The State of the Fitness Industry Report

20211220-soti-blog

Mike (00:02):

It’s a Two-Brain Radio special edition. Chris Cooper is here to present our annual state of the industry report. This is data and insight you won’t find anywhere else. Get the free report at twobrainbusiness.com/soi2. That link is in the show notes. Now, here’s Coop.

Chris (00:18):

Hey guys, Chris Cooper here. And this is the state of our fitness industry at the end of 2021. When I’m trying to improve any part of my business, I ask myself three questions. First, who has solved this before me so that I can just buy the answer instead of paying 10 times more and taking years to figure it out myself. Then I ask myself who has solved this better than anyone else so that I can set my sights on like the best in the world. And then I ask myself, what’s the average solution so that I can recognize average when I blow past it. Two-Brain Business is my mentorship practice. It’s the largest in the world for gym owners, because we have the answers to these three questions. We provide mentorship every day to gym owners and it’s delivered through mentors who have already solved the problems that our clients are facing.

Chris (01:04):

We publish leaderboards every month so that you can target the best in the world. And we publish this guide every year so that you can see the average. This year, we’re providing data from 14,162 gym owners worldwide. We drew on data from some of the largest gym management platforms in the industry, like Arbox, Wodify, Zen Planner. And we dove really deep into the numbers with our friends at Gym Lead Machine and also Incite Tax. And we dug right down to the roots with a thousand gyms who use the Two-Brain dashboard every month. If you wanna reach the moon, you have to take a leap and to make the highest leap, you have to start with a foundation. That foundation is data, and this is your data. The end of N equals one: data eliminates risk and silences those without proof. Good data equals proof.

Chris (01:56):

Good interpretation of that data equals clarity and acting on clarity gets results. This report goes really, really deep, but it’s also broad because the experience of one person isn’t enough. We have data from 14,162 gyms worldwide in this report. And we hired an independent and objective analyst to help bring clarity to all these numbers for you. When I started mentoring gym owners in 2012, I only had my own experience as a gym owner to draw from. And that data set was like N equals one, right? My gym, seven years at that time, that experience was enough to help other people, but now our recommendations are exponentially more valuable because they’re based on data from thousands of gyms instead of just mine. My ideas in 2012 were pretty good because they came from experts with data in other fields. But at the end of 2021 and moving into 2022, Two-Brain’s tactics and strategies are better than good.

Chris (02:55):

They’re proven. We teach our clients the lessons we’ve learned from the largest data set in the fitness business. So why should this matter to you? Well, because in the fitness industry, there are always voices saying this worked for me. It’ll definitely work for everybody else. And these are the N equals one experts and maybe their ideas will work for you, but their advice carries risk. Like what if they’re overreporting their results? Or what if they’re under reporting the downside or the costs? What if their ideas only work that one time? Or what if their ideas only worked in their gym or what if their idea only worked with their clients or will their ideas stop working over time? Or of course, what if they’re getting paid to tell you that it worked and even worse are the N equals zero biz coaches out there who will sell you an idea that they haven’t even tested themselves.

Chris (03:46):

This is a rapidly growing segment of the business world, but data eliminates risk and silences all those people without proof. Data also makes great things possible. Two-Brain created six first time millionaires in 2021, real millionaires, not the shell game success stories who say I made a hundred thousand dollars in my gym last month, and now it’s gonna last forever. Instead we help real gym owners grow their net worth to over a million dollars. And we did that because of data. So where did this data come from? Well, in August, we sent out a 62 question survey to our 30,000 person email list, to all of our clients and to our Gym Owners United Facebook group, which has about 4,500 more members. We also collect data from a thousand gyms in the Two-Brain business mentorship program every single month through our own dashboard.

