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Gym Valuation Guide: How to Value a Gym and Finance a Purchase

Gym valuation: It’s a critical element if you’re looking to buy a gym or finance a gym purchase.

Owning a gym can be rewarding—emotionally and financially. As a fitness entrepreneur, you’ll be helping people stay healthy, and the fitness industry will offer you an opportunity to prosper in a sector with a revenue growth rate of 8.7 percent per year. If you run your business well, you could see a great return on investment (ROI).

However, before you start shopping to buy a gym, you must know the ins and outs of gym valuation so you can make a smart offer or finance a gym purchase. The gym valuation information below is presented for those looking to buy a gym, but it might also help you if you’re looking to sell a gym business.

What Is Gym Valuation and Why Is It Important?

Most gym owners put all their physical and emotional energy into their gyms, and many gyms are owner-operator outfits in which the principals have very strong connections to the brand, the members, the staff and even the equipment. These “labor of love” businesses tend to make owners add value where none exists. So when owners like this decide to sell a gym, their value assessments might be heavily influenced by intangibles that are difficult to quantify.       

As a result, you will need the most accurate assessment of the current worth of the seller’s gym business: You must do an objective, emotionless business valuation to measure the fair market value of the gym business. Doing so will ensure you don’t overpay. That’s important because buying a gym is only one way to get into the game: You can also start a gym.

Each path has benefits. Here are the most important:

Buying a gym allows you to acquire a profitable business and avoid startup work, or it allows you to acquire and fix struggling business so you can generate ROI on your purchase.You might be able to start a gym for less money, and the gym might come with fewer nasty knots to untangle.

For a list of pros and cons of buying a gym, read “How to Start a Gym.”

For a book that will tell you exactly how to start a gym, a course and free resources, click here.

If you decide to buy, a gym valuation is critical because it:

Ensures you don’t overpay.Provides hard financial data on the business.Establishes your profit potential.Determines the likelihood of financing your gym purchase.Defines your debt commitment.Gives you a basis for recordkeeping.

Factors That Affect Gym Valuation

Without a doubt, intangibles like community standing, branding, enthusiastic clientele and dedicated staff members will influence your final decision to buy a gym. However, the tangible factors are the essential components of your valuation.

The first consideration for assessing the gym’s worth: its profit and profit history. If a gym business isn’t profitable, its value is likely low—though the owner might not agree. In this case, you’ll have to be very cautious in evaluating the business, and if you purchase, you must have a plan to reach profitability quickly.

Microgyms should show a profit, but it’s very common for owner-operators to pay themselves a modest wage and run an unprofitable enterprise. In actuality, these owners have not created a business—they have created a job for themselves. If a business is not profitable, this factor becomes a pivotal issue in the entire gym valuation process.

Next, you should look at key operational metrics, such as net owner benefit (NOB), average revenue per member (ARM), length of engagement/retention (LEG), client count, lifetime value of clients (LTV) and expenses. They’re all tied to profit, so if you dig in you’ll see exact how a business generates profit or where it’s flawed.

This insight will help you determine if a business’s past profits are an indication of future performance or an anomaly. In struggling businesses, you might see metrics that clearly indicate opportunities for you to right the ship quickly.

Resource: “The Business Metrics That Any Gym Owner Should Know”

Other factors involved in your gym valuation are the business’s location (does it own or lease space?), its assets (including but not limited to equipment), its debts, and its contracts (with clients and staff).

Seven Great Gym Valuation Methods

There are many methods of assessing the value of a business. We’ll highlight seven of the most common gym valuation approaches below.

You can use a number of methods to value a gym—just be sure to use something so you aren’t guessing.
Discounted Cash Flows

The discounted cash flow (DCF) method is used to calculate the value of a gym based on its projected future cash flows.

To perform the DCF valuation, you’ll need a forecast of expected cash flows from your initial investment, a discount rate, and the total cost of your initial investment. You can forecast the expected cash flows by taking last year’s operating profit and assigning a growth rate to it for several years—three to five is common, though some calculations will go up to 10 years.

Most businesses use the weighted average cost of capital (WACC) as the discount rate in DCF gym valuations. A gym’s WACC is the cost of gaining capital or profit. As such, a gym with a high WACC is least likely to make a healthy profit.

For example, suppose the asking price for a gym is $60,000. The owner supplies you with a forecast of expected cash flows based on last year’s free cash flow of $20,000. The annual growth rate is 8 percent, and the WAAC is 25 percent (a higher rate estimate based on the general instability of many gym businesses). With an online DCF calculator,  you can calculate this valuation using a four-year period:

YearCash FlowDiscounted Cash Flow1$20,000$16,0002$21,600$13,8243$23,328$11,9444$25,194$10,320

By adding the discounted cash flows, you will find that this gym’s value is $52,087. By subtracting your $60,000 initial investment, you will see that this gym’s net present value (NPV) is -$7,913. The negative number indicates the investment is likely not worth the risk.

Any numbers you calculate when evaluating a gym become excellent references when you are comparing other gym purchasing opportunities.

The primary setback to using DCF is this method relies on assumptions, and many gym businesses are not stable very stable. To get a solid valuation, the estimates for future cash flows must be as accurate as possible and take into account foreseeable economic, industry and regional conditions. When it comes to gyms, the degree of unpredictability can be high—especially with newer businesses or gyms in which the departing owner performs every single task.

For an editable DCF spreadsheet for gyms from Rigquipment Finance click here or paste this link into your browser: http://twobrainbusiness.com/wp-conten... .

The EBITDA Method

EBITDA: earnings before interest, taxes, depreciation and amortization. This is an extremely popular gym valuation method because it is simple and accurate. It works so well because the components of EBITDA reflect the cash flow and market value.

You can calculate a gym’s EBITDA by taking the profit total on the gym’s profit and loss statement and adding back the interest, depreciation and amortization. Once you calculate your EBITDA, you can use multiples to find the approximate purchase price.

How do you determine the correct multiple? According to valentiam.com, “The size of the subject company, its profitability, its growth prospects and the industry within which it operates will have an impact on its EBITDA multiple.”

More profit, more stability and more growth potential equal a higher multiple. For example, a profitable tech company might use an EBITDA multiple of 38.58. An oil-exploration company might use a multiple of 4.6. A small gym with limited profit and slow growth would not earn a high multiple. Consider this chart below, with estimates provided by Sportsclubadvisors.net:

EBITDAMultipleExample0 to $50,0001.0 to 1.5 x EBITDA$10,000 x 1.1 = $11,000$0 to $50,0001.0 to 1.5 x EBITDA$48,000 x  1.3 = $62,400$50,000 to $150,0001.5 to 2.0 x EBITDA$120,000 x 1.7 = $204,000$150,00 to $250,0002.0 to 2.5 x EBITDA$170,000 x 2.3 = $391,000$250,000 – $500,0002.5 to 3.0 x EBITDA$260,000 x 2.6 = $676,000

Microgyms often have low start-up costs, so the examples above beg a question: At what point would it be more cost effective to start a gym instead of buy one?

In some cases, a gym’s value is limited solely to its assets.
The Asset Method

The asset gym valuation method takes cash flows and earnings out of the equation. Calculation is quite easy: Just subtract the gym’s liabilities from its assets. For this reason, it is a method that can be used to assess a gym business with negative cash flow.

