Latest / Gym Business Coach Podcast / 5 Myths That Keep Gym Owners Stuck Under $30K (Pt. 1)

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5 Myths That Keep Gym Owners Stuck Under $30K (Pt. 1) · Gym Business Coach Podcast

• 0:08
  [SPEAKER_00]: You are listening to the built-to-grow podcast delivering the knowledge and all things, fitness, business.
• 0:16
  [SPEAKER_00]: We help jimrollers win, hear your hosts, ten lions and Randy Axton.
• 0:27
  [SPEAKER_01]: Alright, welcome back to the built-to-grow podcast.
• 0:30
  [SPEAKER_01]: I'm your host, Tim Lions, join in studio by Randy Axton with us.
• 0:34
  [SPEAKER_01]: Hello, hello.
• 0:36
  [SPEAKER_01]: back from your trip.
• 0:38
  [SPEAKER_02]: I did.
• 0:38
  [SPEAKER_02]: Yeah, three days up in the woods, Ryan horses.
• 0:41
  [SPEAKER_02]: It was good.
• 0:42
  [SPEAKER_02]: Yeah.
• 0:42
  [SPEAKER_02]: Yeah.
• 0:42
  [SPEAKER_02]: Yeah.
• 0:43
  [SPEAKER_02]: Weather was beautiful.
• 0:44
  [SPEAKER_02]: I think it was, I don't know, 60s from most part.
• 0:47
  [SPEAKER_02]: You know, big change for us here when it's even almost 100 degrees.
• 0:51
  [SPEAKER_01]: Yeah.
• 0:51
  [SPEAKER_01]: I'm not complaining about the weather.
• 0:52
  [SPEAKER_01]: That's for sure.
• 0:53
  [SPEAKER_01]: Wow.
• 0:54
  [SPEAKER_01]: Cool.
• 0:56
  [SPEAKER_01]: Well, we got a new series we're going to drop on you five myths five myths that are holding Jim owners in a stock below thirty thousand dollars a month And you know we get the question sometime why thirty thousand and you know over the years we've experienced there's this
• 1:15
  [SPEAKER_01]: Invisible line, I guess, and then yeah, it's like an invisible line in the sand that the problems are different on one side of the line versus the other when you're below 30,000 a month recurring revenue like every month you're doing 28, 22, 18, whatever, you're you're in survival, I mean at the end of the day you got bills to pay you're not really able to really stack any cash to invest and you're just kind of like.
• 1:42
  [SPEAKER_01]: surviving, you know, and that's just the way it is.
• 1:45
  [SPEAKER_01]: When you get past 30, usually you're building a team and you're starting to be able to market more and we're starting to grow in scale and things change, conversations change, and we've got to get you past 30,000.
• 1:56
  [SPEAKER_01]: That's got to be the minimum viable goal for every gym out there that's trying to make a business out of this, make a life
• 2:10
  [SPEAKER_01]: bad, I guess.
• 2:11
  [SPEAKER_01]: If we were working this hard for this long and we weren't making over 30,000, I'd close.
• 2:19
  [SPEAKER_01]: It's just not worth the time.
• 2:21
  [SPEAKER_01]: And unfortunately, I don't know if that is true for everybody, but for me personally, it wouldn't be worth the time because there's just not enough left over to make it worth white.
• 2:33
  [SPEAKER_01]: Yeah.
• 2:34
  [SPEAKER_01]: So we've got to get you past 30,000.
• 2:36
  [SPEAKER_01]: That should be your number one.
• 2:37
  [SPEAKER_01]: Well, that should be your second goal.
• 2:38
  [SPEAKER_01]: Your first goal should be your base operating expenses should be covered by recurring revenue.
• 2:43
  [SPEAKER_01]: That's like the first thing.
• 2:45
  [SPEAKER_01]: The second thing is, okay, cool.
• 2:47
  [SPEAKER_01]: We're making enough to cover the 20,000 or whatever it is.
• 2:50
  [SPEAKER_01]: Let's get to 30,000.
• 2:51
  [SPEAKER_01]: And we like to say recurring revenue.
• 2:55
  [SPEAKER_01]: Doesn't have to be recurring, it should, but it doesn't have to be.
