The State of the Fitness Industry: 2020

Chris Cooper and title text.

Chris (00:00:01):

My name is Chris Cooper, and this is the state of the fitness industry 2020.

Andrew (00:00:05):

It’s Two-Brain Radio. In this episode, Two-Brain founder, Chris Cooper talks about our 84-page, data-filled State of the Industry book. To get your free copy and start planning for success in 2021, click the link in the show notes.

Chris (00:00:19):

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 Two-Brain coaching.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 (00:01:48):

2020 was a test. And for the most part, the microgym industry passed 2020’s test, but many of the big box gyms, the franchises and the access-only facilities failed. This year, 2020 asked us all the questions that we were scared to ask ourselves: How fragile is my business? How loyal are my customers? How useful is my facility and how good is my coaching? COVID created a dark night of the soul for the entire industry. We had to ask ourselves questions about our own utility in the big picture and how our businesses are really doing. Are we really creating value for people? And we had to ask whether we had the energy to keep going long term. While almost no one had a perfect score on this 2020 test, most microgym owners actually came out of 2020 in better shape. But the COVID crisis was also a catalyst.

Chris (00:02:42):

It sped up the natural evolution of the microgym industry. Gyms with 300 members and poor retention suffered greatly, many went out of business, but that model was on its way out anyway. Gyms with diverse revenue streams, more personal training and nutrition coaching, had the best revenue retention in 2020, but they’ve always had the best revenue retention. Microgym owners were slowly trending toward the model of 150 members each paying $180 more or more per month with a very long retention curve. And COVID made it really clear who those people were. Gyms that fared well through the shutdown actually saw a surge when they reopened. And despite a second shutdown in many parts of the world, microgyms now find themselves in a new blue ocean of opportunity as the big chains struggle to emerge from chapter 11 or even bankruptcy. So in this report, I’m going to share some data that supports everything that I’ve just told you.

Chris (00:03:42):

And I’m also going to give you a lot more, but before I do, I want to talk about where these numbers came from. My goal with this report is to unify gyms around science instead of about religion. Most of us opened up a gym because we believe in a model like CrossFit, for example, or Pilates, and we believe unquestioningly in that model’s ability to change lives and save people’s health. And then we modeled our business after that belief, instead of after metrics and numbers. In other words, science. If you’ve ever seen a commercial then you already know how data works, people can use data and studies to prove anything that they want. And you probably saw a lot of these graphs during the pandemic, right? I sure did. It’s taken me five years and hundreds of thousands of dollars to collect the data that I’m about to share with you for free.

Chris (00:04:34):

There’s never been a larger data-driven study of the fitness industry than the one that we have just put together for you. We have more data than anyone has ever gathered, and our Two-Brain database grows every single month. It keeps getting bigger and bigger and more powerful. But what makes it powerful? Its ability to create a model of success for us. And that means translation. And that’s what this podcast is all about. But it’s important that I present data in an unbiased way. So we hired an independent analyst with a background in industry intelligence and market research to review the numbers and present his conclusions for this report. This analyst is independently contracted by private equity firms to do due diligence on potential targets. And we asked him to bring the same rigorous standards to the data that we gathered. It’s also important for you to understand that we don’t try to present a balanced perspective like selling breakfast cereal. These are the numbers. Period. We don’t try to play one side off the other or say, well, the data suggests this, but here’s this other leading industry expert that says something else. No, we don’t do that. One big failing of the fitness media is its attempt to balance opinion instead of seeking truth. So instead of saying the average gym owner makes X dollars per year, most fitness business websites will profile two gym owners who appear to be successful, but might not actually be successful.

Chris (00:06:01):

Want a great example? During the COVID shutdowns, many experts gave advice on how to run Zoom classes, but we said, are Zoom class is actually effective at retaining clients? And it turned out the answer is no.

Chris (00:06:15):

Gyms running only Zoom classes retained only 7% of their clients. During the COVID crisis, failure to ask for proof and data could have been fatal. On the other hand, in our first shutdown guide, I recommended the gyms not lend out their equipment to their members. As it turns out, gyms that loaned or rented equipment to their clients had a better retention rate than gyms that didn’t. So we updated our recommendations in our second shutdown guide, which helped gym owners when lockdowns returned. I’m driven to collect, analyze, and share data because opinion isn’t what will save us. Data is truth, and truth will save us. Without a governing agency to collect and share this data, we are not a nation of microgyms. We’re 20,000 disconnected islands. So my goal with this report is to unify these gyms, these islands, around science instead of religion. Personally, I learned a lot during the COVID shutdown. And the biggest lesson was one that came very early because I went looking for it. Back in last January, which seems like 20 years ago, I told the Two-Brain family that 2020 was the year of focus. I told them exactly how to focus, how do identify their priorities and exactly which steps to take to follow the Two-Brain model. And when the first gyms closed in China due to COVID, I got really worried. I had a few minutes of self doubt. Like, I don’t know how to save these people. I can’t do it. You know, that moment of panic when you don’t think you’re going to figure it out.

Chris (00:07:47):

But then I made the mental pivot that saved my gym, and frankly has saved hundreds of gyms since. I changed my mindset. I didn’t say gyms are not going to survive this. Instead, I asked how can gyms survive a physical lockdown if it comes to Europe and the States and Australia and New Zealand? Now I learned to pivot and ask this question, how can we do it? Instead of thinking, I can’t do it, from years and years of mentorship. It’s hard to solve a problem when you’re in the middle of it.

Chris (00:08:20):

But it’s always easy to solve a problem in hindsight. And that’s because standing outside the problem is a lot easier to see the whole big picture. Standing inside the problem is overwhelming.

Chris (00:08:31):

So I rely on mentors to give me their perspective from outside. Over the last 12 years of gym ownership, I’ve relied on mentors to give me that broad outside perspective. And this year when I was stuck in the middle of a crisis with thousands of other gym owners around the world, I relied on mentors more than ever before. I spent more than $230,000 on mentorship this year. And I brought back everything that I learned and reported it to the Two-Brain family. I hired Seth Godin to tell us how to change our stories. I hired Chris Voss to tell us how to negotiate with our landlords and I hired Risha Grant to tell us how to lead and encourage diversity. And when things were at their lowest, I turned to my personal mentor, Todd Herman, to help me lead. The greatest lesson that I learned from Todd in 2020 is called the calm model, C A L M. Calm stands for clarity, assurance, leadership and movement. When we’re under stress, we naturally look for the leaders who exhibit these characteristics. And the purpose of this report is to give you some clarity and then give you some assurance that things are going to get better. Then the purpose of this report is to highlight the leaders in our midst and to use them as a model for recovery and growth.

Chris (00:09:47):

Finally, I want to help you get some movement. So I’ll tell you how to use the data in this report to grow your gym. So I’ve broken this report into four parts: clarity, assurance, leadership, and movement. Let’s start with clarity. How are gyms really doing? The scope of this section is that while previous reports coming from like software vendors and gym management platforms, they’ve been helpful in getting a general idea of what’s happening in the fitness industry, but none were able to provide a holistic view. They were all limited by their own definitions that appeared in their own dashboards or by you know, the users of those dashboards or the reporting of those users of those dashboards. Another piece here is data. For example, customer relationship management systems have no data on expenses or profit or owner pay and owner lifestyle and industry associations rely completely on surveys and have no concrete data.

Chris (00:10:43):

Industry associations would ask you questions like how confident are you that your gym will grow in 2021? That’s not data. Finally, vision. Our goal in putting this report together is to give you the clearest picture of what’s actually happening in the gym industry right now. And so to do that, we relied on our audience, some proprietary tools that we’ve developed over the last several years and our industry partners. We leaned on them a lot. Here’s where our data came from: While we were creating this report, we used data from the following sources. First, a 59-question survey was distributed to our 30,000 people email list. These are all gym owners. And the Gym Owners United Facebook group. So for perspective on the events of a challenging year, gym owners filled out this survey from mid October to mid November, after the first wave of the COVID-19 pandemic. Then expense, profit and owner lifestyle data came from our Two-Brain Business dashboard.

Chris (00:11:41):

This data is reviewed and verified every month when Two-Brain clients meet with their mentors and that’s how they plan their next steps in their business. Then we compare the revenue expense, profit and discretionary earning numbers that we pulled to the data that was compiled by Incite Tax, one of the largest bookkeeping and accounting firms for small gyms. We also turned to Wodify, one of the largest gym management software providers, for their compiled membership, user demographic and financial data for thousands of gyms around the world. We also turned to Arbox, a gym management software provider that has a strong presence in international markets, to provide similar data. Arbox also provided us with unparalleled insight into what happens during the COVID lockdowns because they tracked membership holds cancellations, and reactivations on a week by week and year over year basis. Arbox analyze these numbers and shared its findings openly in the Gym Owners United Facebook group throughout the year, as well as publishing a report with Deloitte.

Chris (00:12:40):

We also turned to Rigquipment, who provided us with gym owners’ financing and payment activities through 2020. AGuard, formerly Affiliate Guard, had a unique view into how many gyms de-affiliated from CrossFit and how many gyms closed their doors entirely. And Gym Lead Machine gave us website and conversion data so that we could better understand a prospect’s behavior online before they joined a gym. So overall, this report contains information from over 6,000 gyms. The collection and analysis of this data was a massive but necessary undertaking to provide a comprehensive report on the state of the industry. Now, why did we have to do this? Well, about five years ago, I was sitting at a breakfast cafe in Santa Cruz, and I was talking to the then CEO and COO of CrossFit and some other, you know, HQ staff were around the breakfast table too. And I was laying out my vision for a collective dataset from CrossFit gyms.

Chris (00:13:38):

And at the time I thought, OK, there’s about 15,000 CrossFit affiliates. Even if we can collect data, we don’t have to tell the affiliates, here’s how to run your gym. We can just share the data with them and let them make up their own mind about what to do from science instead of, you know, just religion or myth or storytelling. And I laid out this big plan and the guys around the table said, yeah, Chris, that’s great. We’re not going to do it. You should do it. Little did I know how hard this would be? So within about a month, I started a project with a company out in Idaho, great, great company. I invested $70,000, and the system didn’t work. So we moved on. Then I tried to make a partnership with a gym management company and build some custom Two-Brain dashboards that everybody could use.