The asset method also allows you to incorporate goodwill, which involves intangible assets like brand recognition, intellectual property, market share and trade secrets. As you can imagine, it can be hard to determine the value of these elements. Sellers will want to value them higher, of course, and some will overvalue them because of ego, sweat equity and personal attachment to the business. Remember, goodwill assets might actually be worthless if a gym business is in deep trouble—but the seller might not agree with that.

The tangible assets in a gym sale can include the members list, exercise equipment and accessories, franchise rights, account receivables, and lease agreements. The value of each asset is negotiable, though you might agree to use something like the MACRS depreciation method to speed up the process when it comes to certain assets.

The Market Method

Appraising a gym’s value with the market method involves the same steps that a real estate appraiser takes.

First, through research, find recent sales records of comparable gyms in your area. Then account for the differences among the gym businesses. The aggregate adjustments will reveal the approximate market value of the gym in question.

Although real estate and market method gym valuations are similar, the significant difference is that real estate transactions are public record and private gym sales are usually not. So it might be very challenging to find comparable gym sales in your area without the help of a professional with access to secured databases like DealStats and BIZCOMPS.

However, any stats you can find might prove to be very helpful because they can take a lot of arguing and guesswork out of the negotiations. In the end, any asset is only worth what someone will actually pay for it.

For example, if a seller is claiming his unprofitable business is worth $100,000 and you have information that shows three very similar businesses sold for $30,000-$40,000, you have either significant negotiating power or the means to break off negotiations completely and avoid overpaying.

Seller’s Discretionary Earnings Method

The seller’s discretionary earnings (SDE) method is an income-based approach to gym valuation that is particularly applicable to owner-operated gyms. It’s similar to the EBITDA method described above, but this method involves adding owner’s compensation and owner’s perks to EBITDA.

Many gym owners have low profits but derive net owner benefit (NOB) from the business, including salary, profit distributions, vehicle allowances, cell-phone plans, coffee and so on. Those benefits can be important to a coach who wants to be an owner-operator, too.

But be cautious: There’s a difference between buying yourself a job and buying yourself a business, and you must know exactly what you’re buying. If the owner-operated business you are buying has no profit, you are only buying a job for yourself. You can certainly turn that enterprise into a true business, but you will need a solid plan to do so or you’ll be coaching and cleaning and doing the accounting yourself forever.

To reach a valuation with this method, you must multiply the seller discretionary cash flow (SDCF) by a multiplier based on industry, economic environment and other financial factors.

A seller’s discretionary cash flow is the gym’s pre-tax earnings before:

Non-cash expenses.Owner’s salary.Interest expense or income.One-time payments.Non-business-related revenue and liabilities.

Step 1. Calculate SDCF by finding the gym’s pre-tax earnings from the income statement and:

OperationVariablesAddNon-operating expensesSubtractNon-operating incomeAddOne-time expenseSubtractNon-recurring incomeAddAmortization expenses and depreciationAddInterest expenseSubtractInterest incomeAddOne owner’s total salaryAdjustCompensation of other stakeholders to market value

Step 2. Based on the gym’s performance, the multiplier can range from 0 to 3 or more, with the average being 1.5. As you can imagine, the multiplier is always up for debate.

For example, if your total for the seller’s discretionary earnings of an above-average performing gym is $60,000, you might use a multiplier of two, resulting in a valuation of $120,000.

In another version of the same scenario, you might determine that SDE of $60,000 is too low to warrant a sale price of six figures. Paying $120,000 for a business with low SDE might prevent you from generating a return or even properly compensating yourself for the work required to run the business. In that case, you might argue for a multiple of 1.2 or so, which would result in a sale price of $72,000. For more examples on multiples, click here.

The book value method is simple because it leans heavily on the gym’s existing balance sheet.
Book Value Valuation Method

If you want to buy an asset-rich and profit-poor gym, the book value method might be an option. This method is also very simple.

All you need is the gym’s balance sheet to calculate the business’ value at a given time. By subtracting the total liabilities from the total assets on the balance sheet, you can determine the “book value” of the gym business.

Rough Estimate Valuation Method

If you need to make a rough estimate in a hurry, you can use a formula Two-Brain Business founder Chris Cooper lays out in the guide “How to Sell a Gym” (“How to Buy a Gym” can be found by clicking the same link).

This is a suitable method for screening potential gym buyers. Here are the steps to calculating a rough sale price:

Start with last year’s profit, including wages and dividends received.Multiply the profit by three years (zero for unprofitable gyms).Multiply by your retention rate (for example, 80 percent year-over-year retention would mean a multiplier of 0.8).Add the equipment’s real value (30 percent of the original purchase price, 10 percent for equipment three years old or older).

For example, a microgym owner received $70,000 from the gym last year, and the profit was $6,000. The gym’s retention rate is 70 percent (not very good), and the 2-year-old equipment is worth $7,000. On your cell phone calculator, the simple equation would be ($76,000 x 3 x 0.7) + $7,000 = $166,600.

Remember, this isn’t meant to be a shortcut around due diligence. It’s just a very quick method you can use to determine if you even want to do additional research.

Some gym owners will seek to finance a gym purchase through a bank–but there are other options.
Using Gym Valuations When Seeking Financing

When you set out to buy a fitness business, an accurate gym valuation helps you determine whether a gym is a worthy investment.

Along the same lines, having a clear valuation in the financial analysis section of your business plan can show lenders and investors how the gym’s cash flows and asset returns will affect their investment.

You have many options to finance your gym purchase if you decide to proceed. After you’ve completed your valuation for the gym and determined a purchase is a solid investment, you can examine these options.

Clay Ferrer of Rigquiment Finance understands the fitness industry better than other lenders.
Rigquipment Finance

If you plan to buy a CrossFit affiliate, functional fitness facility or similar microgym, you might consider a specialty lender with clear ties to the fitness and gym industry. For example, Rigquipment Finance’s founders were coaches and athletes, so they have personal knowledge of the obstacles you’ll face when seeking capital to buy a gym.

Rigquipment is a direct lender that handles the entire lending process in house—no broker involved. Plus, if you need to finance exercise equipment or flooring, Rigquipment has connections with prominent vendors, including Rogue.

Financing a Gym Purchase With a Bank Loan

If you choose to use a bank loan to purchase a gym, your valuation will be vital in securing the funds. To gain approval, you will need to present a business plan including the valuation of your prospective gym, corroborating documents and evidence of financial solvency.

A bank loan is one of the most secure ways to finance gym purchases. However, the interest rates can be extremely high.

Financing a purchase has drawbacks and benefits: You’ll pay interest, but you won’t have argue to argue with a partner about who should coach the morning class.
Small Business Administration Loans

This body is set up to help entrepreneurs follow their dreams. The SBA can help business owners obtain funding from $500 to $5.5 million by connecting them with lenders.

The SBA lists the following benefits of its loans:

Competitive terms: SBA-guaranteed loans generally have rates and fees that are comparable to non-guaranteed loans.Counseling and education: Some loans come with continued support to help you start and run your business.Unique benefits: Lower down payments, flexible overhead requirements, and no collateral needed for some loans.

Interested entrepreneurs must meet eligibility requirements, and possession of a “sound business purpose” is usually one of them. That means you must have a business plan and financial projections—and your gym valuation will figure prominently in both.

