There’s a lot of marketing noise and advice out there in every industry, but in the gym and fitness industry, there seems to be even more. After all, we’ve had to close up shop this year, bring on more health and cleaning expenses and even pivot to the online space–changing up our offers and searching out new prospective clients.
It’s not been an easy year. But yet, some small gyms have thrived. And others? They continue to struggle.
For many business coaches who serve the gym and fitness industry, the answer seems to be marketing. If you can just get in front of more people…if you can just sell more services…if you can just…if you can just…
Sure, more customers and more revenue is great, but it’s not the answer. Not by a long shot.
Before we get to the solution…
We know you love what you do. Your happy place is working with your training clients, developing training programs, and teaching classes. You want your clients to meet their health and fitness goals, and you know how to get them there.
You opened your business–your gym, practice, studio–because you wanted a space where your clients could gather and you could help more people. Working for someone else wasn’t working for you because you couldn’t create and launch the programs you wanted to. Working out of your garage could only get you so far–and the weather got in the way a lot of the time.
But you knew what would help clients so you opened your own place. And while it’s been a lot of hard work, you’re proud of what you’ve built.
Now, with COVID causing all kinds of chaos, you hear from business coaches, friends and family, heck, even your competition, that more (or better) marketing is the answer to making ends meet this year.
Throwing out more marketing isn’t going to get you over this hump. In fact, chances are that more marketing and more sales (aka more revenue) isn’t what you actually need.
What you need is to keep the revenue you already have.
It feels really good to look at your revenue and see that you have a $250k business. Or a $500k business. Especially if you started off training clients in your garage or at the park down the street.
But those great revenue numbers are just that–numbers. They don’t tell the whole story of your business or your lifestyle.
We’ve had the honor to look behind the scenes at some amazing fitness businesses and we see a lot of the same challenges again and again. When revenue increases, expenses also increase. That’s nothing out of the ordinary. But we see expenses increase at a rate that’s not aligned with the revenue.
If you’re building a scalable, sustainable business, you need to have systems and processes in place that help to make your life easier. Having 20 personal training clients should feel very similar to having 10 personal training clients because you have automations that take care of scheduling, billing, follow-ups, and more. Going from 10 clients to 20 clients should double your revenue, but it shouldn’t double your work (or your expenses).
We believe that before you throw marketing at your business to try to make up for the COVID gap, you should take a close look at your numbers and determine where you can make cuts and where you can tighten the belt–as well as where you’re wasting time and money because the operations side of your business isn’t efficient.
Yes, this is one of the less sexy sides of business ownership. But it’s a lot sexier to have money in the bank and some free time on your hands than it is to feel the stress and frustration you’re feeling right now.
Book a call with us today and let’s talk about how we can help!
Remember the Staples "Easy Button"? We keep one around the gym so after a grueling set of squats or KB swings I can go over and press it, with the cheery voice saying...
"That Was Easy!"
Clients love it, really!
Seriously though, Staples was on to something. They were communicating to their customers that doing business with us is better. Simpler, hassle free, pleasant. Easier. It was a big brand promise, and you can decide for yourself if they live up to it.
I was reminded of the Easy Button as I worked my way through the "Order" level of the Business Hierarchy of Needs (BHN).
Need #1: Minimize Wasted Effort
Question: Do you have an ongoing and working model to reduce bottlenecks, slowdowns, and inefficiencies?
In other words, are you actively looking and working to make things easier?
This applies to both the way your customers do business with you, and the way your team delivers your services. As we discussed last time, documenting and following systems is important. The danger is we get caught in the "that's just the way we do it" trap. Look, I don't like change any more than the next person, but when you discover a way to do something that makes someone else's life easier and it still accomplishes the end result, try that instead!
And remember it's not all about you and your team. Sometimes in our attempt to make things easier for us, we make it harder on the client. Not a good idea. For years in our gym we took attendance manually, you know, on actual paper. That meant the client never had to do anything except walk in the door. Sometimes we would check them off as they made their way in, or make a mental note and check them off later. It worked pretty well, but it wasn't perfect. We would invariably miss one or two throughout the day. Eventually we moved over to a new software that had attendance built in. This would surely make things better! We explained to our clients it had an app for your phone, so when you walked in the door all you had to do was open it up and check that you were here. Easy peasy, right? People are used to using their phones for all sorts of things, surely this would not be a problem.