Chris (00:14:24):

But, you know, the gym management company just didn’t exactly align with what we were trying to track. And so that didn’t work. And then we tried to use surveys and, you know, we were threatened with a lawsuit. Then we tried to build a second piece of software and I spent about 50,000 on that one. And then we dropped it. We tried a third piece of software after that. I only spent 15,000 and then we dropped it. And finally we realized the best thing that we can do lean heavily on our partners to bring this together. We also realized that because we have these partnerships and because we have our Two-Brain dashboard that we use to make decisions and track data and because of our trust in the industry, we were really the only ones who could do this. So while we’re not going to make any money by publishing a state of the industry report that cost us tens of thousands to put together,

Chris (00:15:15):

we also know that it’s our responsibility as the biggest mentorship practice in the world to do this kind of tracking and reporting, because somebody has to tell microgym owners, here’s what’s actually working. And here’s the proof. Let’s start with finances. I want to talk about the percentage of profitable gyms by industry segments. So this is interesting because there’s some disparity here and I want to talk about what’s important. So first of all, 58% of boutique-style yoga style gyms are profitable. That’s interesting because most people assume with such low overhead that most yoga gyms are profitable. That’s not true. 50% of martial arts gyms are profitable. That is super interesting to me because most CrossFit affiliates actually copied the model early of martial arts practices. So back in 2006, if you were a CrossFit affiliate and you went to the affiliate gathering, you would have watched somebody onstage talk about how to build like a CrossFit affiliate model.

Chris (00:16:22):

And this guy’s background was in martial arts where it’s really, really cheap to scale. You can put 30 kids in a class, you can sell them all a gi, they don’t need any equipment. They don’t need more than three square feet and they don’t need more than one instructor and scale that way. Well, that doesn’t actually work in a coaching environment like CrossFit. So it’s really interesting to see that only 50% of martial arts gyms are actually profitable according to these numbers. 69% of CrossFit gyms were profitable. So that’s just fantastic. Only 52% of personal training gyms are profitable according to this data. That is a surprise to me. When I had a CrossFit gym and a personal training studio, the CrossFit gym bled money for years, but the personal training studio paid enough money to keep the gym going. 51% of strength-and-conditioning gyms are profitable.

Chris (00:17:12):

And 45% of what’s called varied gyms are profitable. Now, varied doesn’t mean like they’re offering personal training and CrossFit or personal training and bootcamp. What it probably means is that they’re either like subletting space to let other trainers come in and do their own thing or their message isn’t really clear about what they’re providing. So that’s super, super interesting. Overall, 64% of microgym owners report being profitable at the end of 2020, which is great. And 69% of CrossFit affiliates report being profitable. And that pulled the whole number up. And that’s more than 10% more than any other segment we talked to.

Chris (00:17:50):

So there is another category here, and that includes like sports academies, mixed method boutique gyms with some group classes. It also includes bootcamp studios, cycling, spin studios, health facilities, and so on. And it’s kind of this mishmash is actually insightful because if we’re not clear about what they’re selling, then their audience isn’t clear about what they’re selling and that drives the value of their service down, which might explain why they’re not profitable. So let’s talk about debt range. And when we’re comparing profitable and unprofitable gyms, profitable gyms are more likely to have less outstanding debt. So if we look at like the debt range of profitable gyms, usually they have some debt, about 70% of profitable gyms have a bit of debt between zero and $20,000. But if we look at the debt range of unprofitable gyms, they usually have a lot more debt, like between 20,000 and even a hundred thousand dollars in debt.

Chris (00:18:54):

So what that tells you is like an owner operator business like this isn’t a highly leverageable type of business that you would just keep borrowing and borrowing and borrowing against and building more and more facilities and hoping that revenue outpaces your debts. So, you know, there’s a lot of this strategy that goes on, especially in real estate where people try to leverage their credit, they borrow money from the bank, they buy one house, they buy two houses and they hope to get enough rental revenue back to pay off their bank loans. Well, there are some gyms that follow this model too. So what they do is they open up like a flagship gym, maybe in Manhattan and it’s running at a loss, but it looks beautiful. Then they open up another gym somewhere else. And then they open up a third gym and a fourth gym, and they are making enough money to finance to pay off their monthly bank loans barely, but they’re really getting deeper and deeper and deeper into the hole.

Chris (00:19:51):

And when something like COVID hits them, they’re toast because their revenues dip below their bank payments and they still have this massive, outstanding debt that they can’t service. And so chapter 11, and that happened in a lot of big chain gyms, but it happened in microgyms too. So, you know, should you bootstrap? I’m not sure that you should start from absolute zero and try and like build everything and self-finance your business with cashflow. Zero to $20,000 in debt still produces a ton of profitable gyms, especially in startup, but you don’t need more than that to start a microgym. Now let’s talk about owner hours worked. So how much do you have to work in an owner operator gym, once it’s successful? Here’s the interesting thing. Of the gyms that were profitable, so we’re not taking unprofitable gyms here, 74% of owners of profitable gyms work zero to 20 hours.

Chris (00:20:47):

That means that they’re highly focused in how they spend their time. And we have to ask ourselves, is this correlation or causation, like this is a chicken and egg problem. Do they only work zero to 20 hours because the gym is profitable or is the gym profitable because the owner is only allowing themselves to work zero to 20 hours on highly focused things that actually grow their business? So the interesting correlate there is that the more classes an owner teaches themselves, or the more they do the cleaning themselves, the less likely the gym is to be profitable. And that’s because they’re not spending their time on high-value roles. More is not necessarily better in time spent. And I know this kind of flies in the face of popular media, where we’re saying like, you got to grind, you got to hustle. You know, and I really believed this myth myself for years and years when I opened up, I would make sure that I was the first gym open on my street.

Chris (00:21:43):

I would press my nose up against the window. I would look to the right look to the left, make sure that those gyms’ lights were still off, that their windows were still dark. And then take pride in being the first one open. And I would stay open until they had all closed. And I would take pride in that too. And I was probably getting paid about $4 and 50 cents per hour when you calculated it all out. But what this shows you is the business owners’ skillset is different from grind and hustle. If you want to be successful as a gym owner, you have to be very, very focused and use your time to grow the business instead of just coaching more classes yourself or taking more on yourself. The next question is the median years in business by the number of owner hours worked. So for those people who are working zero to 20 hours in their gym, the median number of years in business that they are was 6.5.

Chris (00:22:37):

So it took them a while to get there. The people who were working 21 to 40 hours a week in their gym, which is still really great, these people had been in business for about five years, three months. The people who are working 41 to 50 hours, they’d been in business about five years and the people who are working 50-plus hours, they’d also been in business for five years. So what really is the difference between the person who’s working over 50 hours a week in their gym and the person who’s working less than 20? It’s not just time spent. It’s not just putting in the reps. It’s really like, what are you doing with that time that makes the difference. It’s not like you just work for five years and then suddenly you can take 10 hours off a week. And then three months later, you can go down to 20 hours a week. That’s not it. You have to actually be doing the right things. So now we’re going to talk about investment in marketing software. And so this was an interesting correlate for us to walk into because a lot of people think like the way for me to work less in my gym is to get more clients, get more revenue. And the way for me to get more revenue is for me to market.

Chris (00:23:46):

And so one of the ways that we tested marketing spend was how much you were investing in marketing software. Now marketing software is like ClickFunnels, CRM website, stuff like that. And more specifically it would be like Salesforce, I guess, different Facebook marketing software tools, like things that auto post to your social media calendar, stuff like that. What we found was pretty interesting to me because I’m not a big investor in marketing software, but there’s a strong correlation between people who work less and people who invest in this type of software. So of the people who worked zero to 20 hours, 70% invested in software like ClickFunnels or more specifically, a CRM. People who worked 21 to 40 hours, 60% of those invested in this type of software.

Chris (00:24:38):

But here’s the thing. Of the people who worked 40 to 50 hours a week in their gym, 67.6% of those people also invested in marketing software. So it’s not actually the software that makes the difference here because there’s such a tiny difference between the people who worked 41 to 50 hours and the people who are zero to 20 hours, they both invested in marketing type software around the same amount. We know this stuff is powerful. We know it can improve retention, conversion, all that stuff. But we also know that it’s not the answer in itself. It’s what you do with it. Let’s talk about profit and years in business to give us a sense of how long it takes to get profitable. Here’s the interesting thing, though. We’re going to break this down by how long you’ve been in business. And then the percent of those gyms who are actually profitable. So for example, gyms who’ve been in business for more than eight years, of all of those gyms, 68% are profitable. That means that some of these gyms, 32%, a third of them, who eight years into this are not profitable. That’s really important to understand, but not as important as what comes next.

Chris (00:25:49):

So of all the gyms that have been in business for five to eight years, 63% of those are profitable. Here’s the crazy part. Gyms that only have been around for three to five years, 68% of those gyms are profitable, and gyms that have been around less than three years, only 52% of those are profitable. So first off, gyms that have been around for more than eight years, 68% are profitable. But so are gyms who have been around three to five years, 68% of those are profitable. So in the three-year difference between the five-year mark and the eight year mark, for most of those eight-year-plus gyms, nothing really happened. They didn’t really change anything that made them more profitable. Here’s the other crazy part. Of the gyms who’ve been around for less than three years, 52% of those gyms are profitable. Now three years is a long time to go without profit in any business. One year I can understand, you know, 80% of restaurants fail in the first year, but they have tiny, tiny profit margins. What we should see is gyms reaching profit in their first year and not doing that by scaling up the number of people in their gym, they should reach profitability really early because they started with a plan to hit profitability. My plan was starvation. You know, I had to get paid on the first Friday that my gym was open. I wrote the check for $900 in advance, and I had to sell enough personal training memberships to get to $900 in profit my first week. So, you know, starvation is kind of a forcing function, but also knowledge and technology and mentorship is really what’s making these gyms that have been around for less than three years profitable. And it’s really amazing that, you know, over 50% of these fairly new gyms are profitable. I think as we continue to track this data over time, what we’re going to see is the long tail effect of the unprofitable gyms just kind of fading away after about three years because their first lease will be up and the profitable gyms kind of taking over and dominating that eight-year mark.