Relatives and Personal Savings

In most cases, financing your gym business with your savings or an investment from relatives can be advantageous due to increased flexibility and favorable loan structures. But that doesn’t mean you should cut corners and throw money around without research. It’s still important to create a business plan with a valuation because it gives everyone a clear understanding of the gym’s value and its potential to deliver the desired rate of return. That will ensure you don’t cause family stress or blow your savings on a bad investment.

Remember, your gym purchase has to generate a greater return than your savings would if you kept the money invested.

For example, suppose you are considering taking $140,000 out of an IRA account yielding a 10 percent return (compounded annually) with fees of $1,000 over three years. If your three-year DCF gym valuation shows the present value of your gym purchase is $199,907 at a 10 percent growth rate with a 5 percent discount rate from free cash flows starting at $20,000, you can compare that to the $185,340 (after fees) IRA return you would get during the same period. As a result, it might be reasonable to use your savings to invest in a gym with cash flows of $18,000 and higher.

Partnerships can be great—just make sure you lay out roles, responsibilities and exit strategies clearly before shaking hands.
Financing a Gym Purchase With a Business Partner

A partnership is a viable way to finance a gym purchase: Two or more people pool money and resources together to share the work and spread out the risk. This option is better when partners bring in complementary skills and abilities.

For instance, one partner might have a business administration background while the other might have people and marketing skills. Or maybe one partner is silent and the other handles operations and takes a salary in addition to a share of profit.

Whatever your arrangement, the rigors and stress of running a business can strain even the best relationship. Regardless of how rosy the picture is before the deal is signed, you should create a partnership agreement with conflict-settlement terms and an exit strategy.

And remember this: Multiple owners will divide the profit, just as they divided the risk.

Crowdfunding to Finance a Gym Purchase

Crowdfunding provides a unique and exciting way to finance a gym purchase. Instead of appealing to an institutionalized lender representing millions of investors, you can directly take your pitch to the prospective investors. While this sort of approach was unheard of years ago, it’s more common now.

Many online crowdfunding platforms like Kickstarter and Indiegogo allow you to make your pitch to anyone who might be interested in sharing in your gym business success. The crowdfunding platform allows you to provide investors with enough information about you and your venture to satisfy their due-diligence requirements.

Depending on how you structure your offer, you can provide an ROI for investors in many non-traditional ways. For example, a video game creator might send each investor a free advance copy. Or you might offer equity ownership in return for cash. In some cases, people simply donate money rather than invest it.

Be careful when setting up your offer. In the fitness game, you might be tempted to offer lifetime memberships in return for a cash infusion, but that can turn out to be a very bad play if your gym’s classes are packed with people who won’t every contribute to your cash flow. And then there are the percentages taken by the crowdfunding platform: They can range from 5 to 12 percent.

The Bottom Line

Nothing guarantees the success of a venture, but taking the steps to properly value a business will give you incredible insight.

Through your work, you might discover that a gym purchase is risky and your cash will generate a better return right where it is. Or you might discover that a gym business has a huge potential upside that more than balances the risk. Similarly, research will help you avoid overpaying, and it might even help you acquire a promising business at a fantastic price.

All insight aside, a solid valuation is an essential part of making a deal, and you’ll need it when you try to secure financing.

Our advice: Put in the effort so you can make the best decision. And if you need help, Two-Brain mentors work with aspiring and established gym owners. You can book a call to find out more here.

To get the free guides “How to Buy a Gym” and “How to Sell a Gym,” click here.

About the Author: John Burson successfully ran a personal training business for over 20 years, and he has written volumes of published articles on business entrepreneurship, finance and the fitness industry.

The post Gym Valuation Guide: How to Value a Gym and Finance a Purchase appeared first on Two-Brain Business.

Gym Owners: Here’s Proof That You Should Charge More

Exercise is an investment in health.

You and I know it.

But for some reason the public and federal governments don’t know it. Or maybe they just don’t care.

On June 23 at its global conference, the International Health, Racquet and Sportsclub Association (IHRSA) released the report “Economic Health and Societal Well-Being: Quantifying the Impact of the Global Health and Fitness Sector.” The report, which is broken down country by country, is free for IHRSA members and $495 for non-members. It’s available here if you’re a member or want to lay down your credit card.

I have no idea why you’d want to paywall this thing and use it as a membership magnet. I’d think IHRSA would want everyone in the world to read it, including politicians at all levels.

All that aside, Fitbizweekly.ca shared some details from the Canadian report. Here they are:

In 2021, the fitness industry in Canada added US$1.7 billion to the nation’s gross domestic product (GDP) and provided over 83,000 jobs.The Canadian health-care system—which is crumbing, by the way—is burdened with $3.9 billion in costs as a result of inactivity. Of that, $2.7 billion is paid by public health.Insufficient physical activity costs $7.9 billion in lost productivity every year.The average worker who isn’t active enough has an economic price tag of $2,068 when you combine the costs of productivity losses and health care.

That’s all fairly stunning, and I’d guess the stats are similar for other nations once you factor in population differences.

So how do you solve the problems on a national level?

I haven’t a single clue.

Inactivity on a National Scale

It’s simple: If more people were active, health-care systems—and taxpayers–would save billions.

But then it gets really complicated: How the hell do you get an entire nation to start moving?

No one knows.

And I’m not really exaggerating when I say “an entire nation.” According to the Participaction Pulse Report, only 16 percent of Canadian adults are active enough. That means 84 out of 100 people don’t move much. In the U.S. only 23.2 percent of people over 18 do enough cardio and weight training, according to the CDC.

The huge number of sedentary people in any nation can be viewed as a cruise ship that’s heading toward a gigantic, jagged rock. You can’t turn a cruise ship on a dime, and the recent COVID pandemic suggests the rock is actually tearing a hole in the side of the ship as you read this.

In other words, a lot of people are suffering as a result of inactivity, and more will join them in the next years.

People on the cruise ship really only have one option: Escape disaster on an individual level by jumping off and swimming for shore. It should be obvious at this point that gym owners and trainers represent lifeboats.

I’ll drop the analogy there and simply remind you that publication of these stats isn’t going to change anything. That will be up to you.

Governments around the world actually chose to lock gyms down during the pandemic, and they aren’t suddenly going to rid us of inactivity.

Members of the general public just spent two years hearing that inactive people had a higher risk for severe COVID-19. But most people stayed on the couch anyway. So it’s unlikely the majority of people will suddenly start training.

What the Stats Mean for You

Here’s what the average gym owner should take away from the stats listed above:

1. If the average worker costs a nation over $2,000 a year, you should feel great about charging more than $200 a month for your service. Divide $2,068 by 12 and you get $172. Tack on a profit margin of about 33 percent and you get a rate of $225. Sounds fair, right? (This isn’t how you should price your services; it’s just a reminder that coaches provide way more than $200 worth of value. Two-Brain has an exact formula for pricing—please use it.).

2. Every single person you get moving is a huge win—for your business, for the person and for your nation.

The numbers prove you’re doing important work—and you should be paid for it. You are keeping people healthy and helping them stay out of the hospital. You’re changing lives.

But if you’re burning out, working too much for too little, and don’t know how to charge what you’re worth, you need to get help.

If you stop coaching, more people will suffer. We need you. If you aren’t charging more than $200 a month and making a good living by improving health in your town, talk to a mentor soon.

The post Gym Owners: Here’s Proof That You Should Charge More appeared first on Two-Brain Business.

