Concrete Money Goals at Each Stage of Gym Ownership

20210819-money-goals-blog

Mike (00:02):

Make mad money. That’s the goal, right? Not really, says Two-Brain founder, Chris Cooper. Cooper’s in right after this to break that vague statement down into precise goals that will guide you and motivate you at each stage of entrepreneurship in the fitness business.

Chris (00:16):

Chris Cooper here to talk about Incite Tax. The people at Incite Tax know you’re working long hours to improve health for the world, but it can still be hard to turn a profit. You just can’t focus on your mission without money in your account. So Incite founder John Briggs wrote “Profit First for Microgyms” and created a system that increases your cashflow so you can be home for dinner with a thriving fitness business. Bookkeeping, profit first, cash flow consulting, taxes, whatever your financial needs, Incite can help. Join their free five-day challenge at profitfirstformicrogyms/five days to get a snapshot of the financial health of your gym. That’s profitfirstformicrogyms/five days. .

Chris (00:56):

Hey everybody, Chris Cooper here and today, we’re talking about financial goals for yourself and your business. We’re not given a financial education in school. We think we should take loans, assume debt and save money and eventually retire, but that’s not actually what happens and it’s not the best path to wealth. So today we’re going to talk about what the hell is wealth. What should my goals be and when, and how do I know if I’m achieving them? Now, if you haven’t read “Founder, Farmer, Tinker, Thief,” that’s my book where I break down the four phases of entrepreneurship into the founder phase where you’re just starting out. It’s mostly you, you’ve kind of bought yourself a job. You’re not really a business owner yet. You’re more like self-employed OK. So you could be a subcontractor at a gym listening to this. You maybe just started your own studio.

Chris (01:45):

You’re not necessarily new, but you’re kind of doing it by yourself. You don’t have a team to support you yet. In the farmer phase, you’re diversifying your revenue. You’re becoming a leader, becoming a manager of other people, probably for the first time, you’re hiring people. You’re firing them. You’re evaluating them. You’re building systems that your staff can follow when you’re not there. Farmer phase, you know, it’s the toughest phase. I think in the tinker phase, you’ve got one solid working business. That’s paying you. It’s profitable. You know, you’re getting a consistent income from that. And now you’re looking to expand your platform. So maybe that’s adding a second gym, a third gym, a fifth gym, whatever. Maybe that’s adding like an online business. Maybe it’s building a bar, maybe that’s buying an Airbnb or Bitcoin or investing in index funds. You’re building a bigger platform.

Chris (02:32):

That’s more diverse and stable. That generates you revenue. And then in the thief phase, you’re kind of giving it all away. This is the Robin Hood phase where you’re taking money. OK. You’re providing value to the market. You’re making money and you’re dispersing it to people who don’t have that skill. So for example, in thief phase, for me, I live in Sault Ste. Marie, which is a pretty depressed city. The major industries are gone. Drug use is just skyrocketing. Crime is going way up. What I can do is provide value hopefully to you, to other gym owners, to other entrepreneurs worldwide, I can build a platform of wealth and Sault Ste. Marie. And I can share that wealth by distributing it to people who need it. So we buy bikes, we sponsor bike trails. We give to a bunch of different charities and stuff like that.

Chris (03:23):

And eventually we’ll train more entrepreneurs to build their own platforms in Sault Ste. Marie and share that way. So that’s a brief synopsis. And of course, even that was a little bit confusing because I haven’t told you how to do that. I need to tell you what to do with revenue at each stage. So in the founder phase, when you’re just getting going, maybe you’ve got a new or gym maybe you’ve been solopreneur for a long time. I spent probably five years in the founder phase trying to just be a personal trainer and make money on my own. Your goal is revenue. OK. Get to break-even as fast as you possibly can. Get to a point where you’re paying yourself just enough to survive and keep going in business. A lot of businesses actually fail in founder phase because they just can’t generate revenue or enough revenue.

Chris (04:11):

How much revenue do you need? Enough to pay your expenses and pay you enough to survive. So that means keeping low expenses, right? Starting small, bootstrapping where you can covering those expenses and paying yourself first. So the two biggest lessons that I learned in founder phase were start very small. I had a very small space, and write yourself a paycheck in advance because it will be very tempting to starve yourself to get this business going and to tell yourself the fib that like, I’m just reinvesting in my business. No, you’re not. You’re not, you know, pulling out different parts of your body and investing them in your business so that your business can grow what you break down. That’s not good. In a farmer phase, your financial goal is income. So it’s not gross revenue anymore. One of the biggest myths in the micro gym space, and I’m not just talking about CrossFit, I’m talking about like yoga, Pilates, even some of the franchises is that the more revenue you’re making the better, but what is really important is income, right?

Chris (05:10):

How much you benefit from the business. It’s easy to be making, you know, a hundred thousand dollars in farmer phase. And then you take your gym to $500,000 per year, but you’re still only taking like $45,000 home. You don’t have a better business when you do that. Your goal in farmer phase is income. We call that net owner benefit and net owner benefit is the sum of the salary that the business pays you, profit disbursements that you might take quarterly and all the little things that the business buys for you to avoid overtaxation. So maybe the business owns your vehicle, or maybe the business rents office space for you, or maybe the business bought you that new camera, maybe the business pays for your internet bill or your cell phone bill, whatever that is. OK. Those are the small things. The big things are your salary and your profit disbursements.

Chris (06:00):

That’s net owner benefit. And your goal in farmer phase is to get to a net owner benefit of about a hundred thousand dollars. OK? For most people.

