Episode 329

5 Most Common Gym Owner Mistakes with Mark Fisher

In this episode, Mark Fisher joins me to talk about the 5 most common mistakes that gym owners make.

[00:00:00] Hello, my friend on today’s episode, I’m speaking with Mr. Mark Fisher, and he is sharing the five most common gym owner mistakes. This episode is a great episode. If you want to learn from all the mistakes that we have made in running our gym over the years and the mistakes we’ve heard other gym owners make in our unicorn sighted group, this is a great episode for you to take lots of notes and avoid the pitfalls that we’ve experienced.

So keep on listening. It’s a great episode.

Welcome to the business for unicorns podcast, where we help gym owners unleash the full potential of their business. I’m your host, Michael Keeler. Join me each week for actionable advice, expert insights, and the inside scoop on what it really takes to level up your gym, get ready to unlock your potential.

And become a real unicorn in the fitness industry. Let’s begin.[00:01:00]

Hello, fitness business nerds. What’s up? Welcome to another episode of the business unicorns podcast. I’m back with Mr. Fisher. How are you today? My friend doing great today. Before we dive in, I just want to give a quick shout out to our email list. I feel like our emails crush Fisher puts out several emails per week that are full of super valuable, tactical, actionable takeaways.

We also put out content from Pete on a regular basis. So I know you all love from this podcast. We also put out a recap every weekend that tells you what you missed for the week. So even if you only want to get on our email list to get our weekly Saturday recaps, I think it’s valuable. So you can go back and see High level takeaways from all the things we talked about in a given week.

So click the link in the show notes, join our email list. If you’re not already on it and share with all your fitness friends who also would benefit from being on our email list, which actually is a great segue to today’s topic, coincidentally, which is one of the emails Mark sent out recently, I thought it was so valuable that we’re going to talk about it today.

And the email title was the five most common [00:02:00] gym owner mistakes. And so we’re just going to dive right in because I think that topic speaks for itself. And number one is that your prices are too high. Fisher, why everyone’s price is too high, too low. I said, everyone’s prices are too low. Prices are too high.

You’re charging thousands of dollars. No one will pay for what you’re charging. You’re giving too much value. There’s a bunch of reasons for it. Like the knee jerk one, which is usually correct is because most people set their prices by looking at what their competitors are charging down the street and they charge a little bit less and a lot of people, what they charge is tightly wound up and.

A lot of their sense of self worth and money, and they’re very A lot of people for very understandable reasons, get very afraid thinking through about what these sales conversations will look like and people being angry at them because they’re charging too much money. And I think that all makes a lot of sense.

But in practice, a lot of people nonetheless are charging such a little rate for their monthly [00:03:00] membership. That’s. The business just doesn’t work. And there’s probably room for debate around what is too low at this free occurrence. We have some models that we use because to some extent you can map the price per month to how many people you can fit in per session.

So to state the obvious example, if you can fit in. 30 people per class, which I don’t know, that’s a great idea, but if you can, you have a lot more capacity in theory and can play more volume game and have a slightly lower monthly rate. Whereas if you’re only doing, for instance, one on one for your business to work, you’re gonna have to charge a lot more.

So although I think there probably is some room for debate around what those numbers are, and we certainly have ours, I think that regardless in our experience, it is very rare that the people we see are in line with the numbers we would recommend. And I think even giving a charitable room for differences of opinion.

I think most gym owners by any stretch of the imagination, even by people that don’t have the numbers we would offer as benchmarks would say that most gym [00:04:00] owners are massively underpriced. And that is a lot of downstream issues, right? To say nothing of like your ability to pay yourself appropriately, your ability to have a team that’s paid appropriately, your ability to have some freedoms that you’re not chained to the business.

A lot, a lot of issues downstream. If you’re not charging enough for your base services. Yeah, 100 percent and the benchmarks that we use that I think you listed in the email are on average We see for like small group personal training around 300 per month per client as a membership fee on average and for classes around 175 per month for the larger group class again, it’s an average It’s a benchmark But I think if you’re nowhere near those for those services you might want to do some looking and we also have a free tool On our website called our raise your rates playbook So if you just go to business unicorn or click like I’ll put it in the show notes.

So in the show notes, we’ll put a link to the raise the rates, uh, playbook and that’s a roadmap to just raising your rates, which you should be doing it for a year anyway. And if I can offer one other quick hit about those, just one other quick hit thing about those benchmarks. [00:05:00] When we say 300 for small group personal training, understand we’re basing that on six on one.