What Gym Owners Need to do at the 2022 CrossFit Games

Chris Cooper: (00:02)

What to do if you’re going to the CrossFit games this year? Hey, my name is Chris Cooper. I’m the founder of Two-Brain Business. And for the first time in many, many years, probably a decade, I won’t be at the CrossFit games this year. But I wanted to share with you who I would visit, what I would do if I were going, in hopes that I can help you maximize your experience if you’re gonna be attending the CrossFit games in 2022.

Chris Cooper: (00:27)

Let’s start with your perspective as an affiliate and how going to the Games is valuable to you. First off, if you’re a CrossFit affiliate, I really wanna recommend that you take your staff to the Games. The last few years I did this because the first few years that I went to the Games, I was working for CrossFit. I was in their media department. And so I had some responsibilities. After that, I was working for Two-Brain Business or 321Go. And so I had responsibilities. But the last couple of times I went, I took my staff and guess what? They lit up. They love the CrossFit competition. They love seeing these superstars that have never been accessible to them. And so getting to see Matt Fraser in person, Kari Pearce, it really lit my staff up. And when they came back to the gym, they were super fired up to coach.

Chris Cooper: (01:15)

They weren’t just super excited about CrossFit, although that was definitely part of it. But just being in that crowd where you’ve got 20,000 people sharing one common heartbeat, it really made them excited. And it helped them overcome some fatigue and some burnout that they were having. So we took them down, we got hotel rooms, I took them out for dinner. It was a great time to just celebrate my staff and do something just for them. The last visit that I had at the Games, to be honest, you know, it was not my first time. It was probably my eighth and it was kind of old hat to me, but I got to see it fresh through their eyes. So the first tip is take your staff, even if it costs you a little bit. What you’ll get back in staff energy and staff retention is priceless.

Chris Cooper: (02:01)

The second thing that I would recommend as an affiliate is that you make time to visit the affiliate lounge. Now it might be set up a little bit different this year. I’m having trouble getting an agenda, but you wanna look for speakers who have actually been successful and can teach you a specific model. So for example, if Jeff Jucha is on the stage and he’s talking about hiring your staff, you want to make that seminar because he’s gonna give you a very specific model about how to hire your staff. And this isn’t just some random dude. This is a successful affiliate owner who’s willing to share a usable model and experience with you. That is super duper important. I also want to talk to you about some vendors and some partnerships that you should make and meet when you’re in the affiliate lounge.

Chris Cooper: (02:50)

The most important thing that you can do is meet other affiliate owners and then form a plan to stay in contact with them. Not because they’re doing better than you or you’re doing better with them. Not because you’re gonna share tips and tricks or compare your pricing or your bench press, but because you need this network of support. And if you can create this little board for yourself of support, then you’ll find that you can bounce ideas off them and you can kind of compare strategies and you can tell ’em what you’re doing and they can share what they’re doing or doing well. That is probably the most valuable thing that you can get out of the affiliate area. It’s not meeting your CrossFit heroes or the CrossFit affiliate team, though they’re great people. It’s really meeting other affiliate owners with a plan to stay in contact.

Chris Cooper: (03:34)

And in fact, if you just go in and say, “Hey, I’m looking for five people who wanna meet up every 30 days to talk business”, you will get a lot of hands raised. Go in there and shout it out. If you need introductions, find a Two-Brain Mentor who might be around the affiliate area and ask them to connect you with a few other people because they know lots of people. Now let’s talk about vendor village. There are some people that you should really go out of your way and make time to meet and have a conversation with. The first is Dave Colina at O2. I think Dave’s got an amazing revenue stream for affiliates. He’s got an amazing product in O2. More than anything else, this guy’s got an amazing heart. He’ll connect you with anything that you want. He builds his programs around helping gym owners, and O2 is gonna sponsor a couple of happy hours, but also if you go into vendor row or whatever it’s called, and you find the O2 tent, Dave will probably be there.

Chris Cooper: (04:31)

They’re also going to be in the affiliate owners-only vendor area. And so you wanna meet Dave and talk to him. Some of these other vendors were also at the Two-Brain Summit and I got a lot out of talking to them. So for example, Chalk It Pro, if you wanna talk to Nate about software for workout tracking that really puts clients at the center, provides built in scaling options and makes clients feel like they’re not less good if they don’t do the RX version, this is the guy that you wanna talk to. They work with Level Method quite a bit, but they work with any programming stream basically. And what they do is they automatically build the levels into the app so that your clients don’t feel like, oh, you know, I’m not as good or whatever. There’s a couple of others here too.

Chris Cooper: (05:19)

Garmin International. So I don’t know anybody at Garmin, but I really think you should visit their booth. The evolution of the fitness world right now is strongly trending toward tracking heart rate. And you might remember Whoop sponsoring the games, I think last year, but nobody really told us how to use that heart rate monitoring and training to train people better, and what those metrics meant. Garmin has leading edge heart-rate technology. And if you have clients who do local 5K’s or cycling or swimming, I guarantee you they’re using Garmin and an app called Strava. Garmin is a great pathway into a lot of great heart rate training technology. You can see what they’re doing, even if you’re not interested in doing heart rate monitoring at your gym right now, that’s fine. This is a glimpse into the future of what’s to come. Again,

Chris Cooper: (06:10)

I don’t know anybody at that booth, but I wear a Garmin device nearly 24 hours a day. The next one that I really think that you should be going to talk to if I’m going down this list- and I’m definitely not gonna recommend everybody here, but I think you should go talk to Scott at Phoenix Multisport. So this guy is interesting for a lot of reasons. Number one, he’s a great entrepreneur. Number two, he has built his business, Phoenix Multisport, around one very specific client avatar. And those are people in recovery from addiction. They do a lot of stuff, some is CrossFit, some is sport, but this guy has built this brand by focusing on this niche. Whether you wanna offer a Phoenix program in your gym or not, these guys are really a great group to learn from. Another one is Ascent protein.

Chris Cooper: (07:00)

I think we met Ascent for the first time in person at the Two-Brain Summit this year. And I was actually blown away by their generosity, their quality. This might be old news to some of you, but I had never spoken to them in person before. And if you’re looking for a really good product to carry in your gym, you need to talk to these guys. There’s a lot of supplement dealers out there. Some of ’em have good products. It’s really tough to find a balance of a great product that you’re proud to serve, with a decent profit margin that makes it worth carrying. But I think ascent has kind of really done a good job. Another one in the supplement industry that you want to go talk to is Thorne. These guys, I don’t think get nearly enough credit in the CrossFit APN or whatever.

Chris Cooper: (07:46)

They have amazing supplements. Where it’s easy to get overwhelmed is just the sheer volume of supplements that they carry. So what you want to do is talk to Thorne, tell them you wanna carry the top five supplements or skews for CrossFit gyms and ask what those are. They’re probably gonna say, oh, there’s like a whey protein. You know, there’s a fish oil, or whatever. Then it’s really, really easy to set up your dispensary. That’s what they call it. You make really good margins. They make top quality products. And I’ll level with you. There are supply chain shortages coming, but Thorne has already thought of that and they’ve got a workaround so you can avoid some supply chain problems in the future. They’re also just a great bunch of people, and they’re just amazing to talk to. So I’d go talk to Thorne as well.