• 3:00
  [SPEAKER_01]: Like you could,
• 3:01
  [SPEAKER_01]: make 30, 40, 50,000 with 40 of it being recurring in 10 of it being new sales stuff like that.
• 3:08
  [SPEAKER_01]: So bottom line is this, 30,000.
• 3:11
  [SPEAKER_01]: And there's these myths.
• 3:12
  [SPEAKER_01]: There's these things that Jim owners believe to be true that we're going to debunk in a way.
• 3:19
  [SPEAKER_01]: Like the first in the first myth real quick is that more members
• 3:25
  [SPEAKER_01]: will be the solution right more members equals more money more members will solve the problem.
• 3:33
  [SPEAKER_01]: And while on paper or on the surface of that, it sounds like, yeah, you know what?
• 3:37
  [SPEAKER_01]: If I just had more members, everything would be great, right?
• 3:41
  [SPEAKER_01]: But we need to debunk this in a couple ways.
• 3:45
  [SPEAKER_01]: Yes, you need to have members that pay the bills, but doesn't it make sense.
• 3:51
  [SPEAKER_01]: that the money that is generated is responsible for the success not the member count right so you could have more members paying a dollar and still not be anywhere so it's not the member count it's the revenue that we that we need to focus on and again
• 4:14
  [SPEAKER_01]: The old saying goes, only three ways to make more money.
• 4:17
  [SPEAKER_01]: You get more members, you charge them more, or you can get them buying more frequently.
• 4:22
  [SPEAKER_01]: Those are the three ways.
• 4:25
  [SPEAKER_01]: We believe, and for a lot of reasons that it would make a lot more sense to have less members paying more money than a lot of members paying less money.
• 4:35
  [SPEAKER_02]: Yeah, and I think there's a big eye-opening,
• 4:38
  [SPEAKER_02]: point for a lot of jim owners because at the end of the day, bandwidth, the headaches that come with serving more people, I mean, there's the Dunbar number, this has about 150 relationships, is all one individual can be responsible for, you know, you know, names and being able to maintain those relationships, there's a portion of that that I'm sure comes into this situation.
• 5:01
  [SPEAKER_02]: But at the end of the day, it is the revenue that matters more.
• 5:05
  [SPEAKER_02]: I mean, the analogy I use a lot with Jim Monters is, you know, if the goal is a dollar, do you want to do it with four quarters?
• 5:12
  [SPEAKER_02]: Or is it think about, you know, maintaining four quarters or ten dimes, you know what I mean?
• 5:17
  [SPEAKER_02]: Like the responsibility of keeping track of ten dimes versus those four quarters.
• 5:21
  [SPEAKER_02]: To me, I'd much rather have a higher valued service, a bringing a premium product to the marketplace being able to charge a little bit more, maybe not serve everybody, but serve those that are in alignment with those beliefs and that do want that superior product.
• 5:37
  [SPEAKER_02]: then have a lower price price point and just be able to kind of push people through the door because of the challenges that come with that.
• 5:46
  [SPEAKER_02]: We talk about attrition, the larger, even maintaining the same percentage of the larger your member count, the more people are leaving your business every month.
• 5:54
  [SPEAKER_01]: Yeah, and that's the thing I want to hit on either harder.
• 5:58
  [SPEAKER_01]: It's yes, if you had a thousand members at five, actually, I can't do the math.
• 6:03
  [SPEAKER_01]: That's 200 members, 100 members.
• 6:06
  [SPEAKER_01]: 100 members and you're at 5% of Trisha.
• 6:08
  [SPEAKER_01]: You're losing five, you get 200 members.
• 6:10
  [SPEAKER_01]: You're losing 10.
• 6:11
  [SPEAKER_01]: If you're at your members, you're losing 15 at the same 5% of Trisha.
• 6:17
  [SPEAKER_01]: is the cost of marketing getting cheaper or more expensive.
• 6:21
  [SPEAKER_01]: It just by default, it's always getting more expensive.
• 6:25
  [SPEAKER_01]: If the cost acquire a customer is going up, what do it make sense to have to replace less customers to maintain?