Chris (04:38):

We collect data from Arbox, PushPress, Wodify, Zen Planner, and they contributed anonymous data from about 13,000 gyms worldwide. Their data sets weren’t uniform. So in some cases we only pulled data from one or two or three. Arbox contributed key insight into international markets and provided a comprehensive package for data and analysis. Wodify gave us a huge data package with stats on memberships, users, demographics, and financial data for thousands of gyms, PushPress contributed important data that included a year over year analysis of average revenue, total members, new clients, and cancellations per gym, and Zen Planner gave us data on month over month check-ins, new members, cancellations and a lot more. We also turned to our partners at Incite Tax, one of the largest bookkeeping and accounting firms for small gyms for data on monthly rent, payroll and profitability, and Gym Lead Machine supplied website, marketing prospect conversion data.

Chris (05:37):

Then we had an independent industry analyst screen, research and package the data to give us the clearest picture. And that’s what we’re gonna talk about today. So first who’s in this data set. Well, the majority, about 65% is from CrossFit gyms or gyms that would call themselves CrossFit gyms. There’s a small sample from martial arts studios, multifunction facilities, boutique studios, and some strength and conditioning gyms. Also, most of our gyms about 75% in the survey are in the US, but there are other gyms worldwide. Canada is well represented, the UK, Australia and New Zealand and also parts of Asia. So let’s get into gym growth here. First we asked gym owners, how long have you been in business? And what we found was that 25% had been in business for fewer than four years. 75% had been in business for fewer than nine years.

Chris (06:35):

So most of the gym owners are still, you know, maybe they’re emerging from that founder stage and they’re becoming more mature as entrepreneurs, but you still don’t have like a lot of even 20 year old gym owners to draw information from. OK. And median years in business across all segments was about six. So while this sample size does come from mature gym owners, you know, it’s not people who’ve only owned a gym for about a year. They’ve been around, they’ve seen some stuff, they’ve done some stuff. You’re also not getting long term feedback from people who’ve been in the industry as a gym owner for 30 years because those people just aren’t around. Let’s start by talking about how many clients the average micro gym has. This is one of the biggest questions that we get asked is like, how many clients do I need?

Chris (07:21):

And every year we publish a report. Last year, we published a model called the 150 model, and we showed you how to make a hundred thousand dollars in net owner benefit per year for owning a micro gym with 150 clients. In the state of the industry this year, we found that the average gym has 137 members. This is the average of over 13,000 gyms worldwide. Of those 137 members, about 51% are men 49% are women. So pretty close right down the middle, but a lot of people would’ve guessed a larger percentage of women. So I think it’s really important to get that. That gender breakdown doesn’t differ much depending on where you are in the world. So in the states, it’s 51 to 49%. And it’s about the same in Canada. The place where you get a bigger, significant differences in the UK, where it’s 53% men and only 47% women in gyms, European Union falls along those lines too.

Chris (08:15):

Now let’s talk about average member age, and this is really important to understand when you’re building your client avatars and thinking about your marketing. A lot of gym owners are fairly young. I was young when I opened a gym, but the person that’s owning the gym is not necessarily the target audience for the gym. OK. So, it’s important that you know, that the average member age at gyms is 35. So when you’re doing your marketing, whether you’re 45 or you’re 25, think about what a 35-year-old would wanna see and think about what’s going on in a 35-year-old’s life. Like they’re probably settled down. Like they probably have a home. They probably are in the middle of a career of some point they might have family, they might have some kids. All right. I’ve also got here in this state of the industry guide, which by the way, you can download for free and do like a really big, deep dive into these numbers.

Chris (09:06):

If you click on the link in the show notes. You can see that there was a general uptick in members in 2020 and 2021 at certain points. And you’ll see gradually that those upticks happen as gyms were getting reopened worldwide after COVID. All right. So I’ve got some growth numbers you can see, like, depending on where you are in the world, how much the average gym grew in 2021 and how much in 2020. And you can see all that on page four team of this report. Let’s turn now to people who are thinking about becoming clients, but they’re not clients yet. OK. We would call these leads. So what we find is that the average gym is booking about 33% of all the leads that come onto their website for a free intro. Now, these aren’t like Facebook leads. They’re people that actually make it to your site, but that’s a good number to have. 33% of the people who come to the website are actually booking an intro.

