Chris Cooper's Blog, page 126

Why the “More Members Myth” Must Die Before It Kills Us

Andrew (00:02):

What if you’re shooting all your arrows at the wrong target? Today on Two-Brain Radio, Chris Cooper explains why some CrossFit gym owners are chasing after the wrong thing.

Chris (00:10):

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Chris (00:28):

When I became a personal trainer, I was too embarrassed to tell people what I did for a living. Not because the pursuit of being a personal trainer wasn’t an honorable one, but because I didn’t look like a personal trainer or so I thought. I had some muscle, but I was pretty skinny. My background was teaching kids to play hockey outdoors, and cycling. And so I was definitely not the biggest or most shredded dude at the gym. And at that time, fitness was really associated with bodybuilding. The most fit people were the biggest guys with the most shredded abs. In fact, the question that I was scared they were going to ask me after saying, yeah, I’m a personal trainer is, well, how much do you bench press? Because obviously bench press was the ultimate measure of somebody’s fitness.

Chris (01:20):

So I was scared if I said, yeah, I’m a personal trainer, that they would do that slow body scan. You know, like the down, down, down, down, down, up up up up, and then finish by looking me in the eyes and say something like, Oh, what do you bench? Something like that. And it’s really funny to think of that as like the perfect or the ultimate measure of fitness 20 years ago. But that’s what it was. And today I’m talking about a different metric. When we meet a gym owner, especially a CrossFit gym owner or any micro gym owner on the street, the first question that comes to our mind is how many members do you have? But how many members do you have is the modern equivalent of how much do you bench. It’s not the best metric for deciding how good a business the gym owner is running.

Chris (02:07):

And so today I’m going to talk about what the right metric is. But first, I’m going to tell you a story about why we believe this false metric that more members equals better gym. Before I get into what metric you want to track, let’s talk a little bit a little bit about history here. In his earliest writing, Greg Glassman told the story of working at a globo gym or two. His clients would show up regularly train with him and they would make good progress. And so he was talking to the owner about it because the owner one day walked into the gym and it was Sunday or something. And he said, Hey, Greg, there’s more people here than I thought there would be. And Greg said, all these are my clients. My clients are like the only ones in the gym training today. And the owner would say, that’s cool.

Chris (02:52):

But like, here are the clients that I want. And he pulled out this big stack of membership cards. And there were hundreds of them and they were all people who had signed up for a membership, but never actually showed up. So Greg got disillusioned and he started moving around from gym to gym, renting tiny spaces. And then he eventually found kind of a industrial space in Santa Cruz and you can watch all the original videos to see it on the CrossFit Journal. It’s really cool. It’s got like a balcony, but it’s set up to work with about six clients at a time. Max. Greg started out as a personal trainer and then he started partnering his clients up together. And eventually this small group group training studio became this worldwide phenomenon, but he never actually trained big classes of people.

Chris (03:37):

He couldn’t. That space was way too small; when you see it you’ll know that. So where did the idea come from that every CrossFit gym should have classes of like 12, 15, even 30 people to be successful? Or to have 300 members all paying you some, you know, recurring monthly membership, all sticking around, putting their names on the whiteboard. And that’s what it would take to build a successful box. Well, as close as I can figure, my best guess is that that myth came from the 2006 affiliate gathering. In 2006, CrossFit affiliates were brand new. The whole concept was only about two years old. And so this was one of the first times that he’d ever brought everybody together in a group. And at that meetup, the new affiliates heard about this model for their business for the first time. Now these new affiliates had met Greg for sure. Might have visited his gym in Santa Cruz.

Chris (04:34):

But this was the first group of affiliates who really weren’t in constant contact with Greg or who hadn’t actually trained with him themselves. So the model God presented to them in 2006 was from this guy named John Birch. And it was helpful because any business model is better than no business model. But the problem was that the model was built for martial arts school. Now, if you run a dojo, you want 30 people, preferably kids in a class because each person in your class doesn’t take up a lot of space. You’re basically keeping everybody following like the same choreography. And you have really minimal equipment. The only equipment that you do have it doesn’t change from day to day. So they have like some sparring pads and stuff stored in a locker in the corner, but it’s never different. It’s always the same sparring pads.

Chris (05:26):

And the retention strategy in a dojo is inherent. It’s the belt system, it’s the best. But none of those things are true in a CrossFit gym. Clients in a CrossFit gym take up way more space. The movements are asynchronous. This girl is doing pull-ups while that guy is doing cleans and you have a ton of equipment, 80% of your equipment is sitting around waiting to be included in your programming. Some of your equipment takes up space, even when it’s not being used, like your pull-up rig. You pay hundreds of dollars in rent every month, just for the floor space required for your rig and the retention system in a CrossFit gym isn’t obvious. The workout changes every single day, which is exciting at first, but people don’t see progress unless you’re programming the named workouts like Fran and Cindy and Diane. And you’re retesting those really, really often, right?

Chris (06:16):

Like every week. Very few gyms do that at all anymore. Level Method is great because it brings a belt system to CrossFit gyms and other microgyms. But back to the problem at hand. When this model: get hundreds of clients into big groups, was presented, it was accepted because information existed in a vacuum. There was no other model forthcoming from HQ. So early affiliates accepted this as the best model. And they went out and chased it. The quote unquote best affiliates were obviously the gyms who could do the best with this model, right? Like the gyms that could get the most members. And then the myth was perpetuated by the Games. The gym owners whose members won the Games were often those with the largest client base, this could have been coincidence. I mean, these gyms had great training and great coaches. They had great programming, but when you have a client base of 300, you have a broader selection of athletes to choose from.

Chris (07:15):

It’s like the Olympics. When a small country wins a medal, it’s a big deal because they’re drawing from a smaller pool of talent, or it could just have been coincidence that the biggest gyms tended to win the Games. And I don’t want to get into the Games. And I’m not saying that the big gyms always won the Games. My point is that the affiliate owners who won the Games at least at first were successful with the big class model, or at least they appeared successful. They got media coverage. And the myth that lots of clients equaled a successful gym was perpetuated. But as I learned, lots of members didn’t necessarily mean a profitable gym. I got to travel with CrossFit media, and I traveled around on my own for the mentoring agency I was with at the time. And I would meet a lot of these folks, and I was really interested in picking their brain because I, like everyone else, assumed that they were the model for success.

Chris (08:07):

I also owned my own gym. So I was very invested in learning everything that I could from them. And while some of these big gyms were pretty successful financially, others, the majority, were really struggling despite having like 300 members. So I’d sit down with these owners at conferences. And I would hear that most of their profit was coming from their online programming, or they were making a big chunk of their revenue from selling t-shirts. That was great. I was happy for them and they deserve to be successful. But the average gym owner couldn’t do that. It wasn’t a model that could be duplicated with any kind of success.

Chris (08:40):

Hey guys, it’s Chris Cooper. Your members are buying supplements somewhere, so they should buy them from the person who cares about them the most: You. And you should work with my friends at Driven Nutrition. Jason Rule and the Driven team put customers first, every time they’ve got a ton of products with high margins and they’ll even train you so your retail program adds revenue to your business. Kirk Hendrickson from Iron Jungle CrossFit says Driven Nutrition has some of the best support I have seen from any company we’ve partnered with. To make more money with supplements and retail sales, visit drivennutrition.net. Now back to the show.

Chris (09:14):

So the story of get big classes and you’ll be successful had really weak roots. And it wasn’t grounded in a lot of experience, but the story was a sticky one. And as Jonathan Swift wrote, a lie can travel halfway around the world while the truth is getting its boots on. The myth of big classes and 300 members to make money has been rampant for the last 15 years, because it was told in a vacuum. There was no other theory in the micro gym community. Though it really didn’t stand up to proof, the few examples of success were enough to keep the story alive.

Chris (09:47):

And there are still gyms out there doing really well with 300 members, keeping those members engaged, getting them results and making the owners good money. But they’re rare. In fact, they’re the exception, not the rule. Even on our own mentoring team, these people are in the minority. There are gyms doing a million dollars in revenue on our mentoring team with 300 clients, multiple locations and all that stuff, but they are not the average. So if you think I’m going to get to 300 members someday, here’s where the problems really start to come out. Because you think, OK, 300 members, that means about 240 of those people, 200 of those people are going to pass through my door every single day. So you take on crazy expenses. Like you get a lot of space, more than you need, and you take on equipment and you take on too much staff.

Chris (10:37):

And look, I’m more guilty than anyone here. I should have figured this out in six months. Back in 2005, I opened up Catalyst. In 2007, we found CrossFit. In 2008, I opened up a CrossFit gym across town. So I had a personal training studio in the financial center of our city, which was thriving at the time. And then I would drive all the way to the outskirts where the industrial section was. And I had my CrossFit gym there. And in the morning I would train my clients downtown. They were high value clients. I was keeping them for five or six years each. They would pay with cash. They’d pay on time. They’d pay a high value rate. And then around lunchtime, I would drive across the city to relieve the morning coach at CrossFit Catalyst, which was bleeding me dry. And many times I can remember driving back downtown at five or 6:00 PM to check how much money was in the cash box and bringing it up to the CrossFit gym.

Chris (11:35):

In fact, I can remember calling the personal training studio from the CrossFit gym. I don’t know if Mike remembers this, but saying like Mike what’s in the cash box right now, and you’d hear him fluttering through and he’d say, Hmm, it looks like three or 400 bucks. And I’d say, I’ll be right there because I had to pay some kind of bill at the CrossFit gym. And so for years, about three and a half years, the PT studio was like funding the CrossFit gym. It should have sunk in within about a month or two that like, wait a minute. There’s a happy medium here between scaling my time and scaling my income. And instead of working one end against the other, I should be looking for that middle ground. Well, it’s taken me years to get my boots on, but here’s the truth. You don’t want more members.

Chris (12:20):

You want high value members. The number you should be chasing isn’t headcount, it’s ARM, which is average revenue per member per month. On average, you should be looking for an ARM of around $205. So that means the average client is paying you about $205 per month. And that’s to get started. 150 members at a 205 ARM will get more than 80% of micro gym owners to a hundred thousand dollars a year in net owner benefit, like profit plus your pay. As long as you’re not doing anything crazy with expenses. Let me repeat that again. 150 members at 205 ARM will get more than 80% of the people listening to this podcast, that’s you, to make a hundred thousand dollars in revenue a year. Flipping that, 205 members at 150 ARM, won’t do it, because at 205 members, you need more space.

Chris (13:14):

Your classes are bigger which means your retention is poor, which means that you have to spend more time marketing, which means you need more staff to coach classes while you’re doing that, which means you need more space and you need more equipment. Do you see? Just that simple little flip makes such a massive difference. The problem with chasing big group numbers isn’t getting the people, it’s keeping them. You’ll probably get 300 clients through your doors and signed up into your program. And you’ll probably do that in the first three years you’re open. But after three years, you’ll look around and you’ll say, I don’t even have half of the people who have been through this gym and signed up. Why? Well, obviously something is wrong with the system if you can’t keep clients long enough to get them meaningful results. So why are you losing, you know, almost everybody who signs up? Average LEG, length of engagement, which is like a metric for retention in a micro gym is 7.8 months.

Chris (14:11):

That means the average client coming in and signing up at the average micro gym CrossFit gym right now is staying shy of eight months. That is not enough time to change their life. And it’s not long enough to be a meaningful foundation on which to build your business. If you have to replace every client every eight months, you’re going to spend the rest of your life marketing and trying to get more people in the door. And I don’t have to tell you what happens then. It’s really, really important that we think about this new model. And I’m going to get a little bit deeper into retention here for a second. I said that the metric that we should be chasing is ARM, which is average revenue per member. Now talking about LEG, which is retention because they each feed off the other. Higher value

Chris (14:56):

clients stay longer. So you want to think about LEG and you want to think about retention. There’s some interesting stats here about what it means to keep people longer and longer and longer, and what that does for your business. So for example, the largest drop-off point in the client journey is the 90-day mark. So this is about three months in. The primary reason that people quit at the 90-day mark is that they’re saying, I’m not sure this is for me. In other words, they don’t understand what their future holds or like what the next step is for them. They don’t even know if they’re making progress. They need to talk to you at that point. They don’t know if they’re getting from your service the thing that they signed up to get, right? But if you can keep a client past 90 days, there’s actually over 70% likelihood that you’ll keep them for seven months.

Chris (15:46):

It’s, you know, 7.8 months, almost eight months. And that’s a huge jump in revenues because it’s the same client. You don’t have to onboard them all over again. You don’t have to market to get them again. They’re staying and they’re doubling, more than doubling what they’re worth to your business. But if you can keep them past that eight month point, the likelihood of keeping them for 12 months is big. It’s like 76%. What keeps them up to that first year mark? It’s not your programming. It’s not your community. It’s their plan and their progress. You need to sit down with them and show them their plan, change the plan if it’s not working and let them measure themselves on the plan, is it working or not? This really doesn’t happen in a lot of gyms, but it happens with every personal trainer two, three times a week.

Chris (16:35):

And here’s where it gets really interesting. If you can keep a client past the 14 month mark, then over 60% of those clients will stay to the 24 month mark, an extra 10 months. And if you’re doing 205 ARM on each client, that’s well over $2,000 in extra revenue from every client that you get. So while this LEG correlation isn’t linear, the benefits are massive. And if you’ve got 150 clients, even if they’re only paying you 150 bucks a month ARM, and you can improve their retention by three months, your net owner benefit goes up by $40,000 a year. That’s $40,000 a year in your pocket. So let me bring this back to ARM. How is that happening? Well, the higher value clients stay longer. It’s easy to pay somebody or to keep somebody who’s doing personal training for that long than it is to keep somebody who’s doing a group class.