• 6:36
  [SPEAKER_01]: If it cost a hundred dollars to replace a customer, and I've got to replace five, that's only a five hundred dollar cost bracket, or a five hundred dollar ad spend, just throwing numbers again, to just break even.
• 6:48
  [SPEAKER_01]: So if we want to grow, we go to 1,000, 1,500, 2,000, but what if you had so many members that you had to replace 15, 2020, 25?
• 6:53
  [SPEAKER_01]: I've seen gyms that have to replace 40, 50, 70, 100 members per month.
• 7:02
  [SPEAKER_01]: just to maintain and recoup the losses from the month prior.
• 7:07
  [SPEAKER_01]: To me, you're just a marketing machine.
• 7:10
  [SPEAKER_01]: You're just having to constantly market.
• 7:12
  [SPEAKER_01]: Now, yes, marketing, lead, customers is the lifeblood of business.
• 7:17
  [SPEAKER_01]: We get it.
• 7:19
  [SPEAKER_01]: But nowhere in this equation has anybody just looked at, hey, maybe we're not charging enough, sure.
• 7:25
  [SPEAKER_01]: Maybe we should have a superior product on the table that we can charge more force.
• 7:31
  [SPEAKER_01]: So therefore, we don't need to have a hundred members.
• 7:35
  [SPEAKER_01]: We only need 50 to make the same amount of money.
• 7:38
  [SPEAKER_01]: And it's so interesting to me that the default is never my product isn't good enough.
• 7:45
  [SPEAKER_01]: The default is we need more members.
• 7:49
  [SPEAKER_01]: Your product needs to be best in class.
• 7:52
  [SPEAKER_01]: It needs to solve the problem.
• 7:53
  [SPEAKER_01]: It needs to be able to be charged for a premium.
• 7:57
  [SPEAKER_01]: Versus, oh, if we just have more members, we'd fix all of our problems.
• 8:02
  [SPEAKER_02]: And you see, it's interesting though, when you look into the gym and you look at the areas of education and the things gym owners do,
• 8:10
  [SPEAKER_02]: in an attempt to, whether it be, provide a better service, get it, bottom line is get a client a better result, right?
• 8:18
  [SPEAKER_02]: A lot of continued education in the fitness realm.
• 8:22
  [SPEAKER_02]: When you open to gym, chances are you didn't have an understanding that you're going to have to be a marketing and sales expert.
• 8:28
  [SPEAKER_02]: You, your background, your area of genius, if you may.
• 8:32
  [SPEAKER_02]: And in the area you enjoy is a client result.
• 8:35
  [SPEAKER_02]: And so all of the time an energy goes into delivering a better result and we don't do anything in the business that actually mere like aligns with that right raising your price point after you've read distributor changed the delivery of the service found a new way to deliver a superior result that should equate to the value of which you're selling your service at.
• 9:01
  [SPEAKER_02]: but we're afraid to raise our prices.
• 9:03
  [SPEAKER_02]: And there's so much fear around that, versus one of the right-to-go-acquire, more clients.
• 9:08
  [SPEAKER_02]: But at the end of the day, most Jim owners, you're not doing anything to understand the marketing or change your marketing.
• 9:15
  [SPEAKER_02]: So it's like, it's a misalignment with the areas that you're educating yourself and the work that you're putting in the business and then what you actually should be doing with the business to get that benefit.
• 9:25
  [SPEAKER_01]: Yeah, most Jims don't raise their rates.
• 9:29
  [SPEAKER_01]: at a pace that's congruent with the value.
• 9:32
  [SPEAKER_01]: I've seen people in look, guys, this is the fear of losing clients that keep you stock, but it's, you're charging people from five years ago, the same rates from five years ago, yeah, maybe you've raised the rates on the new people, but answer this question.
• 9:51
  [SPEAKER_01]: Are you better today than you were five years ago?
• 9:55
  [SPEAKER_01]: Is your gym better?
• 9:56
  [SPEAKER_01]: Is your training better?
• 9:58
  [SPEAKER_01]: Is your programming better?
• 9:59
  [SPEAKER_01]: Is your team better?
• 10:00
  [SPEAKER_01]: It better be yes.
