WEBVTT

1
00:00:00.000 --> 00:00:03.680
So even though you get permission to open back up, it doesn't mean that you're

2
00:00:03.680 --> 00:00:06.800
necessarily going to have the profit to be able to do so.

3
00:00:06.800 --> 00:00:09.280
Welcome to the Jim Secrets Podcast where you talk about how to get more

4
00:00:09.280 --> 00:00:12.160
customers, how to make more per customer, and how to keep them longer,

5
00:00:12.160 --> 00:00:15.520
and the many failures and lessons that we have learned along the way.

6
00:00:15.520 --> 00:00:18.640
I hope you enjoy and subscribe.

7
00:00:18.640 --> 00:00:22.000
Going everyone, welcome back. So I want to make this

8
00:00:22.000 --> 00:00:26.000
video because I in our community was talking yesterday about the math behind how

9
00:00:26.960 --> 00:00:31.840
how many sessions you should have as you're reopening to make sure that you are profitable.

10
00:00:31.840 --> 00:00:35.600
So one of the big issues that's going to come up is a lot of different states have

11
00:00:35.600 --> 00:00:38.800
different recommendations. Some of them are based on percentage of capacity,

12
00:00:39.680 --> 00:00:44.480
you know, reopening through COVID. Some of them are, you know, limited to 10 people or it's

13
00:00:44.480 --> 00:00:49.280
the greater of the two or the lesser of the two excuse me. And so what that does is it

14
00:00:49.680 --> 00:00:57.520
creates a lot of issues for most gyms because the profit model is not built for large group

15
00:00:57.520 --> 00:01:01.840
training to not be able to do large group training. All right. And so what I mean by that is

16
00:01:01.840 --> 00:01:07.920
if you're charging, let's say, $5 a session or $10 a session for what it would work out to in

17
00:01:07.920 --> 00:01:13.440
terms of the attendance for your $100 a month clients, if you're only able to have 10 people per

18
00:01:13.440 --> 00:01:17.760
session at your facility, that would include you and probably one other person. So now you're down

19
00:01:17.760 --> 00:01:24.560
to eight. Now, if you're providing one on eight service, it doesn't make monetary sense for you

20
00:01:25.440 --> 00:01:30.560
to be in business, right? So even though you get permission to open back up, it doesn't mean that

21
00:01:30.560 --> 00:01:34.240
you're necessarily going to have the profit to be able to do so. So if you were to come back to

22
00:01:34.240 --> 00:01:39.920
your full client schedule, when you come back, you probably won't be profitable. And so this is

23
00:01:39.920 --> 00:01:44.960
how you reopen the right way. Okay. So there's two main components of this and I'll go through each one

24
00:01:45.920 --> 00:01:52.720
as in depth as I can. All right. The first is what I was mentioning just now. If you're only able to

25
00:01:52.720 --> 00:01:58.560
have 10 people per session, then you need to price your services at the price that that service

26
00:01:58.560 --> 00:02:04.000
would be normally offered. So if people are normally paying $129 a month at your facility or $150 a month

27
00:02:04.000 --> 00:02:10.720
or whatever, for unlimited, and you're only able to have 60 people a day, your gym if you had

28
00:02:10.720 --> 00:02:15.520
six sessions a day, for example, those sessions, you can't even have 60 because you're going to

29
00:02:15.520 --> 00:02:19.920
be included in that. So now you're talking, you know, 50 people a day that you can service,

30
00:02:19.920 --> 00:02:25.440
which means you can only service 50 customers. All right. So if you're having a one on eight

31
00:02:25.440 --> 00:02:31.520
scenario, then you need to charge $300 or $400 a month for that service as long as that happens.

32
00:02:31.520 --> 00:02:35.600
Now, here's the good news. The people who will want to come back are going to be itching to come

33
00:02:35.600 --> 00:02:38.720
back. Not everyone is going to come back, but the people who do want to come back desperately want

34
00:02:38.720 --> 00:02:43.520
to come back. And so they'll likely you'll have the supply demand curve in your favor, meaning

35
00:02:43.520 --> 00:02:48.800
there's more people who want you than there is availability of time for you to be able to train clients.