Chris (00:27:52):

The bottom line here is like, if you’ve been in business for eight years and you’re not profitable, there’s something you’re not seeing. I’m not sure what that is, but you could use an objective third eye to tell you. Let’s talk about monthly expenses. This is really interesting to me. So if you look at the data in two different ways, you get two different answers. Let’s talk about what median means and mean means. So median average is the number that occurs most often in the dataset. So if you’ve got, you know, one person with $1 in expenses, one person with a hundred dollars in expenses and five people with $80 in expenses, then the median average is 80. 80 occurs most often in the sample. A mean is literally, you know, the total amount of expenses divided by the total number of gyms. OK? That’s a hard average. So when we’re looking at monthly expenses, the median total expenses were 10,000. The mean total monthly expenses were 14,000. What that tells us is that while most gyms are paying around 10,000, there are a few outliers who are pulling that expense count way up. Now, this expense doesn’t include staff. We’ll get to that later. And you can see if you download this guide, the State of the Industry, you can see some really cool graphs showing you how that breaks down.

Chris (00:29:10):

Now let’s talk about monthly spending and profitability, you know, do you have to have more expenses to make more money? So this is interesting. 53% of gyms with monthly expenses less than or equal to $6,000 are profitable. Just over half. OK? So these are people who really are not spending a lot in expenses. Maybe they’re paying a little bit of rent, but that’s about it. 65% of gyms with monthly expenses between 6,000 and 10,000 are profitable. That’s pretty good. You know, two thirds of gyms spending between 6,000 and thousand are profitable. That’s better than the people spending less than 6,000. What are they spending that money on? It’s a guess right now, but it could be like a better location. It could be mentorship. It could be better equipment. It could be paying a loan on building upgrades. Something like that. 64% of gyms with expenses between 10,000 and 18,000 are profitable. So going from 10,000 a month to 18,000 a month doesn’t necessarily mean a big difference in profitability. Again, it’s what you do with that. And then finally, 74% of gyms with expenses over $18,000 are profitable. Now that’s interesting because obviously just throwing $8,000 out your car window will help you spend more money, but it’s really what you do with that. I’ll give you a great example. Let’s look at 65% of gyms with monthly expenses between six and 10,000 are profitable.

Chris (00:30:34):

And 64% of gyms with expenses between 10,000 and 18,000 are profitable. There’s no difference really between the gym spending 6,000 a month and $18,000 a month when it comes to the percentage of gyms that are profitable. So why isn’t that an obvious difference? Well, some gyms invest, or they sign up for expenses that don’t actually help their gym become profitable. For example, you could make two decisions on your facility. The first is to pay more money to get it into a better location. Will that make you profitable? Probably, because you can charge more money for your service and you might get more clients. You could also choose to invest the same amount of money every month in the bigger expense of growing your gym in a less perfect location. So this is what I did, right? I stayed in the industrial park. I doubled my space, but that is going to increase expenses without increasing revenue, because having a bigger gym does not pull in more clients and having a bigger gym does not pull in higher value clients.

Chris (00:31:35):

And having a bigger gym does not increase how much your clients spend or how long they stay. So I made that mistake and I know a lot of other gyms are out there making that same one. The next we want to talk about is how much it costs to run a gym depending on different segments. Now, this is crazy, crazy, interesting to me because we want to know, like, what if I opened a bootcamp? Would it be cheaper than opening up a CrossFit gym? What if I had a martial arts studio? OK. So we want to talk about the average expenses by industry segment. So if we look at like what people are paying, I’m going to go through the third-quarter numbers, but I’ve got the first quarter, second quarter numbers here too. The reason I’m only going to walk you through the third quarter numbers right now is because a lot of gyms were getting like rent abatements or cessations during COVID.

Chris (00:32:24):

So those numbers are lower than they might normally be. So if I look at yoga, yoga actually has the lowest expenses. It costs less to run a yoga studio. I kind of mentioned this earlier. They have less overhead because they don’t really need any equipment, right? They do need space. They need a certain type of decoration in that space, but they don’t need to go buy a rig. They don’t need a reverse hyper. They don’t need barbells. People generally bring their own mats. So why aren’t more yoga gyms profitable? Well, we’ll get to that later. CrossFit’s average expenses for a CrossFit gym was around 17,500 personal training. Gym expenses were around 11,000 and that is probably directly tied to the amount of space needed for a personal training gym. You know, when I had a personal training studio, it was doing about a quarter million a year in about 1600 square feet.

Chris (00:33:16):

My CrossFit gym was doing less money than that, even when I went up to 5,000 square feet, until I started turning things around. So personal training is actually the least expensive facility to own. That doesn’t necessarily mean it’s the most profitable, but we’ll get there. Strength and conditioning about 20,000. And if I were to guess, I’m picturing a strength and conditioning facility, they probably have a lot of equipment, but they can get away with kind of a grimy space in the middle of an industrial park. And facilities that are quote unquote varied. They actually have the highest expenses per month, which are 52,500. And if you remember these varied gyms, which could have been like health coach, sport-specific training, these also have the lowest percentage of profitability. So, you know, if I’m looking at, for example, a gymnastics gym, they need a ton of space.

Chris (00:34:06):

And it’s very specific space with very high ceilings and they have to cater to a high-end clientele and they have a lot of kids. So they have to have bathrooms and change rooms, all these expenses that add up, but don’t actually generate any additional revenue. So these varied gyms, and I’m not just picking on gymnastics, but like sport-specific training, you’ve got to have different equipment. You know, you’ve got to have like a turf track, for example. These are maybe not the most profitable type of businesses to get in for this reason. Let’s talk about the owners of these facilities. How many hours a week are they working? If we look at the mean average, the average number of hours worked per week, it was 37. So what does that mean to you? If you’re working more than 37 hours a week on your business, and that’s not just the time that you roll in to the time that you leave, that also includes the programming that you’re doing on the weekend.

Chris (00:34:57):

It includes, you know, you scrolling through your phone and looking at various Facebook groups for answers. It includes you designing new T-shirts on Canva. All of that counts. If you’re working more than 37 hours per week in your business, that’s OK, set your goal could be 37 for 2021. And then audit your time. The low end was CrossFit gym owner, surprisingly working 34 hours a week. The high-end were strength and conditioning facility owners working 46 and boutique yoga owners operating at 44 hours a week. So the effective hourly rate, this is what I really care about. This is the real measure of entrepreneurship. And in my book, “Founder, Farmer, Tinker Thief,” I actually this the Kingmaker Equation because effective hourly rate tells you how successful you are as an entrepreneur. If your effective hourly rate is lower than what you would make as a coach at another facility or driving an Uber, then you should go drive an Uber, or you should fix your business because you haven’t bought yourself a business.

Chris (00:35:59):

What you’ve done there is you bought yourself a low-paying job. The purpose of opening a business, of being an entrepreneur is to scale your finances up and scale your time down. Entrepreneurship should create wealth, which is the freedom of finances and time. But if you’re just trading time for money and making an hourly wage, that’s less than you’d make somewhere else, then you need to fix your business. Don’t ditch your business, don’t go get a job driving an Uber. I was just kidding. You still have the opportunity to change that most people don’t. Now, the effective hourly rate, the median effective hourly rate across all segments in the fitness industry was $26 per hour. All of my coaches at Catalyst make more than that. Any coach doing personal training on the 4/9ths model will make more than that. Most coaches coaching groups at most Two-Brain gyms will make more than that.

Chris (00:36:52):

So what’s the problem? The problem is usually that the gym owner has transitioned to being a gym owner in title, they love saying I own a gym, but they’re still a coach in practice. They haven’t developed the skills of an entrepreneur. Therefore they’re not able to give themselves a raise as an entrepreneur. So let’s look at effective hourly rate, which is, you know, the measure of entrepreneurial success across the segments. The highest effective hourly rate is in martial arts, $35 per hour. This is probably due to the easy scalability of martial arts. Scaling is built right into martial arts, right? You start as a student with your white belt and you get your yellow belt and you work up to black belt. And when you got your black belt, you are hired to be like an assistant sensei. If you’ve ever watched the office, you’ll probably understand where I’m going with this.

Chris (00:37:43):

And your job is to like clean and then assist in coaching classes and kind of like be the backup for the sensei. And then eventually you become the sensei. And you know, now you’re a qualified to kind of like run the whole place. But you’ve also got these assistants who can run classes because the classes follow almost a choreographed path, right? You’re not doing individual skill instruction with every student. You are leading from the front 30 people who are just mimicking your movement. So it’s easier to scale martial arts. And that’s probably why the immediate effective hourly rate is high. The lowest is a strength and conditioning facility. And I can understand this, the lowest EHR strength and conditioning, 19 bucks an hour. So these are not just personal trainers. It’s personal trainers who will not work with the clients who will pay them the most money.

Chris (00:38:34):

Now, this is what I wanted to be my whole life. I was actually a certified strength and conditioning specialist through the NSCA. I wanted to work with athletes. I wanted to work with powerlifters. I wanted to work with people who didn’t mind getting dirty and sweaty and you know, risking injury and using chalk and going hardcore and like bleeding for their sport. That’s who I wanted to work with. The problem is that there aren’t many of those people out there and those people don’t pay you. And ultimately they don’t make you happy. So I’m not saying that you only need to chase the very wealthy soccer moms and dads. What I am saying is you need to cater your service so it’s welcoming to everyone and not just pushing people away, do not hang a pirate flag above your front desk like I did.

