Run a Profitable Gym

Why Most Businesses Are Just Houses Made of CardsThe scientist Bertrand Russell once gave a public lecture on astronomy. He described how earth orbits the sun, and the forces holding our galaxy together. At the end of the lecture, a little old lady stood up in the back of the theater and said,"What you've just told us is rubbish. The world is a flat plate, resting on the back of a giant tortoise."Russell asked, "What is the tortoise resting on?'The old lady replied, "You're very clever, sir. Very clever. But it's turtles all the way down."When a gym owner books a free callwith me, I spend the first ten minutes asking questions. I want to know their story; I want to see if I can help them. And I want to find their bedrock.So I ask about their Perfect Day. I ask them to tell me the story of their business. I ask, "Who's helping you with this?" But what I'm really trying to find is their foundation: the systems on which their business runs. When I discover a lack of systems, I want to know their goals. And if they can't clearly state their goals--their giant, big WHY IN THE SKY--then I ask about their values. I'm looking for their foundation.Knowledge--in science, in myth, and in your business--requires a foundation of absolute truth.If I ask your staff, "Why do we open at 9am?" are they likely to say, "Because that's the time we've always opened"?If so, and I asked, "Why have you always opened at that time?", what answer would they give?"Well, that's what time everyone opens on this street"?And if I asked, "Why does everyone on this street open at 9am?"--what answer would I get then?But if, to the first question, your staff answered, "We polled our best clients, and they prefer to start visiting at 9am" or "Traffic patterns on this block show that people arrive around 9:30am", then I would know that your business had a solid foundation of data.When I worked in a treadmill store years ago, a traveling rep subjected ME to such questions."Why do you open Monday to Friday from 9 until 5; then open for a half-day on Saturday, and stay closed all day on Sunday?"My answer: "Because that's when people come in."He asked, "What other times have you tried?"I backpedalled: "Well, no one else in this mini-mall is open on Sunday. We'd be the only one."He asked, "Why do they all close on Sundays?"Finally, exasperated, I answered, "Well, I'm not going to work seven days a week! I need my Saturday afternoons and Sundays off!"His point: most people don't buy treadmills between 9am and 5pm, because they're at work. They buy treadmills between 5pm and 9pm, and on the weekends, because they're not at work. So why open during those other times at all? Why not run wide open for two weeks, track when people wanted to visit most, and then close for the rest of the time?As he asked me those questions, I realized that I had no bedrock. I didn't have REAL reasons for doing things the way I did. It was turtles all the way down. My business was a house of cards, and each card was just a guess.Here's how we build foundations at TwoBrain:We start with your values. What's your PERSONAL non-negotiable bedrock? What are you not willing to sacrifice? For example, I believe in transparency and fairness, so I don't offer discounts at my gym.Then we follow with goals. What's YOUR Perfect Day? Where are we heading?Next, we build playbooks so that staff find it EASY to do things the way you want them done. The playbooks become THEIR bedrock.Finally, we examine the gold standards in your industry and ask, "What are the BEST doing? What's a ten out of ten?" and work to improve all of it.Just as you can't add weight to a house of cards, you can't grow a business without a foundation. Myths and science alike fail when