Except it was. Clients left their phones in the car, "forgot" to do it, or just didn't care. We had added one more thing to their plate in order to get it off ours. The new system ended up being less efficient and less accurate than the old one. After a few weeks, we tweaked the system so we were doing the input again, just using software this time. The important take home here is we listened to what clients were saying. If we were stubborn and insisted it be done our way, it would have just led to bad feelings on top of it not getting done.
Often reducing bottlenecks and being more efficient is amazingly simple, if you are willing to listen to what your clients and team are saying. Sometimes "complaints" are key insights into what is causing friction with the way you do business, and wisdom listens, not dismisses.
If you want a happier team and happier clients, what is the one thing you can do today to make them want to press the "Easy Button"?
As a gym owner or someone working in the health and wellness industry, you know that revenue fluctuates throughout the year.
During the fall and the holidays, clients aren’t as responsive or working out as much–either because they’re busy with work and family or because they don’t want to feel bad about not following their health plan. At the beginning of the year, things pick up as people set resolutions and goals…but then taper off after a few weeks or months. Then, of course, there’s beach season where clients are ready to dive back in. And around and around it goes.
All this fluctuation in client commitment results in a fluctuation in revenue. And it’s enough to give you a headache.
After all, your operating expenses don’t fluctuate that much, and you’d like to collect a regular paycheck that you can count on.
That’s why reverse engineering your cash flow goals can help you stay on budget month to month and ensure you’re spending (and saving) the right amount to meet your operating expense needs.
This is why it’s so incredibly important to have a bookkeeper on your team to help explain your financial data to you and what your financial reports mean. A bookkeeper can also ensure that you’re staying within your budget each month, even on those slow months.
Here’s how reverse engineering works:
- First, you’ll need a profit assessment to determine exactly what you’re making in your business right now.
- You also need to take a good look at your P&L statements–over the course of a year. Determine what your average operating expenses are each month (total OPEX for the year ÷ 12 = average OPEX each month).
- Are you making your average OPEX each month?
Typically, the answer is no. But the idea is to allow your busier months to make up for your slower months.
And if you’re spending more than 45% of your revenue on OPEX, chances are you’re not paying yourself enough. It’s time to find ways to lower your operating expenses.
But I can’t lower my expenses any more than I already have.
That’s what you’re thinking, right? I get it. Ask yourself this: Are you legitimately getting 100% value out of everything you’re spending on right now?
- Do you need two team members covering the front desk when the gym is slower?
- Is it necessary to buy that equipment this month?
- Can you negotiate a better rate on your insurance?
- Is it possible to let go of some of your equipment leases?
- Can you reduce the frequency of equipment maintenance because usage is lower?
With your Profit First advisor, go through your expenses line by line and look at ways to reduce spending so you can get your OPEX more in line with where it should be. You’ll be surprised at where you can find money!
We’re happy to help you with this process. Schedule a call with us today and let’s reverse engineer your cash flow so you can start hitting your goals.
If you've been in business for any significant length of time, you've probably heard and read it over and over - you have to have "systems" in your business. Systems for sales, and marketing, and service delivery. Systems for finances, and hiring, and team management.
What you may not realize is regardless if you have all these things documented in a fancy manual, you already HAVE systems for each of these. As Mike Michalowicz writes in "Fix This Next", these systems are "In many cases...simply the routines you and your colleagues follow."
The question then becomes "Are the routines we are following efficient and predictable, leading to reliable outcomes?"
If so, the work becomes documenting those systems. You can write them in a manual, take screenshots, do video screen captures of the task being performed, or all of the above. The important thing is that the system is documented and able to followed by anyone.
On the other hand if your systems aren't working, the job becomes to find out why and work on improving it.
The goal here is not to take hours and hours to write fancy manuals that nobody ever looks at and are hard to understand.
The goal of creating (if necessary) and documenting systems is to help you Achieve Organizational Order.
And not coincidentally, that is Level 3 on the Fix This Next "Business Hierarchy of Needs" (BHN).
The way we define "Order" in this context is important. Order is not only about efficiency, productivity, and getting stuff done faster.
It's about creating a company that is not dependent on any one individual. Including you. Maybe especially you.
A business that achieves organizational order is a business that runs smoothly when you take a vacation, or your admin is sick, or a key employee has to rush out of town on an emergency.