Chris (06:07):

We know that getting clients results isn’t enough to make a great business or a great career, but it is the foundation. If you’re not getting your clients results, none of the other stuff matters. Your marketing plan, your operations plan, your retention plan, your systems, how much you care about the clients. You need to get them results. What does it take to get a client results? Long-term behavior change, short-term habit change. It means learning skills like motivational interviewing, peer-to-peer programming. It means focusing on things like adherence and retention instead of novelty. And I built twobraincoaching.com with my partner, Josh Martin, to teach coaches how to do this. More than ever before it is critical to get results for your clients. You need to charge a premium fee. You need to provide high value to warrant that fee. And what is most valuable to the client? What do they care about the most? The results on the goal that they choose. Twobraincoaching.com has programs set up to help your clients achieve those goals. We will train you and your coaches to deliver personal training, group training, online training, nutrition coaching, and coming soon, mindset coaching, in a way that’s simple for you to adopt, it’s legal everywhere. And it’s super effective. These courses were built by experts with years of experience getting clients results. Twobraincoaching.com is a labor of love for me, and I know you’re going to love it too.

Chris (07:36):

Now, if you’re listening to this overseas, especially, that goal might be different. You know, $70,000 in Sault Ste. Marie is enough to support a family of four. $70,000 in Vancouver

Chris (07:48):

BC means that not only can you not support a family of four, but you’re like renting one room with two other roommates to have a small apartment. So wherever you are in the world, that net owner benefit goal might change. But the point is that your business is not successful until you reach that income goal. Forget about how many clients you have forget about gross revenue. In the tinker phase, your goal is wealth, and this is freedom of finances and time. So freedom of finances means you have more than enough money. You’re sitting on cash. And you’re like, what do I invest in next? And freedom of time means that you don’t have to actually be in a certain place. Most of the time. You might have a meeting every month that you have to make. You know, mine is once a month on the second Wednesday at lunch, I have a lunch meeting with the GM of my gym.

Chris (08:37):

You might have meetings for your other businesses. You might have meetings with your financial person. You have time commitments, but you’re not locked into a schedule. You’re not working 8:00 AM to 8:00 PM at the gym or a nine to five or even 12 to four. This wealth platform is stable. It’s anti-fragile. So, you know, if heaven forbid your gym takes a hit because it’s locked down for 14 months, you’ve got revenue coming in from other places. So does this wealth platform look like? It looks like, you know, a business or two, cashflow assets, some investments probably, and it might include another business, or it might not. So my wealth platform, just so that you have an example, I have a gym, right? That is a cornerstone of my platform. And the gym pays me a hundred thousand a year. I own a couple of commercial buildings, which are another cornerstone of my wealth platform.

Chris (09:30):

And they pay me rent every month. So about 7,000 bucks a month in rent net. I still have some balance owing on one of them, but when that’s gone, that net will be about $10,000 a month. I have some investments, index funds very conservative with my investments because as an entrepreneur, my risky investment is my businesses. And then of course I have Two-Brain Business and Two-Brain Coaching, Two-Brain Programming, a couple of other companies, that also pay me every month too. So that’s my platform. And in tinker phase, that’s your goal, is to build a big enough platform when you don’t have to worry about how much time do I spend anymore. OK. In thief phase, your financial goal is impact. So what do you do with that money to make sure that you have a multi-generational impact? Really, it’s kind of a way to make sure that you live on after you die.

Chris (10:19):

You know, how can you have a resounding multi-generational impact? Well, you have to have a big enough platform and make investments that generate their own returns that fund whatever it is you’re funding. Let me give you an example. Let’s say that you want to set up some kind of like scholarship fund. OK. You can set up a scholarship fund for $5,000 and pay for somebody’s books for a year. You can set up a scholarship fund for $20,000 and pay for one person’s first year of dental school, you can set up a scholarship fund for 50,000 and maybe pay for an undergrad degree for one person. Or you can set up an endowment for $50,000 that pays $500 per semester for a whole bunch of students. And the interest generated by that endowment fund keeps growing. And so you can pay for more and more and more over time.

Chris (11:11):

And it really doesn’t run out because you’re not touching the principal. So there’s a couple of different ways to do this. The way that I prefer is I can see like the power of one entrepreneur in a city. So if one entrepreneur can bring $5 million a year to Sault Ste. Marie and one entrepreneur can employ like 12 different people in this city, then five entrepreneurs can have a dramatic and profound impact and 10 entrepreneurs more and 50 entrepreneurs could change the trajectory of the city that I live in and love. And so part of my impact will be to train entrepreneurs. And so there are ways to do that, but our financial goals at each stage change. If you’re in the founder phase right now, don’t worry about your impact. Don’t worry about your legacy or your wealth platform. Worry about getting enough revenue to cover your bills and pay you enough to survive.

Chris (12:02):

If you’re in the farmer phase, don’t worry about your personal brand or building like a big platform yet. You’re not there. Worry about getting your gym to a place where it can consistently and predictably pay you a hundred thousand dollars a year. OK? If you’re in the tinker phase, don’t worry about how do I give all this money away? I’ve got more than I need right now. You’re not there yet. Worry about broadening your platform so that you’ve got revenue coming from a wide variety of ways and you’re antifragile. And if you’re in the thief phase, just don’t worry. So those are your revenue goals. If you haven’t read “Founder, Farmer, Tinker, Thief,” you can just send me a DM on Facebook and I’ll send you a copy if you want to, or it’s on Amazon and we’ll post a link in show notes.

Mike (12:44):

Thanks for listening to Two-Brain Radio. Please subscribe for two great episodes every week. For more industry insight and tactics from Chris Cooper, join the Gym Owners United group on Facebook. Chris is constantly posting articles, instructional videos, and advice in there. And these resources will literally help you make more money. That’s Gym Owners United on Facebook. Join today.

 

Thanks for listening!

On Monday, Two-Brain Radio presents marketing tips and success stories. Chris Cooper delivers the best of the business world on Two-Brain Radio every Thursday. 

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