Chris (00:39:21):

Let’s talk about revenue models. So most of the gyms in our sample had a group training model and the percentage of gyms that are offering group training. I mean, they were all so close that it’s hardly worth mentioning CrossFit gyms, a hundred percent, martial arts, a hundred percent strength and conditioning gyms. Yeah. A hundred percent other gyms, you know, were around 80% each yoga, 92%. I’m surprised to find out that there is some personal training going on in yoga studios, but that’s fantastic. I’ll probably be signing up for some. If we look at personal training though, 76% of personal training gyms are offering group training. That’s amazing because when I was a personal trainer, any personal trainer that I knew wasn’t doing that. In fact, when Greg Glassman started talking about training two people at a time and three people at a time that was revolutionary because we only sold our time by the hour to one person.

Chris (00:40:14):

The median cost for unlimited group membership in all categories of fitness is about 155 bucks a month. The median cost for CrossFit is also 155 bucks a month. So forget about mean averages. Forget about what your demographics will bear. Don’t send me an email saying, but I’m in the poorest part of America because I’ve had that from literally every part of America. What you need to do is say, what service can I sell that’s worth at least $155 a month to my members. Don’t worry about what you would pay. Your members probably earn more money than you. What you have to ask yourself is what value can I provide that’s worth more than this amount? Now 155 is not enough, that median value is still way too low, but if you’re below that value, then that’s your first target. Make it to 155.

Chris (00:41:03):

Now let’s talk about the percentage of revenue that gyms get from group training. Boutique and yoga get about 62% of their revenue from group training. So I said that 72% of yoga gyms offer group training, 62% of the revenue in those gyms comes from group. That’s interesting. Looking at the yoga studio that I’ve attended here in town, I would say that a large percentage of their revenue actually comes from retail, not from training, but this could be different. 77% of the revenue in a CrossFit gym comes from group training. That’s interesting because every CrossFit gym offers group training. So where’s that other 23% coming from? Is it retail? Is it personal training? Is it nutrition coaching? As we’ll see later, the numbers that offer personal training and nutrition coaching are actually a lot higher now than they used to be, which is fantastic. In a personal training studio, 46% of revenue comes from group training.

Chris (00:42:02):

Super interesting because a very low percentage of personal-training studios offer group training. But among those who do they get half their money from the group training, and across all segments, about 71% of revenue comes from group training. So if I were listening to this, I would say, OK, my target is to make 29% of my revenue the difference in non-group training. What am I offering that people want, that they need to get results and that they’re willing to pay for? So that’s probably personal training, online coaching or nutrition. Now let’s talk about personal training. Let’s talk about the percentage of gyms offering personal training. So first off, 83% of yoga gyms offer personal training, which is absolutely fantastic. 93% of CrossFit gyms offer personal training. Now this is great. In 2012, when I published my first book, most of the feedback that I got was we don’t do personal training.

Chris (00:42:58):

And it was again, you know, kind of a religious belief that that’s not CrossFit instead of a scientific belief backed by data that, hey, some of my members want this or need this. These varied gyms like the health coaching, sport-specific coaching, 90% of those offer personal training. Everybody else is in between 95 and a hundred percent. Let’s talk about price. The average price of a 60-minute personal-training session across all segments right now is $72. You should be higher than that. So your expertise is probably greater than most of the people around you. If you want to check, call the big globo gyms near you and ask what they charge for an hour of personal training, you’re going to hear a number that’s higher than 72. Meanwhile, the people providing that personal training are not as credentialed as you. They might not care enough, or as much as you do, this is probably like their part-time career to get them through college or until they get that acting gig and you should be charging more.

Chris (00:43:59):

The thing is we limit our perception of value based on what we think we can afford or based on what our credentials are. Instead, we should be looking at the market and saying, I need to charge more. So if we look at like the average across the board, 72, I think that’s a good number. It’s an encouraging number, but you should aim to be higher than that. Even if you go 75, move your 60-minute personal training sessions up to 75 bucks an hour starting in 202. Let’s look at nutrition coaching. This is super interesting. 69% of the gyms in this dataset, over 6,000 gyms, across all segments, 69% offer nutrition coaching now. Crazy interesting. When we started talking about nutrition on the podcast in early 2016, we brought a registered dietician on who had started a nutrition coaching practice in a CrossFit gym. And this was so revolutionary at the time that she just got flooded with emails and eventually started her own business helping CrossFit gyms get nutrition coaching, and it’s a good business. Now 69% offer nutrition coaching. This is super, super, super important. The other interesting thing is that that number is actually pulled down by martial arts gyms who offer zero. And maybe it’s not their place, but people who are teaching yoga, seventy-five percent of those gyms offer nutrition coaching. 75% of CrossFit gyms offer nutrition coaching now. Only 48% of personal training gyms offer nutrition coaching. So if you’re listening to this and you have a personal training gym, that’s probably your easiest path forward. And then strength and conditioning have about 63%. Now this is super interesting because this is like the easiest opportunity for most gyms. And it’s so important that we now teach it as part of our ramp up and growth process. We give you all the tools that you need to create nutrition coaching programs at your gym.

Chris (00:45:52):

And then the TwoBraincoaching.com program for certified nutrition coach is one of only two certifications that will actually make your nutrition coach insurable in North America right now. Super cool. The average or the median price for nutrition coaching across all segments is $110. The highest median was in gyms that fell into like the other category and CrossFit. So the other category could actually mean nutrition coaching businesses. CrossFit was about $120 per month for nutrition coaching. Which is pretty amazing. As a percentage of revenue, CrossFit gyms were the highest, about 6% of their revenue is coming from nutrition coaching. The lowest was in yoga, where about 2% of their revenue is coming from nutrition coaching. Now, if you back up, or if you’re looking at this guide as we talk about it, you’ll notice that a lot of yoga gyms sell nutrition coaching, but that only 2% of their revenue comes from it.

Chris (00:46:51):

So if you’re listening to this, you own a yoga gym, that’s probably a great opportunity for you to boost your revenue in that area. Let’s talk about online coaching. I would have loved to have taken this sample back in 2019, but at the end of 2020, we see that 63% of businesses offer online coaching. Now that might overlap with other areas of business like personal training, or maybe you do your nutrition coaching portion online. The online training though is actually highest in yoga gyms, more yoga gyms offer an online option than anybody else. Personal training gyms also have a high percentage; 69% of personal training gyms offer an online component. 64% of CrossFit gyms do, but only 25% of martial arts do, where, you know, this could actually be really simple. The key again is not that you offer it. The key is how you offer it.

Chris (00:47:46):

If you’re just streaming Zoom classes, that’s not enough. That’s not the answer. You need to customize workouts for every single client. Gyms like Equinox, they really have this down where you do a personal training session. Maybe you do it in person once a month, once a week, twice a week. And then their accountability package lets your coach check in on you once or twice every single day. What are you eating? How you feel? And they might not give you a new workout. They might just be holding you accountable. But for most clients, that’s the key that unlocks results. Now let’s talk about average percentage of revenue from nutrition coaching. I said that CrossFit gyms were the highest, with about 6% of their revenue coming from nutrition coaching, yoga was 2% on the other end and martial arts gyms were around zero. Supplements.

Chris (00:48:34):

Let’s talk about the percentage of gym selling supplements. CrossFit gyms were actually the highest. And I have to give a shout out to our friend, Jason Rule here at Driven Nutrition. He has an amazing affiliate program for supplements in a CrossFit gym. Yoga gyms were second highest with 55% selling supplements. CrossFit was 62%. martial arts gyms, personal training gyms. These were actually the lowest with 25 and 24% respectively. And the average percentage of revenue from supplements and retail in a gym is about three. Now that’s a percentage of revenue. So if you look at like, how much of that revenue is actually profit and we generously assume that you’re getting a 30% margin on everything that you sell, which is really unlikely, then that means you’re making maybe 1% of your revenue from supplements and retail. There’s a couple of ways that you can improve that number.

Chris (00:49:28):

Number one is to sell higher margin things. Number two is to sell no retail or supplements and use that time to do goal reviews with your clients. The other option is just to sell more of them. I’m not sure that selling in volume is really the answer here. The partners that we like to use, Forever Fierce for retail and Driven Nutrition for supplements, these guys have put together affiliate programs with very low minimums and most of the time you’re running in pre-sales so you don’t have to inventory anything. The inventory is really what kills you. But I wrote a ton about that in my first book, “Two-Brain Business.”

Chris (00:50:01):

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Chris (00:50:41):

Let’s talk about kids classes. The percentage of gyms offering kids classes by segment. Across the board, 44% of microgyms offer kids classes. Martial arts gyms are the highest, a hundred percent of martial arts gyms run kid classes, which is great. Personal training gyms were the lowest with 17%. Yoga and CrossFit were both right under 46, 47%. Kids classes are a tricky one. You have to have the right person. That’s what’s most important. You can send that person to get a Brand X certification online, but they should only do it if they’re passionate about coaching kids. Let’s talk about revenue structure by owner estimated value. This is a tricky one to measure because without doing a formal evaluation, everybody overvalues their gym. So if we break down total revenue, so basically for this question, we said to the owner, what’s your gym worth?

Chris (00:51:41):

And then we said, OK, you know, how much group training do you have? How much personal training, et cetera. So gym owners who said that their gym was worth zero to $60,000, had at least 70% of their revenue coming from group training, 18% coming from personal training, 3% coming from nutrition coaching and supplements and retail were around 2% online. Coaching was around 2%. For gyms whose owner said that the gym was worth 60 to 122,000, 69% of their revenue came from group coaching. 15% came from PT and the rest was kind of spread across the board. Now these might not add up to a hundred because again like these are owner reported based on what they think their gym is worth. For gyms worth 122 to $250,000 in value if they were to sell the gym, these gyms had about 67% of their revenue coming from group training, about 20% of their revenue coming from personal training and just under 5% coming from group coaching.

Chris (00:52:41):

And the same thing with gyms who are valued at over $250,000, about 62% of their revenue is coming from group training, about 20% from personal training, 4% from nutrition coaching and a higher percentage from online coaching. So there is a bit of a correlation here with gyms that are worth more making less of their total revenue from group training. And that is probably tied to member retention long term. Personal training has a higher retention than group coaching by a massive factor, like four or five to one. And that’s because you have this personal relationship with this person. The more one-on-one attention you give a client, the higher their retention is, so gyms that have more personal training, more services like nutrition coaching are actually worth more than gyms that just offer group coaching. And you have to balance that because you can’t just do 300 one-on-one sessions a week.