"10:19pm. Leaving the gym. Missed my girls, but my 5am class will have clean floors. All about the hustle!""I don't care if this gym ever pays me. I love the community and I'll fight like hell to keep this box open!""A bunch of members quit when this new box opened down the road. They've got daddy's money and all the toys. But I'm just going to keep coaching my clients even better even if it means my wife has to go back to work."Scroll through the Instagram and Facebook pages of gym owners for an hour today, and I guarantee you'll find one of these. I know, because that's where I found all three.All came from excellent coaches who are changing their clients' lives.All came from coaches who had thousands of followers on Social Media.All came from coaches who deserve better. All came from dads whose kids deserve to see them at bedtime. All came from husbands whose wives deserve to live without stressing over the grocery bill.This has to stop.Here are the myths that lead to martyrdom, and what to do about them:No one can do it like I can. You *might* be the best coach in your gym, but I doubt you're the best cleaner. Or the best Instagrammer, best programmer, best website builder, best writer or best bookkeeper. You're definitely not the best at ALL of them, I promise. And there's a way to pay them that doesn't involve asking volunteer coaches to be volunteer cleaners.There's no money to pay myself. Yes there is. Your expenses will always expand to fill your revenues. If you pay yourself first, you'll get paid.I opened Catalyst on Monday, and had to get paid on Friday. I emptied the business bank account to do so, because there wasn't an option: make money, or don't eat. Not everyone has the luxury of absolute necessity, so they delay paying themselves. And then they get into the habit of working for free, and never start. Your business is not successful until it can support you. That's its purpose.Leaders eat last. A humble statement repeated by those who can feed their flocks and still have a feast left over. The statement should really be, "Leaders Eat."Let's say you're flying to Australia. It's a 20-hour flight, and the catering crew forgot to load the plane. One of the stewards finds a single sandwich in the fridge. Who gets it? I'd give it to the pilot, because if he goes hungry, the rest of us go into the ocean.There is no glory, no sainthood, in depriving yourself while your coaches get paid.I need to pay off all my debt before I take a paycheck. Also false. Cash flow is more important--especially at startup--than your annual balance sheet. When I had to buy my partners' share of the debt in 2010, I called the bank and asked to consolidate my loans and spread them out over a longer time frame. I was ashamed and embarrassed and felt like a failure.My loan officer said, "Oh, you've never taken a cash flow loan? Everybody does that." My monthly payments went down, my stress level went way down, I stopped missing paychecks and I found some breathing room. Then I started building my business, and paid off the loan in 3 years instead of 10...but only when I had the money.Sacrificing your pay to pay off a low-interest loan faster doesn't hurt the bank. It just hurts you.Everyone will forgive my exhaustion, bad temper and poverty because they'll respect my hard work. This is the biggest lie I've ever told myself: that I'll be respected, damn it, because I'm such a hard worker.But my kids still missed me at bedtime.My wife would rather have had me home, and not exhausted.My clients would rather have hung around a successful person. The friends of martyrs, zealots and desperate people tend to get sucked into their bad luck.Martyrs aren't typically known for extravagant lifestyles. But nearly all of them share one luxury: their hardline acti

I spent New Year's Eve with a friend named Matt. Matt's a farmer.We sat at his handmade kitchen table drinking Mad Jack, both of us stifling yawns: I'd been up since 4am. Matt had been up all night, fixing power lines in -30 weather for his "real job". Matt works for the power company, but he's still a farmer.Our wives were talking about a mutual friend who'd won the lottery in 2017. Half a million isn't enough to retire on, but it pays a lot of bills, and I asked Matt what he'd do with it."I'd farm until it was gone," he said.Most farms lose money. If you calculated the value of a farmer's time, each hour worked would be worth pennies or less. And yet Matt wears a shirt with a tractor on it. His kids' toys are all tractors. Look out any window in his two-story house, and you'll see farm.Matt doesn't farm to make money. Matt makes money so he can be a farmer.I know a lot of coaches like Matt: if they won the lottery today, they'd still show up to coach the 6am class tomorrow. In fact, it's one of the questions on our Gym Checkup, and almost everyone gives the same answer.All of us receive something greater than money from coaching. And many of us take "day jobs" to support our coaching habit. But that's where the similarities end.We NEED our businesses to thrive. Our clients depend on our ability to make the business work. Our coaches deserve success. Our kids deserve to see us at bedtime.We need to balance our "right brain" (emotion and care) with our "left brain" (systems and processes) to provide the best gym. Being excellent doesn't mean "just caring more"--it means being excellent at business, and providing an excellent service. It means wearing CrossFit t-shirts to your New Year's party, but it also means buying the wine.We have the unique entrepreneurial opportunity to start with almost nothing and scratch out a business that changes the lives of our clients. It's our responsibility to be successful, and then help the next guy do the same. Do you think the world will have another shot at this? If all the microgyms go, will they ever be replaced?If you own a box, you understand the plight of the farmer. Small gyms--like small farms--are constantly battling high-volume corporate brands. We're outgunned and outfinanced, but quality keeps us in the game. Many of us would spend our lottery winnings to prop up a failing gym, if it came to it.  Passion is not the problem. Profit is. We have to be profitable now.Matt looks exhausted until we talk about chickens. He hates chickens.  But he's a farmer, so he'd rather talk about chickens than about his "day job".  I get it. I used to hate "the business side" of my business--but it was my business, so I got excited about it when someone asked. Now that it's very profitable, I get excited about it all the time.Matt might never get the chance to go all-in on farming. You and I have that chance. It's now or never. 2018 is the year: succeed or fail. But if you're counting on passion for coaching to make your business a success, you might as well buy lottery tickets.