And when we say 175 people for group classes, we’re basing on that 20. people per class or more. So I also want to highlight that because sometimes people are like, Oh yeah, I’m good. I’m doing amazing. I’m charting. I’m a little under it’s 165, but that’s pretty good. But then you look at their business and they’re like, but you’re only doing nine people can fit in your class.

But that’s actually closer to small group numbers, right? Or small group. If you’re doing three on one, which by the way, can be a good way to go, right? There’s actually strong arguments you made, frankly, for a four on one. Yeah. The charge is even more money. It’s a little bit less of a volume play. You need less clients.

You will have to charge more per month. So retention is going to be a little bit more of a grind, but you could argue you can get closer to true one on one with four on one and six on one. So it’s not our preferred model. I think we prefer six on one generally, but I just want to highlight that because again, if you’re like, Oh, I’m doing, I’m doing a lot of.

Three on one and I’m doing 270 per month. That’s not quite there, but it’s almost there. Now we have trouble here in River City because you do the math of it. Again, it’s going to be very [00:06:00] hard for you to have sufficient margin to run your business. Yeah, 100%. That’s why benchmarks are so challenging right there because it leaves out the context, which is different for all of us.

But I think just making sure that you have a model where the math works. Yeah, it’s really critical. Yeah. That’s number one, which is your rates are too low. Number two, big mistake that we see a lot is that you expand too soon. So walk us through what does, what is the right pace of expansion look like?

Yes. It’s interesting. Cause again, the, this is a big bucket. If I were being less a click baity person and trying to put everything in buckets, I probably would. delineate these different kinds of expansion because they’re actually all different, but I think they all stem from the same incorrect thinking that we map out.

Okay. I’m really not quite ready to expand X thing, but I’m pretty sure in six months we’ll be there. So I’m just going to go ahead and do it and be prepared for the business that I know is certain to come once I, I make this change for this demand I know is coming. And examples of might be Adding in sessions before you really need to, right?

So if your utilization is too low and [00:07:00] you don’t have enough people in the sessions, as is Billy says, he wants to train on Mondays at 2 PM and you’re like, okay, I will get this other client would be X per month. If I do the math of it just makes sense to offer it. By the way, we prepare for all this other business is going to come in when I open up these class times.

And usually that’s not going to be the case. Some other examples of this are adding services. Without sufficient demand, right? A classic thing here is people being like, my clients need nutrition. And by the way, forgive me, father, I have sinned here too. So we add in this nutrition program and ultimately there aren’t enough people willing to pay what you need to charge to make it sense.

And now you run into issues. And of course the classic ones deal with. space. So the most notorious one of course is thinking that if my first location is not doing good, if I add a second one to which I always say the metaphor, this is very much akin to, I’m having trouble in my marriage. I think if we open up the relationship and we, and I have a girlfriend that will make it much easier to navigate these issues with my wife.

And based on the experience of, Many people, I know it doesn’t [00:08:00] actually seem to work like that, actually, in spite of what you might think. So anyway, those are a little complicated. I’m not saying it ever. Yeah, I think, yeah, I think those are really great examples for sure. And I think all too often we talk to gym owners who have like a, if I build it, they will come mentality.

And oftentimes we’re trying to convince them like, no, you should. Sell it and then start building it. You have to create the demand. The demand doesn’t come from capacity. And so I think you need to capacity can trail demand. That’s okay. And people are just so fearful of like having clients and not enough times.

Adding times is much easier than getting clients. So focus on that part first. That’s a great one. All right. Number three is all about staff compensation and quite often your staff compensation is just wrong. It’s just the ratios are wrong for being profitable. So walk us through this one. Yeah, so a lot of people just pay their staff too much because most of us make the mistake where my boss wasn’t paying me enough, I’m going to do better with my team.

And then we decide, Oh, I’ll, I’ll pay out [00:09:00] 80 cents on the dollar because you’re doing most of the work, not factoring the fact that a fully loaded payroll, depending on your state is going to be easily another 10 to 15 percent on top of that. So it’s okay. 92 and then 3 percent for credit card fees. Oh, that’s 95.

And then if you’re doing any kind of benefits, but I realize it’s not common, but let’s shoot for the moon here. You literally might be in the hole at that rate. And in practice, you might think, okay, but I do 55%. That’s better. But even so, when you back out the math, play the same game again, let’s say it’s, let’s say it’s 5 for the payroll taxes.