Chris (10:01):

The average gym is attracting 37 new leads per month with 25% of gyms getting more than 50 people per month. So new leads, these are new people coming to your website. And the average gym of course, is then therefore booking about 12 intros per month. With 15% of gyms booking over 20 new intros per month. The average gym website gets 442 visitors and 75 returning visitors each month. Traffic is down about 18% from 2020, maybe because people were hosting virtual workouts and instructions on their website. And they’re not doing that anymore. The average new visitor spends one minute and eight seconds on your website, which means you’ve gotta take advantage of their attention. You’ve gotta get them to an actionable page on your website. You gotta have a very clear link for what you want them to do. They have to be able to understand all of your service in a minute, eight seconds or less.

Chris (10:55):

And 50% of traffic is coming from mobile phones now. So you have to have a site that’s like mobile and tablet friendly. If you aren’t sure, call up your site on your phone right now and take a look. If it doesn’t display properly, you’re losing clients and that’s costing you money. What we found with paid advertising and lead generation is that 80% of gyms had run ads. But now about half of those are continuing to run ads, which means that about half of gyms who have run Facebook ads in the past or Instagram ads, don’t do it anymore. And this is really intriguing because the gyms who know what to do and are running ads generally see a pretty good ROI and they generally don’t stop. So this leads me to believe that the gyms who have run ads in the past and then stopped either random for a very short period of time.

Chris (11:45):

Like I do, you know, a couple times during the year for about a couple weeks to a month, or they just weren’t really sure what they were doing. And they were tired of throwing good money after bad. The average respondent who gets a new lead from Facebook though spends about $25 to acquire that lead, to get them, you know, onto the website, at least. And then, you know, if 30, 33% of those can book an appointment, you can extrapolate out like it costs about $75 to get somebody sitting in a chair in front of you. So that just means you have to make your front end offer worth eating that $75. If you’re gonna turn to advertising. And of course, we’re going to be talking about other marketing strategies too. Ads are kind of like the last strategy that we teach at Two-Brain.

Chris (12:27):

So if you’re not running ads right now, there’s no need to panic. As long as you’re still getting new clients in the door. In fact, when we ask people, why aren’t you running ads? A lot of people said, I don’t know how, or I got a poor ROI when I tried it, but an equal number or more even said, there’s no need, I’m getting enough people. I prefer other methods. I do like affinity marketing, or I do referrals, or I do organic posting, or I do email marketing or whatever. We also asked people who was using a marketing agency. And just like last year we found that the ROI on hiring a marketing agency is not great. So what we generally recommend from looking at this data is you should know how to run ads. You should have ads like ready to go so that you can turn them on.

Chris (13:11):

If you turn them on, don’t turn them off, just dial your, spend back to about a buck a day. And, don’t give up on them foreveriIf they don’t work the first time, it’s just, you know, you need to set something up and you don’t need a marketing agency. If you are gonna run ads, just learn how to do it yourself. If you hate doing it, like I do, teach somebody on your staff to do it for you. OK. A lot of people actually use marketing software like CRMs, funnel builders, stuff like that. And they don’t wanna learn how to use all that stuff, but probably somebody on your staff does. Let’s turn to client value. Now, another big question that so many people ask us is like, how much should I be charging? And this is a massive issue in our industry because a lot of the original gyms they just guessed and then the next person to open in their city, they look at like the price of the original gym and they subtract $5 and that’s their price, right?

Chris (14:05):

Not knowing that the original gym didn’t do any market research or anything like that. So here’s all the data that you need for group training. The average gym in our data set is charging 159 per month. And that’s actually up from last year, which I love to see. Just so that, you know, the average gym in Two-Brain, ARM is just over 185 a month. So about $30 more per member per month. The average person in our data set selling personal training was selling personal training for $71 per hour or compared to last year, which the average was 72. What I think is happening is more people are selling personal training and we’ll come back to that. But they’re undervaluing their price. Nutrition coaching. This was great news this year. The average person in our data set was charging 129 per month for nutrition coaching compared to 110 per month last year.