• 10:04
  [SPEAKER_01]: It better be yes.
• 10:05
  [SPEAKER_01]: If if that is 100% yes, the rate should be 100% Have you raised your rates on all of clients in the last five years?
• 10:15
  [SPEAKER_01]: They answer should be 100% yes because you're delivering a better product.
• 10:20
  [SPEAKER_01]: They don't deserve to get the 2,000 rates when you're in 2025 or 2026 and you're five, six, seven years better than you were five, six, seven years ago.
• 10:33
  [SPEAKER_01]: You just don't, who, who, like, what other industry where else can you go?
• 10:38
  [SPEAKER_01]: No, not that.
• 10:39
  [SPEAKER_01]: But like, who says that they're like, it's not required, okay, there's no rule that says,
• 10:49
  [SPEAKER_01]: You must hold people's rates for five years ago.
• 10:53
  [SPEAKER_02]: I had a conversation with Jim Warner at the grow summit that hasn't raised the rates in 20 years.
• 10:58
  [SPEAKER_01]: It's not smart business.
• 11:01
  [SPEAKER_02]: It's the difference, right?
• 11:02
  [SPEAKER_02]: But it's not to be incentive or, you know, sound cooler or anything like that.
• 11:07
  [SPEAKER_02]: But that business is exactly what we need to be talking about here.
• 11:10
  [SPEAKER_02]: This isn't a hobby, right?
• 11:12
  [SPEAKER_02]: And if it was a hobby, and you were just doing this for as a laborer love, and you're,
• 11:17
  [SPEAKER_02]: You know, cosine buying, you maybe your bills are paid and that's all you really want it out of it.
• 11:21
  [SPEAKER_02]: That's where you're going to end up.
• 11:22
  [SPEAKER_02]: But if the goal is to drive revenue, create profit in your business, all of the foundational principles of running a business, if you're looking through the lens of business to your point, it should be a hundred percent of jams that have razor rates, especially since pandemic.
• 11:38
  [SPEAKER_02]: I mean, that alone proved
• 11:40
  [SPEAKER_01]: we need to raise our rates every you get guaranteed your expenses have gone up yeah and if you haven't passed it on along to the consumer you are you've taken the proportional hit yeah and you're okay with it what yeah you're okay with it I guess by not raising rates you're saying I'm okay making less money and you're you're basically saying you don't care to make any more money than you already are
• 12:10
  [SPEAKER_01]: and it goes it goes back to yeah like are you better or not are you if you're worse than yes keep your rates the same or lower them here's what's here's an interesting one a gym that takes away a service okay let's just say hey we cut you know five classes off the schedule would be more willing to reduce the clients rates then rates the rates when they've
• 12:38
  [SPEAKER_01]: it's really interesting isn't it fear it's got to be fear and it's fear it's um... all trunism it's all truism it's um... it look guys i nobody says you have to be uh... warm buffet in business nobody says you have to be marcus limonus in business to understand common sense this is logic okay so
• 13:03
  [SPEAKER_01]: If you're better than you were five years ago, your rates should reflect that from all of the clients.
• 13:07
  [SPEAKER_01]: I don't care if they've been with you five for five or ten or fifteen years.
• 13:12
  [SPEAKER_01]: Look, as we did this, we did this, I guess, at three years ago now, two and a half three years ago.
• 13:19
  [SPEAKER_01]: Yeah, we had people that were on old rates.
• 13:21
  [SPEAKER_01]: We just did, we kind of lost track of people.
• 13:25
  [SPEAKER_01]: We were like, well, you know what, they're easy to train.
• 13:27
  [SPEAKER_01]: Let's not rock the boat.
• 13:29
  [SPEAKER_01]: Let's not do this.
• 13:30
  [SPEAKER_01]: Anyways, we just said, you know what?
• 13:32
  [SPEAKER_01]: Enough enough.
• 13:33
  [SPEAKER_01]: We had to do it too.
• 13:34
  [SPEAKER_01]: Right.
• 13:35
  [SPEAKER_01]: We had people on all these old rates.
• 13:37
  [SPEAKER_01]: And, you know, we would raise them a little bit, but not up to the current.
