out as sort of a dingy drafty garage, and it’s like a really small space. So that keeps all a lot of like rent and utilities down. I feel like we’re we’re running really lean. Like we don’t have, they’re just, yeah, it’s still kind of a dingy garage. There’s not a lot of amenities, but if we really serve our clients well, and we have great relationships and we build out, group and PT revenue streams, and we’re working on doing more nutrition, it’s like, like, OK, well, you can really skyrocket your revenue, without being the athletic club down the road that needs a pool and locker rooms, and, I don’t know how many square feet, 6,000 more square feet.
Mike (17:44):
Nutrion scales and a laptop on a desk.
Josh (17:45):
Right. Yeah, exactly. So I think I think there’s growth ahead in our future that will grow our expenses and, make the space look a little bit better, or maybe like an InBody, sort of things like more expensive things that do have, a return, but right now I feel like we’re just like, we’re just lean, lean and mean, and with good revenue, it’s a good balance right now.
Chris (18:19):
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Mike (18:40):
That’s good. And that’s, it’s interesting cause Chris has really talked about this and he’s talked about if he could go back, he would get the smallest space that he possibly could. And train his people in there, serving them to the best, just giving them the greatest service ever, but in a small space and a ton of equipment and bursting at the seams, go up a little bit further and like do that kind of thing because there was a real temptation for a lot of gym owners back in the day to be the first gigantic mega gym with 10,000 square feet or with, two or three giant locations or whatever. And there was a lot of temptation for that. And it didn’t work out for everyone because a lot of those spaces are just like, as you said, the expenses go up so dramatically.
Mike (19:19):
And like one of the things that really saved my business was the fact that we rented a warehouse that had been vacant for a long time in a city that’s not a destination. And so we got a good deal on rent. I was able to make a lot of mistakes because my expenses weren’t super high. And the other mistake I made was coaching too many classes, but that still kept our expenses low. And I was able to make a bunch of other mistakes that didn’t sink me because I was absorbing a lot of costs. Now that had its own problems in the end. But you get what I’m saying, where it’s very interesting, like that 1500 square foot model. And again, the very first CrossFit gym, I think was about 754 square feet in the very beginning, you’re doing a lot in a small space.
Mike (19:57):
And then you’re finding ways to scale some revenue. Like I say, with nutrition programs and PT, because like get this, like in my gym, we had 6,000 square feet, and we didn’t use them very well. We were always dead between nine and four, except for lunch. Pardon me, a good lunch class, but one-on-one personal training in a 6,000 square foot, we could have done so much there. So in a 1500 hundred square feet space, personal training makes a lot of sense. You get people in there at different hours, nutrition training, the whole deal. And it all does increase your footprint. Eventually you will. But rather you have an idea of how to do that in a calculated way. Like, do you have a number in mind where you’re like, OK, we’ll pull the pin here and we’re going to another space?
Josh (20:39):
No, but mostly because I don’t know, not to bash on our small town, which is an island like, and development is, there’s not really many other places to go, you know? In terms of like looking for bigger space, like we might be here for a little while.
Mike (21:13):
I just, I find it fascinating. Like I’ve seen all sorts of different, paths of things. And definitely right about like gyms’ million dollar leases in Manhattan and things like that. So it’s fascinating to see how, regionally, you can find ways around things and starting in the garages. There’s nothing wrong with that. And we started in our basement in my back parking lot and things like that. That’s a great way. Did you, when you did get this space, you said did a lot of the work yourself, like, did you do tons of build out stuff like you’re a handy guy, that kind of thing? Or how did it go?
Josh (21:42):
My dad is a handy guy and we worked together a lot on it. Like we like working on projects together and yes, it would be totally honest he’s way, way handier than I am. Not trying to misrepresent that we’re like doing, super clean remodels or anything, but yeah, I mean, we can take down walls, we can put up rigs, we can drill stuff into, we can install racks and flooring and storage, little storage space modifications we can put up, we can install rings, we can install ropes and make cubbies and all that kind of stuff. So yeah, we did a little bit of even did a little bit of work on the floor. We poured some cement, we did some of that stuff. It’s definitely been an ongoing project.