Do you have any idea how special you are?Over the last 72 hours, half a million people did the same crazy workout and then shared their score in public. Most of those people didn't win first place. Most of them didn't even want to compete.They didn't do it because Dave Castro made a workout so compelling that it made everyone jump off their couches and start exercising. They didn't do it because Greg Glassman's 2002 Journal articles made them want to exercise until their hands ripped or they felt like vomiting. And they sure didn't do it because they read this blog and wanted to make up an Intramural team of their own.They did it because you quit your job, took the second-largest loan of your life, or spent all your savings on a cold cinderblock space and some barbells that almost nobody really wants to use.They did it because they see you at 5am, and they know you're still there at 9pm when they're at home watching Shark Tank.They did it because you've put everything on the line for them, and they're willing to cross this one little line for you. For YOU, coach.They did it because they trust you to say "good job", and for dozens of others to follow in your exact example.They did it because you told them they COULD, and you're probably the only person in their life who says that.They did it because Betty-Lou from the noon group said, "Will you play for my team?" and nobody's ever done that, even in third grade. They got picked, coach. They got chosen. Because of you.They're not posting their pictures on Instagram because they're hoping to win a new pair of Reeboks. You made them a celebrity. You made them a first-round draft pick. You made them famous, wanted, cheered. You did.The things their parents wanted to give them--security, health, and friendships--you gave them those things. Their husbands wanted to put them on a pedestal--and you gave them a podium. You gave them the respect of their children and the love of their spouse. You.On some days, when the risk seems heavy; when the debt seems long; when the stress makes even the barbell too heavy; when it feels as if your vow of service was really a vow of poverty, I beg you to remember this:You gave up a "job" to start a business helping people.You spent tens of thousands of dollars with no guarantee of return, let alone reward.You give your clients a longer, healthier life. No one else can.On any given hour of any given day, you can change a person's life forever.And you do.Thank you, Coach.

Go ahead, give them a salary. Then type up the contract on your Electrolux typewriter, send them a turkey at Christmas, and flip your calendar ahead to 1983. 35 years from now, you'll ask your staff what they like; find their strengths; and put them in a job that rewards them financially and emotionally. Or feel free to jump ahead to 2018 now. Pay your staff for the value they bring to your business. Start by breaking down every role in your business. Think of these as the "hats" that must be worn to run it. Now determine the replacement value for each role. What must a person know to be good at that role? What's that level of education worth? (Don't worry, there's an example coming.) How much time is required every week to fulfill that role? How will you measure success? Now group the roles together to create jobs and careers (they're different). Add up all the roles in your business. Does your total payroll (including taxes and benefits) equal 44.4% of your gross revenue or less? Perfect. Sign the contracts! If your payroll is more than 44% of your total revenue, panic.  Just kidding! Take action to either increase your revenue or decrease your payroll. After you make the free appointment, read "The Salary Cap". If you have no idea what percentage of your gross revenue goes to payroll, Call a mentor. Now here's the example: Let's say a business in the Farmer phase has 14 different roles. These include bookkeeping, personal training, group fitness coaching, nutrition coaching, cleaning, Customer Service Manager, and a few others. We sit down with a staff member and ask a few questions (we teach the exact questions in the Incubator). The staff person says, "I really want to make this my career." We say, "Fantastic! We'd love to have you. Here's how we're going to do it!" We pull out our Career Roadmap tool (given to you in the Incubator) and start filling their cup. First, the big roles: "Here's how much you can make by coaching classes in our gym. Here's how much you can make by doing Personal Training." We total those opportunities. Then we turn to the smaller (but still client-facing) roles: "Here's how much you can make if we launch a kids' program. Here's how much you could make if we start a nutrition program with Healthy Steps." We add those to the bottom line. Then we turn to the other roles, which are paid hourly. We ask: "Do any of these roles fit into your Perfect Day?" We pay hourly for those roles. For more, read Specializing Your Staff. We add all the roles together, and we say "Here's the opportunity." Then we say "Here's how we'll get there." Here's an example with MATH: A coach says: "I want to make this my career. I need $50,000 per year to quit my job at the glue factory." We say: "Fantastic! Here's how we'll get there. $50,000 per year is $1000 per week, plus two weeks off." "I can give you 8 classes per week. We pay $25 per class, so that's $200 to start." "I can give you 15 personal training hours per week. That's $31.11 per hour. Add another $466.65 per week. We're two thirds of the way there already!" (If you don't have 15 hours of PT to give the coach yet, don't worry--make it clear that you will, and work with your mentor to get there.)&nbs