Chris (00:53:36):

You have to scale by having the group too. But that number is really around 60% of your revenue for the best gyms out there. Let’s talk about marketing. So, everybody’s doing some kind of online marketing right now. They have run ads in the past. Maybe they’ve done it through Facebook. You know, the problem is that most people have tried it and then dropped out and they said, OK, well the ads didn’t work for me, but they didn’t really break down the problem and say what isn’t working to decide if there was something that they could fix, you know, they tried it, they invested 500 bucks, even 20,000 bucks and then just gave up and never went back. So martial arts gyms, a hundred percent of martial arts gyms have run ads in the past. Only 50% currently run ads. So most people tried it and then gave up.

Chris (00:54:25):

CrossFit’s interesting. 80% of CrossFit gyms have run some kind of ads online in the past. Only 43% currently do. Super interesting. The segment that is still running the most ads is actually yoga. 91% of yoga gyms have run ads in the past and 82% still currently do. But nobody is trending upward. So here’s what’s interesting about that. 61% of businesses that do not run ads online are still profitable. And those are people who are not currently running ads, but have run ads in the past. 66% of businesses that do currently run ads are profitable. Now, obviously they’re not going to attribute all of that success to running ads, but they don’t shut the ads off either. They count on referral marketing and they count on affinity marketing and other methods instead of just online. If we look for a second at the reasons that people are no longer running ads, 30% said they stopped because they got poor ROI or bad leads. 21% said I don’t need to because I’ve been successful with other methods. To me, that is the most valid reason. If you ran Facebook ads, but you got a poor ROI, it’s probably not the Facebook ads. You know, I don’t run Facebook ads right now at my gym, but it’s only because I have success with other methods. I get as many clients as I want every single month with affinity and referral marketing, so I don’t have to. But you have to market. So if you’re, you know, out of love with Facebook ads, that’s OK as long as you’re doing something else. 12% said they stopped running ads because of COVID. So they might come back later and 6% said, I’m at capacity. I don’t have any room for new members. Super interesting. Let’s talk about gyms who work with marketing agencies.

Chris (00:56:16):

So 38% of gyms in our sample had worked with marketing agencies. Only 14% are actually still working with marketing agencies. So that’s like a 63% decline. And 59% of those who have worked with a marketing agency said that they had a bad experience. So we said, well, what do you mean a bad experience? Half of those people said they got a bad ROI or the agency didn’t deliver on their promises. If you’re like me, you see a ton of crazy promises on Facebook right now, you know, I will get you 50 leads or your money back. I promise you 200 people through the door. And honestly they can say these things because nobody’s calling them on it. 17% said the agency was not skilled, no surprise. Unethical practices was 10%. I can’t imagine paying somebody to do something unethical with my business. And lack of support or bad leads were the others.

Chris (00:57:14):

So now let’s talk about the average cost of a new lead. Now this is just a lead. This is not a new client. This is like getting somebody into your funnel and they become interested or aware of you. The highest cost for any lead is in martial arts gyms. They’ll pay $82 for a lead, not even a new client. The lowest is these, you know, like other gyms probably because they’re not advertising very much. CrossFit on average are paying $35 for a lead. So this is a person. A lead basically is like, they see your ad, they click through your website. And maybe they book an appointment. Maybe they don’t. 35 bucks for every one of those. So when you know what a lead costs, then you can calculate, like, what’s the likelihood of getting a member from that lead. And if we look at like the average number of leads compared to the average number of sign-ups, what you really get out of that is conversion rate.

Chris (00:58:10):

So boutique and yoga has about one of the highest conversion rates. But martial arts actually has the highest conversion rate. So they do spend the most to get a lead, but they sign up more people than they get leads every month because they have a big referral program probably in place. A boutique yoga, a large portion of their leads convert because when you click on an ad for yoga, you know what you’re getting, right? You’re getting yoga. CrossFit, about just under half of all leads wind up signing up on average. Personal training it’s about half and across all segments, if you have about, you know, 16, 17 leads per month, you’re probably going to sign up about six of them. Let’s talk about staff. So on average, if we look at, you know, the average here, we would see that the average CrossFit gym has one full-time staff.

Chris (00:59:01):

This is tricky because some owners count themselves as staff. Some don’t. On average, the average martial arts gym has three staff members that work full-time. And the average boutique yoga studio has about one person who’s full-time again, that’s probably the owner. Same with personal training. Strength and conditioning would have about three full-time staff. The interesting part is part-time. So the average CrossFit gym, I said has one full-time staff person, probably the owner, but they have about five part-time staff people. And yoga is about the same, one full-timer, four part-timers. Martial arts. They have two or three full timers, but they also have like 10 part-timers. And this is that whole sensei senpai thing that I was talking about earlier. Personal training has the lowest number of part-timers because it’s hard to be a part-time personal trainer, unless you’re supplementing that with something else. Now who classifies their staff as employees, who classifies them as contractors and how much do they pay?

Chris (01:00:05):

Across the board, 68% of gyms classified their staff as employees, 59% classified their staff as contractors. It’s a pretty even split. And that really comes down to the state’s laws. When possible, I like to qualify my staff as contractors, because I want them to have the same opportunities to avoid overtaxation that I have, some though have to be employees. For example, my desk staff on the weekend, they’re told what time to show up. They’re told here’s how to use the software. Here’s the uniform that you have to wear. Here’s what to say when you answer the phone, they’re employees. The subcontractors are a little bit easier, nutrition coaches, personal trainers, in Canada, it’s not hard to make them subcontractors and allow them to determine how they’ll be taxed. Coach compensation. If we look at how much a coach has paid per class across all segments, it’s about 22 bucks. The lowest segment average is CrossFit at $21. And the highest segment is martial arts, which is $27. If we look at the median highest salary by segment, we get something pretty interesting. So we can look at the median again. We can look at the mean. We’re going to start with the median.

Chris (01:01:17):

This is the most commonly recurring high salaries. CrossFit median,highest salary, $24,000. Martial arts median highest salary, $41,00. Strength and conditioning, median highest salary, $12,000. Across all segments the meeting is 24,000. Now, if we turn to the mean, we allow some outliers, the gyms who are paying a lot to pull this average up. So the median advertised salary for CrossFit was 24,000. The mean is actually a little bit higher, 25,913.

Chris (01:01:50):

But if we go to yoga and we take the median and the mean the median was $20,000 a year, the mean average was 16, 950, meaning that there are some outliers who are paying their staff extremely little. Martial arts, same thing. You’ve got some outliers who are paying a salary, but it’s very, very little, and that’s pulling the mean average down from 41,000 to 35,000. Let’s talk about partnerships and business structures. 34% of the gyms in our sample have at least two partners in the business like legally on paper. That doesn’t count the spouse who is in effect your partner, but it doesn’t show that way on a shareholders doc. The biggest percentage with a partner is CrossFit gym owners. And that is super interesting to me because early on, I did an interview with Dale aran, who was the leading counsel at CrossFit. We were talking about the owner-operator model and why CrossFit affiliates fees were so low. And he said, it’s because they didn’t want to incur the need for silent partners.

Chris (01:02:51):

They didn’t want investors coming in and like footing the bill or loaning money to passionate coaches to start up these gyms. They wanted the coaches themselves to be able to afford affiliation. And that means in an owner operator model, and this is my words now, not Dale’s, that you really are supposed to be buying yourself a job here. So having that business partner puts a ton of extra pressure on the owner to create more revenue that they want to actually see. And, you know, God love the two partners that I had when I started, I couldn’t have started without them. I needed their money to finance the opening, but the bottom line is like, my business could not afford to take 25% of my revenue and give it to them every single month. It just wasn’t going to work. I couldn’t make a living like that.

Chris (01:03:37):

Let’s talk about owner-estimated value of the business. I mentioned this a little bit earlier because it’s interesting now when gym owners are looking to sell. If we look at like how likely is a gym owner to sell based on the valuation of their business, the highest percentage are the people who are kind of in the middle. Now, keep in mind that like these people are estimating the value of their business themselves. They might have used evaluation tool. They might’ve had it professionally done. They might just be guessing they could very well be using the back of a napkin to figure this out. But if they estimated that their business is worth $0 to 60,000, only 16% would sell, right? That’s kind of like, I’ve got nothing to lose here. But if they estimated that their business was between 122 and 250,000, 30% are willing to sell right now. That presents a massive opportunity because these people are obviously not looking to get wealthy through the sale of their business.

Chris (01:04:34):

They’re just looking to get out. They’re looking to get a little bit of return on what they’ve invested. If 30% of the people in your business are actively looking to sell, and they’re looking to sell just to get out, that is a huge warning flag for me. For example, let’s say that I started a new martial arts franchise and I invented a new martial arts method called Coop Fung Now, and a few years in, you know, gyms that had been open for five or six years, 30% of them were looking to sell. That would pretty much spell the end of the Coop Fung Now method, because that would mean that like the people who have invested time and energy are disillusioned enough, or they don’t think they can be successful. That is super important. And I can’t understate the importance of this statistic. Let’s talk about COVID-19. Now, as we publish this, a lot of gyms, a lot of countries are going into their second shutdown.