Chris (17:28):

It’s time for a new model. And we’re going to give you that model. You can download our how to make a hundred thousand dollars with 150 clients guide from our site. I’ll put the download link in our show notes, but you can also get it by joining the Gym Owners United group on Facebook. It’s free. I’m in there once a day, twice a day. We post resources in there all the time. My mentors are in that group doing free help. It’s very supportive. Nobody calls each other names or attacks one another’s ideas, everybody’s tactful, or we remove them. It’s a safe place. And this is where people are really making progress before they enter our mentorship program, which is something else. Here’s the targets that you want to hit in this new model. At first. Now you can always exceed these targets.

Chris (18:12):

You can always go bigger. You can get 300 clients if you want to. And some do. But the key is that you don’t start with the goal of making 300 clients. When you start with that goal and you say, OK, well, I’ll do anything to get 300 clients, that’s when you start undervaluing yourself, charging unsustainable rates, giving unsustainable discounts, underpaying your staff, over-committing to space. All the stuff that’s killing gyms starts with this goal of I’m going to hit 300 clients. Instead start with a goal of 150 clients. Start with the goal of $205 ARM per month. Start with the goal of keeping everybody for at least 14 months. Start with the goal of spending only 22% of your revenues on expenses. That’s going to be the hardest point for most of you who are already open, but don’t worry about that yet. Start with a goal of paying your staff

Chris (19:05):

44% of the revenues that come in every month and start with the goal of making a hundred thousand dollars net owner benefit to you. This is the model that will make thousands of microgyms successful. The proof is there. We’ll share more success stories on this podcast and our site every week as we’ve been doing for the last five years. Look, it’s hard to change your mind. It’s even harder to change your business. So if you’re listening to this and you’re saying, Oh my goodness, 150 members at 205 ARM, it all makes sense, but you’re looking around your gym and you’re thinking, Oh crap, I’ve been shooting at the wrong target all along. I don’t need all this space or this equipment. And I’ve got too many coaches and I’m over paying for all this stuff. That’s OK. The most successful entrepreneurs are not the ones that get it right on the first try.

Chris (19:53):

They’re the ones who can say, OK, here’s where I am. Over there is where I want to go. Instead of trying to bend the world to fit me, I’m going to start to change right now. The best time to plant a tree was a decade ago. The second best time is today. So I’m going to give you the first seed and then I’ll sign off. This is it. When most people hear $205 ARM per month, they think I could never charge that. Instead, you have to change your thought to how can I charge that and go from there.

Andrew (20:30):

For more from Chris Cooper, join the Gym Owners United group on Facebook. Chris regularly posts articles, instructional videos, and advice in there. It’s the only public group he’s in. That’s Gym Owners United on Facebook. Join today.

 

The post Why the “More Members Myth” Must Die Before It Kills Us appeared first on Two-Brain Business.

The Companies Behind the Top CrossFit Games Athletes

Influence is everything—and the top CrossFit Games athletes have it.

These racehorses do unbelievable things when the clock starts, and fitness athletes are gaining more notoriety every year. Maybe Mat Fraser and Tia-Clair Toomey-Orr aren’t yet close to the same level as Lebron James, Patrick Mahomes, Serena Williams and Naomi Osaka, but companies know partnering with top functional fitness stars is good for business.

Back in 2009 at The Ranch in Aromas, sponsorship was rare. A local business might have kicked in a few bucks for a plane ticket, or maybe a gym handed over a hat full of money from a fundraising workout.

In 2021, sponsorship is a big deal even if companies aren’t yet forking out millions of dollars to the fittest of the fit. Still, every bit of corporate assistance helps the athletes, and the businesses get a greater return as fitness athletes become more prominent. 

Fans simply want to know what the athletes at the top of the leaderboard are wearing, eating and drinking, and they want to know how their heroes are training and what equipment they’re using. When they find out, they’re only too happy to supply a credit card number.

Below, we’ll take a look at some of the top fitness athletes in the world and the companies that are working with them as they train to be the fittest people on the planet.

Tia-Clair Toomey-Orr: Olympian and now four-time CrossFit Games champion. (CrossFit LLC)Tia-Clair Toomey-Orr

Website
CrossFit Games Profile
Instagram
Facebook

It’s good to be the champ: Four-time CrossFit Games winner Tia-Clair Toomey-Orr has a host of businesses backing her. First among them is PRVN, founded by her husband, Shane Orr. PRVN sells apparel, ebooks and programming streams for fitness, competition and affiliates.

For fuel, Toomey-Orr promotes supplements from 1st Phorm (though she isn’t listed on the company’s Athletes page), and she also chews ashwagandha and apple cider vinegar gummies from Goli.

Like many other top athletes—including old-schoolers such as Matt Chan and new young stars such as Haley Adams—Toomey-Orr carries the Rogue flag.

A pair of champs: As of 2021, Toomey-Orr and Fraser have nine CrossFit Games titles between them. (CrossFit LLC)

The fittest woman on Earth likely rests better at night knowing she has a referral page with beam, makers of recovery, performance and sleep supplements. PGA golfer Billy Horschel and NFL quarterback Baker Mayfield endorse beam dream capsules and dream powder, but the company is clearly targeting the CrossFit community: Katrin Davidsdottir and Mat Fraser are also featured on the home page.

If you’re going to sponsor the CrossFit Games, you might as well get your name on one of its most marketable stars. NOBULL has done just that, and you’ll see Toomey-Orr wearing the company’s apparel regularly—sometimes while unwinding with ROMWOD drills and Hyperice products.

Interestingly, Toomey has managed to break into a world dominated by bodybuilders and fitness models. You’ll find her wearing a lifting belt on the Schiek website, and she’s surrounded by the likes of Mr. Olympia winners Jay Cutler and Phil Heath, as well figure competitor Latorya Watts, bikini competitor Angelica Teixeira and fitness model Jenna Renee Webb.

If Toomey picks up her fifth win in 2021, her list of backers is sure to grow longer.

The fittest man in history: Five-time CrossFit Games champ Mat Fraser. (CrossFit LLC)Mat Fraser

CrossFit Games Profile
Instagram
Facebook

Recently retired five-time CrossFit Games champion Mat Fraser is still carrying a heavy load of sponsors. First and foremost, he’s pumping his own tires through the HWPO Program delivered through Hybrid Performance Method—the platform founded by world-record holding powerlifter Stefi Cohen and weightlifter/powerlifter Hayden Bowe.

Launched April 1, HWPO is a functional training program that features the “PSM method”—percentages, scaling and modifying.

Perhaps the “Michael Jordan of CrossFit,” Fraser is hooked up with Nike and even has several editions of signature Metcon shoes.

After collecting his fifth winner’s check at the Games, Mat Fraser retired and launched his own programming stream. (CrossFit LLC)

Like Toomey-Orr, Fraser pushes beam dream and can regularly be seen frothing beverages on the daily newsletter from the Morning Chalk Up. Fully rested thanks to beam, Fraser had the energy to connect with Compex, provider of muscle stimulators and other cool recovery devices.

The fittest man in history is a longtime Rogue athlete, and Fraser stays limber with GOWOD, which no doubt kept him flexible enough to answer all kinds of questions during a recent appearance on the The Joe Rogan Experience.

With more time to build a business now that he’s not focused on crushing all opponents, Fraser recently teamed up with Buttery Bros Heber Cannon and Marston Sawyers to launch Podium Nutrition. More details on that project are forthcoming.

Two-time CrossFit Games champ Katrin Davidsdottir took silver in 2020. (CrossFit LLC)Katrin Tanja Davidsdottir

CrossFit Games Profile
Instagram
Facebook

The last woman to beat Tia-Clair Toomey-Orr at the CrossFit Games boasts an impressive array of sponsors. Icelander Katrin Davidsdottir is a two-time Games winner (2015 and 2016) and former Reebok athlete. Now, she’s on the NOBULL plan for apparel and shoes but has maintained her long-term connection to Rogue.

Davidsdottir relies on Ascent for protein—Native Fuel Whey is her favorite—and stays bendy with GOWOD. The CrossFit New England athlete might be considered CompTrain’s flagship athlete, and she’s had a long (and very successful run) with super-coach Ben Bergeron holding the stopwatch and clipboard.

Katrin is a Whoop user, and wouldn’t it be cool to see the strain and recovery data the wearable collects on this top athlete? Whoop is now the official CrossFit wearable, by the way.

Keeping her connection to her homeland strong, Davidsdottir is an ambassador for Dropi, a fish-oil provider that sources its cod in the North Atlantic. She washes that supplement down with the fine fare from Super Coffee, which supplies grounds, pods, creamers and ready-to-drink options including cold brew and espresso. On Facebook, the company listed Katrin as both a partner and investor, so you can be sure she’ll be awake and caffeinated even if Dave Castro announces a surprise 3 a.m. event at the CrossFit Games.

Samuel Kwant went on to finish second at the 2020 CrossFit Games. (CrossFit LLC)Samuel Kwant

CrossFit Games Profile
Instagram
Facebook

Four-time CrossFit Games individual athlete Samuel Kwant is hooked up with ESC Sounds, Elite Fuel and CompTrain.

Old-schoolers will remember Chris Spealler running at The Ranch in Aromas with wired headphones, but anyone who’s snagged a cable on a squat rack likely prefers the wireless ear buds that ESC Sounds and others provide. In addition to Kwant, the U.K. company keeps the likes of Sam Briggs, Adrian Mundwiler, Amanda Barnhart and Bethany Shadburne connected to their jams.

Kwant looks to Elite Fuel for his supplements and points to The Fuel as his product of choice.

“I love the extra edge I feel mid workout. It also makes my supplementation easy, as it is so comprehensive in covering everything I need nutritionally for my training and recovery,” he said on the Elite Fuel website.

The Fuel is an energy and endurance product containing folate, vitamin b12, magnesium, sodium and more.

A CrossFit New England athlete, the 200-lb. Kwant is hooked up with Ben Bergeron and the CompTrain crew, which includes Katrin Davidsdotttir, Cole Sager and more.

Kwant was most recently seen battling Justin Medeiros during the live announcement of Open Workout 21.2, and he finished 224th worldwide in the Open.

Kari Pearce finished third at the Games in 2020 to remain the fittest woman in the United States. (CrossFit LLC)Kari Pearce

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Instagram
Facebook

Six-time Crossfit Games athlete Kari Pearce is all in on PearcePointers and PowerAbs—and the related products PowerGlutes, PowerArms and Pearce Perfect Pull-Ups. The 2020 third-place finisher at the Games has a degree in movement science, and Pearce’s platforms are devoted almost exclusively to pushing her proprietary pump-up programs.

No former gymnast would let her hands become hamburger, so she’s also linked to Victory Grips.

Like many other top athletes, she’ll chug some beam before bed—probably to offset all the coffee from Caffeine and Kilos.

Pearce has the distinction of being sponsored by perhaps the most interesting product manufacturer: Halo Neuroscience. Halo makes a product that looks like a headset—and even plays music—but acts to prime your brain to train through a nub-filled interface you wet before wearing. Transcranial direct current stimulation might not be as common as rolling your glutes with a lacrosse ball, but the site is packed with research innovative athletes can review. The company website states the product has been discontinued, but as of press time Pearce still had Halo listed as a sponsor on her site.

Pearce is also connected to GOWOD and Renaissance Periodization (RP). The former will make sure Pearce stays as bendy as she was when she was vaulting at the University of Michigan, and the latter has her covered whether she’s lifting forks or dumbbells.

The youngest male athlete at the CrossFit Games finals in 2020, Justin Medeiros earned a spot on the podium. (CrossFit LLC)Justin Medeiros

CrossFit Games Profile
Instagram

The youngest male on our list is just 22 but still managed to nab some sponsors thanks to a third-place finish at the 2020 CrossFit Games.

It’s almost inconceivable that the dude who sports the sickest mullet in functional fitness hasn’t got a hair-care sponsor yet, but we can only guess he’ll acquire one soon.

For now, he’ll have to stick with NOBULL for shoes and apparel and Rogue for gear. Medeiros and Haley Adams (see below) lead the youth movement at Rogue, and it’s nice to see the Columbus crew throwing love at some of the newest faces on the scene.

GOWOD makes sure the fun-loving athlete from CrossFit Fort Vancouver is loose enough to party hard after he takes care of business in the gym.

Haley Adams competed as a teenager in 2020 and held her own against much more experienced athletes to finish fourth. (CrossFit LLC)Haley Adams

CrossFit Games Profile
Instagram

The youngest athlete on our list is already one of the most accomplished: She’s won the Open twice, she’s won the CrossFit Games once, and she’s been on the CrossFit Games podium three times—all in the teen categories. In the main event, she took sixth in 2019 and fourth in 2020. That’s a spectacular resume for any athlete, let alone a 20-year-old, and it’s no surprise Rogue signed her.

“SO EXCITED to officially be a part of team Rogue Fitness,” Adams wrote on Facebook in February 2021. “It’s been a dream of mine since the beginning & I’m so proud to represent this amazing company.”

That’s far from her only sponsor. She’s hooked up with Reebok and has her own collection on the Mayhem Nation site. She’s also linked up with Rich Froning’s affiliate, CrossFit Mayhem.