Chris (15:00):

So, the average value of an hour of nutrition coaching has gone up 20%, sorry, slightly more than 20% by about 20 bucks. That’s awesome. Online coaching. This year we found that the average person selling online coaching is charging 163 per month, which is right even with last year. But that’s interesting because that price is higher than group training in person or nutrition coaching in person or personal training in person. And what’s probably pulling that up are these packages that include a lot of accountability. So, when we looked at revenue mix, like how are gyms making their money? We found that depending on what type of gym it was, most gyms are making most of their money from group training, but different gyms had a different kind of revenue mix and you can see all of them. And we looked at kids’ classes, supplements, online coaching, nutrition coaching, personal training group training, and we broke them all down by segment.

Chris (15:57):

So if you’re a personal training studio, if you’re a martial arts facility, if you’re a yoga studio, if you’re a CrossFit gym, you can see all of them on page 21 of this report. And again, you can download this report by clicking the link in the show notes. It’s free. All right, next interesting stuff is client retention. We wanna know how long does the average client stay. And we track this very religiously in Two-Brain. The average Two-Brain gym keeps the average client for an average of 19.2 months. And if you’re thinking like, OK, well the average person is paying $200 per month. That means that the average client is worth about $4,000 at a Two-Brain gym, right? 3,800. What we found though is that length of engagement actually improved through 2021. And so, people were just less likely to cancel.

Chris (16:47):

Of course, I’m sure there was a COVID effect there, but we’ve been working really hard to help gym owners keep clients longer. And so what that means is like, if you’re keeping people an extra month, every single client in your gym is worth an extra $200 to you, but it also means you have to market less because your churn rate goes down. You spend less time on marketing. You spend less time on no sweat intros. You spend less energy worrying about who’s leaving your gym and most importantly, you can change their lives. You know, if every client stayed with you one more month, how much of a difference could you make in their lives? So let’s talk about what the average gym is like selling or delivering to their clients, right? Their operations. The average gym has about 13 average membership plans. Now that’s way too many.

Chris (17:33):

You need a maximum of nine, like three options, times three price tiers, maximum. 13 different average membership plans means that people are probably getting paralyzed and not buying from you. We see the average class attendance to be six, which means that a lot of gyms are running a lot of classes that barely break even, or might even be costing them money. And we’ve got some great media series that will help you with that. 28% of gyms offer between 25 and 40 classes per week. That’s the largest segment. And the average number of classes, all segments was 33 classes per week. The busiest class times were 8:00 AM. 9:00 AM, 6:00 PM, 7:00 PM was the biggest class time across all segments. 8:00 PM was also big. Surprising to me was that there weren’t a lot of early morning class times like six and 7 because that has always been super popular at our gym, but this could have a seasonal effect too.

Chris (18:34):

So for example, in the winter here, fewer people will come to a 6:00 AM class because it’s hard to start a cold car. In the summertime though, that’s our busiest class. And so if you average that across the year, it could very well be that those are the most popular classes we hear from people lot. Like I’m running this 10:00 AM class. How do I fill it? And that’s tough because 10:00 AM is just not a convenient time for people who work a nine to five or people who work a night shift even. So, the two busiest class times overall were 7:00 PM and 6:00 PM. Super, super easy. All right. Almost everybody offered group training like 97 percent, which is great. I mean, there are a couple of personal training studios in our sample who didn’t offer group training yet, but I’m sure they probably will.