Mike (22:42):
It’s interesting again, because we always want to look at the value of your time, right? So if you could make some $70 an hour personal training, it would be a mistake to do like labor jobs for $12 an hour. But in the startup stages, there definitely are some opportunities where you can sometimes dig in and get your hands a little bit dirty and get way ahead, especially when you’re starting up or growing up, like you’ve got a parent or a friend or you’ve got some members that you can help would help us stuff. Like we definitely leaned on a construction guy who ran a construction company to our gym. He helped out with a ton of stuff and poured concrete, and did all this stuff essentially that you’re talking about. We found some ways around that to cut some costs that would have added up very quickly and especially with lumber prices right now, there’s some interesting math to be done on some of this. You certainly shouldn’t pour concrete instead of taking a no sweat intro, but you can certainly look at like, Hey, if I can spend hours doing that and save $400, maybe you do it. Trading or bartering within memberships or anything like that?
Josh (23:40):
No, actually, I mean, I think we started with Two-Brain early enough in the gym’s career that, we were kind of able to avoid a ton of trading or bartering. So where we mostly all of our members are paying. I think I have one member that, does photography for the gym once a month in exchange for his membership, but yeah, I mean, yeah, photography is great. And then I do have a coach who’s kind of a godsend, she’s like a graphic designer and website person.
Josh (24:25):
And I mean, and she, gosh, she really is a godsend like graphic designer, website person, part-time coach, and wants to pay for a membership. Like, I mean, she’s just incredible. I’m just grateful to have good people that want to help and that kind of thing, but I can’t really attribute that to any business skill. She put it all together. She’ll make edits. I mean, I know how to do a good number of edits, but if it’s, yeah, it’s nice having somebody that you know personally that can make changes very, very quickly, you don’t have to submit any forms or lead time. And so it lends a certain amount of flexibility there.
Mike (25:23):
It’s interesting, again, with the bartering, I always ask that. That’s such an interesting one because you can make big mistakes there, right? Like Chris has written about this, where all of a sudden that friendly side deal that you cut with someone and, it’s just not, they’re not delivering. And it happens always with cleaners is one that I see regularly where it’s like, oh, clean in exchange for my membership. And then all of a sudden there’s dust bunnies everywhere during a rowing workout, they’re just blowing around the gym and the cleaners like, oh, I took vacation, didn’t tell you for three weeks. Like, that’s just so common. Chris has written about this, if you’re gonna do barters and trades, put them in writing, put a vlaue attached, sign the contract and make sure everyone exactly the same page. So this stuff doesn’t get away from you because it can, and it did to me and it’s done many.
Mike (26:07):
So it’s an interesting one to kinda, to kind of look at. The thing that I like most about this whole conversation is just that you’re a four-year gym owner, you’re evaluating your situation, it’s unique, right? You’ve got this interesting thing that you’ve done. You’re slowly building and looking ways to scale revenue and scale revenue before you expand. Right. The cool part about that is that so many people talking about expanding to scale revenue, like it’s like, oh, if I get a bigger gym, if you build it, they will come, which is great movie, but nonsense in the business world, you’re doing it the opposite way, right. Where you’re like scaling that. And then you can do a calculated expansion if you desire, rather than like, OK, I’m going to blow the bank, get out of this great spot that I’ve got, and then hope to God that someone shows up. So let me ask you this, if you bought a gym tomorrow, or if you were going right back to the very beginning of your career as a gym owner, and you had something, where are the first places that you would look to reduce expenses? What I want you to do is give some gym owners out there, some ideas about where they can cut costs after the show, so they can look in their budgets and say, man, do I really need that? What would you target there?
Josh (27:15):
Yeah, I thought about that question that kinda, it’s kind of a tough one without seeing, individual, I mean, everything plays into it, location and the clients that you’re serving, your main offerings, like, and even within like, like, OK, say we’re all CrossFit gyms, are you serving teens, mostly kids, or is it mostly your demographic is parents? Like, is your demographic competitive athletes, you know? So it’s kind of hard to say without knowing the context of that specific gym, and it’s kind of, easier instead to say like, OK, well, let’s look at the revenue side of things, just right away, because, yeah. You can assess how many memberships are being traded or bartered or discounted or or just kind of not being tracked. Fallen by the wayside. They’re not recurring, they’re these people, you know what I mean? Like, it’s just kind of easier to assess that side of things, as opposed to the more context- driven stuff.