For fuel, she looks to BPN (Bare Performance Nutrition), and she’ll swig NOCCO regularly. Made by No Carbs Company, NOCCO creates sugar-free products packed with branch chain amino acids (BCAAs) and vitamins. Renaissance Periodization (RP) makes sure she’s on track with nutrition and training. Like Fraser, she sleeps soundly thanks to beam.

Given Adams’s meteoric rise, this list will likely grow in 2021 aand 2022.

Noah Ohlsen has been a model of consistency with 10 top six finishes at the Games. (CrossFit LLC)Noah Ohlsen

Website
CrossFit Games Profile
Instagram
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The “young guy” is now a CrossFit Games veteran with an impressive list of accomplishments. Noah Ohlsen, now 29, is a seven-time competitor who’s earned a spot in the top 10 six times and the top 5 three times. He also won the Open in 2016.

Ohlsen is approaching 800,000 followers on Instagram and he’s even got his own website. On Noahohlsen.com, you can sign up for Noah’s programming stream, which is delivered through the Playbook app for $14.99 a month (after the initial month at just a buck). The site will also send you to Happy But Hungry for apparel and Evertrain for Ohlsen’s signature supplement, Post Pro.

If you want to package the Evertrain supplement with a muscle stimulator, the Noal Ohlsen page on Marc Pro’s site is the place to go.

Ohlsen pitches less products on social media than some of his peers, likely to make room for posts about Max—his dog and best bud (sorry, Travis Mayer). Max, BTW, is fueled by Nulo.

Brooke Wells tore her hand during Atalanta and finished fifth in the event. (CrossFit LLC)Brooke Wells

CrossFit Games Profile
Instagram
Facebook

Six-time CrossFit Games competitor Brooke Wells made the news in late 2020 by jumping from CompTrain to PRVN—which is, of course, also home to Tia-Clair Toomey-Orr. Like Toomey, Wells is connected to to 1st Phorm—though she isn’t on the athletes page—and she can be seen wearing NOBULL.

You can use the code “Brooke15” for 15 percent off on the beam website, or, if you prefer muscle stim, enter “WELLS” for a similar discount with Compex.

Wells looks to Macrostax to keep her nutrition on track and GOWOD to make sure her overhead squat isn’t affected by tight muscles. And she’ll use Whoop to get data on recovery.

Wells’ best Games finish is a fifth logged in 2020, but she’s a podium athlete on this list when it comes to Instagram followers: She’s got 1.4 million, which is just behind Toomey-Orr’s 1.5 million and Davidsdottir’s 1.8 million.

Jeffrey Adler is back for more in 2021: He just won the worldwide Open. (CrossFit LLC)Jeffrey Adler

CrossFit Games Profile
Instagram

At 26, Jeffrey Adler has made a huge impression on the CrossFit community—and the pool of sponsors. A two-time Games veteran who finished fifth in 2020, Adler just won the 2021 worldwide Open.

Adler works with a pair of “body businesses.” GOWOD is a mobility app that uses a philosophy that’s familiar to anyone in Two-Brain: Test and prescribe a plan for improvement. NXT Generation Physio is also behind the 197-lb. Canadian. The chain has numerous locations in the Montreal area and specializes in corporate, family and sports physiotherapy. The company’s head office isn’t far from where Adler trains at CrossFit Wonderland.

For gear and apparel, Adler is backed by Timebirds, WIT and RPM Training Co. Timebirds provides portable workout timers, while RPM is best known for speed ropes as well as clothing. WIT is a multi-brand retailer with a strong online presence and ties to the functional fitness community: They’re working with Sara Sigmundsdottir to design her signature line.

After his workout, you’ll probably find Adler crushing FITAID, a post-workout recovery beverage made by the LIFEAID Beverage Co. Founders Orion Melehan and Aaron Hinde are old school: They met at a CrossFit box in Santa Cruz, California, in 2009.

If Adler improves on his 2020 Games performance, you’ll be reading a lot more in this section in 2022.

All photos: Courtesy of CrossFit LLC.

The post The Companies Behind the Top CrossFit Games Athletes appeared first on Two-Brain Business.

By the Numbers: High-Value Clients to Highly Paid Owners

Nobody got into the fitness field just to make money.

But everyone in fitness must make money if each entrepreneur is going to make an impact.

In the first post in this series, I shared the top gyms in the world for lifetime value (LTV): the value they deliver to an average client, measured in dollars.

In the second post, I shared the top gyms in the world for net owner benefit (NOB): the owner’s value as CEO of the business.

Though we only release the names of the gyms internally to our clients, I can tell you many of the same gyms are on both leaderboards. That’s no accident.

For example, one gym owner earned $113,000 per year with 150 clients. Each client had an average LTV of $9,000—the gym charges appropriately for its high-value service and keeps clients for 30-34 months.

The more value you create for your clients, the more value they will repay in turn.

Bob Burg, author of “The Go-Giver” talks about this exchange in value on Episode 41 of Two-Brain Radio.

You’ve probably heard something like this in the past: “Fitness is a hundred-billion-dollar industry!” Right? But none of those dollars is for you. Every dollar you earn as an entrepreneur is a dollar you’ll have to create.

How do you create dollars? By creating value. The more value you create for your clients, the more value they will return to you.

Sometimes, gym owners have a value misalignment. They create true life-changing value for their clients but don’t receive enough value in return. They can’t make a living, so they go back to their corporate jobs. That’s a true shame, and it’s why I built our mentorship platform to help.

What’s holding you back from earning $100,000 per year—or more? Take our assessment in this free guide or book a call and my team will walk you through it and give you some tips.

The post By the Numbers: High-Value Clients to Highly Paid Owners appeared first on Two-Brain Business.

By the Numbers: Net Owner Benefit

How much does your business pay you to be the CEO?

When you open a business, you stop being a coach and start being an owner. You acquire different skills, you wear different hats, and you’re paid differently.

The success of your gym isn’t measured by how many members you have. It’s determined by what your gym pays you as CEO.

Watch my webinar here: “How to Make $100,000 With 150 Members.”

And the kicker? You can make $100,000 with 50 members if you want to. But if you have 500 members and you’re not earning anything from your gym, you’ll close.

Some of us take salaries from gyms. Some take profit distributions. Some charge their gym rent as a landlord. To avoid overtaxation, some have their businesses pay their bills (like their cell phone or their car loan). Some do all of the above. Net owner benefit (NOB) is the total of salary, profit and the “extras” your gym provides for you.

For example, a gym owner might make $100,000 in NOB this way:

$66,000 salary ($5,500 per month)$20,000 profit ($5,000 quarterly distributions)$6,000 health insurance$6,000 vehicle$2,000 cell phone/extras

Total: $100,000 NOB (or $8,500 per month)

Here are the top gym owners worldwide for NOB in March 2021:

(We publish the actual gym names for our clients but not publicly).

How did they do it?

They paid themselves first. Using strategies like Profit First, they wrote their paychecks before they did anything else. (Listen: “Why Your Gym Must Pay You First (and How to Make It Happen.”)They increased gross revenue by increasing their client count, keeping clients longer and earning more per client.They maximized ROI on their expenses (instead of cutting expenses).They maximized their value to the business by focusing on high-value roles.

That means they measured what the business paid them and figured out where their money was coming from, where their money was going and how they were spending their time. Then they relentlessly strove to improve each element. These are four of the “Six Strategies” we lay out in our free guide to making $100,000, which includes a self-assessment diagnostic. Get the guide here.

In the previous post in this series, I showed you the Two-Brain Leaderboard for lifetime value of clients. Some of the same gyms on that leaderboard show up on the one above. That’s not a coincidence.

Tomorrow, I’ll tell you how a high LTV translates into more income for you!

The post By the Numbers: Net Owner Benefit appeared first on Two-Brain Business.

Pandemic Tempting You to Cut Owner Pay? Listen to This First!

Mike (00:02):

Ever felt like there’s no money left for you at the end of the month? If you’ve ever missed a paycheck or given yourself a pay cut, this episode of Two-Brain Radio is for you.

Chris (00:10):

Back to Two-Brain Radio in just a minute. Chalk It Pro is a fitness app designed and built by gym owners for gym owners to solve annoying problems that make running a gym hard. It’s an all-in-one app that manages your members, including remote members. It also takes care of programming and it will help you keep clients engaged for longer. Use Chalk It Pro to increase value and build your bottom line. Add more personal training and remote coaching clients. Build a thriving community through social engagement and save loads of time on the backend. Do all this with one app, not three or four. Get your free trial at Chalkitpro.co

Mike (00:46):

It’s Mike Warkentin and this is Two-Brain Radio. I’m here with Ashley Coffey of Get Fit in Bridgewater, Massachusetts. We’re going to trade horror stories about what happened when we didn’t pay ourselves as gym owners. And then Ashley will tell you what happened when she started making sure she got a check every month. Ashley, welcome to the show today. Are you ready to hear my horror story of not paying myself first?

Ashley (01:07):

I am.

Mike (01:07):

So I’m going to pull up a document here. This is actually a business model that I made, I believe, in 2009. And so this is the staffing section. So at least I had the foresight to at least set up like a business plan of sorts, but I made so many huge errors. So I’ll read you the staffing part. In its infancy, CrossFit 204 will not require staffing. The directors will cover all classes and should the need arise,

Mike (01:34):

will retain competent certified trainers will teach classes in exchange for free or reduced membership costs. Whoa. And did that cost us some struggles over the years. And so I made this mistake where I set this thing up and what I set up was a hobby because I actually had another job, but I set up a hobby. And my goal at the time was just to like have a place where people could do CrossFit and to break even. And I accomplished both of those things. People got a place to CrossFit and we broke even. And then sometimes we didn’t because I didn’t know how to run the thing and we couldn’t afford to pay people because guess what? I hadn’t paid myself first. Do you happen to have any horror stories like that? Do you have any examples of, you know, how you operated when you didn’t pay yourself first? Like what was it like for you?

Ashley (02:22):

So we are newer. We are almost three years old. And I had opened a gym previous to this, but it was more of a small personal training studio where I just rented a small amount of space. It was just me. So it was low risk. So, I had gone up to New Hampshire to finish my masters and then came back to Massachusetts sort of without a plan, except that I wanted to open this gym. And so I had a friend who was a silent partner and investor. And so he invested all of his time and energy and money into helping me start this gym that sounded so great. And it is my baby. And it is so amazing today to compare it to what it was when it started. But day one that we opened was sort of him wiping his hands clean and it was all on me.

Ashley (03:13):

And I had just moved back from New Hampshire, like not having a good foothold on what my next step was, other than running this business. It was really hard to, you know, to have staff. I had two other coaches that were teaching yoga and boot camp. And we had this like business model at the beginning that was great in theory, you know, we’ll pay you based on how many people are in class. Like that’s all well and good when you have an established clientele, but we had like 15 members. And so it just, it wasn’t working. Like my mindset was like several years out and like several steps ahead and just nothing was together. So paying my coaches alone and we only had two other coaches, paying them was like the biggest struggle for me, much less paying myself, like paying myself was, you know, businesses aren’t profitable for the first couple of years.

Ashley (04:07):

And that’s just sort of how I ran my mentality. And then six, eight months into owning this business and running it full time. You know, the hours that you put into opening a new business. I mean, they were all 14-hour days, every one of them. And so to not be paying myself for this endless amount of time that I’m putting in, it’s just hard, you know, the drive to run this business, doesn’t go away, the love for what I do doesn’t go away, but it just makes it really, really hard to find the sustainability in it. And so, I mean, like my bank account and the gym bank account were like one in the same and, you know, just the terrible habits of just opening a business and not separating those, you know, financial reasons for using a bank account in the first place. Like there were just, it was terrible. It was tragic. I’m pretty sure the IRS cringed when they looked at my taxes that year, like it was horrible. So yeah, we’re totally in a different place than we were when we opened. And I’m so thankful for that, but to constantly think back of like, where was I even just a year and a half ago, it makes a big difference.

Mike (05:18):

It’s such a trap that you get into when you open a business without thinking enough about it or knowing enough, like for me, I really wanted the business to, you know, to break even, or to show a small profit or whatever. But I made it happen by absorbing so many costs. And when I think about just like you, the hours that I put in back in the day when I had a full-time job working more than 40 hours a week, and then I did the gym stuff on top of that. And I think of the hours that I put in, you know, doing social media, website, blogging, you know, processing all the payments, the database, coaching tons of classes. I remember those nights where you’d coach the final class, end at nine o’clock you do the cleaning, go to sleep, come in at 5:00 AM the next morning, open and teach the class.

Mike (05:59):

And all this was unpaid. And what that started to do was like, you obviously love your business, but it wears you down and you just can’t do it forever. And then you start to get bitter, right? Because you start thinking, I’m not seeing any reward from this. And I actually started doing some math and, you know, at Chris Cooper’s suggestion and figuring out that if I had paid myself and got a job at McDonald’s working those hours over the last, you know, whatever it was seven or eight years before I talked to Chris, I would have made, you know, X dollars. And it would’ve been a lot as opposed to zero. Did you ever do that math for yourself where you’re like, I worked 14 hours for $50.

Ashley (06:33):

So no, thankfully, because I probably would’ve cringed, but my mentor Peter is a total numbers guy and he has a lovely way of pointing those things out at me constantly like, well, have you done the math on this? And so the more he and I chat, the more I start doing those numbers of, you know, of like the, what ifs and what would have beens. And it’s crazy to look at. And those numbers both motivate me going forward and make me cringe to think backward.