Chris (19:19):

The median group training cost again was $159 per month, which is better than last year, but it’s still not really high enough. We need to be getting that up. Let’s talk about personal training. This year, 92% of the gyms in our data set offer some kind of personal training, but it only accounts for about 20% of their revenue. So there’s a big opportunity there for gyms to boost up their personal training and or nutrition coaching and or packages that include all of the above. The average was $71 per hour. Last year, it was 72, so it hasn’t changed much, but it has gone down in this larger data set. The other thing to notice is that strength training gyms that advertise themselves as like a specialty gym for weightlifting or powerlifting, they charge more for one-on-one session than anybody else. On the other hand, the multifunction gyms who they try to do a little bit of everything like boot camp, CrossFit, Pilates, yoga, they charge the least for one on one training.

Chris (20:18):

And it’s probably because without that perception of specialization, they can’t charge for premium service. Let’s talk about nutrition coaching. So this was really, really encouraging to me. 74% this year of people in our data set offered a nutrition coaching service. Last year, it was 69%. And I think the year before it was less than 40. So this is really becoming important, which is very heartening to see because this is how you help your clients best, right? However, nobody’s charging enough. So this year, the average rate for a month of nutrition coaching was $129. Last year the average rate was about 110. And this year, even though more people are offering it, it’s still a very small percentage of their revenue, 6.4%. So there’s an opportunity to do more. If you think about like what’s at the base of your practice, you know, what are you doing?

Chris (21:16):

That’s most important to help your clients? It’s probably nutrition coaching, and that will help your clients more than anything else that you do, but still it’s only responsible for about six and a half percent of your revenue. So that’s some good perspective to think about. The other interesting thing to find there too, is that martial arts gyms who are selling nutrition, coaching actually charged the most for it. So they were charging about 150 bucks a month. The lowest performer were gyms like yoga, who were wildly under charging at 122 a month. Online coaching has come down a little bit since last year. Understandable. A lot of us, we just wanted to get back to our bricks and mortar gym, didn’t we, and as soon as we did that, we said, we’re done with this online stuff. I totally understand that.

Chris (22:01):

Supplements, about 52% of gyms in our survey are selling supplements. Now that’s actually up, or it’s about even from last year, it hasn’t changed very much. But what we see is that supplements account for only 4% of their revenue. So what that tells me is twofold. Number one, if you’re going to sell supplements, like go all in and commit to it, you know, that number should be 10%. If you can’t get that number to 10% of your revenue, just don’t sell supplements, OK. Or like set up a referral strategy with the local supplement shop. If you’re selling 4% of your revenue to come from supplements, it means you’re just kind of half-assing it. And you maybe you’ve got a few on the shelf and you’re not thinking about it. For us, I mean, if we do a couple of supplement pre-sales a year gets people on the train and then when they order more supplements through our portal on Driven, we get paid for that.

Chris (22:55):

And so that drives our revenue up. Kids classes about 42% of gyms are offering kids classes this year, 57% are not anymore. Now this is really interesting because the number of gyms offering a kids class has really gone down in the last year. And I think as more gyms try to focus in on who their key avatars are, they might find that they’re not really dealing with kids. They just saw an opportunity and went for it. So that’s understandable unless you’re absolutely in love with coaching kids, you shouldn’t be coaching kids. All right. 90% of gyms out there rent, very few own. The average gym size is 4,500 square feet. And the average rent that they pay is $3,700 per month. And of course this takes in, you know, cities around the world, which has very wild swings in rental per square foot rental size.

Chris (23:50):

That kinda thing too. Let’s talk about the CrossFit Games Open participation rates. And we see this as a really great measuring stick for participation in CrossFit and like the belief in the program as a whole. One good signal that you’re not just using the method, but you are ingrained in the whole philosophy and community of CrossFit is your participation in the CrossFit Open. And what we found is that 84.7% of gyms in our state of the industry dataset did the CrossFit Open in 2021. And this is super interesting because only 70 something percent of the gyms in the data set are CrossFit gyms, which means that about 10%, across thousands of gyms, identify with the CrossFit method, but are not CrossFit affiliates. The other interesting thing is that 90% of gyms planned on participating next. So even if they’re not an affiliate now, even if they haven’t been an affiliate for a while, they still plan to do the Open next year.