One of the most common questions asked by CrossFit gym owners is one of the most difficult to solve. Like so many things in fitness, the correct answer is "It depends." But I've never been satisfied on that answer, and when I hear it, I always want to reply: "Depends on WHAT?" So here you go: the real answer. Should you put your prices on your website? It depends what phase of entrepreneurship you're in. If you're not sure which phase you're in, start by taking thetest here. If you're in the Founder phase, keep your prices off your website. You need as many conversations with potential clients as possible. You might convert someone who would have been turned off by your rates before they experienced your coaching prowess; but more likely, you just need more practice doing consultations anyway. Get as many in the door as you can. Remain undaunted by price-objectors.If you're in the Farmer phase and have a high ARM (average revenue per member per month) and a high LEG (length of engagement), keep your prices off your website. You no longer WANT every client, but the high lifetime value (ARM x LEG) of the clients you DO get If you're in the Farmer phase and have either a low ARM or low LEG, put your prices on your website. Your best opportunity isn't to get new people in the door. It's to increase ARM and LEG for your current clients, and focus only on the clients who will drive those numbers out. Let people self-select based on price, and use the time on goal reviews with your current clients instead. If you're in the Tinker phase, put your prices on your website. Right up front. You no longer have time for people who need to be sold on price. When Catalyst passed the point of 33% profit margin, I started experimenting with our prices. I put the prices on our site; then took them off. Without a doubt, fewer new people booked consultations with the prices on our site. But by that point, I didn't want to talk to everyone. The exact thing I said to our GM was: "If only four people out of ten are going to sign up after our consultation, then I only want to talk to those four." The other six were mostly price objectors. When I put our prices on our site, our conversion rate virtually reached 100%. Did I miss a few people that I might have convinced? Maybe. But at that point, I was willing to let the "maybes" fall away, and focus only on the people who weren't going to think about our rate every month. One of the key differentiators between Founder, Farmer and Tinker phase is your Effective Hourly Rate (EHR). You determine your EHR by dividing the Time you spend into the Money you make (EHR is money divided by time.) We call this the Kingmaker Equation. When your time isn't worth much (your EHR is low), then spend it on consultations. Get people in the door. Work on talking to people and helping instead of selling. When your EHR moves past $50 per hour (Farmer phase), you have to think about the value of each potential client. If your ARM and LEG are high, then it's probably worth meeting as many people as possible, even if only 40% sign up, because their lifetime value is so big. If ARM and LEG are low, then you have bigger problems than how many leads you get anyway. But when your EHR moves past $500 per hour (Tinker phase), you really don't have time to waste on someone who doesn't know your price. It's not their fault they can't afford you; do everyone a favor and save them the time.

It's no secret that many CrossFit affiliates have opened a second location and had a very bad experience. The mistake usually comes from the old, flawed model of "the more clients, the better" and has sometimes been fatal. As I wrote in "Should You Open A Second Location?" A second location doesn’t double your work; it quadruples it. There's a checklist in that article to help you decide whether the opportunity is really worth it. But Jeff Larsh is one of the very few who has done it successfully. Jeff is the co-owner of several CrossFit Tidal locations. Over the last eight years, Jeff has opened four CrossFit gyms by successfully implementing a multi-site CrossFit model. Jeff has a wealth of experience to draw upon to help you create a profitable and well-run business. Whether just starting out or looking to scale your current operations, join us today as we talk about adding an additional location to your business and much more! Jeff and host Greg Strauch discuss opening multiple locations from scratch; leadership; and holding several locations to the TwoBrain standard. Important Steps when adding an additional location: Step 1: Make sure it aligns with your vision and is not just a shiny objectStep 2: Ensure that systems and process are in place to scale your businessStep 3: Prepare the support structure required for a multi-location businessStep 4: Decide whether to purchase or start a second location from scratch.For those considering the purchase of another gym, here's another resource:Should You Buy Out Another Gym?Step 5: If purchasing, finalize the offer and wrap up the deal. Don’t Forget! Find out what stage of entrepreneurship you are in by taking the exclusive Two Brain test here: https://twobrainbusiness.com/test/or schedule your free mentoring call by clicking here! Links:https://twobrainbusiness.com/mentor-item/jeff-larsh/https://tidal.training/https://twobrainbusiness.com/should-you-open-a-second-location/  0:25 – Introduction with Jeff Larsh2:42 – What should the motivation be to open an additional CrossFit Gym4:11 – What would be the first step, to look into opening an additional location5:26 – How to financially prepare for a second location7:02 – Taking a hard look at your offerings and products before scaling9:40 – Preparing the support structure required for a multi-location business14:18 – Deciding on whether to purchase an additional location or start from scratch17:06 – Financing a new location with other partners and managers18:47 – Finalizing the offer and wrapping up the deal20:19 – Breaking a new purchase or major change to current or new members22:20 – Why only one additional location is not enough28:18 – Two Brain Stories with Kim Moore