Remember when you were getting ready to launch your business? The excitement that you felt? All the hard work you had been doing was finally coming to fruition. Your space was setup and ready to go. Your equipment was gleaming. Your programming was the best you had ever crafted. Website up and running - check. Billing system ready to go. Time to open the doors!
And people did show up. And it was all good. Until it wasn't.
You see the problem with people showing up is that they are, well, people! With all their quirks, problems, likes and dislikes and personalities. We human beings can just plain be hard to deal with sometimes.
Which is why it is so important that we focus on getting the "right" kind of people through our doors. The right kind of person for your business doesn't mean that they are a good or bad person. But they might be a less than ideal fit for you and your gym. Every gym I have ever been in has its own unique personality. I'd fit in some, others not so much. It is crucial that you get this right, or you are going to be wasting a lot of time when it comes to selling. If you are a power-lifting gym, and you are getting a lot of interest from prospects looking for Yoga and Pilates, your messaging needs to be tweaked, just a bit. 🙂
In the beginning we just want bodies in the door, I get it. But as your business grows, you'll want your message to be laser focused on the clients you serve best, AND the clients that will serve your business best. If your space is high energy, with lots of laughing and smiling and joking around, don't be afraid to show that personality in your marketing. You'll get more of those type of people in the door, which will only add to your already rocking place.
Look I know this isn't a new concept. Client "Avatar's" have been around forever. That's not in question.
What IS in question is have YOU done the work to create YOUR ideal client? The client who has that specific need that for who your company is the perfect solution?
When you do, and you craft your marketing so it speaks to that person, you'll attract the right kind of people to your business, save yourself a lot of time and money, make more sales, and create more profit.
Attracting prospects with that "Certain Quality" matters. We can help.
What are your company's sales goals?
You have one, right? Ok, I am going to go out on a limb here and say you do have a sales goal for your business. If you don't, no problem. I am going to explain to you the best way to set it.
For those of you who do have a sales goal, how did you arrive at that number? Was it based on past or current performance? What you have seen others achieve? What you thought sounded good? Something else?
I'll be totally honest. When I set the revenue goals for our gym, it was driven by nothing more than ego. In fact, in the beginning, it wasn't a revenue goal at all, it was the total number of clients. I figured when I hit 100 clients I'd be golden, never even taking the time to think what that actually meant revenue wise for the business. Or even more importantly, for me. (Yeah, I like to eat too).
It wasn't until I actually got to the "cord-cutting" stage until I considered it. In other words, I had been working another job that I relied on to pay the bills. I knew my take home and what I was making from that job. But how does that translate to the business? After all, $10,000/mo in revenue didn't mean I was going to be shoving $10k into my pocket. But what did it mean?
And that's where Lifestyle Congruence comes in. Fancy term, simple concept.
All it means is "How much does the business need to be generating for me to take home what I need to?"
In reality it's probably the simplest of all the Fix This Next questions to figure out. But that doesn't mean it's going to be easy.
First you need to figure out the personal income you need to support your personal level of comfort. This is a need based number, not necessarily wants - not yet. For instance, when I calculated this number, I found I actually needed less than what the old job was paying me which meant my goal could be lower.
After you have calculated your personal income number, you need to know how much business sales income you need to be able to do that. Here's an example:
You find that your personal comfort number is $5,000/mo - a nice round number.
Then you calculate how much you are paying yourself as a percentage of your business sales income.
Let's say your current revenues are $10,000/mo and you are paying yourself $2,000/mo.
That means your Owner's Pay% is 20%. (($2,000 / $10000) x 100%)
So to pay yourself $5,000/mo at that percentage you would have to generate $25,000/mo in sales revenue ($5000/20%)
$25,000/mo = $300,000/yr. You now have a sales number that is congruent with what your personal lifestyle number is. It is a realistic calculation of what your sales goal needs to be. Not a guess, or a hope or a dream. Real Life.
And of course that number can be adjusted and modified. Think of what can happen if you run your business leaner, and now can pay yourself 25%, or 30% or more? That is where the magic happens.
But you gotta know your numbers first. We have the tools and coaching to help you make that happen. Let's talk about it.
At the foundational level of the Business Hierarchy of Needs (BHN) is the creation of cash, otherwise known as Sales.
Does that word bug you? If so, as a business owner, you have got to get over it. You can have the best product or service in the world, but until there is an exchange of value - your customers money for your products and/or services, you don't even have a business.