Here's a challenge for you. The next time you walk into a Starbucks, or Dunkin Donuts, or whatever your favorite place to get coffee is, ask to speak with the owner. Chances are, the team member standing at the counter won't even know who that is, never mind run out to the back to get them. How is that possible? Because these businesses run on systems, not on any one person. That is organizational order.
As we discovered on the Sales and Profit levels of the BHN, there are 5 key questions and needs on the "Order" level as well. Over the next few weeks we will cover each one in, you guessed it, Order.
See you then!
Here’s the thing about quarterly profit distributions: They’re meant to be used. And by “used,” I don’t mean reinvested in the business–as much as you might want to do that.
Every time you do your Profit First allocations, you should be taking 5% and depositing it into a Profit account. This the target distribution based on the Profit First system, and what we recommend to most clients.
Being a business owner is challenging. Being a business owner in 2020 has been exhausting. You’re working long hours, adding extra responsibilities to your plate, stressing over quarantines and lockdowns, and possibly even having really difficult conversations with staff and clients.
Through all of that, we hope you’ve still been setting aside your profit allocations. Because at the end of the day, you deserve it. You’ve done something that not everyone is born to do: you own a business.
The profit distribution is meant for you, the owner. It’s designed to reward you for your work; it’s not designed to reinvest into the business (that’s for a different account).
At the end of each quarter, take half of the balance in your profit account as a distribution and use it for something in your personal life. Something fun, something meaningful, something necessary. You get to pick!
You might be wondering… “But how do I spend it?” Here are some ideas, depending on how large that profit account is:
If your distribution is less than $250
- Treat yourself! It’s okay if your profit distribution is just enough for a celebratory dinner with your partner or a friend. Go somewhere you wouldn’t normally go and order something fancy.
- Visit the spa (or car spa). You deserve a nice massage or a facial, away from the office for the day. If that’s not your thing, treat your car to a detailing job that makes it feel brand new.
- Invest in learning. Here at Fit For Profit, we’re all about learning new things–personally and professionally. What’s something you’ve been dying to learn that you haven’t taken the time to do yet? Sign up for that gardening class or take that Rosetta Stone class so you’re prepared when we can travel again.
If your distribution is less than $2,000
- Beautify your home. There’s a lot you can do around your home for $2,000 and less, including some small remodeling projects or buying some new furniture or appliances. We’re spending a lot of time at home these days and we should enjoy it!
- Take a road trip. If you’re able, take a weekend away at a nearby destination. Sometimes getting out of our normal four walls for a few days is enough to rejuvenate us for months to come.
- Pay down debt. Personal debt can change how we think about money in our business too. We love the thought of using profit distributions to pay down (or off!) some personal debt so you can feel better all the way around.
If your distribution is more than $2,000
- Divide and conquer. Consider gifting part (or all) of your distribution to a favorite cause.
- Invest and save. If you’re not ready to spend the money, open a separate account and save it for a planned vacation or so you can pay cash for that new car. You may also want to invest it in a college fund for your kids.
I personally don’t always have a solid plan for my profit distribution. In fact, I really like to save it for a larger purchase. I’ve saved up for a car before, and I’m currently remodeling my kitchen with several quarters’ worth of distributions.
Whether you choose to spend it or save it, if you’re following Profit First you do need to remove it from your business accounts and put it elsewhere.
Not sure where to get started? Book a call with us and we can help!
Cash reserves in your business are what will not only keep you afloat but also ensure that you have what you need to prevent an inevitable crisis should…I don’t know, a pandemic hit.
It’s something we need to…we must talk about.
If you have a copy of “Fix This Next,” go to page 115 and read (or re-read) that section. In fact it is so powerful that I am going to include the first paragraph here:
“Desperate people do desperate things. This is not a position you want to be in. Cash will help you avoid it, and generally speaking, more cash will help you avoid it more. An adequate reserve of money enables you to navigate unforeseen circumstances with confidence. To allow business operations to continue unabated, or to take advantage of an unexpected opportunity, your business needs two to six months of your average monthly revenue reserved in a VAULT account.”
The last question on the Profit level of the Business Hierarchy of Needs is:
“Does the business have enough cash reserves to cover all expenses for three months or longer?”
Most businesses we start working with would have to answer “no,” even before the present crisis hit.
For many business owners, these are desperate times. And while we can’t change the past, we can learn some lessons in order to help us prepare better next time.
And keep the ensuing panic at bay a bit.