36
00:02:48.800 --> 00:02:52.640
All right. And so when you have supply demand in your favor, then it means you can increase your price.

37
00:02:52.640 --> 00:02:58.880
Right. And so those things work together for kind of scenario one. Okay. If you are limited and can't

38
00:02:58.880 --> 00:03:04.880
do like that many people per session, etc. Okay. You need to adjust your price to reflect the level

39
00:03:04.880 --> 00:03:09.280
of service being provided, not just letting people back into their old price because it doesn't

40
00:03:09.280 --> 00:03:14.560
make monetary sense. Okay. Now, what I'm going to do is talk about the second piece, which is how do I

41
00:03:14.560 --> 00:03:19.760
know when it makes monetary sense? So one of the things in the Jim want secrets book in section two,

42
00:03:19.760 --> 00:03:24.400
which is the profit levers, which I would highly encourage you to read before you reopen because

43
00:03:24.400 --> 00:03:27.760
it'll allow you to fix everything that you did wrong in your gym. This is one of the biggest

44
00:03:27.760 --> 00:03:33.520
opportunities all time for people who own a gym because right now society is giving you permission

45
00:03:33.600 --> 00:03:39.520
to change all these things in your gym at once and then restart the right way with the right price

46
00:03:39.520 --> 00:03:44.960
points, the right hours, the right amount of people per session, all of those things done right

47
00:03:44.960 --> 00:03:49.040
so that you can maximize the profit and capacity of your facility. All right. So this is like never

48
00:03:49.040 --> 00:03:54.960
before will you be able to get this opportunity to take it. Please take 35 minutes and read section

49
00:03:54.960 --> 00:03:59.760
two of the Jim want secrets book. It's free plus shipping. Go read it. All right. Now,

50
00:04:00.080 --> 00:04:05.040
here's the here's one of the biggest pieces that I have to provide for you. Okay.

51
00:04:06.560 --> 00:04:11.280
You want to make sure that you're making an 80% gross margin minimum on your services. All right.

52
00:04:11.280 --> 00:04:15.600
This is this has been a rule of thumb that we've used a gym lunch forever. If you are running on

53
00:04:15.600 --> 00:04:19.600
that, then you will be able to make a profit and have a good business if you do not. And you're like,

54
00:04:19.600 --> 00:04:24.160
well, we're at 75. I'm telling you every percentage point makes an enormous difference. So let me give

55
00:04:24.160 --> 00:04:28.560
you an example. If the average gym is running on 12.5% margins per year, all right. That's the average

56
00:04:29.040 --> 00:04:37.280
if you go from 75 to 83% margins, then you added 8% to your bottom line. So if you were from 12 to

57
00:04:37.280 --> 00:04:41.840
20, that would be a very big deal, right? It'd be almost twice as much money. So these percentage

58
00:04:41.840 --> 00:04:47.760
points matter. All right. So for us, now mind you, you can set the number whatever you want. My rule

59
00:04:47.760 --> 00:04:53.040
of thumb is minimum 80. If you want to be at 85 or 90, by all means, go for it. All right. It's

60
00:04:53.040 --> 00:04:56.880
your business. You can set it up the right way. But let me walk through a simple math example to

61
00:04:56.880 --> 00:05:02.400
explain to you exactly how many sessions you can know by math that you can reopen at any given

62
00:05:02.400 --> 00:05:07.920
moment. Okay. So if you have, let's say 150 customers before this and then you reach out to all

63
00:05:07.920 --> 00:05:12.080
of them and only a hundred want to come back. Cool. So let's say those hundred who have said,

64
00:05:12.080 --> 00:05:15.920
yes, I want to come back and build my card now. All right. Are building it a hundred dollars

65
00:05:15.920 --> 00:05:19.600
a month. I don't recommend that price point, but I'm saying if that is what they are saying,

66
00:05:19.600 --> 00:05:25.040
then that's what we're going to work off for the money math. All right. So it's $10,000 a month

67
00:05:25.040 --> 00:05:30.080
of recurring revenue that you have built in. Now, if you're running an 80% gross margin,

68
00:05:30.080 --> 00:05:34.800
that means that on the cost of delivering the services that doesn't include rent that doesn't

69
00:05:34.800 --> 00:05:40.160
include admin, it doesn't include marketing, just your hard cost of fulfilling a session. All right.