And then another 3%, that still means you’re only keeping 37 out of those Uh, 100, it’s very hard to have enough money left over to pay rent, to pay for marketing, to pay for, if you want some bookkeeping help, et cetera, et cetera. The numbers we always say is we think 40 percent is a good max. Getting down to 35 percent is better.

30 or even 25 percent if you could do it is amazing. And I will say briefly, is it possible to pay your staff too [00:10:00] little? Yes. Again, in practice, we almost never see it happen. Charging. Can you charge too much? Yep. You can charge too much in some markets where the product is not good enough and the market is not there and you can’t retain or sell because just nobody’s going to pay those rates.

I hesitate to say that out loud because everyone’s listening. Oh, it’s, it’s me. It’s me. It’s me. It’s almost none of you. It’s almost never happens, but I do think it’s maybe a little bit more plausible for people to try to really nickel and dime their staff. And they’d be like, why can’t I keep anybody? I can’t keep anybody around here.

It’s, this is a great job for 17 an hour for three hours per week at first thing in the morning with no sort of benefits that can present some issues too. So I think that the former is the bigger issue, but you have to get it right. Which sometimes means paying more actually. Yeah. I think that the thing that so many folks do is that they start off their compensation strategy only looking at what they’ve made themselves nearby or what other trainers have paid nearby.

Similarly, as we were talking about rates, it’s like they based it just on what other trainers have made and not on their own [00:11:00] business model, not on their own revenue and expenses. So I think thinking through those ratios and finding benchmarks by. Working with us or finding those benchmarks online really helps you set the right ratios because you really can’t revenue your way out of.

Paying your staff too much, right? There’s a certain level of a certain ratio. That’s just impossible to overcome with more revenue. And so you have to get that percentage, right. And I think that’s a really, it’s a really important one. Yeah. Because the game is controlling gross game is controlling gross.

As I said, the game is controlling gross, right? So if, if too much money’s coming off the top of each dollar coming in, it just does, you’d have to do so much volume. You’re never really going to get there. I think the final thing I’ll say briefly, as far as how. The challenge you can run into sometimes, I get this in a lot of markets, is the trainer you’re looking to hire, they’re going to be like, yeah, but if I go train down the street, independent trainer.

I’m making 70 an hour. And that’s, that’s true, but you’re also paying 15 of that hour. You’re paying out to the owner of that gym, right? Then you are [00:12:00] presumably probably, if you’re not doing credit card fees, maybe they can save that money, but in practice, now you’re an independent contractor, which means not only responsible for your own taxes, you’re going to get that sweet self employment penalty that nobody ever thinks about because now they will have to actually pick up.

What a business otherwise would have contributed to some of the various taxes that a business contributes to. So at any rate, I know that’s going to be annoying when you’re into and that’s much enough to do their own marketing, their own sales, their own marketing. Yeah. It’s not a fair comparison. It goes on.

Yeah. And they’re going to, they’re going to, listen, there are people incentivized to get you to compare it to what they want to. Life is full of unfair things. That’s dark to say. But listen, I think we’re both big advocates for, we want well paid people who feel like they’re compensated well for their job.

We want them to stick around. I want there to be more kind of career opportunities for trainers in this industry where there historically have been very few. And. And as an owner, you can’t shoot yourself in the foot by overpaying from day one and then be, uh, [00:13:00] confused about why you can never pay yourself, right?

You have to be thoughtful about these percentages. So anything over 40 percent should be at least a little yellow flag that raises an eyebrow for yourself. Yeah. Unless you’re not in the business. If you’re truly not in the business, then you know, there’s a case you made. True. That different ballgame. All right.

So we’re on number four out of five, number four, big mistakes. Jim owners make is you spend money on the wrong things. This could be its own podcast, but high level. What are some of the things that we see Jim or spend money on that just should not be a priority? Yeah. The most cliche one is fancy equipment.

That’s very cliche for a gym owner. Just loves the equipment. They’re enamored with the equipment. They really think, Oh, if I get this amazing, sexy thing, then the people are just gonna be lining up out the doors because they can’t wait to get on X piece of really amazing equipment. And in practice, that is almost never true.

So there, I think there’s a lot of other things that maybe would fall under that. But I think that’s the one that jumps to mind is the most common way that gym owners. Make this mistake. [00:14:00] Yeah. I think it’s a big one. And instead of that money, they should be spending the money on marketing, spending money on leveling up their skills, spending on that money on, on, on finding real strategies for growing the business.