Mike (07:03):

So, let me ask you this. Now, when did you discover the concept of paying yourself first and why did you decide to implement it?

Ashley (07:10):

So I started working with Two-Brain in June of last year in the smack dab middle of the pandemic, which was just by far the most amazing decision that I had made for our business.

Mike (07:22):

Can I interrupt and ask you a question about that? This is important. Why did you, in the midst of like what might’ve been like Death Valley for a lot of businesses, why did you spend the money on mentorship at that time?

Ashley (07:32):

Sink or swim. I was not willing to lose every thing that I had put together. And to me that wasn’t an option, like losing my business wasn’t an option. So I needed to figure out a way to keep it going. So one of—I love reading Chris’s emails every morning and sort of, you know, starting my business mindset off on the right foot every morning. And one of the emails that he had sent was it is your responsibility as a gym owner to be able to provide health and wellness to the community around you. I mean, what happens when you close? Whose responsibility is that, looking out for those people? And that stuck with me really big. And so, that’s definitely one of the reasons looking back why I had committed to working with Two-Brain, but it was definitely about, you know, there are so many other people that are doing so much better than I am that have been in positions

Ashley (08:28):

I am, you know, before me, and like, let’s not float through this pandemic hoping, you know. We transitioned, before I started working with Two-Brain, we actually transitioned to all online and our members were staying strong, but I’m like, this is going to get old, quick. I hate working out at home and I sure don’t want to be staring at a computer screen while I’m doing it. So finding Two-Brain and working with Two-Brain and working with Peter through the midst of a major part of the pandemic was just like a godsend. It was the most comforting thing for me to have this giant network of people that are like, Hey, we’re all in the same boat and this is how we’re going to get through it.

Mike (09:06):

Good. I wanted to know, because I know some people out there are going through similar stuff and they’re scared to ask for help. So I kind of wanted to interrupt and ask for your story there, but also circle back, paying yourself first. When and why, how did you figure that one out?

Ashley (09:19):

So again, when we first opened, I was like, my mindset was like, we’re not going to be profitable for a couple years and until I can pay my staff what they deserve and until I can pay bills and, you know, check all the other boxes, like, then I’ll come last. Like I do what I do because I love it. I’m not a money driven person. And for a long time that worried me, like I’m not going to be able to start a business, not being money-driven like, how does that work out? And so, Peter had introduced me to the profit first book by Mike Michalowicz, and the resources that came with it. And it was like, it was just so simple. It breaks it down into manageable chunks, you know, making sure that you’re allocating just a little bit of every profit to running the business and to yourself and to paying taxes and other expenses that come up. So that way, you know, those little pots grow big over time. That was really the first time that I had blatantly stared that approach in the eye and said like, I need to do this and I need to start now.

Mike (10:20):

The simple idea is that like you, I did the same thing. Business owners tend to put their business and their staff and everything else ahead of them. So often what happens is you spend all the money in the business on like, you know, paying your trainers more, giving them a raise or buying some new equipment or renovating or putting in showers. And then at the end of the month, when it comes time to pay yourself, there’s nothing left. And I was so guilty of that. You are guilty of that. So many of us have done that. The profit first concept of paying yourself first is the opposite where you allocate yourself some money and you make sure that you get paid and then you figure the rest out. And now for me, that was a bit of a mind game, like where I couldn’t get my head around it for the longest time, because I kept thinking like, where does the money come from?

Mike (11:03):

Like, have you ever seen Arrested Development where Joe Bluth is like, where did the lighter fluid come from? Right. Like, that’s how I felt like, where does the money come from after I pay myself? But the idea is that you’re a driven entrepreneur, you’re going to figure it out. And you are going to pursue smart business practices that will generate it. And the reality is that if you don’t pay yourself first, you’re not going to be around to figure it out. You’re going to fail and die. So how did you, like, what were the steps that you took to implement that plan and, you know, did it work, or did you start smaller? Did you start with like, I’m paying myself a big salary for a month, or how did you start with this?

Ashley (11:34):

So I started small and I started incremental because still the thought of this to me was super scary. Like, this is just, Oh, pay myself first. Like, no problem, much like you, I was like, cool. Where does the rest come from? But I am so—I’m driven, like, owning a business. I am not money driven. Like I could never be a sleazy salesman. It’s not in my blood, but I was like every month when rent came up at the beginning, it was like, well, I have to at least make this much because I have to pay my rent on time or this doesn’t exist. And so I always had like that baseline and like, I’d work so hard to get to, you know, whatever that number was in my head. And then, you know, as months went on, there were more expenses. There were more things we wanted to accomplish, you know, that number in your head, like I have to reach this number, increases.

Ashley (12:22):

And so, you know, it was like in my head, well, anything past this is profit and it’s good. And so when I first started the profit first, like Mike Michalowicz talks about starting small and then, you know, maybe quarterly changing those percentages that you allocate those different bank accounts to, to fit the model and what fits your business model. And so I started small, you know, making sure we allocated money to our tax account and to a profit account, and to a savings. And at first I was like, Oh wow, this is nice. And then I was like, teetering on that, like making it work, making it not, that old mindset and that new mindset. And so I was doing it like every other week, every third week. And I’m like, this just defeats the purpose. Like, after about a month of kind of, you know, cheating myself, I really committed to it and made sure like, no matter what, I’m not being greedy, I’m not being selfish, like I am securing my future as a business owner to support the people that I care about to run this businesses successfully.

Ashley (13:24):

And I can’t do it otherwise. And I think that the more I realized that the easier it became to put myself first to make sure that I was building a sustainable foundation for a business.

Mike (13:35):

So essentially, and if you remember, were you at the Two-Brain summit in 2019, the last one that was live by any chance?

Ashley (13:40):

I was not, I saw quite a few videos, but I was not there.

Mike (13:44):

You’ve probably heard the eat the sandwich concept. Did you hear that one that Chris has talked about? And that’s the idea of, you know, a plane, there’s no food and it’s flying and there’s one sandwich and everyone’s hungry, who gets the sandwich? And Chris had a really great way of explaining that the captain, the pilot, gets the sandwich because he or she needs to take care of everyone else. And if that person falls asleep or, you know, goes down with hunger pains, the plane crashes, and that’s the concept. So you put yourself first to enable yourself to care for everyone. And that’s a difficult thing for some gym owners to do, because we are so invested in our clients and our staff members, we often can’t put ourselves first, but if we don’t, happens like what happened to me, you burn out, right. And I really love that you started with that and started small and then put the pressure on yourself to figure it out. So let me ask you this. As you did this and you allocated more profit to yourself, did you have to then start taking some significant steps to generate revenue and to make a better plan to grow the business?

Ashley (14:38):

I did. And I think that finding the profit first mentality was one of the best things for it. Because like I said, I am happy when I am helping other people. That is what drives me, not money. So when I found that base minimum number that I needed to pay the trainers and pay the rent, pay the bills, like then I was fine with making that. And I didn’t care if I was making this huge amount of money. Like everyone else was happy and taken care of. Like, that’s what mattered to me. So when I started really giving more thought to this and paying myself more, it became this, this race of like, well, now you need to make up for it. You need to provide more, you need to work harder. And it forced me to align everything else that I had been telling myself.

Ashley (15:20):

So writing SOPs so that way I can train my staff to better deliver no sweat intros, to better deliver programming, to, you know, all of these things that help run a business, all of these things that help generate more revenue, all of these things that would grow our affinity marketing, forced me to really be good about building that foundation. And so for every dollar that I paid myself, it was like, great. Now you need to earn it. You need to build a stronger foundation and you need to just keep regenerating that energy and effort. And it’s like a snowball. Once you start seeing the effects like, wow, this really is working, paying myself more like everything works in sync with one another. It was really neat to start seeing that all come together.

Mike (16:06):

So let me ask you this. Did you use the Two-Brain concept of climbing the value ladder?

Ashley (16:10):

I did. I still do.

Mike (16:10):

So this is good. And I’ll give the listeners a very quick rundown. Then I want you to tell people what you did. The idea is that every job in your business from cleaner up until CEO has a value attached to it. And in the beginning you probably do everything. So we have this fantastic system and Chris walks you through it in our training where you just, you keep track of what you do and you assign a dollar value to it. And you multiply the time spent by the dollar value. So I spent 10 hours cleaning at, you know, $15, $150. Then eventually you do a time audit. You replace yourself in the lowest value roles. And these are not unimportant roles. They’re critical to the business, but we can all agree that a cleaner does less growth work than a CEO.

Mike (16:53):

So you replace yourself in a lower value role and you move up. And the thing that you have to do is when you move up the ladder, you have to make the money back plus more that you are spending in the replacement. So if we replace that cleaner for $150, you have to get into a role that makes 300 or something like that. And you got to track this, and then you keep doing this, moving up, moving up, moving up and grow the business. So tell me, Ashley, what did you do in the value ladder? Where did you replace yourself first and what happened?

Ashley (17:19):

Well first, I added it all up and added up all the hours that I spent and I was like, Oh man, we gotta do something about this because I am wearing every hat in this business.

Mike (17:32):

Do you remember the total number?

Ashley (17:32):

I think my brain shut that out on purpose, but it was a lot, it was a lot. It really was. And again, it’s all been such an amazing building process for me as a leader and as a business owner. And, it’s so great because I do what I do because I love coaching. I love helping other people. To run a team of seven or eight people successfully and to feel like I’m leading them in a direction they want to go, like, that was the struggle for me at the beginning for a while. And so to delegate out tasks was hard for me because I was like, man, I’ll just do it better and quicker myself.

Mike (18:10):

It’s such a trap, and I fell into it, too.

Ashley (18:13):

It’s so hard. So I started with the little tasks, like social media and cleaning the gym. And I passed those off to two of our coaches who were so super enthusiastic to just take more hours and do more things around the gym. And it’s branched out from there and I’m getting better and better every day at building those foundations and, you know, writing those SOPs and mapping the way so when I do pass off those tasks, there is no miscommunication and there is no question. Everything is built out perfectly. So handing off task by task gets easier and easier. And I think that’ll always be something that I’m working out because as I expand my business, as I build myself as an entrepreneur, there’s always going to be more tasks that I could be doing that is growing the greater good of our business. And I’m going to need more help doing those other tasks that I may enjoy doing, but I don’t need to be doing every week.

Mike (19:09):

For those of you who are listening, just to map out the path, Ashley looked at social media and cleaning. They’re not unimportant jobs, they’re critical jobs, but if she offloaded those jobs to someone who is good at them and interested, she could then do other stuff like create SOPs, which would allow her to offload more tasks or pursue affinity marketing, which you mentioned earlier as outreach to friends and family and coworkers of current clients. And those things will grow the business. So each task that you can then offload, including coaching classes, which is such a hard one when you’ve grown so attached to your members. But if you can offload coaching a class, that’s a free hour that you might be able to spend on retention, which is critical to long-term growth for the gym or marketing, which is also critical to growing a gym. So, you know, what is the highest value role that you do right now? Is i a marking and retention thing, or what is your top level role for growth in the gym?

Chris (20:00):

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Ashley (20:24):

I think I would have to say somewhere in between marketing and sales. So our staff is mainly coaches and personal trainers, and they are amazing and they have all evolved into their roles so incredibly over the last couple of years, and I’m so proud to have them as a part of our team. They took on roles that I never thought they’d be interested in. And it’s given them all such a great chance to expand outside of just teaching a few classes, which I think maybe was a lot of their original reason for coming to the gym. Like I like to teach, I like to coach, like, let me just throw a couple of these in as a part-time job, but they all have fallen in love with the culture of the gym and really taken on the responsibility to have a well-rounded role in the gym.

Ashley (21:06):

And so, I think that marketing and sales will probably be the last thing that I am willing to pass off to others. My background, so I went back to school to get my degree in marketing and professional sales. For the reason of the fact that I hate it. I actually hate them. I hate salesmen, I hate that feeling of like I’m being sold to, and I wanted to own a business and I wanted to run a successful business. And I wanted to feel like I was comfortable enough to satisfy those areas that I didn’t feel comfortable or familiar in. So that is the area that I think I is where my time is most well-spent. Gym Lead Machine has made such a huge help in that, you know, so Gym Lead Machine is sort of like my ninth trainer, I call him, because of the backend automation. Like those things are so awesome and they’re so helpful to me. But I think that is right now where my time is most well spent.

Mike (22:05):

So that’s really interesting. And the fun part about that is like, when you get ready, if you ever are, you could certainly retain those roles. If they’re the top growth roles in the gym, you could certainly retain them forever. But if you did decide at some point that you wanted to replace yourself in those roles, again, Two-Brain has a whole formula for it. And it includes your sales replacements must close at the same rate as you or better. So you would figure that out, there is a way to do that. If you wanted to ascend into a, like, we’ll call it an absent CEO role or an owner role where you actually hire a CEO and a sales team or something like that, that can also be done, or you can choose to hold onto the roles yourself, but you have the freedom of choice, which is really the coolest part of the whole thing. So the best part about it here is that this whole thing was kind of triggered by the concept of you paying yourself first. Am I right?

Ashley (22:49):

Yes, absolutely. Yeah.

Mike (22:51):

So what you’ve mentioned a few things, but are there any major challenges to the paying yourself first concept that you ran into along the way? Like, was there any moments where like, Whoa, I’ve made a mistake and had to figure something out or was it pretty much smooth sailing?