And there is a lot more to sales than just getting the credit card number. In fact I would consider that somewhere in the middle of the whole process, especially for a service based business. My observation and experience has shown me that most sales and marketing strategies focus on two primary things; attracting prospect and converting them to clients. Makes sense, I mean that is what sales and marketing does, right? Yes, but on the other side of that are two very important "commitments" that must be kept.
1) Your Commitment To Your Client
The Fix This Next assessment asks this critical question: Do you fully deliver on your commitments to your clients?
In other words, do you consistently deliver your brand promise, and is the client getting what they paid for? In a gym setting, your retention % and churn rate are good indicators on how you are doing.
2) Your Clients Commitment To You
Do your clients pay on time, every time? Do you have to chase people for money? Do you have systems in place for getting paid and follow up processes for overdue clients? This is all part of the sales process. A sale is not complete unless and until both parties "keep their end of the bargain".
Remember I said "the sale" is the middle of the process? The back end of the process is the two commitments, so now let's talk about the starting point of the sales process.
The very first question on the Sales level of the BHN is also the one I see answered "no" to most often. Here it is:
"Do you know what the company's sales performance must be to support your (the business owners) personal comfort?"
This is what Fix This Next calls "Lifestyle Congruence", and it's the number you want to know first.
I'm not pointing fingers here. If you had asked me that question when I started my business I would have had no idea, or how to figure it out.
But without that number, your sales goals (and mine) are arbitrary at best. Heck when I started my gym I thought if I could just get reach $10,000 in sales a month I would be living large, without even thinking about how much that put in my pocket. Reality caught up with me pretty fast. Bills are real.
So here's how the Fix This Next sales "funnel" flows...
Delivering on Commitments
Collecting on Commitments
Having these 5 core sales needs satisfied is absolutely necessary to create the cash flow every business needs to establish a solid foundation. In fact this blog post is part of that whole flow. We are looking to attract business owners who are ready to take the next step and looking for guidance to solve their biggest business challenge.
If that's you, and you aren't absolutely sure what your biggest challenge is, take the free Fix This Next evaluation here, and I'll follow up so we have an opportunity talk about how to solve it. Let's get fixing!
Are you confident that you are making the best decisions and working on the right things to move your business forward, especially during these turbulent times?
Face it. The "Coronavirus Crisis" is real. I don't use the word crisis lightly. Small business is suffering. Fitness businesses are suffering. Your business is very likely suffering to some extent. Some of my clients have seen revenues drop 50% or more. I don't care how stone cold you are, that can cause a crisis of confidence.
The reality is that for many businesses, COVID-19 revealed shaky foundations. For over a decade, we have seen a largely thriving economy, credit has been easy to get and is cheap, and consumers have had a lot of disposable income. Because of that, many of the basics of good business got ignored; keeping a low debt-load, running expenses lean, building an emergency savings fund. All things that would make a big difference now. It is my hope those businesses that survive learn those lessons for next time. Yes, there will be a next time.
It is not my intent to pile on. We can't change the past. But we can chart a better path forward. The question is not "what did we do?", but "what can we do now to create even better businesses as we recover from the present crisis?"
During the best of times the biggest challenge business owners face is not knowing what their biggest challenge is. That certainly has been true in my business. We are subject to the "tyranny of the urgent", running around trying to put out fires, while never getting a handle on what should be the priority. This is called "The Survival Trap".
Does this look familiar?
There is a crisis in your business. You have run into a cash crunch. Your bank account is getting low and you need to raise cash fast. The obvious thing you need is more sales, right? So you try a bunch of different things to generate cash, focusing all your efforts on sales to cover your bills - for now. But you can only run so many sales, or deal with so many crappy clients, or hire so many outside experts. What are you going to do when it happens again next month, or a couple months down the road? Are you SURE it was a sales problem to begin with?
You can be.
A couple of weeks ago we posted an article about the Business Hierarchy of Needs, which outlined the five different core functions found in every business, and every fitness business.
Sales - The Creation of Cash
Profit - The Creation of Stability
Order - The Creation of Efficiency
Impact - The Creation of Transformations
Legacy - The Creation of Permanence
The goal is to have each one of these core functions working together seamlessly, so you can achieve permanent, healthy growth and move toward your company's vision.
In our example above, the low bank account may not have been a sales problem at all, but a cash management problem (the Profit level) or an efficiency problem (the Order level).
So how do you know? How can you create the confidence that the action you are taking is actually solving the real problem, not just covering it with a band-aid?
