When to Hire a GM (and What to Pay)

Chris Cooper

Mike (00:02):

My growing gym is kind of stable. Time to hire a GM. Right? Well, maybe. Today on Two-Brain Radio, Chris Cooper will remove the guesswork. He’ll tell you exactly when you should hire a general manager and how to compensate the person. Before Chris hits the mic, click subscribe for more episodes. Now here’s Coop.

Chris (00:23):

When should you hire a manager for your gym? A general manager, even a COO. There’s definitely a time and a place to do it, especially if a gym is part of your platform and you’re ready to move on to the next thing. I’m Chris Cooper. And I made a lot of mistakes with my gym, including hiring general managers way too soon. So today I’m gonna tell you the steps when to hire a general manager, when to wait and even what to pay them. At Two-Brain, we teach something called the value ladder. So when you’re starting out with your gym, you identify all of the different hats that you as the owner are wearing, and then you assign a dollar value to each hat, and then you hire people at the lowest dollar value first. So for example, you might say you do five roles in your gym.

Chris (01:15):

You do cleaner, you do admin, which is like booking and billing. Basically. You do coaching, you do personal training and you do management of staff. If I laid all of these things out on a piece of paper and said, what would it cost to replace you in the cleaner role? Or what would you pay somebody that you hired to do the cleaning? That’s probably the first role that you would hire because it would be the least expensive. I can hire a cleaner for $15 per hour in Sioux Sault Marie. So the first person I would hire is a cleaner and I would first write down like exactly my cleaning checklist. I would write down how to buy more cleaning supplies. I would probably take pictures of what like I want my bathroom to look like when it’s clean and then I would hire this person.

Chris (02:01):

And in the time that I saved by hiring this person, I would dedicate that to the next role on my plate. OK. Admin. So I would write my staff playbook and I would clean up my booking and billing and I would set up calendars for my staff, et cetera. OK. And then I would say, OK, now I can hire somebody to do billing for me. And that role is a little bit more expensive. Maybe it’s $18 an hour, and I can hire that role. I can create checklists for them, and I can invest the time that I save in my next highest value role. Right. I can do more coaching. And then I can replace myself in the coaching role and spend more of my time doing higher value work, like personal training or building out my new nutrition program or whatever. And I can keep climbing the value ladder.

Chris (02:47):

Now I’ve made this as simple as possible. Really there are about 12 roles in every gym. And, you can read about that in my book, Gym Owner’s Handbook. Eventually though, you’re going to get to a point where you have a fairly big operation. You have three to six staff working for you, and you’re ready to move on to the next thing. And the next thing might be a gym. It might be like, I wanna work more on marketing and sales. So I need to stop managing people and running staff meetings and worrying about booking, and cancellations and the bookkeeping and the P and L and all that stuff. And I wanna hire somebody to manage operations. And that person is your general manager. To be very clear, their job is to keep things the same. Their job is not to grow the business for you.

Chris (03:36):

Their job is not to handle your marketing, maybe your sales. Their job is not to handle coach development. Their job is to take your playbook and make sure that your playbook gets delivered to a 10 out of 10 every single day. It’s valuable because that is a very leveragable role. And also because it frees you from distraction so that you can focus in on growing, scaling a gym or buying another gym, or, you know, investing in an Airbnb or whatever that is. OK. So for that reason, hiring a GM is one of the last things that people do in the farmer phase before they’re ready to move to tinker phase in our program. The GM role is manager. And so they should be hired if they are good at managing, it’s not necessarily the same skillset as coaching. And so hiring somebody that’s a coach in your gym and like promoting them to general manager

Chris (04:32):

doesn’t always work out. In fact, one out of every two general managers that we see in Two-Brain doesn’t have the skillset of management. They’re just promoted into something that they’re not competent at yet. And so the owner has to really spend a lot of time mentoring their new manager to manage their business. A lot of times too, we see that the general manager is just basically like the new CEO and they’re in charge of management. And they’re also in charge of marketing. And they’re also in charge of sales, all of these skills that it took the owner of the gym three to five years to really gain, they’re now just delegating to a manager with little to no experience, education or even a mentor to help them. So the manager’s job is to keep things the same. The manager’s primary tool is the playbook.

Chris (05:21):

And the manager is paid on a salary instead of on commission for two reasons. Number one, they are bearing the burden of more than just time spent. They’re not being paid for their time. They’re being paid to wear the mantle of responsibility. They’re not being paid to report problem to the owner. They are being paid to solve problems. For example, let’s say that your gym breaks a water pipe and there’s a flood. And it’s 3:00 AM. The general manager’s job is not to press the red button and wake you up. The general manager’s job is to go to the gym, to call the plumber, to get the situation resolved, to clean it up and to get the gym open at 6:00 AM, right on schedule. That is really important to get across that their job is not to report problems, but to solve problems. The other reason that they’re usually paid a salary is they’re not responsible for growth and their actions,

Chris (06:19):

They can improve retention in your gym. They might improve efficiency in your gym, you know, driving down your expenses or improving your ROI. But most general managers do not have the skillset to be marketers. And so they cannot improve top line revenue, which means they have very little info on overall profit, which means they are not in a place where they can make a commission, which means that they need to have like a base salary. So when do you hire a GM? You don’t hire a GM and put them on a salary until you are making a good salary. You are the general manager, usually until you’re making at least $80,000 a year, I would rather, you make a hundred thousand dollars a year and then know what your next step’s going to be before you hire a general manager. So for me, there was no reason to hire a general manager of catalyst until I started working with more and more gyms through 3, 2, 1 Go Project.