Chris (24:51):

And I found that really interesting. Conversely, 78% of survey respondents are confident in the future of the CrossFit brand down from last year, which was 82%. And so while people are eager to participate in the method and things like the Open, they’re not too sure about where the brand is going long term. OK. Let’s talk about staff. On average gyms the industry have one full-time employee, other than like the owner, 75% have one or two staff members and most gyms have about four. So one full-timer four part-timers. Staff compensation for a group class is $22, which was consistent from last year. It didn’t change. Didn’t go up, but it didn’t go down either. I think that might actually rise in 2022, as we move back into full-time bricks and mortar. The highest paying gyms out there were generally boutique studios or martial arts.

Chris (25:51):

And they were averaging 23. Personal training was right in there too, the lowest paying gyms were multifunction gyms like yoga, Pilates who paid their coaches around 20 bucks per class. But that was pulled down because some paid them zero. So if you compare this to gyms that are profitable, you’ll see kinda why there’s low payment in a lot of these gyms, like the gyms just aren’t that profitable. And so this is really all they can afford. It doesn’t mean that the gym owners don’t wanna pay their staff more. They probably do, but it’s all they can afford. Right? If you look at the average, highest salaries per survey segment, what you’ll see is like the highest salaries are usually actually made at like the yoga gyms. They’re just not paying people per class. So the average salary in like a yoga or multifunction gym was 36,000. A boutique studio,

Chris (26:44):

so like personal training was about 31,000. The average salary at a CrossFit gym was about 25,000. Martial arts was about the same. Strength and conditioning was higher at 32. Now if we look at profitability and we compare that against expenses paid to staff, what we find is that 34% of gyms are profitable. 30% are unprofitable. And the other 30% are kind of like right at the break even. And the mean average that these gyms paid to their staff was 33%. Now at Two-Brain, we teach you how to pay 44%. But just so that, you know, in the broader industry, like if you take all the globo gyms, the average amount of revenue that’s paid to staff is about 15%. So while we are paying a bigger percentage of revenue to staff in our part of the gym industry, the pie is a lot smaller.

Chris (27:34):

And so that actual dollar amount is not much better than what they would make at a globo gym, unless they’re working at a Two-Brain gym. All right. So I’ve got some stuff here about, business partners and stuff, but I really wanna get to how much are gym owners paying themself? I mean, you opened this gym for a lot of reasons, right? You opened it to serve your community. You opened it to provide meaningful careers to fitness coaches. You did it like for reasons of saving your clients’ health. I get that, but you also opened this business to create financial freedom and time freedom for you, the owner. And so I wanna compare a couple of things, how much you make and how much time you spend. When I was a young gym owner, younger gym owner, 2005, I asked myself like, who is actually retiring from this? Is anybody keeping a gym for their entire career?

Chris (28:26):

And then like, how are they retiring successfully? And I couldn’t find very many models for it. You know, even the people who were 60 years old at that time were still actively coaching and working every day. And that was a little bit discouraging, but we’re really making a lot of progress here. So first off, let’s talk about net owner beneft. Net owner benefit is the sum of the money that you receive from your business. So it’s like your profit, it’s your salary. And it’s like the little bonuses that your business pays for. Like maybe your business pays your cell phone bill. OK. Half of the people in our data set took home less than $4,000 per month. That’s not enough. However, the top 25% of the gym owners took home more than $6,000 per month, which, you know, depending on where you are in the world actually exceeds the happiness index, right?