Trust us, there will be a next time. It may not be pandemic level, but even the normal business cycle can cause a cash crunch on our businesses. And we can’t and shouldn’t count on the government to bail us out every time.
The good news is implementing the Profit First cash management system systematically and reliably starts building this long term savings (VAULT) account, month-by-month, by creating the good cash habits your business needs. The initial goal is to be able to cover three months of Operating Expenses, and then three months of Sales Income, into that account.
You may be thinking “no way can I do that,” and frankly you need to check that thinking at the door. Instead, start thinking how life would be different if you had been working on this before 2020.
I’ll wait while you think that through.
It’s not all negative, either. Your VAULT account has two primary functions: to cover expenses in case of unexpected business disruption and to take advantage of an unexpected opportunity. Imagine having the amazing property you have had your eye on forever come up for sale cheap, and you could pay cash for it, or even just put a huge down payment on it. Or paying cash when a closing business has a fire sale on their equipment. It’s a great feeling and so worth the effort.
Now that we have had THIS talk, give me a call and let’s talk about how to set it up in your business. Click here to tell us a little about your business and schedule an appointment.
In this week’s post, we are going to be catching up with Erin Haag, whom I have known for a couple of years now. We met when Erin owned a fitness studio and she needed to implement Profit First to make her business better than ever.
Erin’s Success Story
Erin owned a pilates and yoga studio in South Florida for nine years, but prior to that she worked for a whole bunch of different companies in corporate sales. You name it, she did it! We’re talking the weight loss industry, wellness centers, nutrition, medical spas, cosmetic surgery centers, and laser hair removal. She helped make millions of dollars for other people and then she was laid off during the financial crisis of 2008.
At that time, she decided she was done making money for other people and that is when she used all of her strategies to open her pilates and yoga studio. Erin had a pretty successful business. She paid herself from day one and her business was profitable. However, about five years in, she had two kids under the age of two. She was working 50 plus hours a week and hadn’t taken a vacation, let alone a day off in forever.
The final straw for Erin was when she was hospitalized twice within four months. The first time was for a kidney stone that brought on an infection and the second was for viral meningitis. She was released from the hospital on her oldest daughter’s second birthday and she realized something had to give.
She began to make shifts within her business. She did that mostly with her pricing and by automating her systems, but she basically changed everything. When Erin and I began to work together, she went from a 4% profit margin to a 47% profit margin. She also started to pay herself a six figure income and began to work only five days a week.
Erin began to work with me about eight or nine months before she sold her studio. In that time, she saw her biggest growth. In the six months from the time she listed her business until the time she sold it, her business became completely debt free. Erin also sold her business for forty times her original investment.
That was all cash in her pocket!
Since that time, Erin has been helping other boutique fitness studio owners, gym owners, and people within the wellness industry do the same within their business.
I love hearing success stories like Erin’s! But you know that she had to have a few points in her story that were not all that glorious! And that is what allows everyone else to relate to her story!
Making Changes to Your Business Model
One thing that Erin loves telling people right now is that if you are planning to start a business, now is the time to do it. She started her business during a financial crisis and everyone thought she was insane. But her business thrived and the businesses that are lucky enough to make it through and get to the other side are going to be so profitable and successful.
And if you currently have a business, now is the time to make the necessary changes in your business. You now have the perfect excuse. One of the biggest changes you can make right now is pricing. You really have to analyze your pricing and take a look at it over the last eight months.
Then ask yourself, “Have you really continued to maintain a profit margin? Have you continued to have a steady flow of cash?”. If the answer is no, then Erin and I can both tell you it’s due to your pricing. If you are still charging a per session class pack, then you must change it to a recurring revenue model. Switching your pricing model is the only way you can guarantee sustainability.
You may not believe that your business problems are tied to your pricing, but ask yourself if you did the proper analysis when you created your pricing. Did you analyze your pricing or did you simply charge whatever your competition was charging or less than what your competition was charging? We have seen the latter so many times and those owners are simply not making a profit.
How to Find Your Pricing
There is actually a formula for creating profitable pricing for your business. The first step you have to take is determining what your minimum monthly sales goal must be. You will find this number by adding in all of your operating expenses, your payroll, your liability, your debt, and your owner’s pay.
This will give you your monthly sales goal. Once you have that number, you will need to do an analysis on your capacity. Then your capacity will tell you what your monthly client value needs to be. This is basically how much each client needs to be worth to your business based on your capacity.