Chris Cooper: (08:32)

A few others. Victory Grips. Interesting product. I met these guys at Summit too. You should probably visit their booth and just go talk to them about what they’re doing. They have a really unique product. But if you think about grip training and grip strength, it’s really like the first cornerstone that a lot of our athletes need before they can perform some of the higher quality work that they want to do. I mean, if you’re like me, you’ve probably run a pullup clinic on the weekend or something and found that half the people in your group couldn’t even do a dead hang from the bar for 30 seconds. And that’s what’s limiting their pull up. So victory grips is a great product that you probably want to talk with their staff about. Another vendor you wanna meet is Renaissance Periodization, RP.

Chris Cooper: (09:17)

If you’re a real OG around CrossFit, you remember, RP was really popular 10 years ago. They’re coming back and they’ve got a nutrition certification right now that I think is really good. I’ve spent some time with Nick talking with him about this and the flexibility and application of RP is better than ever before. I think they’ve got a really interesting price point and I love that they’re coming back into the CrossFit community in a big way. So you wanna definitely go to the Renaissance Periodization booth and talk to them. My final one, you know, my favorite booth every year is always Rogue. I could go in there and walk around for two to three hours. And, you know, I always make it a point to go get a new Rogue hat every year. I usually spend a few hundred bucks in there on stuff for my kids.

Chris Cooper: (10:00)

They like the shoes. They like the Games swag and stuff. But more than anything, while you’re in the Rogue tent, you wanna notice the organization. So what they’ve done is they’ve thought through flow in advance. They don’t have 3,000 people coming through one turnstile, but they’ve set up their products so that 10 people can be looking at the same thing at once, for example. And security is covered, even though they probably don’t need it. They’ve thought of that. Like they’ve got different entrance and exit points to their tent, but it doesn’t feel that way. And so the organization, the selection, like, notice that they only have a hundred of this tank top, but they’ve got 500 of that T-shirt, okay? So spend some time in the Rogue booth too. Now, if you’re looking for a place to work out in Madison, I strongly recommend CrossFit Recursive.

Chris Cooper: (10:47)

It’s owned by Nikole and Dirk Gessler. Amazing, amazing people. They’ve turned their gym over to Mayhem programming, I believe for the week, but you can still show up. You can try out Mayhem programming. There might be a drop-in fee. There might not. I’m not really sure. These are people who just know how to throw a great time. And they’ve hosted the Two-Brain Business brunch at the Games at least three years that I can remember. So visit their gym, definitely if you wanna get a good workout. They’re the closest one to the venue anyway. Finally, the real blessing of the Games to CrossFit affiliates is simple. It’s media. Yeah. It’s inspiring to you, and maybe to your clients. But really more than anything else, it gives us a great story to tell about fitness. And so use the opportunity to create lots of media.

Chris Cooper: (11:32)

Send wish you were here videos to your private members Facebook group. Take a million pictures that you can use on Instagram to inspire people in your local audience to come and find you if you’re a CrossFit affiliate later. Draw on the experience to fire you up and re-energize you about owning a gym. Use the experience to treat your staff to a once in a lifetime opportunity. But more than anything else, use the experience to create media. Tell your story about why you love CrossFit. Share that with your audience, take pictures. If you can grab somebody else and interview them, do it, but more than anything else, take pictures and videos that you can give to people back home. Your clients who aren’t there wanna know what it’s like. So tell them, tell them the story, share the video. “Hey, got up this morning. I was feeling kind of tired until I got here.”

Chris Cooper: (12:23)

Take a picture at the bonfire in the camping area, share what it actually feels like when somebody does a 300-pound snatch, you know? Record that and stream it to your audience. When you are there and your audience is not, you become their eyes and ears and their storyteller. If you really want the CrossFit Games to benefit your local community, be your own media department and share it with them. So these are my top tips for being at the games this year, don’t forget your sunscreen, and we’ll see you next year when we’ll be back with a meetup for affiliate owners.

Mike Warkentin: (12:59)

This is Two-Brain Radio. We’re here twice a week with tips, tactics, and interviews with the best gym owners in the world. Subscribe for more episodes. Now Coop’s back with a final note.

Chris Cooper: (13:09)

We created the Gym Owners United Facebook group in 2020 to help entrepreneurs just like you. Now, it has more than 5,600 members and it’s growing daily as gym owners join us for tips, tactics, and community support. If you aren’t in that group, what are you waiting for? Get in there today so we can network and grow your business. That’s Gym Owners United on Facebook or GymOwnersUnited.com. Join today.

The post What Gym Owners Need to do at the 2022 CrossFit Games appeared first on Two-Brain Business.

Growing Revenue: Top Tips from High-Earning Gym Owners

More clients? That’s great. But it’s not what makes a good business.

A good business rewards its clients and the owner. As the owner of a gym, you have to make a good living—at least $100,000 per year. You can do that with 50 clients or 150—but you can’t do it without revenue.

Here are the Two-Brain gyms with the top revenue in June:

Secrets From the Leaders

How did these gyms generate so much revenue?

Here’s what the owners said:

“We focus on multiple streams of revenue, including personal training, nutrition coaching and our online programs. We’ll do over $100,000 this year in PT alone.”

“We switched our personal training from session based to auto-renewing personal training memberships.”

“We did speed camps for kids: $450 for 2x / week. Then we proved their results with testing and wrote prescriptions for the future. Most of them stayed on and renewed.”

“I focus most of my time calling leads and getting people booked in for trial workouts. We also really focused on saving cancellations by trying to have a conversation with everyone who asked to cancel. Usually these turned into pauses or downgrades, and sometimes they just needed to talk.”

“We hired a salesperson—part time, got them from a globo gym, former sales director. She’s hired as a salesperson and spin instructor. Making almost FT money for only 20 hours a week—sales, SOPs and handles cancelations, lead nurture, 75 percent of (intros).”

“We look at our numbers every week, analyzing and forecasting—cost control and revenue wise.”

“We’re very consistent in the group PT and youth program; it’s constantly growing. We upgraded our on-ramp to a 90-day journey with different options within. Our minimum/smallest package is 12 PT sessions.”

“We offer a broad range of revenue streams—spreading the risks. We treat our revenue platforms like stocks: diversify the portfolio. The other streams: sports-specific programs, ‘mama’ CrossFit, nutrition, physiotherapy and retail.”

“We dialed in on the things (that) really and truly move the needle, doing less of the stuff that diluted the team’s efforts, like specialty (e.g., six-week promotion).”

“We’re a boxing gym. Increasing overall membership and (average revenue per member per month) via our new foundations program did it for us.”

Focus, Plan and Get Coaching

Some made more money by focusing on their core offerings. Others made more by diversifying and empowering their coaches.

The key? Have a plan. Then execute on the plan and track the results of the plan. Then double down or change.

Call your mentor for help!

The post Growing Revenue: Top Tips from High-Earning Gym Owners appeared first on Two-Brain Business.

By the Numbers: High Speed, Low Drag

Big revenue, small expenses. That’s how you build a successful business.

But in the service industry, we’re dependent on people. And we want the best for our team. How do we balance the need for profitability with the need to take care of our people?

In the first post in this series, I shared data from the gyms with the top revenue in Two-Brain—at a single location (many had more revenue because they had multiple locations, but we only reported revenue for one). I also shared data from the gyms with the lowest expenses.

As a math nerd, I wanted to know who had the best ratio of revenue to expenses. In other words, who’s doing the most with the least? Who has the highest speed and the lowest drag?

