THE 5 SHIFTS

Franchise gyms—the Orange Theories, F45, Curves, Zumbas of the world—seem to be everywhere these days.
They are designed to take on 300 new members on opening day. They are not designed to be sustainable or even profitable in the long run.

They are designed for investors to sell franchises and earn a return on investment in a short period of time. They are not designed to retain clients, or to create a professional class of coaches with the ability to earn a professional wage.

The independent gym has so much more to offer than this. We have the opportunity to develop a professional class of coaches—coaches who build relationships with endocrinologists, neurosurgeons, orthopaedic surgeons, physical therapists, Registered Dietitians etc, and work to bridge the gap between the medical community and the gym.

This long-term, ethical, responsible approach to developing a professional gym also provides the best long-term return on investment for the small business owner.

Exercise and diet delivered by a professional coach—not a Fitbit or the latest fitness app—is what is required to reverse and prevent obesity and Type 2 diabetes, and help ordinary people avoid hip replacements, knee replacements, chronic pain and other all too common ailments.

If you’re an independent gym owner, who is having a hard time getting past 120-150 members, you find yourself paying the bills but aren’t thriving, and you’re struggling to develop full-time coaches and end up doing everything yourself, consider a new path with these 5 shifts.

Switch from short-term to long-term thinking

There needs to be a mindset shift away from mass scalability, and constantly searching for new leads to creating a sustainable business that retains coaches and clients and can function even if you, the owner, are not present.

All business decisions must be designed for everyone to win

This means every decision must consider the success of the coach, the client and the business.

This success can be measured through these 6 key performance indicators (KPIs):

1. Client retention
2. Average client value (ACV)
3. $ per coach hour
4. Total coach pay
5. Business profit (EBITA) (earnings before interest, taxes, and amortization)
6. Business value

Attract and retain high value clients

KPI’s #1 and #2: The focus needs to shift from being about bringing in as many leads as you can to being about client retention and increasing ACV.
Good numbers to strive for include:

  • 80 percent annual retention (the industry average is 30 percent)
  • ACV: $300/month (the industry average is $135)

Attract, develop and retain professional coaches

KPI’s #3 and #4: To create true professionals, you need:

  • A coach compensation model that allows them to earn a professional wage (percentage of revenue on all clients for the lifetime of that client)
  • A coach co-op that allows coaches to share the workload and operate like a co-op in a law or engineering firm, and
  • Professional coach development through mentorship and education (including both technical training and sales training).

The Business must be profitable

KPI’s #5 and #6: The business needs effective client and coach development processes (measured by KPI’s #1, #2, #3 and #4) to flourish and be profitable.

This means the business needs a minimum of 20 percent business profit. Secondly, business value must eventually be high enough that owners can one day sell their business, retire comfortably, and leave a legacy of having created a sustainable, ethical, profitable business for the next generation.

“THE 5 SHIFTS EXPLAINED” WEBINAR

The 5 Shifts

Shift 1: Switch from short-term to long-term thinking

There needs to be a mindset shift away from mass scalability, and constantly searching for new leads to creating a sustainable business that retains coaches and clients and can function even if you, the owner, are not present.

Shift 2: All business decisions must be designed for everyone to win

This means every decision must consider the success of the coach, the client and the business.

This success can be measured through these 6 key performance indicators (KPIs):

1. Client retention
2. Average client value (ACV)
3. $ per coach hour
4. Total coach pay
5. Business profit (EBITA) (earnings before interest, taxes, and amortization)
6. Business value

Shift 3: Attract and retain high value clients

KPIs #1 and #2: The focus needs to shift from being about bringing in as many leads as you can to being about client retention and increasing ACV.
Good numbers to strive for include:

  • 80 percent annual retention (the industry average is 30 percent)
  • ACV: $300/month (the industry average is $135)

Shift 4: Attract, develop and retain professional coaches
KPIs #3 and #4: To create true professionals, you need:

  • A coach compensation model that allows them to earn a professional wage (percentage of revenue on all clients for the lifetime of that client),
  • a coach co-op that allows coaches to share the workload and operate like a co-op in a law or engineering firm, and
  • professional coach development through mentorship and education (including both technical training and sales training).

Shift 5: The Business must be profitable

KPIS #5 and #6: The business needs effective client and coach development processes (measured by KPIs #1, #2, #3 and #4) to flourish and be profitable.

This means the business needs a minimum of 20 percent business profit. Secondly, business value must eventually be high enough that owners can one day sell their business, retire comfortably, and leave a legacy of having created a sustainable, ethical, profitable business for the next generation.

© 2017 Madab Business Group Inc.

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