Chris (29:13):

It’s like, that’s enough. So you’re seeing this big separation between gym owners who are earning enough and more than enough and gym owners who are just making enough to barely survive or maybe like their partner or their spouse has a job somewhere else. And we’re gonna dig into why that separation is there and why that separation is actually spreading out. OK. So first off, about the bottom 25% of gyms are making less than $1,900 per month. The middle 50% are making just under $4,000 per month. The top 75, sorry, the top 25% are making just under $6,000 per month. And, the very top are making about just over 6,000 per month. Now, what we found in Two-Brain is that focusing on a target, earning a net owner benefit of a hundred thousand dollars per year gets gym owners there a lot faster. Failing to have that target generally means that you starve yourself or like you martyr yourself to the business.

Chris (30:17):

So if you look at like, what are causing these separations, what gets people to earn that net owner benefit faster? I’ve actually got some data on this. The first is gonna be goal setting. The second is working with a mentor. If you look at like the people who are earning less than $2,000 per month, only about 45% of those people have a business coach or a mentor, or somebody formally saying do this next. But if you look at the people who are at 4, 6,000 and above, over 70% of those people have a business coach. And if you keep in mind that like everybody who has a business coach is growing, I think what you’re gonna see next year is like these top groups earning over $8,000 per month. The bottom groups though, without a mentor, are probably gonna be the same.

Chris (31:07):

That sounds like a sad prediction. And I hate to be pessimistic, but we just haven’t seen that change. The average gym owner is working about 37.8 hours per week, which is absolutely fantastic. However, this is hours tracked working, and what we find is that, like, if you get there at 6:00 AM, you stay till six at night and you see five or six clients or coach five or six classes in there that you only count those five or six hours, but really you’re there for 12 hours. And so I am surprised that this number is low, but it could just be attributed to the way it’s counted. OK. We also found that there are people at both ends of the spectrum. Some like me who work zero hours in their gym, one hour a month meeting with the GM. And there are also people, more people working between 70 and a hundred hours a week.

Chris (31:59):

This was certainly me for years and years. If we look at like the percentage of people who are profitable, this is where we break down. So does working more make you more profitable? Well, not if you own a real business. So what we find is that the people who work the least zero to 20 hours have a very high profitability. 77% of those are profitable, and it’s not because they work few hours, they work few hours because they’re profitable. If you look at people who work 51 hours or more a week, only 59% of those are profitable. And again, it’s not because they’re not working hard enough. It’s because they’re working, working, working in their business instead of working on their business. So owner hours, you know, what makes you work less? Is it just like, I need to put in the work, I need to spend five years building this gym, and then I’ll automatically work less.

Chris (32:50):

The data says that’s not true, that you can just keep working a 70 hour week forever and not get any better. You can doing the same thing over and over and over again. And just putting your head down and grinding, and that’s not gonna actually improve your gym. And this was the epiphany that I had back in like 2009 that made me seek a business coach and actually fix my gym. Cause I could see that I just couldn’t work any more. I couldn’t work any harder. And my gym wasn’t improving. All right, let’s talk about revenue insights. So if we go from summer 2020 to summer 2021, the average gym saw a revenue increase of about 43%, I don’t think that’s gonna surprise anybody. Because you’re going from a period of like full COVID lockdowns in many cases, to a period of being wide open and back to business. There were some really interesting insights though.

Chris (33:40):

Like for most gyms, when they opened up, they saw a surge of clients. Again, you can download this guide yourself just by clicking the link in the show notes, it’s free. OK. Let’s talk about profit. Let’s talk about profitability and square footage. Is a bigger gym more likely to be profitable? Well, it depends. So what we found is that gyms that are under 2,500 square feet, about 70% of those are profitable. Gyms that are 2,500 to 4,000 square feet, 73% of those are profitable. Gyms that are 4,500 to 6,500 square feet, 77% of those are profitable, and gyms that are over 6,500 square feet, that number drops a little bit to 76%. not a massive swing, which means that size does not really determine profitability very much. Up to a point, you know, it can be hard to be profitable in a smaller square footage, but you know, more than two thirds of gyms are anyway.