70
00:05:40.960 --> 00:05:48.480
Is 20% or less of what you are paying or what you are making. Okay. So what that means is if you're

71
00:05:48.480 --> 00:05:55.760
making $10,000 a month for your services, then it should cost you $2,000 a month or less to fulfill

72
00:05:55.760 --> 00:06:02.000
those services. So if we know that we only have $2,000 that's earmarked for payroll for fulfillment

73
00:06:02.000 --> 00:06:08.160
of those services and you know it cost you $20 per session, that means you have a hundred sessions

74
00:06:08.160 --> 00:06:13.360
that you are able to fulfill on per month. Now, if we're going to be smart about this, then we're

75
00:06:13.440 --> 00:06:18.480
going to divide our hundred sessions by 4.3, which is how many weeks there are per month on average,

76
00:06:18.480 --> 00:06:24.560
which means we have 23 sessions per week that you're going to be able to fulfill. All right.

77
00:06:24.560 --> 00:06:28.960
Given the number of people and the amount of revenue that's being brought in that is already

78
00:06:28.960 --> 00:06:33.280
happening, I don't go off of promises. I'm begging you, go off of reality.

79
00:06:36.160 --> 00:06:40.160
Hey, if you're a return listener and you have not rated or reviewed the show,

80
00:06:40.160 --> 00:06:44.000
I want you to know that you should feel absolutely terrible about yourself and everything

81
00:06:44.000 --> 00:06:47.440
else in the world. I'm kidding. But it would mean the absolute words to me if you guys would go

82
00:06:47.440 --> 00:06:49.920
ahead and do that. You don't even have to pause to show you. Keep listening and you can just do

83
00:06:49.920 --> 00:06:53.520
it with your thumb right now. It'll take you less than 60 seconds. And like I said, the only way

84
00:06:53.520 --> 00:06:58.000
that podcast grows through word of mouth and this is you joining hands with me and helping

85
00:06:58.000 --> 00:07:02.160
as many entrepreneurs as a possible can because no one is coming to save us. It's just us. All right.

86
00:07:02.160 --> 00:07:04.160
So please go do that now and let's get back to the show.

87
00:07:05.120 --> 00:07:10.960
All right. You're going to have like some people's cars won't go through because things have

88
00:07:10.960 --> 00:07:13.760
changed over the last two months. Some people will say they're going to come back and then don't.

89
00:07:13.760 --> 00:07:16.880
Some people are like actually got to wait for my kids blah blah blah. All right.

90
00:07:16.880 --> 00:07:22.400
Go only off of reality. Go off of what goes through. So you get everyone in. You start

91
00:07:22.400 --> 00:07:25.920
there billing and then you see what happens and then you dictate the schedule, right?

92
00:07:25.920 --> 00:07:31.040
If you can do that. If you can't, then you're going to have to downgrade your estimation by how

93
00:07:31.040 --> 00:07:35.200
much you were making before with all of the cancellations included and then drop another 10%

94
00:07:35.200 --> 00:07:42.080
just in case and then use that as the number to base this off of. So $10,000, $2,000 for payroll.

95
00:07:42.080 --> 00:07:47.760
That means if we're getting $20 a session, that's 100 sessions. We divide that as per month by

96
00:07:48.480 --> 00:07:54.560
the number of weeks in a month, which is 4.3. So we have 23 sessions per week. Okay. And so you

97
00:07:54.560 --> 00:07:57.600
can allocate those. Let's say that we've got five days a week, Monday through Friday,

98
00:07:57.600 --> 00:08:02.800
that might be normal hours. All right. So on those days, let's say we did four sessions today,

99
00:08:02.800 --> 00:08:07.200
two in the morning, two in the afternoon. So now we got 20 and we got three leftover. And so we