Let’s use $150 for an example. The $150 will be the pricing point for your mid-range package. You would then create pricing that has a weighted price for single services, which will be intentionally high. This will discourage people from purchasing a single class.
The larger commitment packages will be your bottom line number.
Conquering the Sale
Erin uses what she calls the client flow when conquering the sale. The client flow basically goes from when the client first contacts you all the way through to the collection of money. It’s going to be unique for every business and it must be individualized for every client. By the time you are collecting the money from your client, they will know exactly what you have to offer for their life, how you fit into their budget, and how you fit into their schedule.
Remember, that your goal is to solve a person’s problem, not simply collect their money! If a client begins to object, answer their question, reconnect with their pain point, and position your service as the solution that will solve their problem. You’re only asking them to commit to solve their problem.
Both Erin and I recommend using a checklist type script, so you make sure you remember to share everything with your clients. You don’t have to go down this checklist in order, but you do need to make sure you cover all of the points. This will ensure a potential client has all of their questions answered when it is time for them to make a final decision.
A client will contact you because they are interested. Therefore, if a client ends up saying no to you, something happened within your client flow. A step was missed and you allowed the client to slip out. This is why you need to be confident that you have everything your clients need.
Your Ideal Client and Pricing
You have the choice to be the best, the cheapest, or the most efficient. You can’t be all three though. When you are setting up your pricing, you’re targeting your ideal client. Your ideal client is going to be able to afford you, especially if you are doing the right type of marketing.
Once you have your pricing in place, it is a good idea to do a profit analysis. Determine what your current profit margin is, so you know which direction you are headed in. This will allow you to make adjustments to your pricing and expenses, so you can be where you should be with your profits.
As soon as you have everything where you want them to be, you can work on the systems you have in place. This will ensure that everything is ready for when clients are walking through your door. Those systems will also allow you to re-engage with existing clients and transition those clients into more profitable packages. Those steps alone can help you increase your profit margin by 95%.
The reasoning behind that is those clients are your cheapest clients. They are already in the door and you don’t need to convince them of anything. They love you and want to continue to work with you.
You may be worried about increasing your prices right now in our current situation, but Erin says now is the best time! People are actually expecting price increases right now. Since you may only be operating at 25% or 50% capacity, your clients understand that you need to charge more.
Besides, you should have been increasing your prices every year since you opened and most likely, you haven’t been. A 3% to 5% price increase is normal. After all, your rent likely increases 3% every year and your taxes and expenses increase, so why shouldn’t your prices? So, now is the time to get your prices into current market value.
Learn from Erin’s experiences and price your services properly. You will have a healthier profit margin, can pay yourself more, and hopefully have systems in place that will allow you to work fewer hours than ever before!
It’s a win-win for you and your clients!
One of the most frequents subjects/question that has come up with my clients and peers recently is:
"What should I do with my EIDL loan?"
My observation is that many gym owners have moved on from the mindset of using the money for what it was intended - a short term solution to keep the business afloat due to decreased revenues from Covid-19, or as a cash reserve as we move into fall and the unknowns of a "second wave".
Instead the thought process has evolved to "how can I spend it?" New equipment, building renovations, signage and marketing campaigns are all ways I have seen it being spent. In many cases credit was not previously available through normal channels prior to the assistance programs the government is now offering. Think about that. Your business could not support additional debt pre-pandemic. Revenues are down which triggers loan assistance under new government guidelines, often very large loans for a small business. What makes you think you are going to be able to afford to pay that loan back?
All too often we are in the "monthly payment" mindset. We've been "taught" by those who are in the business of selling on credit - car dealers and real estate agents come to mind. It's not about what you need, it's "what monthly payment can you afford?" Look I have been sucked into this too. The whole point of the dance with the credit manager is to see what the maximum monthly payment you can "afford" is, and then find a house, or car, or refrigerator that stretches the upper limit.
I've heard it more than once about the EIDL loan as well. The argument goes "It's only about $700/mo to pay back the $150,000 they gave me." Yes, that's true. Over 30 years and total interest of over $100,000! That's like buying another house. No thanks.
This is a relevant subject as we work our way through the Fix This Next Business Hierarchy of Needs.
Question #4 on the Profit Level is;
"When debt is used, is it used to generate predictable, increased profitability?"