Ashley (23:03):

It was definitely not smooth sailing. So, you know, committing to it is the hardest part, especially at the beginning. And there are months where like we have a slower month or we had more expenses than anticipated, whatever it may be and my first go-to mentally is always like, do I need to pay myself? Like, can I get away with not paying myself this week? Do I need to pay myself this much this week? That is the biggest struggle for me is every time we hit an unexpected bump, which is always to happen in a business and you just make sure, yeah. Like you just have to make sure that you’re ready for anything, but you’re not willing to sacrifice your foundation. And I think that seeing the success and progression of how simply paying myself first helped grow the gym and helped my ability to help other people.

Ashley (23:53):

Like, I always have to keep that in the front of my mind when something like that comes up. So, you know, COVID was the biggest thing. So in September of last year, our lease was up in our old space. And so in January before COVID hit my area in Massachusetts, we had just been like leisurely looking for places to rent or to build out. And we were keeping our options open and then COVID hit. And every landlord in like a 30 mile radius was like, Nope, don’t knock on my door. I don’t know what’s going on. I don’t know what tenant is staying. I don’t know what tenant is going. I can’t help you. And so it became really hard to find a space. And so we finally found a space and it is so fantastic. We gutted it, we built it out.

Ashley (24:35):

I mean, our members love it. It’s so, so much better than the space we were in and allows us to do so much more. But those transition months were challenging. And for me to say like, look, this is a big expense month, this is a big transition area. Like, are we going to keep all of our members, are we going to grow? You know, now that COVID is allowing us to open, like, is everybody else willing to come out of their comfort zone and be back out in public? And so those kind of times were really hard for me to say, like, you still need to put yourself first.

Mike (25:04):

Did you do it? Did you put yourself first?

Ashley (25:11):

I’ve been sticking to it because you know, our clientele is, I would say probably 75% moms, like moms who are just trying to get by and be good parents, get their kids through COVID like mentally and physically. And I swear to God, I say this more often than not. I always tell these women, like, you need to put yourself first. You cannot take care of your children if you’re not OK. If you’re not feeding yourself, if you’re skipping meals all day long, if you’re not working out, if you’re not mentally healthy, like how do you expect to take care of your kids? And I can hear myself in my own ear. Like, why don’t you just take your own advice?

Mike (25:54):

You did thought, an that’s great. Those are the challenges that come up and it’s, I bet it was very tempting for you to go back to your old habits and say, maybe I’ll just take a thousand dollars less this month. Did that thought cross your mind?

Ashley (26:02):

Always. It still does from time to time, but I always think back and I look at the progress that I’ve made from not taking those shortcuts and the, you know, the answer to that question is just so much more rewarding and allowing us as a business to help more people and to grow what we’re doing,

Mike (26:21):

The idea is you stick to the plan, even when the storms show up and you just weather the storms and, you know, you feel that pressure and you believe in yourself to just figure out that you can find the revenue. Like, is that the idea, like when you get to these things, you say, OK, I had a bit of a down month. I still paid myself first. Do you just recalibrate and say, OK, I need to grow to this amount and drive revenue up here and you take the steps to do it. How does that work?

Ashley (26:44):

My mentor Peter is fantastic at setting goals with me every month because he knows that that is how I operate. Like I am driven under goal setting. And, you know, if I don’t have specific hard-set goals, like, you know, there’s nothing that I’m working hard towards or chasing unless I set those numbers for myself and set those expectations of myself. So, you just, you make it work the same way that you make it work, you know, even people, gym owners who aren’t paying themselves, like you make it work by paying the rent and paying the other bills and you’re not paying yourself. Like you make it happen because that’s what you need to do to function.

Mike (27:24):

So that’s what it is. Right there. It’s the goalposts. Right?

Ashley (27:27):

Exactly. And so if you count that profit first and that paying yourself as that extra expense, that it’s tied into everything else that like there is non-negotiable you got to make it happen or your business isn’t gonna function well and healthy, like, you’ll get there. You totally will get there, but it is absolutely a change of mindset and it takes practice for sure.

Mike (27:49):

So that’s what it is. We just kind of came across it, I think we should, I’m going to spell it out here and you tell me if I’ve got it right. It is figuring out that you, as the owner are a legitimate business expense and you deserve to profit from your efforts, right? That’s the first thing. The second thing then is once you have established that you deserve money from your business, that becomes a business cost that sets up a target, and there’s not an entrepreneur out there that isn’t driven, right? Every single one is driven to succeed and will push. Otherwise you would just have a job at a desk punching a clock. So you have, at that point, you’ve got a goal set up and you’re going to hit that goal. And for most of us, of course, there is failures that happen in business. That’s, you know, can’t be avoided, but for most of us who decide to drive and then get help and do the things that need to be done, I’ve talked to other people about this. They will hit those goals. You think I’ve got that right?

Ashley (28:39):

You hit the nail on the head.

Mike (28:40):

I didn’t actually have this totally understood until you spelled it out for me, because again, I had the whole Arrested Development thing. Where does the money come from? Right. Because it seems when you first hear this concept, unless you dig into it, you really start to wonder like, Oh, so I just pay myself and the money appears. It sounds kind of funny. Tell me, what has this policy done to your business and your life, like from last year to now, where are you at mentally in terms of happiness? Like when you eat the sandwich, do you now feel like you’re ready to pilot that ship all the way to where it needs to be?

Ashley (29:10):

Yeah. I think that it’s been fantastic to have that stability to say I’m a healthy enough business that I can pay myself and all my other expenses and I’m making a profit and I’m running a successful business that there is that feeling of is this business gonna succeed or not, like that teetering point, you know, in a new business, is gone. I feel like we’ve built a fantastic foundation. And it’s not the only healthy part of the business. There’s every aspect, you know, down to your communication skills with your team, like every little aspect is so important in the health of your business. And so we were able to take a week long trip to North Carolina last month, which was fantastic. And that wouldn’t have happened had I not built the right foundation and set myself up and done the profit first model, because it allowed me to basically take a 50 hour break from the gym and have our coaches cover it.

Ashley (30:19):

And all aspects run smoothly while we were gone. We bought some new equipment over the last couple of months for the gym, which has been great because we’ve been growing really quickly, which I’m very thankful for, especially in the middle of a pandemic. And I don’t feel limited in our growth. I feel like for a while we definitely felt limited. It was like a chicken or the egg, like, well, I need more members to make more money so I can buy new equipment. But when I have more members, like, what do I do with those members in the interim if I don’t have enough equipment or I don’t have enough space and we need a bigger space like that chicken or the egg concept was always in the back of my head. And I don’t feel like we’re at that point anymore. I feel like we can grow when we are ready, when we have that solid foundation that just keeps building itself up and up and up as we build a really strong team. And so I don’t feel limited in any capacity in our business anymore, which is a really freeing feeling as a business owner.

Mike (31:12):

So it’s almost like success breeds success, right? When you’re paying yourself, you’re like, I’m a successful business owner. I am generating a profit and I’m paying myself. I can do this. I can do more. I can find more. I can make more and create more. That becomes a whole, like almost a self-fulfilling prophecy, because I went the other way for a long time where I sat there and said, I’m not paying myself anything. I’m not a successful business owner. I don’t know how to grow. I don’t know how to do it. And that was really like a self fulfilling prophecy of a negative sort where we didn’t grow because I was, I felt bad about the whole thing. So paying yourself really is kind of a confidence injection.

Ashley (31:42):

Absolutely. Yeah. Like I said, it’s a snowball effect for sure. And having a strong foundation in all other aspects of your business is just as crucial. But, you know, paying yourself first, like I said, solidifies that backbone to say you are an integral part of this business. You are the reason it is here and in existence, like build your legacy and make sure that you are around to help those people in your community that you know is the reason you started that business in the first place.

Mike (32:12):

I’m gonna ask you to close the show what you would say to gym owners who aren’t paying themselves first? I think you just said it.

Ashley (32:18):

It is true. I mean, everybody starts a business for a different reason and everybody opens a gym for a different reason. For me, it was, I could never picture myself having a career that didn’t involve helping other people. I do what I love because I love helping other people. And if I want to continue doing that, I need to, you know, build confidence in myself and build that foundation and that legacy for myself. So, you know, for any other gym owner, that’s not paying themselves yet, it doesn’t need to be this giant leap, you know, start small, be consistent, be rigid with yourself and trust the process.

Mike (32:56):

If you’re passionate about helping people, I think you’ve just helped a whole bunch of people out there that maybe aren’t paying themselves. So if there’s one gym owner out there who listens to your advice and takes, you know, puts a salary in for himself or herself after the show, I think that’s a big win for you. Thank you, Ashley so much for sharing your story and being here today.

Ashley (33:13):

Thank you so much. I appreciate it.

Mike (33:15):

That was Ashley Coffey on Two-Brain Radio. I am your host, Mike Warkentin. If you have not done so, join the Gym Owners United group on Facebook. Chris regularly posts articles, instructional videos, and advice in there. It’s the only public group he’s in. That’s Gym Owners United on Facebook. Join today.

 

The post Pandemic Tempting You to Cut Owner Pay? Listen to This First! appeared first on Two-Brain Business.

By the Numbers: Lifetime Value

What’s the average client worth to your business?

When you see the answer, you might think about each client differently.

While every client is more important than they money he or she spends, you do have a transactional relationship with your members. They’re not paying you for friendship. Tracking your average client lifetime value (LTV) serves a couple of goals:

It tells you if your service is becoming more valuable over time.It puts marketing costs (or “cost of acquisition”) into context.It might change your perspective when you’re talking to clients.Five-Figure Clients

When I was a treadmill salesman, I had a very gruff, fast-talking boss. She was great at sales, and I wasn’t.

One day, while she was visiting the shop, a shipment of new treadmills arrived at the loading dock. Just as we started unloading the treadmills, the phone began to ring.

It rang once. I kept moving boxes. She didn’t say anything.

Then it rang again. I continued to move boxes. She stared at me.

When it rang a third time, she sprinted to the front desk and answered the phone, out of breath. She spoke with a potential client for 10 minutes. Then she put the phone down and made a beeline for me.

“You always answer the phone,” she yelled. “There’s always a $10,000 client on the line!”

After that, I answered the phone every time—unless I was talking to a customer in person. But you can bet that I returned phone calls fast. The perspective on a person’s potential value added an urgency to my care for clients.

I promise: Your perspective will change when you look at a client and say, “That person will spend $12,000 here over the next few years.”

Leaders—and Their LTV Secrets

Every month at Two-Brain, we track metrics in 20 different categories. We find the gyms that are outperforming everyone else in each category, and we rank them on a leaderboard. Here’s our LTV leaderboard for March 2021:

We publish the actual gym names for our clients but not publicly.

After we report the leaders, we interview them, pick apart their processes and teach what they know to every gym in Two-Brain. This is called the Two-Brain Info Cycle.

We also publish some of their insights here on my blog, on Two-Brain Radio and on our YouTube channel (be sure to subscribe if you haven’t).

Below, I’ll share nine secrets to incredible average LTV from the leaders in Two-Brain.

Secret 1

The members who spend the most per month are usually those with the longest length of engagement (LEG). Top owners suggested a strong link between average revenue per member per month (ARM) and LEG.

Gym owner: “Your highest-value members are also the most likely to stay.”

Gym owner: “We focus on both ARM and LEG in parallel.”

Secret 2

Your high-LTV clients might not be exactly like you.

Gym owner: “We work with many senior athletes. I just had a 68-year-old do a box jump today.”

Secret 3

Top gyms customize or tailor everything.

Gym owner: “We started as a personal training studio first, and I think that gave us the right perspective now that we run groups.”

Gym owner: “We tell our coaches to treat all of the gym’s clients like they’re personal training clients. If you want to keep them, you have to give them that much attention.”

Secret 4

They talk to almost every client every day.

Gym owner: “I send a daily text message. Not all of my trainers do, but they all have a high-frequency rhythm with our clients.”

Gym owner: “I tend to engage more with the people who have higher adherence rates.”

Secret 5

They do social outings—and they find ways to connect outside the gym or online even more often during COVID lockdowns.

Gym owner: “We tried to do something once every month before lockdowns. Now we do it every week.”

Gym owner: “We stay in frequent touch (almost daily), but we don’t have to hang out every weekend to be a part of each other’s life.”

Secret 6

They benefit from their own survival. To have 10-year length of engagement that drives up LTV, you have to stay in business for 10 years.

Gym owner: “Our numbers might be a bit skewed because we’ve been open for 15 years.”

Gym owner: “Our higher-value clients were more likely to stay during COVID lockdowns.”

Secret 7

They know they’re selling more than a workout.

Gym owner: “Most of our clients are looking for accountability, and that’s part of our service.”

Secret 8

They focus on excellent onboarding.

Gym owner: “Coach interaction goes up when they know the client really well.”

Gym owner: “Our new clients actually pull the value up—the older clients might be on lower-value packages or rates.”

Secret 9

They focus on clients who fit “the mold” of the gym.

Gym owner: “When we get clients that fit our ideal avatar, they only quit if they move.”

Gym owner: “We really focus on keeping people long term and boosting LTV that way.”

What Two-Brain Data Says

Now, here’s what our data says about LTV:

1. The average retention in CrossFit gyms is just under eight months. (Obviously, that’s too low).

2. If you can keep a client until the ninth month, you’ll probably keep that client for a full year (about a 70 percent chance).

3. The next common drop-off point is at the 13-month mark. But if you can keep them past 13 months, you’ll probably keep them for two full years.