Who can stretch a small space or low headcount the furthest? Who’s crushing it in a tiny space or shooting the moon and obliterating expenses with a larger gym?

Here’s what the high-revenue, lower-expense gyms have in common:

They all started small and upgraded space later—or the owner started in a larger space but subleased a portion to cut expenses until the gym could afford to use all the space.They have good locations but none are paying retail-area rent.They have some revenue diversity, with 10-20 percent of revenue coming from personal training, nutrition coaching or some kind of specialty program.All spend time coaching or mentoring staff.All give their staff members opportunities to grow the pie for everyone (intrapreneurship).All are either in the Tinker Phase of entrepreneurship or just about to make that leap.All are either in our Top 10 for net owner benefit (how much they pay themselves) or very close. Here’s our video on how to improve NOB:

What can you learn from the people with high revenue and low overhead?

That this combination is possible. That you don’t absolutely need a 30-station rig or 20,000 square feet of space or many of the “toys” you want to buy.

Those things don’t attract clients, and they won’t make you more successful. Grow after you’re successful instead of building and hoping.

Finally, don’t starve yourself by giving your staff a bigger slice of a small pie. Teach your staff how to grow the pie for everyone.

The post By the Numbers: High Speed, Low Drag appeared first on Two-Brain Business.

How to Hire the Perfect People for Your Business

Chris Cooper: (00:00)

How do you hire amazing people who are a perfect cultural fit and want to work for you? My name’s Chris Cooper. And today I’m gonna describe the hiring process that we follow for mentors at Two-Brain Business. The hiring process for coaches in a gym is detailed step-by-step from job ads to interview questions, to payments, to contracts, to evaluations in our modules. And we teach that to people who sign up for our mentorship program. But I really wanna hone in on when you get to a high level and you’re attracting people to your mission and they wanna be part of it. How do you choose the right ones? How do you check for fit? How do you get them to apply? How do you select them? How do you train them? How do you keep ’em around? And so today, I’m gonna tell you the process that we follow to hire mentors at Two-Brain Business, because this process has evolved dramatically over time, producing better mentors who can get amazing results. So today we’re gonna walk through that step by step, and we are hiring from internal for about five more mentors this year, because we are growing so fast. So thanks for your support. If this podcast is helpful to you, please hit subscribe on your favorite platform or just send me an email and let me know so that I can do more topics like this.

Chris Cooper: (01:21)

So we have a lot of people, maybe one every week, ask me, “How can I work for Two-Brain Business?” And so I wanna lay that out. I’m gonna start with the three things that they have to have. I wanna talk about how that standard has gone up over time, and then I’ll tie it back into how it can help you pick future staff or coaches for your gym. So the first thing is they have to demonstrate knowledge. We hire from within because we need people to understand the Two-Brain process and be fluent in it. That’s number one. We know that there’s more than one way to grow a gym. And we teach a bunch of different models that people can choose based on their preference of how much time they want to spend coaching or growing their gym or doing other tasks.

Chris Cooper: (02:05)

The key though is that you have to have a model. You have to have a plan to follow. And you can make variations on the model, but if you don’t have a plan, you’re going to be in trouble. You’re gonna flounder around without any kind of direction and you’ll never get anywhere. So we want people to be fluent in and experienced with the models that we teach at Two-Brain Business. That’s knowledge, that’s step one, but really knowledge is not enough. So step two is they need to show proof that they can take action instead of just knowing what to do. Knowing what to do is something that you see a lot in the business community. There’s a lot of experts out there who quote-unquote “know what to do”, but they’ve never actually done it. And they’ve never been successful with it. And you know, who knows what the problem is?

Chris Cooper: (02:49)

Maybe they don’t take action. Maybe they don’t completely understand, whatever. But we want people as mentors at Two-Brain who have proven that they can take action and understand, instead of just knowing what to do. And so we usually select from our growth program at minimum, usually from our Tinker level program. So these are people who have a net worth of a million dollars or more. They’ve been in Two-Brain for at least a year. They know the processes, they’ve done the processes, they’ve been successful. That’s the second characteristic they have to show. Third, they have to be able to prove that they can get others to take the right action to grow themselves. It’s not just enough to know the answer. It’s not just enough to have done it yourself. It’s a specific skillset to be able to get other people to do it too.

Chris Cooper: (03:41)

Once talking to Greg Glassman, we were talking about this analogy of the brick layers and he was saying, it’s one thing to be a really great brick layer. It’s a completely different skillset to be the person who teaches brick layers. And it’s a dramatically different skillset to be the person who teaches the people who teach the brick layers how to lay bricks. And at the time when I spoke to him, Two-Brain was much smaller. I think we maybe had half a dozen mentors on the team. Now it’s close to 40. Now I understand what he meant. Being the person who teaches the people who teach the people to lay bricks is a dramatically different skillset. And so I’ve had to level up as time has gone on. And now every single month we get on a call with the mentor team and we share wins.

Chris Cooper: (04:29)

But most importantly, we share lessons. Here is what is happening now. An interesting evolution has happened in Two-Brain over the years: when we started out, I was still publishing a blog from my personal perspective, here is what I did at Catalyst. And that helped a lot of people because they could see, oh, well, here’s a model for starting to do referral marketing, or here’s a model for here’s how I do the CrossFit Open, or here is a model for a staff playbook or staff evaluations. And it was very, you know, “Copy what Chris does.” Today, it’s very, very different. Now what we do every month is we track gyms that are in Two-Brain. And every year we track data from over 16,000 gyms around the world with cooperation, from a lot of our partners. And we look at this data and we say, who is doing the best?

Chris Cooper: (05:19)

Who is setting the model? Who is doing something different? So every month we track these metrics and we create a leaderboard of the top 10 gyms for each metric: who has the highest average revenue per member, who has the most members, who is keeping people the longest, et cetera. After we publish that leaderboard, we interview the top gyms in the world. And these are the interviews that you hear on Two-Brain Radio almost every week from people who not only have taken the knowledge from Two-Brain and learned it, who have actually taken action on that knowledge and been successful at minimum. And so from that pool, you’ll often see a mentor selected, but that final criteria of “Can they teach it to someone else and get that other person value, results?” That is the tricky part. Now the ROI on our mentorship growth phase is something that we track every single month.

Chris Cooper: (06:15)

And in the last year it’s gone from just under 5X per month—so put a dollar in, get five out—to just over 11X per month. So right now, if you invest a dollar into growth phase, the average gym owner gets back $11 and 20 cents for every dollar they invest. That’s an amazing ROI. And it’s a reflection of choosing the right people who align with the mission and have the specific skillset. Trust me, there are dozens of people who are amazing, who know Two-Brain material better than I do, who can quote it back to me. And I’ll say, where’d you get that from? There are people who have been dramatically successful, but it takes a special person to be able to help others become successful. Now, let me bring this back to your gym. When you’re selecting coaches, it is very tempting to just look at your friends and say, they are great people, or to look at your clients and say, that person is great at yoga, or even to look at people who are doing other jobs for you.