Answering this question requires some discipline and work. When choosing to take on debt in your business, there needs to be a clearly defined and achievable increase in profits in a clearly defined time frame. There also needs to be ongoing measurements so when that isn't happening, you can take action by either adjusting the plan or pulling the plug on any more money being flushed. It''s the difference between "spending", and "investing". When you invest, you expect a return. I would suggest that every dollar you use be approached with this mindset.
My job is to help businesses create cash management systems that guide strategic thinking and decision making around their money. Dancing with Debt is Dangerous. You have to take the lead, not let debt take control. Know what you are getting into and why. Run projections that prove the debt you are taking on is an investment, not just a spend. Know when it's time to cut your losses. And always have a plan for paying it back.
This week, we are going to be focusing on the year end. It is coming up faster than you think, since it is already the middle of October! I have four tips for you to be thinking about as you plan your year end. Well, I actually have five, but the last one is a bonus and it definitely won’t apply to everyone.
I think it is best to dive right in and talk about the things you can be doing right now. Basically, how you can prepare your finances for year end.
4 Tips for Preparing for Your Year End Plus a Bonus Tip
- Get Your Bookkeeping Up to Date
I know a lot of you have been putting this off. You’ve had a lot of other seemingly more important things to do this year. And I agree, I probably told you before that I don’t always do my bookkeeping every month or all of my financial tasks every month. They sometimes fall behind! But NOW is the time to get those caught up!
The way I would recommend you getting caught up right now is to actually start doing September’s bookkeeping. Just start there and then you can stay current. Then in November, you do October and December, you do November. In the beginning of January, you do December.
I’ve also done a little calculation for you. There are 11 weeks left in the year now. Let’s say you haven’t done any bookkeeping yet in 2020. So, you basically have January through August to do. If you do one month per week, you can take almost all of December off, because you will be all caught up by then. Or since there are holidays in there like Thanksgiving, Christmas, and New Year’s, you might want to plan to get your bookkeeping completed in the weeks around those holiday weeks.
So, figure out the weeks you are going to do bookkeeping. It is super important that you get it done before the end of the year. If you don’t do it before the end of the year, you are going to pay your tax preparer more to get your taxes done.
You can reach out to us to learn more about us doing this for you. We are currently doing a lot more historical transaction work right now. People want to be caught up before they get to their tax preparers and tax return.
- Talk to Your Tax Preparer at the End of the Third Quarter or the Beginning of the Fourth Quarter
This is something you need to be doing right now if you haven’t done it already! We always recommend our clients and every business owner, myself included, talk to their tax preparer at the end of the third quarter or the beginning of the fourth quarter. Do this when your bookkeeping is up to date, so they can look at your financial statements and give you a projection of what your tax bill is going to be. They can also tell you if you will be getting a tax refund. That would be really good news to have right now. The earlier you know this information the better. After all, if you’re going to owe money, you have the rest of the year to save that money up.
If you haven’t already been saving, or you haven’t been saving enough, we can make adjustments and get you on track.
When your tax preparer gives you an estimate in April or when they do your taxes, that’s based off of what they think is going to happen. Well, we all know that 2020 has not given any of us what we thought was going to happen!
So, take your financial records to your tax preparer and have a conversation with them about what they really think your tax bill is going to be based off of the actual results you have had in 2020.
This is also a good time to talk to your tax preparer if your revenue has significantly increased this year. That has happened with some of our clients. If that happened to you, now is the time to consider becoming an S Corp. It can be beneficial to change from an LLC or sole proprietor, depending on the numbers.
The bonus tip applies here, but only if you are already an S Corp. This designation requires you to pay yourself via payroll. (You cannot pay yourself via payroll if you are in a partnership, an LLC, or a sole proprietor.) If you haven’t been doing this yet in 2020, now’s the time to start and talk with us or your tax preparer. You might need to do some catchup payments as well.
The IRS is starting to crack down on that and they need to see reasonable compensation to you as the owner.
- Set Your 2021 Revenue Goals
We all definitely need to be setting 2021 revenue goals right now. I think we all had revenue goals for 2020 and we’ve had to readjust those. This is the time to look at what 2020 was actually like and make whatever predictions are reasonable for 2021. Set those revenue goals and then start to reverse engineer all of the things you need to do to hit those revenue goals.