But I think that’s a good example. We’ll keep going. We can keep talking about that one for a long time. Number five of five out of five of mistakes Jim owners make is that Jim owners ignore their most important asset, which is what? It’s your existing contact database. I talk about this so much and I’m going to spend my entire career just talking about it because the whole game is for people.

They have to first know you, then they have to like and trust you. And then in response to some kind of interesting offer, they, if they not hire you, they at least make a step towards hiring you. The very top of what is often. Use the, we often in the metaphor of a funnel, right? Where it’s wider, the top and near at the bottom, the top of the funnel is the people that know you exist because it is very difficult in my experience to sell.

So I mean, it’s somebody that doesn’t know that you’re there, right? Because the, if you’re [00:15:00] going to try to sell them, they know you’re there. And for a lot of individuals, they are. Thinking about driving leads or thinking about how do they get new people to find out they exist? And that’s good. You need to do that.

I’m not taking anything away from the value of audience building, but for a lot of people they just haven’t properly organized their existing list of personal contacts or most. With love unforgivable are people that you have an explicit professional relationship with. This could be people that were prospects at one point that never came in.

They could be people that were clients back in the day that left on very friendly terms that haven’t been in a while. So there are all sorts of people that probably know you and probably already entrust you. But you just haven’t organized your database such that they’re hearing from you on a regular basis.

And that is perhaps the biggest missed opportunity, I think, in all of Jim Dumb marketing. Yeah, I think it’s such an important one fun, fun personal share is when we have a new unicorn signing member who joins unicorn society and within the first few weeks of them [00:16:00] joining, I get sent their newsletter from their gym.

I get so excited and send them like a congratulations, email or text. They’re doing exactly what we’re talking about, which is probably buying anything from them. Like I almost never happens. It’s literally just a 1 percent of university members who have that process where anyone they meet, anyone who goes into their inbox just gets added to the list.

And while again, I’m not probably ever going to buy anything from their gym. I probably don’t even live anywhere near them. But. Right. The fact that they have that routine in place, I just always want to applaud and celebrate because you’re only growing your business to as big as the number of people who know you exist.

And so shout out Tim Kincannon if you’re listening. Yeah. He always sends me his emails. I’m like, that’s my guy. That’s my guy. Totally. Yeah. Because sometimes I’ll unsubscribe in a few weeks, but. I also want to celebrate that they added me in the first place. Yeah, for sure. And that’s the thing too, like people will unsubscribe and understand.

We don’t, unfortunately, there’s a lot of context we can go into this, that we have in our marketing playbook that we take the unicorn side of people [00:17:00] through. Cause you have to be careful. You don’t want to like spam people. I think there’s ways of doing it. That’s

So I’m not literally suggesting just go ahead and just like spam all the people, but in practice, if they already know you and they already like you, they’re probably not offended by this, right? Like in New York city, for instance, I have a lot of friends who are former actors and a lot of former actors or current actors become real estate brokers.

And the very first thing you do when you become a real estate broker, if you’re at any major agency, they make you just dump all of your contacts and you start sending out a monthly fee. newsletter of some kind. And it’s harder for real estate brokers, at least in fitness, we’re talking about things that are really relevant for everybody.

Now, admittedly, I happen to like real estate, so I don’t totally hate that. But the real estate brokers are either sending you just randomly sending you Apartments from a given zip code. And that I think makes sense because that’s, if you happen to be in the market for buying, you have to be there, particularly the real estate, right?

It’s like there you’re, people aren’t, you’re not going to convince somebody to buy an apartment. You just have to be there when they’re looking, [00:18:00] but what a lot of them do, and I don’t know, this really makes sense for a lot of gym owners is they’ll just send like a, the slice of life. Here’s the things that are going on in New York.

And. I get it. They’re trying to build and some of them successfully a personal brand and a relationship so that just as the gym owner, if and when it’s time, because people don’t buy when we’re ready, they buy when they’re ready. So we want to just be there with top of mind awareness. So if and when it’s time they think of us because we’ve been visiting them on a regular basis with some sort of ongoing marketing.

I think it’s a great note to leave it on. Honestly, I think it’s, yeah, great sentiment got to stay top of mind. All right, my friends, hopefully you found it valuable to hear these five mistakes, Jiminers make and some things you can do to avoid those mistakes. If you want more hot tips like that, click the link in the show notes and join our email list to get stuff like that on a regular basis.

Thanks for a great conversation as always, Mr. Fisher, have a great rest of your day and I’ll see you on the next one. [00:19:00] Bye.