Chris (01:05:32):

So the average length of the gym shutdown as we collected data was 91 days. That’s three months. That’s bananas. 60% of people that we surveyed, so over 3,600 saw at least one of their competitors go out of business. 57% of owners reported taking a pay cut. That’s actually pretty good. You know, 43% didn’t even take a pay cut. And 57% took some money, but didn’t, you know, pay themselves their full amount. The most affected segment was the strength and conditioning segment. You know, and these guys usually focus on athletes. There were no sports. Of course they’re going to be affected. CrossFit. About 54% of CrossFit, gym owners took a pay cut. Staff adjustments. 18% of owners had to fire staff. That’s pretty good. I means over 80% were able to keep their staff. Most affected was martial arts. CrossFit was actually the least effected. CrossFit only laid off about 18% of their staff or 18% of gyms laid off at least one staff person, 50% of martial arts gyms laid off at least one staff person. For financing 44% of microgym owners took a loan during COVID. Martial arts. 75% of martial arts schools did. Personal training, only 32% did, probably because they have lower overhead with lower space. CrossFit. 43% did take a loan. 35% of owners across the board invested personal funds back in to support their business. Most affected, 75% martial arts, again, least affected was these other places that could probably just run online and CrossFit was 29%.

Chris (01:07:09):

Let’s talk gym size. This is the question that gets asked a lot. How big should my gym be? If we look at square footage and profitability, and if you’re looking at the guide and following along with me and some interesting numbers here. So first off, the gyms that are smaller than 2,500 square feet, 44% of those are profitable. The gyms that are in 2,500 to 4,000 square feet, 70% of those are profitable. That’s really interesting because that seems to be kind of the sweet spot. Now there is a higher profitability number coming, but I’ll show that difference in a second. The gyms that are 4,000-6,200 square feet, 66% of those are profitable. The gyms that are bigger than 6,200 square feet, 74% of those are profitable. That’s the highest segment, but 13% of those are actually owned by the gym owner. They own their own building.

Chris (01:08:01):

Now, if we look at that ownership percentage and we go back down to the gyms that are 2,500 to 4,000 square feet, about 6% of those owners own their building. If we look at the gyms that are 4,000 to 6200 square feet, about 4.4% of those people own their building and their profitability is about 66%. So I actually fall into that category. The thing is, if you eliminate the gyms where the owner owns the building and they own it in the same company that the gym is owned under, so they’re technically not paying rent cause they’d be paying rent to themselves, the most profitable gym size really seems to be 2,500 to 4,000 square feet across all microgyms. Now that’s not to say that you shouldn’t own your building. You should. It’s a great goal. And when you get there, you can go a little bit bigger.

Chris (01:08:52):

Let’s talk about CrossFit. This is a very sensitive subject. It’s an emotional topic for me. I deffiliated during 2020, I reaffiliated several months later, after some really deep conversations with some CrossFit affiliation team staff and Eric Rosa himself. During 2020, nearly 17% of CrossFit related businesses in our survey deaffiliated, but 90% of owners who reported participating in the CrossFit Games Open last year say they will participate again in 2021. Just over 18 and a half percent of businesses that did not participate in the Open plan to participate in 2021. So very few gyms are likely to start participating, but the gyms that did participate in the CrossFit Open last year are very likely to continue. Even if they’re not an affiliate. The companies, the gyms who are profitable are more likely to be confident in the CrossFit brand. So 69% of the owners who are profitable are confident in the brand versus 53% of the unprofitable owners.

Chris (01:09:53):

And again, you know, you’re questioning your belief, is this religion, is this science that makes me want to be an affiliate, but honestly, if you’re not profitable, I could see why you would have a dimmer view of the value of affiliation or maybe it’s just, you know, you’re more skeptical or you’re kind of beat down by 2020, which is totally understandable. 82% of CrossFit affiliates are confident in the future of the brand, which is really great. 10.2% are not, and 6% are unsure, 1 or 2% just say, I don’t care. Now we’re going to talk about some specific information that comes to us from our partner Wodify. Wodify was the greatest contributor to the State of the Industry guide, with thousands and thousands of gyms, they were able to give us some data that we really couldn’t get a meaningful sample from anywhere else. If we look at active clients by age and gender, what we find are that the 31 to 40 age range is almost double any other age range in CrossFit and microgyms. Of that, it’s pretty evenly split between men and women. So you’ve got 18.4, 1% of all clients in microgyms being women aged 31 to 40, 18.58, virtually the same number being men 31 to 40. The next biggest segment is the 21 to 30 segment followed closely by 41 to 50. And you can see the exact numbers in the guide. If we look at how many classes or how many people attend a class, pre and post COVID, I don’t think the numbers will surprise anybody. The average class attendance, according to Wodify pre COVID was 17.36 clients. And the average reported post COVID class size was 13.56. Now this is probably because of enforced limits. They just weren’t allowed to have more than maybe 10 people, and that would pull the average down. You can see the entire table in the guide. The interesting thing though, is that even though limit sizes are down or the number of people in a class are down, total check-ins per month are down by a smaller amount. So, you know, total people in a class is down to about 13, 14% or people.

Chris (01:12:11):

But sign-in declines are only down about 9%, which means that gyms are just obviously adding more classes to make up the difference. And that totally makes sense. Let’s talk about programs. The average gym offers 5.2 different programs. So programs are unique class offerings like CrossFit, bootcamp, yoga, call it something else. The average gym who has 7.3 people who we would qualify as being on staff. They manage settings in Wodify and the average LEG is about 755.13 days. So about two years. So that is a slightly different LEG calculation than we use at Two-Brain, and that’s basically skewed by people who stay around for a very long time. If you actually take and measure by cohort, what you’ll find is that the average LEG for most gyms is way lower. It’s around, like just under eight months. The average client is likely to say about eight months in most microgyms, according to our data. Let’s talk about ARM and LEG.

Chris (01:13:15):

So this is the scary part. The thing is a lot of gyms chase client headcount. They want more clients. The problem is that every single client they get is worth little money. And we said that a lead for the average CrossFit gym costs $35. Well, the ARM, the average revenue per month per member, in the average gym is between 50 and $150. So if you’re paying 35 bucks to get a lead and one in three leads signs up, that means a new client cost you a hundred bucks. It takes you two months just to make your marketing, spend back, let alone pay your coaches, let alone turn the lights on, let alone pay yourself. The most important thing in this whole survey is that 77% of gyms have an ARM, average revenue per month, between 50 and $150. That is absolutely terrifying to me.

Chris (01:14:13):

You cannot be in a service business with high retention and have clients paying $50 a month because you’ll always be dependent on marketing, which means you’ll have a high churn, which means eventually you’re just going to run out of potential clients. As far as revenue goes, the average revenue for a gym in the third quarter of 2020 was down 15% from the previous year. The average gym lost 39% of its revenue between January and April. Let’s talk about some data from Incite Tax. 68% of gyms were able to secure a PPP loan in the States or something similar to that in their country. Unfortunately, 42% of the gyms that went from being profitable to being unprofitable during the shutdown, haven’t recovered their profitability yet. I mean, that’s good. 58%, how went from profitable to unprofitable and now they’re back, 42% haven’t recovered. And that profitability is tied to total revenue.

Chris (01:15:10):

The median revenue is the same for the gyms in the top 30 and the top 10%. So while more revenue doesn’t always mean more profit,, right now, it does. This tells us two things. One gyms are running as lean as they can. Number two, the gyms who kept selling memberships, personal training, nutrition coaching, or anything else online, maintained their profitability or recovered it more quickly after being shut down. Here’s the dark side. The bottom 30% of gyms are still losing an average of 1753 per month. Could you afford to pay $1,700 and 53 cents, sorry, $1,753 per month for a CrossFit membership? Because if you own a CrossFit gym, that’s losing money, that’s basically what you’re doing. You’re buying yourself a job that costs you. Let’s talk about Gym Lead Machine data. The average gym owner reported eight new members a month through 2020. Pretty amazing.

Chris (01:16:06):

Especially considering the shutdowns. The average gym is booking about 67% of all their website leads for a free intro. Now this is GLM and they are not going to present this as here’s how GLM conversion rates are compared to the rest of the industry. I will tell you, as a GLM user, I went from a story branded website that was clear and I liked it. And it was kind of artistic to a data-driven GLM website, Gym Lead Machine. And our website leads converting to a free intro went up 30%. So this isn’t an ad for Gym Lead Machine by any means. But if we’re looking at Gym Lead Machine data, don’t be surprised if your number is actually a little bit lower. The average gym is closing 63% of leads who book a free intro. That number should be higher. And that’s a great goal for you for next year.

Chris (01:16:55):

If only two-thirds of the people who come in for an intro are signing up, shoot for 70% or 75%. The average gym website gets 500 new visitors and 92 returning visitors a month. So about 10 a day. Traffic is down about 13% from pre COVID average. May was the worst month and it’s been getting better every month since. Average traffic is up about 19% from the bottom of the COVID low. The average new visitor looks at two pages on a site. So gym owners, you got to really make sure that you capture attention and get people to book within the first minute. And 71% of traffic is now coming from mobile phones and tablets. So you have to have a website that’s mobile friendly. From Arbox: In March to April, Arbox, who does a lot of work with gyms outside of North America, they reported 26.4% total revenue drop for their clients. In the same period, 5.5% of all gym members in the system canceled their memberships and many others put their memberships on hold.

Chris (01:17:58):

And then it got worse. Membership cancellations increased four times between April and May. Now they normalize in the fall to get back up to pre COVID levels, but unfortunately new sign-ups were still down by about eight and a half percent. So there’s an interesting graph that shows like what was happening outside of North America here. Data from AGuard, formerly Affiliate Guard, 5.5% of CrossFit gyms went out of business during the lockdown period from mid March to July, that’s among their clients. Yelp reported that 2,600 US fitness businesses had closed since March. So in September Yelp reported that, which is about 6.5% of all gyms and their data also shows that microgyms might be more resilient than the broader industry. This makes a ton of sense to me because frankly, you know, as the owner of a microgym, we can pivot, we don’t have to follow a franchise model. We don’t have to wait for somebody else to make decisions about how we pivot online. And we don’t have to compete with the head office who decides to sell an online membership to our clients.