100
00:08:07.200 --> 00:08:12.880
can go three on Saturday, right, in the morning. If that's what we wanted to do, right? And so just

101
00:08:12.880 --> 00:08:18.320
like that, you can get your payroll and you can get your business to a point where you have an 80%

102
00:08:18.320 --> 00:08:23.600
gross margin or higher, right? And so like I said, that is the minimum. But that is the way that you

103
00:08:23.600 --> 00:08:29.200
can know in your gut, they are opening up in a position to be profitable. Now, if you've done

104
00:08:29.200 --> 00:08:33.200
the math and you're like, you know what, I can only have $10,000 a month recurring and my red is six.

105
00:08:34.080 --> 00:08:38.160
Well, then you're probably not going to start a profitable anyways. And so at that point,

106
00:08:38.160 --> 00:08:42.320
you're going to have to make harder decisions of like, do I want to do a big presale and then

107
00:08:42.320 --> 00:08:48.400
get another, you know, 50 or 100 people pre sold on a trial to be able to monetize this.

108
00:08:49.280 --> 00:08:54.240
And that's where cash is really important, right? But big picture, most of you don't have that

109
00:08:54.240 --> 00:08:58.240
situation. And if you did have that kind of rent, then hopefully your revenue is higher than that,

110
00:08:58.240 --> 00:09:02.080
hopefully your price is higher than that, et cetera. But that's how you, that's how you can

111
00:09:02.080 --> 00:09:06.640
figure this out. And most people do this wrong. Most people are like, I'm trying to open up as many

112
00:09:06.640 --> 00:09:11.600
available times, right? Or the worst scenario you can have is, and this is what I feel like it's

113
00:09:11.600 --> 00:09:15.680
going to happen for a ton of people is I'm going to be limited to 10 people per session. I've got a

114
00:09:15.680 --> 00:09:21.040
hundred clients. I'm going to increase my overhead so that I can have 10 sessions a day so I can

115
00:09:21.040 --> 00:09:26.800
see all my clients and there goes your margin forever. And then how do you transition back and

116
00:09:26.800 --> 00:09:32.480
having to cut sessions, right? It's not a good way to do it. Start as little as you can. Start with

117
00:09:32.480 --> 00:09:38.320
two sessions a, start with 90% margins, right? That's fine. It's okay. Start with 90% margins to

118
00:09:38.320 --> 00:09:42.800
work at two sessions a, and work your way back. Start at three sessions a day, whatever, right?

119
00:09:43.600 --> 00:09:47.920
And so from there, this is one of those beautiful opportunities that if you ever had that session

120
00:09:47.920 --> 00:09:52.960
that never really had good attendance, right? Cut it, right? Cut it. Get your margin back, right?

121
00:09:52.960 --> 00:09:58.160
And like, I just want everyone like thank COVID, like sure, there are things that you probably

122
00:09:58.160 --> 00:10:04.000
wish didn't happen. Okay, but, but take what you can, right? Right now you can click reset on your

123
00:10:04.000 --> 00:10:07.520
business. These are the five things that you need to do right now, right? I'm going to give you

124
00:10:07.520 --> 00:10:12.400
the, the cliff notes and what you need to do. One, you need to switch from unlimited to two or three

125
00:10:12.400 --> 00:10:16.880
times a week is your main offer, all right? Because right away that'll double or triple your capacity.

126
00:10:16.880 --> 00:10:21.360
Two, you need to switch your billing to a weekly cadence. Now, it doesn't have to actually be weekly,

127
00:10:21.360 --> 00:10:26.400
but it has to be on a weekly by weekly or four, or every four week cadence. Why? Because if you do

128
00:10:26.400 --> 00:10:31.440
it on every 28 days, you're going to get 13 billions a year instead of 12, which means you get an extra

129
00:10:31.440 --> 00:10:37.440
of almost 8% in top line revenue for the same amount of service, right? What that means is if you

130
00:10:37.440 --> 00:10:42.240
have a 12% margin, you get an 8%, now you're at 20, all right? Almost doubles how much you make

131
00:10:42.240 --> 00:10:48.240
just from that one change, right? Each of these levers is like that, okay? So unlimited to two to

132
00:10:48.240 --> 00:10:55.280
three times a week, you're going to switch to a billing cadence of weekly by weekly or 28 day cycles.