• 13:40
  [SPEAKER_01]: It was like a whole mess.
• 13:41
  [SPEAKER_01]: Like so I'm not immune to the feeling of losing people because you're running out of this fear, right?
• 13:49
  [SPEAKER_01]: But when we did do it, it felt great in the people that stuck with us, understood what we were doing, they saw the value and they didn't have any problem.
• 14:00
  [SPEAKER_01]: Some of them were pain, then now double what they were paying prior.
• 14:04
  [SPEAKER_01]: Sure, we heard about it.
• 14:05
  [SPEAKER_01]: Yes, we lost people, but in the grand net net, we were way up.
• 14:09
  [SPEAKER_01]: We're not even going to close, and I was even going to question how much further up we were in revenue.
• 14:16
  [SPEAKER_01]: but it was more can grow with the value or delivering.
• 14:20
  [SPEAKER_01]: The gym change and new equipment and all the stuff at the same time, we ushered in all these new changes and we just raised everybody's rates and we said on this state everybody goes to the new rates no matter what.
• 14:29
  [SPEAKER_01]: There was no
• 14:30
  [SPEAKER_01]: Hey, I'm special, you know, and we heard about it, but like it wasn't anywhere near what you think it's going to be in your head.
• 14:39
  [SPEAKER_01]: So it's always that way, right?
• 14:40
  [SPEAKER_01]: Yeah, and you just got to be, you just got to do it, right?
• 14:44
  [SPEAKER_01]: It's a business decision, and here's the kicker.
• 14:48
  [SPEAKER_01]: Here's the kicker.
• 14:50
  [SPEAKER_01]: Here's the kicker.
• 14:51
  [SPEAKER_01]: I have a chapter in a built-in.
• 14:53
  [SPEAKER_01]: That says, culture is a, culture is a myth.
• 14:56
  [SPEAKER_01]: That should be one of these five.
• 14:57
  [SPEAKER_01]: I don't know if it is, but with, culture is a myth.
• 15:00
  [SPEAKER_01]: When you raise somebody's rage, or if you hold them to an agreement, or if you do something that they're not happy with, and you believe that they were your friend, like personal friend, Uganda lunch with them, maybe you were in their wedding, whatever it was, you'll see how quickly they turn on you.
• 15:18
  [SPEAKER_01]: and make it really clear this is a transaction, a business, relationship, and not personal.
• 15:26
  [SPEAKER_01]: It's the opposite.
• 15:27
  [SPEAKER_01]: When you believe them to be your friend,
• 15:30
  [SPEAKER_01]: Maybe you want to make cases with them.
• 15:32
  [SPEAKER_01]: There's people that like this app.
• 15:33
  [SPEAKER_01]: Hey, sorry, Mrs. Johnson.
• 15:35
  [SPEAKER_01]: We've got a whole just agree me.
• 15:36
  [SPEAKER_01]: Yeah, you signed this.
• 15:37
  [SPEAKER_01]: Yeah, you knew about it.
• 15:38
  [SPEAKER_01]: Yeah.
• 15:38
  [SPEAKER_01]: Well, I know I did, but I'm special and I believe that X. Well, I can't because of Y. Okay.
• 15:45
  [SPEAKER_01]: Well, that's it.
• 15:45
  [SPEAKER_01]: My sister is going to call you.
• 15:46
  [SPEAKER_01]: She's an attorney.
• 15:48
  [SPEAKER_01]: Whoa.
• 15:49
  [SPEAKER_01]: What happened?
• 15:49
  [SPEAKER_01]: We just had coffee yesterday.
• 15:51
  [SPEAKER_01]: Whatever, right?
• 15:52
  [SPEAKER_01]: That's that culture thing and I know there's some people that believe culture is the savior of everything.
• 16:02
  [SPEAKER_01]: If they just love being here and they love the family and the friend until you do something they're not happy with.
• 16:08
  [SPEAKER_01]: Yeah.
• 16:09
  [SPEAKER_01]: Then you'll see that culture never really was a thing.
• 16:12
  [SPEAKER_02]: Well, and you can't equate a value to the culture unless, you know, I mean, that's a pressure test for culture.