Chris (01:19:02):

Let’s talk about Rigquipment. Now Rigquipment finance has an interesting perspective on the industry. Though microgyms commonly make the mistake of trying to self-finance or bootstrap everything,tThose were the buffer of credit or cash are set up to make a lot of headway in 2021. So here’s what Rigquipment told us. First payment deferral requests are down 84% since April. This is a good sign that gyms are recovering their cashflow and paying their bills again. On the downside, 5% of gyms went out of business between April and October, which is five times higher than normal. And of course, this is supported by what I’ve already mentioned from Arbox and AGuard. But here’s the silver lining applications for financing to buy out an existing business are up 40%. That means that more successful gyms are taking over failing gyms, which is a huge win for everyone because it means that their clients will get better service.

Chris (01:19:55):

Their coaches will get better jobs and the failing owner is bailed out. So interestingly Rigquipment reports that used equipment prices also increased about 22% over historical levels. And this is probably due to scarcity. More than one retailer reported they’ve sold out of everything. And one friend of mine even said, I sold that broken dumbbell that I used to use to prop the doors open. So now let’s get to Two-Brain data. COVID created a brand new category of client and it woke up the unmotivated. While 2020 was tough, Two-Brain gyms are largely profitable with some hitting record years despite the shutdowns. So first the average Two-Brain gym is running at an annualized profit of 15% despite losing revenue during shutdowns. Two-Brain gyms are still going to have a successful year. In fact, Two-Brain gyms make 63% more revenue than the average gyms in our survey and partner data.

Chris (01:20:50):

They’re also working less. The average Two-Brain gym owner is working about 36 hours a week. So how are they doing that? Well, they have a higher client value. The average ARM in a Two-Brain gym is $184 per client per month. Our partner data, and I said this earlier, showed that 92% of gyms have an ARM lower than $150 per month. And 50% of gyms have an ARM lower than a hundred. While Two-Brain gyms are making $184 per month per client, other gyms are making $150 or less. The average Two-Brain gym also made some necessary cuts during COVID. On average, our gyms removed around $3,000 per month in expenses by renegotiating leases and loans. And they removed an average of $1,500 in staff costs as staff received wage subsidies or stopped working part-time at the gym. The most interesting part of that is that these changes set Two-Brain gyms up for even greater success long term. Revenue has not returned to pre COVID levels, but neither has spending and a gym’s ability to reach a high profit can be limited by its expenses. So here’s where gym owners in Two-Brain spend their money. The average gym inTwo-Brain is spending about a third of their revenue on staff costs. The average gym owner in Two-Brain is spending 53% of their revenue on general expenses, not staff costs, and we’re going to work hard to get that down next year. With that in mind, my goal in 2021 will be to provide more of the things that gym owners are paying extra for elsewhere. We did this with our nutrition business program and our online coaching business program this year, which are now both free for Two-Brain gyms. And we’re going to roll out even more programs before the end of January. In fact, if you’re a Two-Brain client listening to this, we’ve got a super awesome surprise coming for you in the next week or so. Overall with Two-Brain gyms, things look pretty promising despite a very tough year.

Chris (01:22:48):

You can recall this data from Gym Lead Machine. The average gym owner is getting about eight new members a month. The average gym website gets 500 new visitors and 92 returning visitors every month. Web traffic is up about 19% from the depths of the COVID lows. The gym is booking about 67% of all website leads for a free intro. So that, you know, the industry average on that is about 10%. And the average gym in Two-Brain is closing 63% of leads who book a free intro. For most gyms dealing with cold Facebook traffic, that number is lower than 30%. So now I want to talk about leadership. Who’s going to lead us into the future? Many leaders in the fitness industry broke under the pressure in 2020. Other leaders emerged to fill the vacuum. In individual gyms owners with a high effective hourly rate continue to earn really well during COVID, suggesting that the same team and systems that made them profitable also protected them from danger.

Chris (01:23:46):

This wasn’t really correlated to the number of staff or the full-time part-time status of their staff, which reinforces the idea that the quality of the staff, not the quantity is what’s most important. And while coach education is part of that, personality and engagement are far more important, especially in chaotic times. Microgym owners and coaches are doing better at leading their clients than big globo gyms are, but who will lead the industry? Will it be CrossFit? CrossFit started 2020 without a succession plan. But founder Greg Glassman sold the company in July. Backed by a few investors, Eric Rosa took over as CEO in August. CrossFit is a licensing body with two separate value propositions. The first is certification in the method of CrossFit. And the second is affiliation, which is licensing the CrossFit brand to use on your physical gym. Each should be considered separately, held up to the light on its own and evaluated on its own merits.

Chris (01:24:43):

But the lines are often blurred. What CrossFit brought to the surface this year is that branding and affiliation are deeply personal choices. I started 2020 as a CrossFit affiliate, but I canceled my affiliation in June. Within three hours of emailing affiliate support, I got a call from Dave Castro. He asked me to keep the affiliation and I agreed to hold onto the rights to CrossFit Catalyst, but I removed the brand from my gym entirely. Our city knows us as Catalyst Fitness. So changing our sign wasn’t a big deal, but it wasn’t a decision that I took lightly after 11 years as an affiliate. And I acknowledge that my personal experience with Greg Glassman, which was negative, isn’t one that’s shared by everyone. Through this filter of personal experience, I can’t make a blanket recommendation. Everyone will have to audit the value of the brand for themselves.

Chris (01:25:34):

So if you’re considering making a change and affiliating, deaffiliating or reaffiliating, you’ll have to go through this decision on your own. My annual expense audit process is really simple. I ask myself, is this investment helping my business? Is this investment not affecting my business? Or is this investment hurting my business? I was willing to pay the CrossFit affiliation fee even when the CrossFit name stopped helping my business, because I love the mission and I want to support it. When the value clearly became less than zero, I took my name off the gym, but even that decision came after years of being disenfranchised with HQ and Greg himself. Personally, I like Eric Rosa a lot. Has the value of affiliation increased in the last six months since he took charge? Not yet. Is that yet enough to keep you affiliated? It is for me, but I don’t have anything to lose here.

Chris (01:26:27):

I’m also personally fine with private equity firms financing the purchase in order to make CrossFit profitable. Even if it requires a different affiliate model, that’s OK with me. If they can make CrossFit more valuable than they deserve to profit from it, but affiliation hasn’t become more valuable yet. I’m willing to pay more if it does, but after paying tribute to an etiology for more than a decade, my brand has evolved to be more than a method. CrossFit gyms are really inexpensive to open compared to the alternatives. That doesn’t mean they’re easy to keep open. And as a licensing body, instead of a franchisor, CrossFit has no legal obligation to help its affiliates, Any legal help, any representation we should see as a bonus. Though the financial reasons for helping its constituents seem obvious, more affiliates equals more revenue for CrossFit Inc., we really can’t count on large scale representation at a government level.

Chris (01:27:21):

What about gym owners associations? Will they lead the industry into the future? So groups like the international health racket and sports club association, IHRSA, are different from certifying bodies. The value of an industry association is in data reporting and lobbying power. That’s it. Associations usually host one or two large summit events for their members every year. They publish reports based on the data that they collect from surveys. And they lobby governments to create new laws that are favorable to association members. But when legal action was most important, when we really needed this lobbying, industry associations struggled to provide any help. IHRSA published some decent letters that gym owners could send to their government officials, but still gyms were among the first to close and the last to reopen in most places around the world. IHRSA’s November report said that Lifetime Fitness was forecasting, a $500 million loss and several of the largest chains, which are the funders of IHRSA, had already filed for chapter 11, bankruptcy protection.

Chris (01:28:25):

Meanwhile, the IDEA health and fitness association moved its annual meetup, the largest in the industry, online. It published some resources from others, but it didn’t appear to take any action to lobby governments to reopen gyms. And I’ve got a link here. The sports and fitness industry association SFIA is a fraction of the size of IHRSA or IDEA, but at least provided some useful updates on which US states were open during COVID. So overall, no industry association stepped up to make a measurable impact when the industry was in crisis and because most make the majority of their membership fees from globo gyms who suffered the most in 2020, I predict a lot of turnover in 2021. One of the newest groups is community gyms coalition, which has gathered some collective power in the CrossFit, Barry’s bootcamp and Orangetheory fitness communities, as well as in some other microgym groups, but they’re just getting started.

Chris (01:29:16):

We have yet to see what kind of change they can make. What about franchises? We spoke to many fitness franchisees this year and we heard the same message over and over. The things that usually make a franchise strong were the very things that made franchises weak and fragile during COVID. All the benefits of a franchise like a preset model, done for you pricing, group purchasing power, brand marketing. Those can look pretty attractive to a solopreneur trying to figure everything out on the fly. In fact, established entrepreneurs often buy franchises because they don’t want to spend years and thousands of dollars trying to figure it all out while they’re just burning money nonstop. But in times of crisis, a franchise becomes extremely fragile. As a franchisee, you don’t have the ability to pivot your core offering. You can’t simply take your business online overnight. You have to wait for the franchisor to say, here’s what we’re going to do.

Chris (01:30:11):

You might not have the ability to cut expenses. As a franchisee, you might be contractually tied to a lease or franchise fees, or even a certain number of staff. You could easily lose all of your clients and all of your revenue with no way to get any back and no end in sight. Almost overnight, the value of gym memberships went to zero. No one can sell access to equipment anymore. Within a week, the value of exercise programming fell to zero because nobody can just sell workouts anymore. Soon, the value of coach-led Zoom and online classes will fall to zero because clients know how to enter free workout class into a search engine. The only thing that’s retaining its value is coaching. And the value of coaching is increasing. Two-Brain gyms made a quick pivot to customize online coaching spending four to six minutes per client per day, to tailor group

Chris (01:31:03):

programming has resulted in a greater than 90% revenue retention rate. Some have actually grown in client numbers in revenue since reopening and many have been able to cut their largest expenses. These gyms could do it because they’ve built anti-fragile businesses, their failures and their successes are theirs alone. Many have licensed the CrossFit name through affiliation to benefit from the branding and because they align with CrossFit’s values, others haven’t. But even within that affiliate model, the terms of licensure are so loose that CrossFit affiliates can make fast moves. They’re antifragile. What about certifying bodies? Can they lead us? By and large, certifying bodies exist to improve the fitness education of their trainers, not their business education. I finished my four-year degree with a certified strength and conditioning specialist, CSCS credential. It took me a year to get my first client. And on the day of that first appointment, I asked myself, what do I actually do with this kid?