133
00:10:55.280 --> 00:11:00.320
You're going to change your pricing to match your service, all right? Which means when you make

134
00:11:00.320 --> 00:11:04.880
these adjustments, typically when you limit people's sessions, fewer people show up, which then

135
00:11:04.880 --> 00:11:10.000
means that a number of people per session goes down, which means your value goes up. And so that

136
00:11:10.000 --> 00:11:14.560
means that you can bill more, believe it or not, because people change, it changes the value

137
00:11:14.560 --> 00:11:18.640
proposition to the end user. So just remember that you're not cutting sessions, you're adding value

138
00:11:18.640 --> 00:11:22.480
by making it more personalized because the sessions are going to be smaller and more controlled,

139
00:11:22.480 --> 00:11:28.240
okay? And so when you do that, my minimum recommendation is 167, all right? That's my minimum,

140
00:11:28.240 --> 00:11:34.000
bare minimum, bare, bare, bare, bare, bare minimum, which works out to $39 a week, all right?

141
00:11:34.000 --> 00:11:40.000
Bare minimum. Most people will be at $49 a week or $59 a week or $69 a week, okay? And that's

142
00:11:40.000 --> 00:11:44.480
what you can do for those, and that's what the overall pricing would be. So if you did it at

143
00:11:44.480 --> 00:11:50.480
$49 a week, be $49.99, don't forget your $99 cents, all right? Which means you're going to be $199.99

144
00:11:50.480 --> 00:11:59.760
every 28 days, all right? Beyond that, if you typically have exercise is that you use that you

145
00:11:59.760 --> 00:12:03.360
wanted to get rid of because they take too much space up and they eat too much square footage.

146
00:12:03.360 --> 00:12:09.040
This is the time to get rid of those things and take them out of the program in terms of your

147
00:12:09.040 --> 00:12:15.600
sessions, instead of being 60 minutes, cut them to 45, all right? It'll also increase your capacity

148
00:12:15.600 --> 00:12:20.880
and decrease your payroll. So all of these things are things that you can do right now doing it

149
00:12:20.880 --> 00:12:26.160
the right way, starting with the right price, with the right services, the right amount of sessions,

150
00:12:26.160 --> 00:12:31.040
the right margin, so that you can actually come out of this profitable or even more profitable

151
00:12:31.040 --> 00:12:35.200
than you did before. Every person who goes in and tries to increase the amount of sessions

152
00:12:35.200 --> 00:12:39.440
they're doing, keep the pricing the same and then have more individualized service that they're

153
00:12:39.440 --> 00:12:45.200
going to do is going to go out, right? The math doesn't support it. And so just like if I can

154
00:12:45.200 --> 00:12:49.520
give you one thing, just trust the math, right? You will be able to make a profit, build a

155
00:12:49.520 --> 00:12:53.120
provide more value to your customers and actually get through this so you can grow your gym,

156
00:12:53.200 --> 00:12:59.200
which hopefully is your goal. So that's part one of how to reopen the right way,

157
00:12:59.200 --> 00:13:03.840
is structure everything properly. I'll probably make another video on how to market and sell before

158
00:13:03.840 --> 00:13:09.360
that. But right now, make sure to get this stuff right. If you get the book, there's a letter inside

159
00:13:09.360 --> 00:13:14.640
the book on how to communicate the changes. You can literally copy it, go for it. It's my gift to

160
00:13:14.640 --> 00:13:19.040
you. But yeah, if you don't know where the book is, just go to Alexisbook.com. There's a free book

161
00:13:19.120 --> 00:13:23.680
there. I think it's on Amazon too. If you do, by the way, you review lots of love.

162
00:13:23.680 --> 00:13:27.360
Anyways, happy Wednesday. When did the next thing I got that out for you and keep being awesome.