Chris (34:33):

However, where you start to see the numbers drop off is when the gym gets bigger than 6,500 square feet. That was a big sigh of relief to me because Catalyst is like 6,400 square feet. So I don’t need to get any bigger. Profitability by sector. What we found going through 2020 and 2021 is that most gyms did manage to stay profitable. Now this is really profound because if you look outside the micro gym community and you look at like the big globo gyms that make up most of the industry, most of them went to zero profitability. They went to zero revenue, which meant they were losing money, several filed for chapter 11 protection. OK. But by and large, the small operator gyms, the micro gyms, they survived and they actually finished 2021 profitable. The sole exception is martial arts gyms and martial arts gyms tended to take a beating.

Chris (35:22):

It could be that they lost clients as they tried to pivot online. And then back again. It could be that masking restrictions or vaccination mandates in their local area stopped them from doing their usual stuff. But strength and conditioning gyms bounced back really, really fast. Boutique studios like one on one, they bounced back really fast, less so CrossFit, yoga did. OK. But CrossFit gyms are on the way back. According to this data set. Let’s talk about business debt. You know, I started with 16,000 in debt. Some people try to start with zero in debt, , but we found that 62% of people in our data set had debt, between zero and $20,000, could have been purchase, buyout, whatever. And 10% had debt over hundred thousand dollars, which is a little bit scarier. Let’s talk about profit. So if we look at like how profitable a gym was before COVID shutdown and how profitable they were after, that will give us a great insight into the gym’s retention, like their adherence rates, how close they are with their members and also their systems, how well they did during COVID. Their ability to retain clients online was actually a great predictor of how quickly they would bounce back when they could reopen.

Chris (36:36):

So what we found was that within a month, 71% of Two-Brain clients returned to full profitability, but only 53% of other gyms did. We also found that revenue got right back to where it was after COVID in 74% of Two-Brain gyms, but only 55% of other gyms. And with that means is that during COVID, the gyms may have cut some expenses that they didn’t really need anyway. So revenue got back really, really quick. Profit came back almost as quickly, but you know, caught up in the next month or so. Now you can download this guide for free. You can have all of it. The reason that I put this guide together is even back in 2009, when I was trying to figure out like, why can’t I make this gym work? Or how am I ever gonna retire?

Chris (37:25):

How am I gonna put my kids through college? Even back then, there were these fitness industry gurus who were like selling their system. And I would look at these people, they were always dudes back then. And I’d say that guy doesn’t even own a gym. How’s he know what I’m going through? Or they would put out an idea and I would say, OK, like where have you tested this? You know, what’s been your experience. What’s your data? Is this working better than something else? You know, compared to what is basically the question that I’d ask and nobody had any data. And so I started sharing my wins and especially my losses on a blog just to share like my N equals one data. But over time we’ve said the industry needs a data set. Like you need an objective set of norms to say, am I doing better than that?

Chris (38:13):

Not because I want you to be average, but because I want you to know what average is. So you recognize it as you blaze on by. So Two-Brain Business is a team of successful leaders mentoring gym owners to success. And we use experience instead of opinion, we use data and proof, not random ideas. We move entrepreneurs through distinct phases of entrepreneurship, founder phase, farmer phase, where you’re growing your team, tinker phase, where you’re growing your wealth. And then thief phase when you’re giving it all back to your community. And we’re committed to generating measurable results for fitness professionals so that you can help your clients, because I want you to stick around for 30 years and help correct the flow of health, which is on a downward trend worldwide. Our values guide our actions. We believe in honesty, we believe in transparency, and that’s why we create this guide. That’s why we spend a ton of money, time and resources putting this together. And it’s also why we give it to you for free. You can make your own decisions. I want to empower you to do that. I wanna empower you to say this works, that doesn’t, but I also want to empower you to ask the question compared to what. Or I want you to say, prove it. And if somebody can’t prove it, then it’s their opinion. But if somebody can prove it, then that’s your bedrock and you can leap from there.

Mike (39:31):

To get a free copy of our state of the industry report, click the link in the show notes, or visit twobrainbusiness.com/soi2.

 

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