4. If you can keep them for three years, you’ll probably have them for five.

5. A solid onboarding process, lasting between two and four weeks in this sample, really made the difference between clients who stayed for a few months and clients who stayed for a year.

There’s a lot to unpack here.

We have every gym owner build a Client Journey document in our RampUp program so they can identify these drop-off points, fix their retention, boost their ARM and keep high-value clients longer.

We can teach you how to do it, too. To talk to us about mentorship, click here.

The post By the Numbers: Lifetime Value appeared first on Two-Brain Business.

Why Mat Fraser Vs. Dave Castro Doesn’t Matter

Welcome to Pressing It Out! This week:

What CrossFit Games champ Mat Fraser and a Formula 1 driver have in common when it comes to criticism.Mike Burgener says “fix the feet” even though everyone refuses to do it.Dick’s House of Sport uses The Force.Former WWE champion wins DOMS belt on Wrestlemania 37 weekend.

Mat Fraser Vs. Dave Castro

Re-listening to the Mat Fraser episode of The Joe Rogan Experience, I found it really interesting that Fraser cared at all about Dave Castro’s comments that he was “slipping.”

At the time Castro made the comments—likely just to stir the pot, create some drama and switch up the 1,500-day “Fraser is dominant” narrative—Fraser’s four-year run of CrossFit Games championships was already more impressive than literally any other accomplishment in the Sport of Fitness.

Even with four titles each, Fraser had already bested Rich Froning by my estimation. That’s no shade on Rich. It’s just that the competition gets harder to win every year as the sport grows and the world’s athletes get fitter. So I gave Fraser the edge for his more recent four-peat. And that was before he won a fifth time.

The whole beef with Castro felt like spitballs against a battleship to me. Then I watched Season 3 of the always-amazing Netflix series “Formula 1: Drive to Survive” and saw the irritation of Mercedes driver Valtteri Bottas after some rando criticized him on social media. Bottas was looking at his phone like he was holding a rotting piece of chicken.

So I guess no amount of success can truly drown out criticism, whether you’re utterly destroying all fitness competitors every single year or jet-setting to Monaco to drive a four-wheeled rocket ship past the Casino de Monte Carlo at 360 kilometers an hour.

Irritated or not, Fraser will stop at five titles and is without doubt the sport’s greatest athlete. His retirement leaves the men’s field wide open. So who’s next? Noah Ohlsen maybe? The always entertaining Patrick Vellner? Personally, I’d like to see Justin Medeiros win for no other reason than the mullet.

Leave a comment and drop your choice for Fraser’s replacement as king of exercise.

The Novice’s Curse Revisited—Again

It was great to see Coach Mike Burgener in the CrossFit Email of the Day this week to remind that “90 percent of all missed lifts are attributed to the feet.”

Coach B—of Burgener Strength—has been saying this for decades, yet many lifters don’t listen. Instead, they just keep going heavier and inventing more challenging barbell complexes with which to showcase their fundamental errors.

If you’ve ever coached a bull-headed athlete with functional fitness aspirations, you know exactly what I’m talking about.

Were I to start an Oly club today, I probably wouldn’t use barbells for about a year. I’d just drill footwork with PVC for 12 months straight. After that, we’d bring out the barbells, get a little stronger and beat all the lifters who are still short-stepping jerks and jumping six inches forward on snatches.

Want more on footwork? Check out this article I wrote back in 2016 with expertise provided by Coach B: “Perfecting the Jerk: Part 1.”

Home Run for Dick’s?

The Independent Health, Racquet and Sportsclub Associaton newsletter recently directed me to a list of feel-good stories after a dismal year of COVID in the fitness world. One of those stories was about Dick’s House of Sport, a new store/super-playground in Rochester, New York.

The store seems to be a blend of try-before-you-buy retail, facility rental and fitness/sports community. The facility has a putting green, batting cage, turfed sports field and climbing wall, and you can book services like a four-week bridal boot camp run by Victor CrossFit, time on the climbing wall and something called “Jedi Training” on Star Wars Day.

Dick’s also offers free stuff like a personalized shopping experience for mothers and store-perimeter walking sessions for seniors.

When I worked in sporting goods back in the day, people always claimed to want to “try out their cuts” with new shoes but almost always made final choices based only on color, brand or style.

Beyond that, the in-store putting green was definitely abused by some and probably got its best use during after-hours staff sessions involving betting and pitching wedges from the bike department. And I heard about a few speeding golf balls that got through the netting in the driving area at a sister store.

Nevertheless, it’s great to see a creative retailer opening up more places for activities and connecting with local gyms—even if you have to exit through the pro shop.

Seth Rollins Is Sore?

On April 20, the Morning Chalk Up published long and interesting member-exclusive article about WWE star Seth Rollins. (You’ll find him on the CrossFit Games Leaderboard under the name Rollins uses when he isn’t delivering the Pedigree to Roman Reigns: Colby Lopez.)

Rollins completed the five Quarterfinals tests a day or two before taking on Cesaro at WrestleMania 37 on April 10. The part I found most interesting: Rollins said he hadn’t done GHD sit-ups for two years due to a back injury, and he did 110 in Test 2.

That’s gnarly.

Say anything you want about Wolverine-esque powers of recovery and intestinal fortitude that reminds of the best days of Macho Man Randy Savage. Doing 110 GHD sit-ups at intensity after a long layoff is “not advised”—to say the least. Doing the sit-ups—and a bunch of other tough workouts—before a scripted but incredibly physical wrestling match might be considered the sort of torture only Mick Foley could endure.

That’s not to criticize Rollins. Professional athletes can do as they see fit, and they have coaches and trainers guiding them. I point all this out only because I’m surprised Rollins could even stand up straight to battle Cesaro at Raymond James Stadium. If I did 110 sit-ups at high intensity today and sneezed tomorrow, I’d likely implode. Indeed, the man they call “CrossFit Jesus” said the sit-ups left a mark.

Rollins lost at Wrestlemania, BTW—so perhaps the GHDs were all part of the angle Seth is working right now. I can almost hear legendary ring announcer Jim Ross now:

“As God as my witness, the GHD broke him in half!”

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download Two-Brain’s huge collection of free tools.

The post Why Mat Fraser Vs. Dave Castro Doesn’t Matter appeared first on Two-Brain Business.

Why Your Gym Must Pay You First (and How to Make It Happen)

Mike (00:01):

The profit first concept is simple: Your business pays you first. But it’s not always easy to see a way to do that. I’ve called in John Briggs to explain. He’s the author of Profit First for Microgyms, and he’ll tell you why this powerful concept can change your fitness business and your life

Chris (00:18):

More on that in just a minute. This business management platform is designed to take you from a fitness expert to a successful gym owner. Arbox offers a full suite of tools, including a dashboard and report with the top metrics that we prioritize at Two-Brain Business. With a glance, you can see length of engagement, average monthly revenue, new versus lost members and more. Arbox will also help you drive engagement with a members app that allows clients to interact with their friends. So here’s the special deal for Two-Brain Radio listeners. Save up to 50% for the first year using Arbox. Visit arboxapp.com/tbb to register to a free 10 day trial and schedule a demo with one of Arbox’s experts.

Mike (01:03):

John Briggs is an accountant, gym owner and author. He’s the perfect person to help you understand how the profit first concept applies to a fitness business. John runs Incite Tax and Accounting in Utah, as well as GSL Fitness. In January, 2020, he published Profit First for Microgym, which explained exactly how Mike Michalowicz’s concept applies to a fitness business. The link to purchase John’s book is in the show notes and the man from Incite is here to give us some insight. All right, John, welcome to the show. Are you ready for a short story that might hit a little too close to home for me?

John (01:34):

Yeah, I’m ready.

Mike (01:36):

So here’s the thing. I started a business and my approach to getting profitable as fast as possible was by absorbing all the labor costs myself. So guess what happened when I tried to hire people to replace me, I bet you know, I was not profitable, so I didn’t actually have a business.

Mike (01:55):

What I had was a job and it wasn’t a very good job because I was working huge hours for no money. So we met in person, I think for the first time in Chicago, in 2019 at the Two-Brain Summit. But I wished that meeting had happened far earlier because I think you could have prevented a lot of problems for me. So I’m glad you’re on the show today to help some gym owners with some all too common problems. Ready to go?

John (02:15):

Let’s do this. You got it.

Mike (02:16):

So right off the bat, what’s the shortest most direct explanation of the profit first concept, break this down for me. So people understand.

John (02:25):

Yeah. So I’ll start with the most basic explanation of the concept. When money comes into our businesses, that money has already been committed to other things. And so with profit first, all we’re doing is allocating some of those commitments ahead of time before we give ourselves a chance to spend that money. So that’s the shortest explanation, but I have to go into a little bit more of a moderate explanation. What we’re really protecting against that gets us in trouble is Parkinson’s law.

Mike (03:02):

And you wrote about this in your book, right?

John (03:04):

Exactly. So Parkinson’s law is as the demand for something expands, it will match the supply. The demand for something expands to match the supply. So what I’m talking about in this case is our money. If I have one bank account and I got a bunch of cash in it, think of that as a pile of supply, which means the demand to spend that money in the form of expenses is always going to increase until I have no more money left to spend. So what we want to do is create a false reality that we actually have less money to spend than we really do. And so with profit first, we recommend setting up, we call them the essential seven, seven separate bank accounts, and I can go over what each of those are, but each account is going to have a specific purpose. So when money comes into the business, I am able to then transfer some of this money to these other buckets. These other accounts. Now, the money that I have left in the account that’s for operating expenses, I can go ahead and let Parkinson’s law happen because that’s the purpose of the money in my operating expense account, is to spend it to run the business. But now I have other things which we’ll go over with the essential seven that are really important in the longevity of a business that we often overlook if we just have one bank account.

Mike (04:32):

Yeah. And that Parkinson’s law, it’s a thing, you know, I’ll give you one physical example, at one of my university jobs, I had to clean out a giant storage room in the basement of the university and we organized the whole thing, made all this space. And I was so proud of myself. I came in the next morning and all the space had been taken up by new stuff that had been moved in overnight. Right. And it was just like, someone’s like, Hey, we got space. Let’s fill it. You know, and it’s exactly—and then the principle can be found in like loot coins in video games or money or whatever it is. It’s like when we have a surplus, and I think you used a toothpaste analogy, when you’ve got a lot of toothpaste in the tube, you wrote in your book and said, yeah, spread it out, use as much as you want. But then at the end, you’re squeezing every drop out. And I thought that was such a great analogy because Parkinson’s law. If you start looking for it, you see it everywhere.

John (05:17):

Exactly. And the thing is if we use that toothpaste analogy, compare it to business. So if at the end I’m a lot more efficient with the toothpaste, still getting the great same clean. I’m just not being excessive. The same will happen to us when we use this method in our business, we are going to find the ways to continue to provide the great service that we’re already providing. Our members are going to still love us, but we’re going to do it in a more efficient way and we’re not going to let our business get financially fat.

Mike (05:50):

So before I ask you about the seven accounts, I want to ask you this other question, because I’m curious about this because you specifically know profit first for gym owners, and it’s a concept that applies to all business, but you’ve written the book specifically for gym owners. So I, as a gym owner was so guilty of paying myself last many gym owners have made the exact same mistakes. So why is it that so many gym owners fall into this trap? Is it because like, we’re trying to, you know, we want to put our staff first, our clients first, we’re guilty about making money or what is it that affects a gym owner specifically?

John (06:18):

Yeah. That, I mean, I think there’s a few things that at least we’ve seen and there could be other issues. So please don’t take this as an all-inclusive list. But I think the first main challenge the gym owners have is that we love to serve our members. The reason we’re in business is because we want the world to be healthier. Specifically, we know that we can have an imprint on our local community and the people who come through our doors, or if you’re virtual only now the people who come on and experience that, you are making their life better. Now because there’s a component, a strong component of service that comes with that, we just innately know, cause it’s an eternal truth, that when you help people, you’re doing the right thing. And so we just sometimes take that a little too far and say, well, if I’m doing the right thing, then naturally the income should follow and I should have profit.

John (07:15):

I should have money left over just because I’m doing the right thing and helping the world be healthier. Unfortunately, doing the right thing, yes, serving others will build your character and make you a great person. But it does not always translate into having money left over so that you can stay in business. I think that’s one of the first main reasons, but you said it too, and I’m just going to put a little bit of a different spin on it. We do want to take care of our staff. It’s a lot easier to hire someone in my opinion than it is to fire that person, especially knowing all the gym owners that we’ve associated with. I mean, almost everyone is just very likable and you want to be friends with them, just like you want to be friends with your coaches. And unfortunately, sometimes we have to make a business decision that affects someone’s lifestyle or their, you know, like, Hey, the business decision is I can’t afford to keep you. And I know that’s going to affect you negatively. And I’m really sorry about it. We basically want to avoid those things. And so we go longer than we should trying to support our staff. And unfortunately all we’re doing is putting the legacy that we can leave and the viability of the business in jeopardy, because we’re the ones now falling on the sword. So it’s a lot easier for us to sacrifice that instead of having to deal with that tough conversation with our coaches who usually are our friends as well.

Mike (08:42):

You see this debate pop up sometimes in CrossFit affiliate owners groups, or even times in the public where people will say, you know, how dare you charge $225 a month, that selects out a large number of people. If your service is so essential to so many people, you should be giving it away for free, or you should charge to make it more accessible to people. And like, there is a reality and there is a place for nonprofits and all that kind of stuff. But the other reality is that, and you and I know this from digging into the numbers with Chris Cooper, of course, you can’t run a business in that way. You can’t offer like $28 all you can CrossFit memberships and still turn a profit. Like it just, the numbers don’t add up. And yet parts of the community still will criticize gym owners for turning a profit. Like, have you seen that?