Chris Cooper: (07:18)

“Oh man, that person is so, so, so good with our books. I’m gonna hire them to be a coach.” And just hire those people. But these are people who have only shown you maybe one or possibly two of the skills that you need if you’re gonna build an amazing team that’s aligned with your mission and has a great culture. What you actually need to do are look for these three phases. So, number one, knowledge. If they can demonstrate knowledge. You know, maybe they’ve been to their CrossFit L1 or, you know, maybe they are a great weightlifter and they can demonstrate that they are great at weightlifting, or they can demonstrate that they are great at yoga. That’s great. That’s prerequisite number one, they have to at least know the material. Prerequisite number two is, have they used that material successfully? So maybe if you’re working at a football strength/conditioning facility, maybe this person has used the knowledge to become a collegiate football player.

Chris Cooper: (08:10)

Fantastic. They’ve proven they can use the knowledge to benefit themselves. But that third step of being able to say, “I can use this knowledge. I can demonstrate success by using this knowledge and I can help you be successful by using this knowledge.” That is something that you have to watch for. And so I wanna give you a few tips here. If you run a gym and you’re looking for coaches who have all three of these attributes, then you actually want to look for the people who are sharing their knowledge to help other people in your gym. Now I know in years past a lot of gym owners have said, “Oh, I hate it when I’m coaching and there’s a class of 12 and people are coaching one another.” But what you have to understand is that the willingness to step in and help that other person is really important.

Chris Cooper: (09:02)

Now not everyone should be helping their neighbor, and sometimes that help can be distracting. But sometimes the person doing the helping sees a vacuum that you don’t see. They see a client at the back of the class who’s struggling to hold their back in the correct position during a deadlift. And so they step in to offer their help. If we’ve been primed to believe that that is interference or distraction or noise, we might step in and ask them to stop. But really, most of the time, these people want to help. Of course, there are outliers who are just doing it to feel important or who actually think that they know more than you do. And believe me, I’ve met both of those a few times, but when you have a client who is saying “Let me help you” to another client, that’s actually a sign that they might possess this high level skill that you want in your staff.

Chris Cooper: (09:57)

I’ll give you something else that you should be looking for. If you maintain a private Facebook group for your gym or your clients congregate somewhere online, other than in your gym, you want to look for the person who is sharing tips and videos and tactics, and “here’s what I did”. It’s not necessarily the person who is most enamored by the method, right? Like, here’s this amazing boxing routine that I got from the founder of another nine round franchise. It could just be, here’s a person who found this video on squat technique that really helped them get it. And they’re sharing that. When I’m looking for these traits in mentors, I’m looking for people who say, Hey, I just rewrote our staff playbook. Here it is. And they just freely give it to the other people in our group. Hey, I just made this amazing social media campaign on Canva.

Chris Cooper: (10:46)

Here it is. Copy it, put your own brand on it. Believe it or not, that happens a ton in Two-Brain because when you’ve created this culture of trust and sharing knowledge, without any of the BS filters of who’s got the best gym, then you get this kind of “we’re all in it together” sharing. And if you have established that culture in your gym, you probably will never have trouble finding coaches. I hope this helps you. If you’re in Two-Brain, we are posting for mentors. And we usually are. We post two to three times a year. If you’re outside Two-Brain, I want you to understand how we select and hire mentors and what our actual process is, because the people that we hire–and you can see them at TwoBrainBusiness.com/Mentors–have met all of these criteria. They know our material inside and out. So they know the stuff you can skip and the stuff you can use. They’ve proven themselves successful with the material to a very high level. And they’ve also shown how willing they are to do anything it takes to make you successful too. And if you can get any of these things from the coaches in your gym, you will build a world class facility. Hope it helps.

Mike Warkentin: (11:59)

That was Chris Cooper on Two-Brain Radio. Thanks for listening. Before you go, hit subscribe so you don’t miss a show. Now, Coop’s back to close it out.

Chris Cooper: (12:07)

We created the Gym Owners United Facebook group in 2020 to help entrepreneurs just like you. Now it has more than 5,600 members and it’s growing daily as gym owners join us for tips, tactics, and community support. If you aren’t in that group, what are you waiting for? Get in there today so we can network and grow your business. That’s Gym Owners United on Facebook or GymOwnersUnited.com. Join today.

The post How to Hire the Perfect People for Your Business appeared first on Two-Brain Business.

By the Numbers: Most Revenue in June

Growing top-line revenue—the money coming into your business—isn’t really complicated.

You can get more members, keep your members longer or make more from your current members. The best revenue-producing gyms do all three really well.

Many gyms focus solely on getting more clients and absolutely miss the easier, higher-return opportunities. Top earners this month did get more clients but also provided huge value (and charged high rates). Only a few had gyms larger than 5,000 square feet, and even fewer had more than 200 clients.

Here are the top Two-Brain gyms for gross revenue in June:

Here’s what our top revenue performers said this month:

“We ran multiple programs and saw a significant increase in personal training—as Chris says, it’s more legs on the stool.”

“Now that we have on-ramp, we are slowing people down and getting the right people in the gym.”

“Doing the RampUp program was a huge boost, right from the first week!”

Above, I said you can use three strategies to grow your revenue. One of those strategies is to grow your overall membership: the number of clients who pay you on a recurring basis.

Here’s a video on how that’s done:

In the next post in this series, I’ll share a strategy to make more money even without getting more clients.

You can watch my training on getting more clients in our free public Facebook Group and download the free guide, too!

Your business isn’t a charity—it exists to serve your family first, your clients second and your staff third. If you’re not making a good living, your gym won’t last. Growing your revenue is a key step in earning a good living over the long term.

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White House to Finally Join Gym Owners in Addressing Health

The Biden-Harris Administration is turning its attention to nutrition and health.

I’ll say what you’re thinking:

It’s about time.

Right now, the U.S. government is creating a national strategy to “end hunger and reduce diet-related diseases.” Until July 15, the government was asking for “ideas and stories.” The official strategy will be announced at the White House Conference on Hunger, Nutrition and Health in September 2022.

This is great.

Any time fitness and nutrition are in the news, it’s a good thing for gym owners—especially when a nation turns its attention to health. As gym owners, we have the solution to many of the problems that plague most nations when it comes to diet and exercise.

It’s not an exaggeration to suggest that fitness professionals have all the knowledge required to dramatically reduce rates of disease related to poor nutrition and inactivity. But, as Two-Brain founder Chris Cooper said at our 2022 Summit in Chicago, knowledge isn’t the answer anymore. We need action to get results.

Solving Health Problems With Common Sense

Let’s just take a second and provide solutions to all issues of hunger, nutrition and health:

1. Nutritious food must be affordable and widely available in all parts of a nation.

2. People must eat more vegetables and fewer highly processed carbohydrates.

3. People should work out regularly, either on their own or with a coach for optimal results.

There. That didn’t take a Ph.D. Just common sense.

So why are we still in crisis? Again, no Ph.D. required to answer.

1. Food is becoming more expensive by the day and nutritious food isn’t always available everywhere. Twinkies ship more easily than lettuce.

2. Many people prefer convenient, hyper-palatable, fatty, sugar-filled processed foods that are very high in calories and very low in nutritional value.

3. It’s easier to sit on the couch and watch Netflix than lift some weights and go for a run.

I can’t resist adding No. 4: Many governments blocked gyms and coaches from helping people over the last two years of the COVID pandemic. That’s a fact, and I’ll let others debate whether lockdown measures actually saved lives or caused people to move less and eat worse. I’ll ignore No. 4 for now.