I always start with the revenue as my goal and then say, “Okay, that means I can pay myself this.” Or maybe you start with your pay as your goal and reverse engineer it into your revenue.
Either one of those options is okay since they are interchangeable. It depends where your pay is currently, but then how many new clients does that mean you need and how many new leads does that mean you need? How much marketing should you then be doing to generate those leads?
Hopefully you have data to back it up. Say you want to get 48 new clients in 2021. That’s 4 new clients a month. So, how many leads do you need to sign up 4 new clients? It may be 8 or it may be more. Hopefully, the data you shows you exactly how many leads you have needed in the past to obtain the number of clients you want. Use that data to back up your goals for 2021.
Take the time in the fourth quarter of 2020 to be the CEO of your business and set those goals. Then reverse engineer to get all of those quarterly and monthly goals for 2021.
- Find an Accountability Partner
Finding an accountability partner is probably the most important thing on this list. Once you have your goals for 2021, you can report them to your accountability partner or group. If you don’t have an accountability partner or group yet, find one. They are the only thing that’s going to make sure you hit those goals. I have a blog post that shares how to find accountability partners, so give it a read if you need a little help finding your accountability partner.
These are the four things you must be doing in the rest of 2020 to end the year on a positive note and to make sure 2021 is as close to what you plan for as possible. Obviously, we have to readjust when things happen, as 2020 has taught us. But we can only adjust if we have a plan in the first place. If you don’t have a plan, you are only flying by the seat of your pants all of the time and that won’t be very helpful.
If you are struggling with ways to end your year in a good way and start 2021 strong, contact us today. We can catch up on your bookkeeping for you, so you never have these struggles again in the future.
Over the last few weeks we have been digging into the Profit Level on the Business Hierarchy of Needs. Question #3 relates to Transaction Frequency.
"Do your clients repeatedly buy from you over alternatives?"
As I considered how this question related to the fitness industry, I realized there are some layers to work through when it comes to answering that question.
It's no secret that there are many different options and modalities of training in our industry. Weightlifting, Powerlifting, Crossfit, Yoga, Pilates, HIIT; just to name a few. Attracting clients is one thing - keeping clients is a different thing altogether. We as consumers have pretty short attention spans, and are prone to chasing the "latest and greatest". In the fitness business it seems like there is some new fad coming out all the time. How do you keep clients from jumping ship and heading across town to the newest shiny object?
1. Know Who You Serve.
We have talked about finding the "sweet spot" in your business. Sometimes this is called a "Niche", but it's more than that. It's knowing what you do best and why, and finding clients who speak that same language. When you walk into our gym it looks very much like a Crossfit, but a dedicated Crossfitter would be very disappointed after a very short period of time training with us. That's ok. It's just not what we do, and trying to put a square peg into a round hole just isn't going to work. You can't be the only choice to everybody, but you can be the only choice to your ideal client.
2. Think Long Term Relationship
Relationships take work. It's not just a matter of signing up a new client and "setting and forgetting." Live up to your brand promise. Listen to what clients are saying. Genuinely care about your people. Remember details. And educate, educate, educate. If you don't want people "gym hopping" on you, you must be prepared to tell them why you do what you do, how that benefits them, and why alternatives may not suit them. You don't have to bash a competitor to explain why loaded box jumps might not be good for 60 year old knees. And it doesn't cost extra to care.
3. Build In "Longer Term"
There has been a move away from longer term contracts in the industry. "No commitment" is attractive to the consumer, after all. Now I am not saying you have to beat your customer over the head and try to force them to stay because they have a contract, but it does provide you some leverage. And it's more than that. From a training standpoint you know your clients need consistency over the long term to see results. Does it serve them well to offer punch cards and class passes, or would educating them up from about the importance of a training program be more beneficial? I can't answer that for you, however I believe the gyms that are setup for success long term don't just have random classes, they have a unified training philosophy. Yes, this requires more effort from the training staff and commitment from the client. That is a good thing because the client gets better results and you can charge more for those results.
4. Find Ways To Do More Business With Current Clients
What other ways can you serve the clients you already have? What are they purchasing elsewhere they could be buying from you? Supplements, equipment like foam rollers and bands, and nutrition coaching are just a few of the things you can bring in house and increase your revenue.
Creating a business where you are the "only choice" in the minds of your prospects and ideal customer will attract better clients, reduce churn, and put more money in your pocket. There are four ideas in this article. Which one can you put into action today?