That's where the "Fix This Next" Assessment comes in. This powerful tool identifies the Next Vital Need in your business, so you can immediately know where to focus to level your business up. THAT is how you create confidence during crisis. Once you have identified your vital need, you can immediately put into action a plan to resolve that need.
So here's my ask. Take the Fix This Next assessment by clicking the button below. It's a series of 25 questions that covers all the levels of the BHN, and it won't take you more than 10 minutes. Stop guessing what your fitness business needs to level up and take action now.
Download the PDF for the for the best guide I've seen yet to decipher the CARES Act for business owners. Thank you to Verne Harnish for sending it over, and to Greg Crabtree of Simple Numbers, for sharing this resource.
Produced by our partners at MikeMichalowicz.com, The Recession Response is an action plan for small businesses to implement now to preserve and manage cash flow. I appreciate Mike and the team for responding so quickly to the current conditions caused by the Coronavirus pandemic
It's hard to believe that we are almost 3/4 of the way through 2019. In the US you just sent your quarterly tax payment in (it was due Sept. 16).
Or did you?
Take it from me, you DO NOT want to owe taxes to the IRS. I have been there, and it's the worst. Talk about sick to your stomach.
It's crucial you are proactive regarding your tax situation. Here's what you need to do going into Q4.
1) Check in with your accountant and/or tax preparer today and have them report to you on your tax position for the year so far. If you have grown this year it is very likely you will owe more tax than you have been sending in quarterly. Starting to prepare for that NOW will save on your antacid bill on April 15th.
2) If you haven't already, separate the taxes you will owe from your operating account. It's too tempting to "borrow" money from your main account and then never put it back. The minimum you should be putting away is enough to cover quarterly payments. Take it out of your Operating Account and leave it alone until you have to write that wonderful check to the tax man. You'll be glad you did.
Those two simple steps will help make sure you don't dread the next tax deadline, by being prepared and having managed your cash well.
Now go do it!
But to trust the process, you have to have a process that is proven to work, time after time.
When it comes to making every dollar count, do you?
In one of Eric Cressey's latest articles, he reminded me that "Bigger Isn't Better, Better Is Better", and went on to state...
"I think you're better off taking home 50% of a $500,000/year fitness business than net 5% on a $5 million/year one." Do the math. 🙂
Couldn't have said it better myself (no pun intended). A business that is 10x bigger is probably going to cause you a lot more than 10x the headaches, for the same take home.
Now I am not here to crush dreams. If you want a $5 million company that brings tremendous value and impact to the world, do your thing. All I am asking is you count the cost first. One of the mistakes I see many owners is chasing a big business before they nail down the fundamentals of business.
I used to think that getting bigger would solve all my problems. More income = more money = more flexibility, right? More stress, yes. More money in my pocket, not so much. As Profit First author Mike Michalowicz says - It's easier to control a $10,000 a month cash eating monster than a $100,00 a month cash eating monster.
Here's my advice.
Get REALLY good at what you do when your business is small. Perfect your craft. Develop your systems. Crush your debt. Learn to use every dollar to its maximum potential. You may find nailing down those skill gives you exactly the business you want. And if you do decide to scale, they will give you the foundation to do it right.
Better Before Bigger.
Because bigger isn't better. Better Is Better.
The original meaning of the word "coach" was as a description of transportation; a means of getting from Point A to Point B.
The same applies to a coach as we usually hear it today. A football coach, a basketball coach, a business coach. They all are trying to get their players/clients from Point A to Point B; from a good player to a great player, from flawed mechanics to good mechanics, or from one level of success to another.
My role as a Profit First coach is no different. It's to get your business to next level.
The truth is most of us didn't get into business to crunch numbers all day, and struggle to answer financial business questions like;
How much should I be making as the owner?
How do I know if I have a healthy profit margin?
Am I going to have enough for taxes this year?
Can I afford to hire some more people?
When is it the right time to scale?
Will I be able to sell my business and retire?
Not knowing that stuff kinds sucks, and usually leads to a lot of second guessing.
So I help solve that problem by coaching you through a system so you can easily manage your cash and give a purpose to every dollar you make.
The biggest benefit? The two "C's" - Clarity, and Confidence.
Clarity around your finances; we take the complicated right out of the equation. That clarity in turn creates the Confidence you need to hit your goals, grow your business, and keep more of your money.
Get from Point A to Point B. Faster and more easily.
If that sounds good to you, let's talk. Just click the button below.