Changing Society: One Person at a Time

No. 1 is a massive, complicated socioeconomic problem that reaches into every aspect of society, from wages and employment to supply chains to social safety nets. Let’s just say this and move on for now: The United States has enough food to feed its citizens.

No. 2 and No. 3 are cultural issues. That means the average person is more likely to turn on a screen and reach for a bag of chips than do a few squats and eat some lean protein.

If I review North American history, I’d estimate that it’s taken us about 80 years to significantly alter daily life, with the majority of the damage done in the last 30. My parents didn’t have a single screen growing up, and they moved a lot as part of daily life. Today’s kids throw nutritious food out so they can get to sweets faster, and they’re all “screen zombies” who stare at devices for hours without blinking.

I don’t know that the problem is solvable on a societal level. It’s sad to say, but I think a lot of people are going to suffer needlessly solely because they are unwilling to eat better and move more.

That’s grim.

Here’s some hope: Gym owners, trainers and nutrition coaches can “save” anyone they work with.

If you’re in the fitness industry, you know that isn’t hyperbole. If someone eats what you tell them to eat and moves the way you tell them to move, that person is almost certain to avoid a host of diseases and health conditions. I won’t quote studies. I’ll just offer common sense: It’s unlikely the average microgym client will develop Type 2 diabetes, osteoporosis or hypertension. Or any other diseases linked to inactivity.

More common sense: The children of that client are highly likely to avoid the same issues because of parental influence.

With that in mind, gym owners should see a clear path forward: Find and connect with people who are ready to take action. Then work hard to connect with every single person close to that client.

The White House can collect ideas, run them through a think tank and then issue documents with strategies. Consider any resulting improvements in health to be a bonus.

In the meantime, it’s really up to you to change society. And you can do it within your lifetime. You can actually live to see the results.

Your Mission

Catalyst Fitness in Sault Ste. Marie, Canada, has a mission to enhance and extend the lifespan of 7,000 people in the city—that’s 10 percent of the population. I’ve seen other gyms state similar goals recently.

That’s what’s going to make a difference in the world: Clear action that leads to one-on-one connections that lead to more connections. Not some government document that rehashes stuff we already know and motivates a few people to eat a vegetable.

If you’re reading this, you are the solution. Remember that. If you do, you’ll understand how valuable your service is and you’ll wake up every day with a clear sense of purpose.  

But if you ever waver in your commitment because you’re overwhelmed by the business side of things, we can help. That’s Two-Brain’s mission. With a mentor’s assistance, you can build a strong, stable business that allows you to make a great living as you change the world.

Don’t ever give up. If you’re struggling, get help.

Society needs you to do that.

Click here to talk about mentorship.

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Secrets of Semi-Private Training and Monster Average Revenue Per Member

The post Secrets of Semi-Private Training and Monster Average Revenue Per Member appeared first on Two-Brain Business.

How to Grow in a Recession

To grow during tough economic periods, your business must have a rigid footing and flexible delivery.

You must operate your business on values and fairness. You must deliver with consistency. But you must upgrade your model to make it less fragile.

This means you don’t give discounts or do special favors. It also means you focus on the clients and services that are recession-proof. This focus will actually help grow your business long term.

Nobody thinks about money until they run out. Then it’s all they think about.

Here’s the plan for getting ahead of the problem. 

Antifragility

“Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.” —Nassim Taleb

An antifragile business is one that grows while others are failing. A robust business doesn’t simply avoid problems; it uses challenges to diversify and grow.

Many gym franchises are considering bankruptcy. They have solid foundations and systems. They have good marketing and branding. But they couldn’t change their delivery model.

Gym franchises sell access. You sell coaching. And coaching is a flexible delivery model.

I started writing about antifragility in the fitness business back in 2010. One of the first concepts I shared on Two-Brain Radio was how to build a robust business.

This has always been a hot topic for me because most of the media in the microgym industry says the opposite. We’ve been led to believe that big group classes in a big space with multiple coaches and a lot of equipment provide the best model. But the COVID Crisis proved that it’s actually the most fragile. A prescriptive model, combining 1:1 coaching with group coaching, is resistant to economic downturn and confusion.

The Danger Zone

For years, I’ve watched the microgym industry polarize. More than ever, the good gyms are growing and the weaker gyms are shrinking. 

Resource: “State of the Fitness Industry: The Disappearing Middle”

Unfortunately, this doesn’t correlate to excellence in coaching. It correlates to excellence in business.

Great coaches with bad business practices are going bankrupt and leaving the industry. But that doesn’t mean bad coaches with good business are thriving.

In the end, an excellent service that gets results is necessary for survival. But it’s not sufficient on its own and never has been. Being the best coach in town won’t make you successful at business.

Meanwhile, the gyms in “the middle”—with around 120 members, 5,000 square feet, overpaid coaches and underpaid owners—are being squeezed. They’re forced to either become a great gym or go out of business. Spread over 100 years, it’s libertarianism. Squeezed into six months, it’s a tragedy. Crisis puts pressure on the middle of any market.

Short-term pressure on the fitness market will accelerate the life cycle of fitness businesses. Those who survive the next few months will emerge into a world with a leaner, more agile business and far less competition. But many won’t survive. Gyms that might have struggled along for two or three years, just breaking even—a recession could kill them before they have a chance to fix their businesses.

24 Hour Fitness was in the middle of the globo-gym market. It’s neither the best nor the cheapest. And it filed for bankruptcy during COVID lockdowns.

But you have a huge advantage: You get to choose. If you have a robust business, you can stay open. And if you have an antifragile business, you’ll grow from this challenge.

Resource: “Fragile Franchises: Why It’s a Great Time to Be an Independent Gym Owner”

It’s a horrible time to own a big globo gym. But it’s a great time to own a coaching business.

It’s a horrible time to sell access. But it’s a great time to sell coaching.

It’s a horrible time to sell a commodity. But it’s a great time to sell a premium service.

Resource: “Beating the Recession”

Rigid in the Right Places—and Flexible in Others

To become antifragile, start with a strong base: solid systems, good retention metrics and personal coaching.

Then be consistent: Treat everyone the same. Consistency breeds trust. Everyone is your favorite. No one is an exception.

Let your best clients determine what you sell. Pivot your coaching to solve their greatest problem (and expect that problem to change over time).

Teach your vision to guide their choices. Tell them both the stark truth of the problems they face and the reasons they should remain optimistic about a solution. Publish every day.

Lead. Show them the way. Make it simple for them to follow.

The great gyms will survive the economic recession. But the best gyms will actually grow.

The science on health and lifespan has never been easier to understand. We need exercise and nutrition more than ever. Share that message far and wide.

Teach your clients how to save money in other areas of their lives.

Teach them to beat stress at your gym.

Teach them about the value of support. Teach them to be optimistic. Give them someone to follow: Don’t hide away, hoping to be discovered. Shine your light brighter than ever.

Focus on your highest-value clients in the gym.

And add an off-menu “downsell”: a way for your clients to stay engaged in your community, follow your programming and maintain their relationship with your coaches. A habit-coaching model can be implemented inexpensively and used prepare clients to return later.

Antifragile businesses win both ways. Antifragile businesses gain from disorder.

In “Antifragile,” Taleb wrote that “difficulty is what wakes up the genius.” You’re the genius. But if you don’t want to try and figure this out alone, call a mentor.

Rigid footing, flexible delivery—that’s what makes you gain from disorder.

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