• 16:17
  [SPEAKER_01]: I mean, raise the raise.
• 16:18
  [SPEAKER_01]: Raise the raise.
• 16:19
  [SPEAKER_02]: Let's see how great the culture is in your business.
• 16:22
  [SPEAKER_02]: If it's that great, then that's not going to be an issue.
• 16:25
  [SPEAKER_02]: 100% of your clients are going to continue paying you, right?
• 16:27
  [SPEAKER_02]: What?
• 16:28
  [SPEAKER_02]: That would be interesting.
• 16:29
  [SPEAKER_02]: You know, it's, but it's a, it's a truth.
• 16:31
  [SPEAKER_02]: I mean, it's, it's, we see a check out every time and in tell it's inconvenient.
• 16:36
  [SPEAKER_02]: Yeah.
• 16:36
  [SPEAKER_02]: You know, and I think the one thing that we have to remember in every gym owner should probably adopt or believe what I'm about to say, what we bring to the table,
• 16:48
  [SPEAKER_02]: Even at, I mean, there's some astronomical gyms out there.
• 16:52
  [SPEAKER_02]: There's gyms that do in $10,000 a month per client type of thing, right?
• 16:55
  [SPEAKER_02]: We know exos has a $40,000 per year membership.
• 16:59
  [SPEAKER_02]: Even if you were charging that type of superior rate, you know, exorbitant rate.
• 17:07
  [SPEAKER_02]: would you believe that what we provide still has value compared to that dollar amount more value more value right.
• 17:14
  [SPEAKER_01]: Exactly.
• 17:14
  [SPEAKER_01]: Health is invaluable.
• 17:16
  [SPEAKER_02]: And so at the end of the day, if you believe that the things that we bring to the table, the things that we change in our clients' lives, do carry that much more, like, I don't know, is it intrinsic value or just value that not even perceived value, but true value of what we provide.
• 17:33
  [SPEAKER_02]: and you're afraid to raise your rates, that's what you really have to dig down on.
• 17:37
  [SPEAKER_02]: Why?
• 17:37
  [SPEAKER_02]: That's where I would say that it's probably your product.
• 17:41
  [SPEAKER_02]: The health and the fitness and the things that we provide for people will never see the full value of what we bring.
• 17:48
  [SPEAKER_02]: But the fear of raising your rates cannot be.
• 17:52
  [SPEAKER_02]: You just can't have it.
• 17:54
  [SPEAKER_02]: You have to understand.
• 17:57
  [SPEAKER_02]: And I think that's really what it comes down to.
• 17:58
  [SPEAKER_02]: And if you don't feel good about raising your rates, then that's where I would challenge you to look at the product that you're bringing to the table.
• 18:04
  [SPEAKER_02]: And there is room for improvement.
• 18:05
  [SPEAKER_02]: And if you're doing everything in that realm, then you should also not have the fear of raising those rates.
• 18:13
  [SPEAKER_01]: So there you have a myth number one, more clients is not equivalent to more money.
• 18:19
  [SPEAKER_01]: It's the revenue, right?
• 18:23
  [SPEAKER_01]: It's the price, the price per member, et cetera.
• 18:29
  [SPEAKER_01]: So hopefully that changes your mind on a couple of things.
• 18:33
  [SPEAKER_01]: Maybe it forces you to go look at your own product to say, hey, you know what?
• 18:38
  [SPEAKER_01]: Maybe we should be charging more.
• 18:41
  [SPEAKER_01]: and go do it guys you won't regret it if you do it the right way.
• 18:45
  [SPEAKER_01]: So hopefully that helps you guys until next episode keep changing lives.
• 18:48
  [SPEAKER_01]: I'll see you in the next show.
• 18:50
  [SPEAKER_01]: Alright, thanks for listening to another episode of the built-girl podcast.
• 18:53
  [SPEAKER_01]: If you want more help growing your business join our free Facebook group, profit accelerator, helping training gyms grow to $30,000 a month and beyond.
• 19:02
  [SPEAKER_01]: We'd love to see you there.
• 19:03
  [SPEAKER_01]: Go check out the show notes for the link and keep building something great and we'll see you in the next episode.