Mike (28:32):
Let me ask you this one, I’ll give you a couple of ideas and you tell me what you think of these? And you mentioned I’m stealing your ideas. I’m just rephrasing it. The first one you mentioned was looking at all the different subscriptions out there. If I was a gym owner, again, starting out, I would look at not necessarily starting out, let’s say if I bought a gym and I was trying to reduce expenses, I would look at all the subscriptions and say like, do I use all this stuff? Right? Like, have you found any that you cut and just looked and said, man, this expense is worthless and got rid of.
Josh (29:03):
Yeah. I mean, I think the last like time Coop sent out an email that was like, I was like, OK, you’re going to an audit expense. I mean, yeah. I mean, it’s so easy to cut, like a bunch of $10 stuff, like, different storage subscriptions, like Dropbox or something like that. There’s so much there. I mean, what are we really looking at? Like all the different subscriptions that somebody might have. So like yeah. Programming yeah, I mean, I’m not saying to cut programming. I’m so thankful to have programming as a subscription.
Mike (29:48):
And if it pulls its weight, it’s worth its weight in gold. But if it’s not serving your clients and you’ve always referenced your client journey during this interview, it’s your program, isn’t satisfying your clients and it’s expensive. Is there a better option? Right? I’ll throw one more at you. And I want your perspective on this because I love the way you think about it. Gear. And gear might not be an expense that like you can reduce, but you could certainly choose not to spend the money that you would otherwise. Right. Talk to me about that because I’ve seen a lot of gym owners and I know some crazy stats from people that I’ve heard through the grapevine about people like doing some extreme bank business to like buy piles of equipment. And when I saw some of the equipment, I was like, whoa, that is not very useful. So talk to me about your plan for purchasing gear. Cause you think you can reduce expenses in there.
Josh (30:37):
Yeah, yeah, definitely.
Josh (30:48):
We do have like this random pegboard on the wall with which like nobody ever uses. So I’ve definitely like made that, made that mistake before. I mean, we’ve got all the standard stuff. We, yeah, I’m definitely a fan of running lower on equipment and doing all the partner work that you need. I am a fan of not buying the equipment that can only be used by one person, for sure. Like it kind of has to be like, OK, can everybody use this? You know? And if not, is it something that can be leveraged into a personal training clientele. Like, I will say that, like I only have one trap bar, and I’m like, Ooh, this is the best bar I’ve ever bought. Because like, I do so much personal training with people that have like lower back pain and are really scared of barbell deadlifts. It really pulls its weight. So, yeah. The big fancy pieces that only one person could use, those should get a lot of scrutiny for sure.
Mike (32:00):
There’s space concerns there too. Right. So if you decide to buy 17 prowlers and stuff, where are you gonna stack them?
Josh (32:05):
Oh man. Exactly. And that’s one thing that I realized, a couple, year or two into a gym, I was like, oh, like my barbells and plates and the rig are not the most valuable piece of equipment. Like most valuable thing I have in this gym is just the floor space, like if like, if I can just have an open floor space, like possibilities are endless, it looks cleaner. People feel like they’ve got their arm space to like swing around, you know? And so like, yeah, if I were to go back and do it again, I might like even have a little bit less like rig than I do now. And look at everything in terms of like, like how cleanly does this store, and how can I maximize the floor space that I’m using here. Definitely have some pieces I want to get rid of like some racks and stuff that had to buy during COVID times. The most valuable thing is just that floor space. So yeah, the extra equipment is just not worth it.
Mike (33:17):
When you get your expansion whenever that is, months, years, whatever. Let’s talk again. Let’s see if you hold your plan and you do your expenses and I’d like to see what your next step looks like now that we have this conversation, let’s touch base again and we’ll give some people more ideas. Will you come back and do that?
Josh (33:36):
Yeah. For sure.
Mike (33:39):
Excellent. Thank you so much for being here today. Listeners, if you’re out there, do some thinking, generating more revenue is great, but it’s also challenging. Cutting expenses is sometimes a lot easier and if you look closely at that balance sheet you might find some stuff that shouldn’t be there or some spends that you do not need to make if they don’t generate ROI. I’m Mike Warkentin on Two-Brain Radio with Josh Thorn and we’ll be back next time. Please remember to subscribe for more episodes. Before you go. Be sure to head to the Gym Owners United group on Facebook, the smart kids in the gym biz hang out there and you need your voice in there too. That’s Gym Owners United on Facebook, join today.