John (09:24):

Yeah, I’ve actually seen that. It’s crazy. It’s weird. I’ve also seen that. Yeah. Look, we have to understand 99% of the world doesn’t understand business. That’s why they’re not business owners and yeah, we would love to make it accessible. But in order to give back, you have to have something to be able to give. And it’s like, so those who have a big heart and want to be very charitable, the reality is that means you’re gonna have to be very profitable on something. The cash to be charitable has to come from somewhere. And you can’t, you just can’t do that by opening it up to the masses and making it quote unquote affordable for the entire world, you have to make it valuable, yes, but we have to focus on value and not affordability because guess what, there are demographics of people who will be able to find the value you offer and they’re going to be willing to pay for it. That leads to profitability. That then allows you to take that profitability and go do charitable things with it. But you have to start with the foundation of profitability as the foundation to the success that then gives me the ability to be charitable. You can’t be charitable and hope that somehow your business becomes profitable because of it.

Mike (10:42):

And I’ve seen, I’m sure you’ve seen this even more than I have with your work as an accountant. I’ve seen some businesses run by wonderful, you know, great hearted people who did some amazing things in the community, but ultimately couldn’t make it work because it wasn’t a business. And that was sad to see them go. And ultimately, because they weren’t profitable, the community lost their contributions because they weren’t able to keep giving them, they had to do something else to provide for their families. So that tragedy aside, I won’t go down that rabbit hole, but it is out there. So now why don’t you lay out for me the seven bank accounts that you mentioned? What are they?

John (11:14):

Number one is the income account. The purpose of this account as stated is to literally receive all your customer deposits. That’s its only purpose. If you’re not familiar with the progression of profit first, it was initially created by the author, Mike Michalowicz, and in his first book, he actually says having an income account was an optional account. He then did a revised version based on the feedback from professionals like myself, who said, dude, it doesn’t work without the income account. I don’t understand it, but I ran profit first for myself without an income account for an entire year. And I always felt like the system wasn’t working, I couldn’t find the cash to do the things that I needed to do. And by adding the income account and it just—I don’t get the science behind it. All I can tell you from personal experience of my own and the hundreds of gyms we work with, you got to have it. OK. Income account number one. OK. Then we have a team member bucket, the team member account is for the purpose of paying your entire team. That’s your office, your joy girls.

Mike (12:30):

And we call them joy guys now, too.

John (12:33):

Joy guys, joy humans.

Mike (12:37):

Right? Exactly. Cover it all.

John (12:40):

Of course your coaches, because paying your team is either your number one or number two expense as a gym. It’s important to set aside the money as you incur it because that’s the last person you don’t want to be able to pay. I go into more detail in the book, but we recommend if you’re the owner and you’re coaching classes that the income you would have paid a coach to coach the class that you took over needs to be allocated to this team member expense and bucket, and you need to pay it to yourself.

Mike (13:21):

John, if you had said that to me in 2010, I would probably have a hundred thousand dollars more in my bank account right now. Where were you?

John (13:33):

Sorry. You said it earlier. When we started people fall on the sword, they keep their profitability up by doing all the work, but not paying themselves. And then when they get to paying the coach, they’re like, I can’t afford this.

Mike (13:44):

I couldn’t do it. I couldn’t replace myself.

John (13:46):

By setting aside the money into this account, you now know when you can afford to replace yourself and you know you have the cashflow to do it because you’ve already been doing it.

Mike (13:56):

It’s such a simple thing that makes such a huge difference. And it would have saved me, not just money, but stress and frustration and time and everything else that if people get nothing else from this show and take that, that’s still a win, but keep going and we’ll win some more.

John (14:13):

So income, team member, then owners pay. Now, this is definitely pay for you as the owner, working in the business. And it basically all your pay minus what you would have paid yourself with the coaching work, because that’s in the other bucket, both of those go to your personal account, but this is a separate account. And this is for all the other stuff that you’re doing, but this is to make sure that you’re paying yourself first, because what we do not talk enough about in the gym space is the reality and danger of burnout.

Mike (14:49):

It’s real.

John (14:49):

And look, I work with a lot of entrepreneurs in a lot of industries, and I can tell you, the gym owners have the highest level of fortitude that I’ve seen in any other demographic of entrepreneurs. What that means is that you guys are willing to fall on the sword.

John (15:10):

You’re like those heroes in action movies. You’re like the Avengers, oh, I have a sword through the side of my face and I can’t walk, but I’m going to keep going. You guys fight through things and you can go years and years and years not paying yourself. But then reality will sink in. At some point, it always does. If you’re not earning a livable wage off of your efforts as a gym owner, there will come a time. And it is almost like a switch that gets flipped. It’s pretty quick. It’s like, wow, I can’t continue to sustain this level of effort, especially without anything to show for it because I have a life that I need to support. I have probably a family that needs to be supported. And guess what, when that happens, you will go out of business. So all that passion that you have in the world of helping each individual become healthier, it’s gone. You’re not there now. And all of that can be solved by being profitable. And that’s why we have this specific account of owners pay so that you will pay yourself first. And I’m listing them kind of in the order that I rank them. Like you have your income account, team members, owners pay. So there’s that. So those are the three—

Mike (16:30):

John and just to interrupt, like, you’re preaching to the choir in the sense, like, if anyone’s looking for confirmation, that literally happened to me, right. Where everything was fine until it wasn’t. And when it wasn’t, I wanted out really bad. And it was all because I wasn’t seeing the reward because I sat down one day and I did the calculation and said if I had paid myself even McDonald’s wages, how much money I would have. And I was angry and I had only myself to blame. Luckily at that point I had a buddy named Chris Cooper. We had known each other from our work at the CrossFit Journal over the previous decade. And I connected with him and he allowed me to offload a lot of tasks, responsibilities to my wife, where she’s now in charge of the business. And I focused on other stuff and things changed dramatically. And we do the profit first system with her. And all of a sudden the business isn’t a burden that I hated. It became something that, you know, supports our family. So everything you just described literally happened to me. And so if you’re listening out there and it’s happening to you, there is a solution. Keep going, John.

John (17:29):

OK, the next one is profit. So we separate these two because owner’s pay is the amount of money that we want you to effectively base your lifestyle off of. It should be an amount that you’re able to pay yourself at least monthly. The other aspect of being the owner though, is that you’re taking a risk that no one else is. Guess what? Risk deserves to be rewarded. The financial world calls it return on investment. When you buy stock and hope it increases, you’re looking for a return on your investment. This is the same deal, you actually have stock. It’s just not traded like whatever the S and P 500 is, but you own this equity in your business. You deserve to receive a return on that investment. That’s what the profit account is for. We use the profit account to give ourselves quarterly profit distributions. And what we do is we only take half of the balance in this profit account, because then the other half sits there as a rainy day fund and can be used in a time of crisis.

Mike (18:35):

A COVID fund. So to speak.

John (18:38):

I’m happy to say that of what I have seen from our specific clients that we are working with, every single gym owner who was running the profit first system prior to the COVID situation, they are still in business. And a lot of it has to do with the fact that they were using this profit account and it came time that they needed to use that other half that was left in the bank account, but it got them through it. And that I can’t tell you what type of psychological benefit that gives you as an owner, just to have that cash sitting there, knowing that you have a runway in case a crisis happens and you make better business decisions based on it.

Mike (19:20):

Well, think about like, they always say, Oh, you should have three months expenses or whatever it is. Like, whatever the number is in the industry, how many businesses actually do that? It doesn’t seem like very many. And when the crisis comes as it inevitably does, bad things happen, like, have you seen other businesses, not your clients or whatever, but just other businesses get decimated by not having that buffer?

John (19:40):

Totally. I mean, I actually have clients who got decimated by not having that buffer and they were in hyper-growth mode. It’s really important, guys. So just a little Ninja trick for you as well, which I’ve used, I use the profit distribution also as a way to eradicate my debt. So I might celebrate, and, you know, go and buy a gigantic tub of ice cream and eat it. I love ice cream. But the rest of that profit distribution, I’m going to put towards principal debt because guys, there’s a cost to having debt. And I get it. I’m not anti debt, but there is a cost to it and we have to be smart about it. If you don’t owe money, those payments you were making to the debt, like those can accrue in places, your savings increase.

John (20:31):

So there’s a lot of benefit for it. And I know a lot of people just don’t have a good strategy of how they’re going to pay down their debt other than making their minimum payments. So with the profit for system, you make your minimum payments. And then because you’re living off of the owner’s pay amount in that bucket, you can afford to use all this other money that’s for you in the profit distributions to help yourself grow wealth and improve the financial health of your life.

Mike (20:56):

So you’re talking about like Visa bills and like even mortgages to some degree, any like, you know, anything that’s charging that you owe interest on, that’s eating into you. You’re going to get rid of that with that profit account, or you can.

John (21:09):

You can. And I definitely recommend it. I love the Dave Ramsey snowball method, which doesn’t take into consideration the interest rate. It takes into consideration the lowest balance owed first. And so you pay off that debt first, and then you keep kind of going down that rabbit hole.

Mike (21:31):

I love it.

John (21:31):

We talk about this in the book and we have some online courses as well that go over that, but I don’t want to get too nitty gritty, but I love the system because it does help us get out of debt faster. And man, when that happens, you can see your financial freedom just grow so quickly once that debt is behind you.

Mike (21:50):

And it’s Lamborghini time.

John (21:52):

Sure, if you want.

Chris (21:55):

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John (22:31):

OK, so to summarize. So far we’ve talked about income, team member, owners pay, profit, then tax.

Mike (22:38):

Ugh. All right, I’ll let you go on this one.

John (22:41):

I’m not aware of a government that doesn’t charge you tax. So, we got to save for it, guys. The last thing you want to do is get to a scenario where you’re already feeling strapped. Like you can’t put food on the table and then you owe a tax bill. We see it all the time. Like, wait, how much do I owe in taxes? How’s that possible? Where’s that money? We have to show them, because again, Parkinson’s law, you’re going to spend that cash, even though that cash was committed to cover your income tax burden. So tax, that’s the fifth account.

Mike (23:10):

By setting it aside, that’s brilliant. Because I’ve dealt with this. I’ve seen people deal with this. Especially the one that I saw most commonly was when I ran publications and we’d pay a freelance writer on a contract and they would get their check and they’d spend it. And at the end of the year, they’d come back and say, where’s my T4. And I can’t remember what it’s called in the U.S., the income statement. And it’s like, you don’t get one because you’re a contractor. And they’re like, how do I do my taxes? You’re like, well, you gotta file that stuff. And they get a return from their accountant who says you owe X, and they’re like, I spent it. Same principle with gyms, right. You’ve seen it.

John (23:40):

It’s not a nationality thing. It’s a worldwide human pandemic. And yeah, we will spend that money if we don’t set it aside. And here’s a great thing, too. If you use the right percentage, instead of being happy about getting a refund from the government, now you can be happy that you have the money to pay the tax.

John (24:04):

And if there’s money left over, you can use that for whatever the crap you want. It’s your money. It’s like Christmas in April. It’s great. OK. The last two, the obvious one which you already have is your operating expense account. This is where you pay all your bills out of, this is where you run the business. And then we believe in an equipment account. Wear and tear happens on our stuff, and we are going to need to replace that. So instead of putting ourselves in the situation where we’re hoping and praying our rowers don’t break down, because there’s no way in hell we’re going to be able to replace it, we’re setting aside a little bit of money every month into this account. We recommend each gym owner kind of figuring out what’s the dollar amount that they’re comfortable with. And once that dollar amount is in the equipment account, you can refrain from putting money into that account until you actually need to spend money out of it and you replace it. So this is another version of a rainy day fund, just specifically allocated to replace the equipment eventually will need to be replaced.

Mike (25:12):

If you’re a new gym owner and you just bought that gigantic Rogue order, and you’re having a great time, I will tell you, it is a consumable and you are going to start seeing equipment bills. If maybe not in the first six months, you will see them. And John has seen them in his gym. I’ve seen them at mine, put that money away. It is going to be needed.

John (25:30):

Yeah. And look, we tell our clients, please don’t drop that 50 pound dumbbell from over your head and throw it down on the ground, please. But they’re going to keep doing it and you’re going to have to replace that damn rubber sleeve thing. So those are the seven accounts.

Mike (25:48):

So that is huge. So even just going through that, I see exactly what you’re doing there, where you’re taking the money and you’re putting it in its places. So that you’re basically, you’re drawing like gigantic walls between things so that, you know, you can’t creep from one to the other, like you can’t start taking, Oh, I’m just going to not pay myself this month because I’ve got operating expenses. Right. Cause that’s such a temptation. I talked to a gym owner yesterday who was dealing with the COVID situation. She does the profit first system. And I asked her, I said like, were you tempted at all to start paying yourself less to cover your expenses? She’s like, Oh my God, I sure was. But she didn’t. So it’s a win for John and profit first.

John (26:26):

Yeah. Dude, the temptation is real, even when things are good and you see that opportunity and the shiny object to want to pull from other places, like it’s there, but that’s why these boundaries work so well because it gives you just a barometer or a metric, a visual for you to realize, OK. Yeah. That’s a nice thing that I want to do, I see that opportunity, but I’m going to save up for it within this profit first methodology so that I can actually afford to pay for it because right now I can see I don’t have the cashflow for it.