Chris (07:14):

And also Ignite Gym was really starting to take off. And I had to do a lot of traveling. That’s when I hired a manager. I wasn’t focused on growing the gym anymore. I just wanted the gym to maintain its current level. And that’s what a manager does. Right? They maintain through management. They even have the same root word. So you hire the manager when the gym is doing well enough that it can maintain, and you’ll be happy because you’re working on something else. What you don’t do is hire a manager to grow your gym for you. That’s just abdicating your responsibility to grow the gym. Now can a manager grow a gym? Yes. If you’ve done the work to learn how to market and how to sell, and you are so good at it that you can write an SOP, hey manager, if you just keep doing this, the gym will keep growing.

Chris (08:06):

That’s when a manager can take that job over. When the manager has shown that they have the same close rate as you do, meaning that if 10 people walk in the door and they meet with you and seven of them sign up for your gym, and then you run that test with your manager and 10 more people walk through the door and seven of them sign up with the manager, then it’s OK to hand off sales to them too. Is it ever OK to pay the manager a commission or to get a halftime manager? Yes. On both counts. If the manager is also taking on a sales role, then absolutely you can pay them some kind of sales commission, but more than likely, you’re probably just gonna start them with a base salary. Should the manager also be able to take on coaching hours?

Chris (08:51):

Yes, absolutely. The nature of most micro gyms is not such that you’ll need a management layer to run the micro gym where it’s somebody’s, full-time 40 hour a week job to run this gym and nothing else. That probably won’t happen. The general manager of catalyst works about 20 hours as a manager and 20 hours as a coach. And his salary is split between a salary for managing obviously, and the four-ninths model for personal training and group coaching. And so that’s how he makes his income. You can do it either way. Absolutely. But you have to generate the revenue first and then pay the manager. In most cases with most of your staff, the staff should generate the revenue that’s required to pay them times about two and a half. That’s where the four-ninths model really comes from is if somebody wants to make $40 an hour as a personal trainer, which is great, then they need to be generating about $90 an hour for the gym.

Chris (09:53):

But a general manager is not in a position to generate the revenue that pays for their salary. So the gym has to already be generating that revenue before you hire the manager. The only time I would say this isn’t true is when hiring the general manager buys you the time to generate the revenue for the gym. They’re freeing you up to go full time, all in on marketing and sales for growth. The other time when you really have to hire a general manager is when you have your eyes on the next thing. So if you’re going to start your second gym, you should hire a manager to run your first gym for you because your full-time job will become opening this second gym. If you’re going to acquire another gym, you need a great manager in your first gym, even more because you’re not starting from scratch with the second gym, you’re fixing the other owner’s mistakes.

Chris (10:44):

And that’s gonna take you all of your attention. If you are building a new thing, you know, you wanna build a t-shirt company to sell to other gyms in your area. Then you definitely need a general manager. For example, when I was building ignite gym, I realized that I needed a general manager to run catalyst because both things took so much attention that jumping back and forth was exhausting. This is a mental cognitive condition called task switching. And it really wears you out. So I would think about ignite gym for two hours, and then I would go coach a class, and then I would come back and I’d try to get refocused on ignite, but I was hungry and I might get a good 20 minutes of work out of the next hour. And then I would go back and I would be like trying to sell somebody in a no sweat intro.

Chris (11:32):

And I would fail at that. And I’d come back and try and work on ignite. You really need at that point, somebody who will just maintain what you’ve got so that you can focus on the next thing. I hope this helps you out with general managers. The biggest mistake that I see in gyms is people hiring general managers too soon. And the, the reason that you usually see it is because they want to abdicate responsibility for something they don’t like, like sales or marketing, onto somebody else. And so what they do is they hire somebody with no education, no background, no skillset, no practice to do the job that they hate doing. And then they’re surprised when they have to micromanage this manager because that person doesn’t have training. What I do because I can’t spend time managing my gym anymore is I hire an amazing manager.

Chris (12:23):

Who’s passionate about catalyst and my mission. And then I put them through ramp up, the Two-Brain program, and I get them a Two-Brain mentor. So that I don’t have to be their boss. I don’t have to micromanage them. They don’t have to come to me when they’re struggling with something or they can’t figure something out. They have access to all the Two-Brain resources and the Two-Brain mentor helps them run my gym. And I think a lot of the people in our tinker program do this exactly the same way they want their gym to grow, but they’re also busy working on other things. Hiring a general manager is hiring somebody to maintain what you have. And I hope this podcast has helped you decide when the time is right for that.

Mike (13:04):

Want another perspective on our industry? Check out our new podcast, Women In Ftness Business with Tiffy Thompson. Tiffy presents big wins, lessons from failure and real conversations with real women who are improving the health of their clients around the world. Now here’s Chris Cooper one more time.

Chris (13:19):

on Facebook, this is my personal invitation to join. It’s the only public Facebook group that I participate in. And I’m there all the time with tips, tactics, and free resources. I’d love to network with you and help you grow your business. Join Gym Owners United on Facebook.

 

Thanks for listening!

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