Chris (01:31:59):

Certifying bodies have a vested interest in keeping their trainers and coaches active in the fitness game long term visit any of their websites and you’ll encounter a sales pitch for continuing education credits, exam schedules and virtual summits. Now you might even find some tips for training athletes at home or how to clean your equipment properly, but while certifying bodies can help people, coach better, 2020 had very few coaching problems. In fact, the industry at large has very few coaching problems anymore, but the industry has a lot of making a living problems. We can buy lawsuits. The national strength and conditioning association really isn’t as popular as it once was. The National Academy of Sports Medicine certifies more trainers. But those trainers usually don’t recertify after two years because they’re out of the fitness business already. The American College of Sports Medicine published a call to action statement in August, which fitness lobbies could potentially use with governments as they work to get people moving during and after the pandemic. It’s a useful tool, but so far nobody appears to be using it.

Chris (01:33:03):

All of this tells me that the industry won’t be saved by certifications or certifying bodies. The etiologies really don’t matter. And your method doesn’t determine your success. Good coaching isn’t the problem. Good business is. Here’s what we do in Two-Brain to let the best gyms lead us forward. My mission is to make a million gym owners wealthy. They’re hardworking and generous and trying to solve huge problems in our society and culture. Here’s how we unite microgyms and coaches. First with data. We need a broad, inclusive dataset. We need to know what the best gyms in the world are doing. And then we need to teach that back to everyone else. We also need to know why some gyms fail so that we can get those poisonous mistakes out of our collective bloodstream. Here’s what we’re doing about it. Over the last four years, I’ve spent more than half a million dollars building dashboards and data extraction tools.

Chris (01:33:58):

Now we have the largest data set in the industry. This is primarily due to our strategic partners who have contributed heavily to this guide. Wodify, Arbox, Incite Tax, AGuard, Rigquipment and Gym Lead Machine and our own data set at Two-Brain is growing literally by the minute. This guide does the first large publication of many. The second thing that we’re doing is facilitating conversations. We need positive collaboration, not competition. You’ve seen the worst case scenario, play out. Gym owners calling each other names, attacking each other’s ideas in Facebook groups, accusing potential collaborators of stealing clients. Here’s what we’re doing about it. We have the most progressive Facebook group in the world, but we need more than that. We need to bring gym owners together. When the COVID crisis pushed us to alter plans for our annual in-person summit, we came up with something that I honestly think is better.

Chris (01:34:50):

Regional meetups held three times per year around the world in 30 locations at once. They’re free to Two-Brain clients, but other gym owners can buy tickets. In seminar and workshop sessions presented by certified Two-Brain mentors and regional facilitators, gym owners can work together to improve their businesses and the industry face-to-face. We also need representation. While I’m no fan of a board of directors scenario, imagine if your clients had a vote in how you ran your business, it makes a lot of sense to identify your top performers and teach their strategies to everyone else. Some franchises do this, but not many. But the CrossFit Games does this really well for fitness. The Games creates aspirational models of fitness. We can pick apart routines and habits and training and diet, and we can build new models for success from them. And we can prove what’s working.

Chris (01:35:44):

Two-Brain can do the same thing for the fitness business. We can now identify the top microgyms in the world through real testing, interrogate the owners and share what they know. This is literally how the Two-Brain model works. We also need transparent leadership. So like me, you probably saw a dozen calls to sign a petition or join our GoFundMe page when COVID hit. And if like me, you dug a little bit deeper, you probably uncovered a hidden motive in a lot of these cases. When the world emerges from the COVID-19 lockdown, independent gym owners will find themselves swimming in a larger ocean with fewer sharks. They’ll have new tools, online training, nutrition coaching, and a hybrid online in-person model that we call flex. They’ll be thinking differently about their equipment and about their space and their other expenses. The best gyms will be stronger than ever before.

Chris (01:36:33):

And they’ll have far less competition. Gym ownership has always been a game of attrition. COVID just knocked five years off the natural evolution of the fitness industry. Licensees and solopreneurs who pivot fast will benefit. Franchisees won’t. When the world is constant and predictable, it’s attractive to own a franchise. No guesswork, proven models and somebody else to blame if it fails, but when the world changes as it always does, it’s far more beneficial to be the master of your own fortune. And if you’ve already built your plans and playbook, why do you need a franchise at all? Franchises aren’t going to lead the industry forward because their rigidity makes them inflexible to evolution, fast and slow. The ACSM and the NSCA aren’t going to step into the role of transparent leadership because their boards are full of scientists who only rely on grants to survive.

Chris (01:37:25):

The associations didn’t prove their ability to lead when it really came down to lobbying power. The key to the future is to understand that leaders will come and go. We need to get what we can from them, and then seek the expert who can help us next. If the leaders can pivot, they’ll earn the trust of the industry. If they can’t, they’ll be left behind. And finally movement. We want to let the best gyms lead and you can be one of them. You can use the data in this guide to improve your gym. Two-Brain gyms, have a big advantage, we constantly use data to find the new best practices, and then teach those back to every gym in the Two-Brain family. Every month, we look at the Two-Brain leaderboards for every metric that we’ve reported here. We interview the top five gyms in each category

Chris (01:38:08):

every quarter. We find out what they’re doing. And then we put it in our curriculum. Sometimes the data shows us that we don’t know enough about a topic. For example, when gyms had to pivot online, we didn’t have enough experience to say, do it exactly like this. So we bought the expertise of people who actually do this for a living to come in and help us. When we don’t possess the specific knowledge that we need right now, we ask who is the best in the world at this, and then we hire them. Then we share their knowledge with gyms around the world. As Two-Brain gyms grow faster and faster, we share their successes and their methods with everyone. And this is how the whole industry moves forward. Why don’t franchises do this or licensing bodies? I have no idea. COVID’s pressure showed us where the fitness industry needed help first.

Chris (01:38:53):

First coaches need help coaching the why instead of the what. Instead of just correcting movement faults in air squats, coaches need to tell their clients why a workout is important for them and how to use it to achieve their goals. We immediately found some of the most successful online coaches in the world and built an online coaching course on the new TwoBraincoaching.com platform. So next coaches need to deliver nutrition coaching and mindfulness help to their clients. This is more important than ever before. So we built a Two-Brain coaching nutrition course to help coaches deliver nutrition coaching without getting sued. We put the business of nutrition coaching right on the Two-Brain roadmap so that our clients at Two-Brain Business would get everything they needed for free. And we built a brand new mindfulness program to help coaches deliver this now critical piece of the puzzle, also on TwoBraincoaching.com.

Chris (01:39:45):

One of my favorite outcomes of 2020 was that a lot of the gym gurus went out of business, but there’s a new crop of them emerging, of course, you can’t keep them down. It’s more important than ever to have a place where you can find core truth. So we commissioned this data publication to provide a solid base on which gyms can build their futures. During the summer of 2020, it became more important than ever to provide gym owners with clarity. Trying to pivot to a new business model is hard enough, but sorting through all the industry noise, the government regulations and the staff challenges created a lot of overwhelm. So we published a daily brief to support our step-by-step guides. These briefs provided a specific directive to gym owners: Do this one thing right now. During CrossFit’s transition of ownership, the idea of regional meetups was heartily embraced by gym owners, including me. Tired of feeling alone, especially after the forced life in captivity of the COVID crisis,

Chris (01:40:41):

gym owners needed to meet with others in person. And when our summit couldn’t provide an in-person meeting, we moved to 30 regional in person meetups plus a live event online. We’re going to continue this regional model in 2021 with 30 events around the world. On February 13th, on June 19th and 20th, and in September on a date to be announced. These are all free for Two-Brain clients and open to all gym owners who want to attend. Our 2021 summit will continue to feature the experts the gym owners need now. Our first registered keynote speaker is retired US Navy SEAL officer Jocko Willink. As Two-Brain gyms showed their resilience through 2020 and ultimately rebounded on the other side, we were asked for help from other industries and even some of the franchises that we would normally consider our competitors in the fitness industry. So we’re certifying more mentors to meet that demand, but we’re focusing only on fitness.

Chris (01:41:37):

We also published our roadmap, a collection of over 400 mini masterclasses for gym owners. Now mentors use our dashboard app to diagnose a gym owner’s priorities using their data. And then they prescribe action from the roadmap. This helps gym owners become more profitable faster than ever before, and we can prove it. Finally, I published my best book on the fitness industry, ever. The “Gym Owners Handbook,” which is available on Amazon by the time you’re hearing this. In running the world’s largest gym membership practice, I’ve discovered your business has two parts, your operations and your audience. Each of those two parts can be built according to a recipe. And this is the recipe book. It’s the step-by-step guide to building a gym and it’s full of tactical, actionable advice that entrepreneurs can use today. When I started this podcast, I said that 2020 was a test.

Chris (01:42:27):

COVID sped up the evolution of the fitness industry. That change was painful as evolution always is, but it was coming anyway. And the urgency actually put many gyms ahead of the game. The key is to be open to questions like asking, how can I do this? Instead of pessimistic, I can’t do it. The strongest gym owners are the ones who bend instead of trying to ram their way through. The first part of the COVID crisis was a three-month test. Imagine you tried to move your business online without the forced urgency and without the safety net of reopening your bricks and mortar location someday. You could fight for years and go down the wrong path, but COVID didn’t allow that. It told you quickly whether your idea worked online or not. Strength is the root of many elements of fitness, but as 2020 proved, flexibility could be the root of good business. 2020 was not won by the largest gyms or the gyms with the most members. 2020 was won by the owners who could pivot fast and still carry the trust of their clients. Most of the best gyms are still in business and they should be a beacon for the best coaches in the future. I hope that happens. Thank you for listening. This is Chris Cooper.

Andrew (01:43:38):

Thanks for listening to Two-Brain Radio. You can download a copy of Two-Brain’s State of the Industry guide for free. Click the link in the show notes, and then take action to make 2021 a great year for your business.

 

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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