Mike (27:01):

So here’s the big one. And I found an answer with a gentleman named Ashley Coffey, who runs the profit first system. I found this on a podcast, previous podcast, but I want to ask you the answer. So gym owners often don’t pay themselves first because they, you know, quote unquote can’t afford to. So where does the money come from? Like, let’s say you’re in a situation right now and there’s a gym owner out here listening, who is in this situation where you’re not paying yourself enough. There’s no money. How do you make this shift? Where does the money come from?

John (27:29):

Yeah. And I’m really glad you asked this question because I think this might be one of the number one reasons why people don’t take courage and implement the system. Cause I get it. You hear what I’m saying and you’re like, I don’t have any money left over right now. And now you want me to allocate to all these different buckets. So let’s see. If I start with a negative number and I subtract more money out of that, does that make me positive now?

Mike (27:53):

I’m dying faster.

John (27:53):

Yeah. All right. Here’s the big answer. The money comes from your income account and really what’s going to happen is by doing the methodology, you will see the areas of your business that need fixed. And in this case, one of the obvious areas is it’s gonna highlight the expenses that you can’t afford to pay.

John (28:22):

And when you can’t afford to pay an expense, what you do is you allow that natural ability within you, which I have seen every gym owner have this. So that’s why I say it’s within all of us. You’re going to find the expenses that you realize you know, that actually isn’t adding anything to my business. It’s not improving my members’ experience, it doesn’t improve retention. It’s a nice thing to have, but it’s not a critical thing to have. Because ultimately if you’re running your gym and you don’t have any money leftover, you very likely, not always, but very likely have more expenses than your gym can afford. And you just need to get rid of those expenses. But the only way to figure, start figuring that out is to do the steps and to allow these roadblocks to come up and say, well, OK, I’ve allocated the money. I have all these expenses, but I only have half that cash available to pay for them. Now you force yourself to actually prioritize the bills. OK. Which are the ones that I actually need to pay, the most critical. Obviously I’m going to pay those first. Cause I only have X amount of dollars to pay for all these. You’re going to find certain expenses that you continue to push off and guess what? Those expenses you push off, they’re not critical. So you don’t need them right now.

Mike (29:38):

So this is very interesting. I’m going to throw this at you and you tell me what you think of this answer. Cause this is what the gym owner told me. So I asked her the same question, where does the money come from? And she said for her, the money came from, she needed goalposts. And like gym owners by and large are driven people, right? Most of them do competitive workouts and they want to win. And the whole leaderboard thing. So she said for her, when she started paying herself and did this whole analysis that you’re talking about, she obviously cut expenses and changed some things up. But then she looked at the numbers and said, OK, for me to, you know, achieve this standard of living or to do whatever she wants to do, she needed this much revenue. So then she looked at just like you said, the areas of the business that needed improvement. And in some cases it’s going to be revenue. It’s not just cutting expenses. Right. She found that. And she said that goalpost and that accountability and that number drove her to accomplish what she needed to, to hit the numbers. What do you think of that?

John (30:35):

Yep. It’s basically just an advanced way to say what we’re saying here, because it’s both ends, right? You can’t cut your way to profitability, but you can acknowledge and identify the unnecessary expenses. So in the book I have an entire chapter on how to analyze expenses and I talk about what’s productive. What’s a productive expense and what’s a not productive expense. Crazy terminology there, but it’s simple, right? You can really determine if this thing is worthwhile or not. And then the other angle, which obviously Two-Brain is phenomenal at doing is helping gym owners reverse engineer. OK. If I need to make X amount, what does that revenue look like? And Two-Brain then gives the resources to help people figure out how can I bring in that additional revenue? You have to look at both. Even though I wrote the book and you know, profit first is the name of it.

John (31:29):

The reality is it’s not an end all be all solution. You have to have a healthy business. You have to have good standard operating procedures. You have to have a great culture and good coaches. There are so many components. Profit first is just one of those things that if you run it while you do all the other things, you’re able to do those things in a way that allows you to increase your profitability, because without these goalposts and boundaries, as your income increases, your expenses will always increase at the same pace, if not faster. And so profit first kind of gives you the ability to control the increase in expenses as your income continues to increase, which will happen if you follow what Two-Brain teaches.

Mike (32:12):

Yeah. And so I had started with Two-Brain I want to say in 2017, something like that. It’s been several years anyways. So we had gone through a lot of this stuff, but when I read your book just before it came out last year in January 2020, I went back and I looked at my expenses and I did a hard look based on what I read in your book and said like, is everything here legit? And luckily, because I had done a bit of work for this, I found that everything was legit. Like there was not a thing I could cut. You know, I couldn’t cut my phone bill at the gym. Like there was things that just needed to happen. But when we’d done this first expense audit, exactly what you said, we found that, OK, we’ve cut everything now.

Mike (32:48):

Now we need to generate some more revenue. And that’s what we did. Right? Because we had the numbers in mind. I knew what I wanted to pay my wife. And that’s what Chris is now developing. Right? He’s got this whole system where he wants to get gym owners, first to $100,000 a year salary. And exactly like you said, we can reverse engineer all the parts that need to go on the place. And that profit first system is the number one step that Chris is recommending is pay yourself first concept is now a huge part of our roadmap to help clients. So I want to ask you this, what generally happens to a business when someone implements the profit first strategy and you know, I’ll preface this by saying, can someone like stick a toe in and start by with a hundred dollars a month or something like just to, just to pay themselves something like, how does it work and what happens?

John (33:27):

Yeah. I mean, profit first is a set of guidelines. It’s a framework. It’s never been designed to be, like black and white, do this exactly like this because we are all different. And especially when we’re in different countries and even different locales, like we were just talking before we started recording. My gym is located in Utah and Utah has done a pretty good job. So we weren’t shut down for too long, but you’re where you’re at. It’s a stay at home order. So obviously there’s a lot of different factors that go into these aspects. But when you implement profit first, if the whole thing seems daunting, start small somewhere, paying yourself first is probably the best place you can start because you’ll start, you feel the benefit from running it. And then, as Chris taught me, success precedes motivation. By paying yourself a little bit first, you’re going to get that success. And you’re going to be like, maybe there’s other components of the system that I should start implementing. So if you’re not paying yourself anything right now, absolutely. What does Chris recommend? Like write out four weeks in advance of checks that you’re going to give yourself starting with like a hundred bucks or something and just like start it. That is basically the same. That’s the profit first system. Start by paying yourself something and commit to it and let yourself figure out the other things.

Mike (34:52):

So you can start small and you can make adjustments for, you know, unprecedented pandemics and so forth. So you can do that and get the profit first system rolling. When you get a gym business that puts the whole thing in place, and let’s say they’ve gone a little bit further and they’ve got these seven bank accounts. They’ve got everything in place and they’re following it. What generally happens to that business and to the owner’s life?

John (35:14):

Yeah. Take-home pay increases, their stress level decreases because they’re able to—they’re now comfortable that they can pay themselves. The stress decreases also, because now they’re not going to be worrying about how am I going to pay my tax bill. They have clarity on when they can and can’t afford to bring on a new coach. So all of those things lead to the ability to make better business decisions, the freedom to not feel desperate when having to make business decisions. And so they make the right ones, not just the ones out of desperation and in general, their gym also starts to increase in revenue as well.

Mike (35:57):

Just the stress level alone reduction is a big win, but you know, having some extra money helps too. And we all know, you know, or at least many of us know from getting through some stuff, as your stress level goes down, your income goes up, as a gym owner, you become a better person, right? You’re just not as crabby. You can give more to your members. You can go back to what we talked about earlier. Do some charity work. You’ve got some spare time. You’ve got some money to donate to charity. Like everything kind of gets better in that entire orbit. And it’s such a cool thing. I just love the way you put it together specifically, like Michalowicz’s system for gym owners works so well. So guys, please click the show notes and get Profit First for Microgyms. It will help you a ton. So John, step one is ordering that book. That’s what I’m getting gym owners to take action on today. Order that book. Step two, you might’ve said it, but we’ll just confirm is to just start pay yourself something. Or if we were going to tell gym owners to take action today, what would you recommend they do right after this show? They’ve ordered your book. Now what?

John (36:53):

I think, I mean, absolutely pay themselves, but I really want them to really make an assessment of where they’re at. Be honest with yourself, because depending on what stage you are in the business, that will probably indicate what your next step should be. But absolutely, if you’re not paying yourself, that is the most critical step. Because once you give yourself that success, a lot of other stuff will start falling into place. If you are paying yourself, setting up bank accounts would be the next obvious step.

Mike (37:23):

So you’re just going to take, and you said you ordered the seven that we talked about in order of how you would set them up. Is that correct?

John (37:30):

Well, owner’s pay. I would probably do owners pay before I do team member expense.

Mike (37:35):

Read me out if you don’t mind your recommended order. So if someone’s going to go to the bank today, what would be the order of accounts? Let’s say they only get three done or something like that. What are the most important?

John (37:44):

Owners pay, tax, and I mean, honestly the income account, because what we didn’t get into, which I do in the book, it’s the system of how to manage your cash. And we recommend you sit down, at least twice a month, but no more than once a week. And when you’re sitting down, you’re taking the money that’s now deposited into that income account. And you’re putting into these other buckets that you set up and just knowing from experience that when I was having my deposits sent into my operating expense account, it just didn’t work as well. Just setting up the income account is going to at least give you some clarity on the rhythms of cash with your gym right now. And then you allocate to whatever number of accounts that you have decided to set up.

Mike (38:36):

John, thank you so much for writing that book and for taking the time to share this with everyone, do you have a website that people can go to to find out more?

John (38:42):

Yeah. So profitfirstformicrogyms.com has all the information you could want. We have a bunch of free resources. In addition to that, incitetax.com is our accounting firm brand. We also have a ton of resources there. As a CPA, I had to include an entire chapter in my book on tax strategies. We talk in more detail about a lot of those strategies in blog posts on our website. So either of those websites hopefully will serve you guys really well.

Mike (39:17):

Yeah. And I know that you are no fan of the IRS and you’ll make sure they get every dollar they’re owed, but not a penny more. And that’s important for everyone. So if you’re not super happy with your tax situation, figure that out because John has some clever ways for you to save as much money, keep it legal, but don’t give them more than they need. John, thank you so much for being here. I really appreciate your time and I hope some gym owners contact you.

John (39:42):

Thanks Mike.

Mike (39:43):

I’m Mike Warkentin, your host on Two-Brain Radio and John Briggs was my guest today. Stop what you’re doing and join the Gym Owners United group on Facebook. Chris regularly posts articles, instructional videos, and advice in there. It’s the only public group he’s in. That’s Gym Owners United on Facebook. Join today.

 

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Two-Brain Summit Speakers: Todd Herman

“If you know how to build an audience, you’re set for life.”

Todd Herman has been my business mentor for nearly two years.

After starting as a personal trainer, Herman found that most of his clients needed mental training. He quickly became popular with professional athletes, and his book “The Alter Ego Effect” spread his strategies to CEOs around the world. Todd’s great at getting his clients to perform their best on their own “field of play.”

Todd’s top business strategy for our “field of play”? The 90 Day Year plan.

As gym owners and coaches, we struggle most with overwhelm. There’s so much we could do that we become paralyzed. Should we order more T-shirts for inventory? Hire more trainers? Sell nutrition coaching? Raise our rates? Improve our own fitness? There are never enough hours in the day—unless you plan each day in advance.

Todd’s going to walk us through the 90 Day Year plan at the Summit in June. We’re going to set up the next sprint in your own life on your own field of play. You’re going to leave this presentation knowing exactly what to do, how to do it and where to invest your energy to win.

The 2021 Two-Brain Summit will be online and broadcast to select regional locations on June 19 and 20. Get tickets and more info here.

Other Media in This Series

“Two-Brain Summit Speakers: Jocko Willink”
“Two-Brain Summit Speakers: Lisa Nichols”

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Two-Brain Summit Speakers: Lisa Nichols

Some people were dancing. Some were crying. Everyone was yelling. It was bedlam.

And all I could think was: “I’m so glad I brought my daughter to see this.”

Lisa Nichols might be the best presenter I’ve ever seen. And that’s a long list—from Zig Ziglar to Seth Godin to Colin Powell to Christopher Reeves to Maya Angelou, I’ve seen a lot of speakers. Nichols tops them all. She’s more authentic than Henry Rollins, more energizing than Gary Vaynerchuk.

20 years ago, Lisa Nichols was a single mother on government assistance with less than $12 in her bank account. She never got above a C in school, and, at 27, found herself raising a child whose father was in prison. That’s when she hit rock bottom. She’s quoted as thinking, “I have to be my own rescue. No one’s going to rescue me.”

Her rise has included appearances on “Oprah.” Her teachings were cited in “The Secret.” She has six bestselling books of her own. And she will move you.

Like me, you will find yourself yelling “Yes! Yes!” in a room with friends and strangers. From the outside, it looks a bit like a tent revival. On the inside, it feels like the best birthday party ever.

After listening to Lisa, you will believe in yourself. You will feel like you’ve shed your skin. You might just shout.

Lisa will speak to gym owners and their teams at the Two-Brain Summit. Then she’ll appear for a live Q+A immediately afterward.

The Two-Brain Summit will be online and broadcast to select regional locations on June 19 and 20.
Get tickets and more info here.

The post Two-Brain Summit Speakers: Lisa Nichols appeared first on Two-Brain Business.