[00:00:00] Hello, fitness business nerds. What’s up? Welcome to another episode of the Business Unicorns podcast, and today I’m here with Mr. Pete. What’s up, my friend? Hey there, Michael. Good to see you as always. Good to see you. Good to see you. What a treat. Before we dive into today’s conversation, I just wanna do a quick little shout out to our friends at Kilo.
For many gym owners, it’s really hard to find a place that that will design you a really good website that converts your leads into. Paying members and Kilo has really just been our go-to recommendation for someone who’s gonna build a solid website for you. Plus they have all this technology that integrates with your website to make all those forms that people fill out and all that lead follow up as easy as possible.
And so if y’all wanna some have a great kick ass website and some great software behind that website, go to use kilo.com. Let ’em know that we send you and they’ll take good care of you. A lot of our unicorn members use them. And of all the platforms that our gym owners use, it’s the one.
People seem to like the most, that does what it says it’s going to do. And so we’re a [00:01:00] big fan. Happy to promote them here on this podcast. So again, go to use kilo.com, let them know that we sent you and they’ll take good care of you. Let’s go into today’s topic. Pete, you brought this topic up because of some conversations you had recently, so do you wanna tee us off as to where this topic came from?
Yeah, good topic. We’re gonna talk benchmarking today and the impetus for this hitting my agenda in this occasion was I was speaking with a Canadian gym owner. Who is beating himself up a little bit because he’s not hitting the same numbers he did last July. And the more we dug into it, the more I realized, hey man, you guys came out of the bubble last July because they had some more significant restrictions on their ability to reopen in a covid world.
And they were at this moment in the calendar. Riding high on the fact that people had been so cooped up for so long that they were dying to get into the weight room, and they had this wonderful surge that I [00:02:00] know we felt here at C S P in both of our facilities. It’s just we felt it earlier. We felt it more in 2021 and.
This specific gym owner was holding himself accountable to numbers that reflected very different variables, and he was just killing himself and I had to help him to reset mentally because a lot of people are measuring performance against some wildly unique years. It’s like saying I’m so proud of myself for my record 2021, or I should say, for being so strong in 2021 and not acknowledging the fact that they were closed for half of or more of 2020.
And so we need to take into consideration these very. Unique variables that aren’t coming back, hopefully and benchmark against years that are more representative of where we are and where we’re heading. So if you’re a Canadian gym owner, and last summer was awesome. Maybe you need to give [00:03:00] yourself a little bit more grace as you consider how the business is performing right now because things have normalized and people are back in season, and I felt this in such a big way last year that I course corrected to a point where in a lot of ways I’m measuring performance against 2019 numbers right now.
Yeah, that’s huge. I love this topic, Pete, because I think it’s such an important skill set for Jim Os to learn as to how to do benchmarking, specifically how to do internal benchmarking, because I think this is probably the most effective for most gyms, right? What I mean by that is internal benchmarking is trying to do better than you did before.
As opposed to external benchmarking is where you get numbers from, industry standards or industry benchmarks about how gyms on the whole perform. I think there’s a time and place for that, and that can be very useful, but most gyms most of the time should get really good at benchmarking against themselves.
Just doing a little better than you did. I. This month, last year, for example. But the sticky part comes in exactly what you said, Pete, is that they forget about the context and that’s like saying, oh, I really, I’m really gonna hold myself to that six [00:04:00] minute mile I ran when I was 21. I’m not 21 anymore. The context of that six minute mile I might’ve ran 20 something years ago is really different.
And that context matters. And I think one of things that, when. Small businesses, like our gyms, is that we forget that our gyms don’t exist in a vacuum. And then the kind of thinking I think that’s useful here is, you know what we call an organizational psychology, like systems thinking, right?
To remember that your business is a system that has inputs and the inputs are like the external environment. And so when you’re building really any system in your business, you have to think about what’s the external environment’s effect on the system. And this is one, like your ability to forecast and benchmark and do financial planning is all about.
The context of the external environment. So much of your ability to have those numbers go up and down are like half about the environment and half about you [00:05:00] and your actual execution. And we forget to record that information. Yeah. So I think that’s a pretty clear problem. Let’s talk a little bit about what do people do about it?
How do you do internal benchmarking in a way that’s like more effective and can take the consideration, can take the context into consideration. So what do they do? For me, I see a big consistent problem with people who only benchmark against gross revenues. And that is so incredibly shortsighted.
And so for starters, I think you need to identify key performance indicators that step outside of just dollars created. And overhead as a sense. So for an example, the gym owner in question in this case takes his training very seriously. It’s important to him. He’s, he has a little bit of a power lifting background based on looking at him.
He appears to be immensely strong and I said to him, how’s your [00:06:00] training going? And he said, it’s really great. I’m training with kind of an intensity that I had before starting a business, and that’s really refreshing. I said, did you notice that? Sure, your numbers are, your net profit numbers are down a little bit because you have to invest in a business partner and more resources to keep the place moving.
And part of that is because you are financing your ability to prioritize training. And so if I told you 60 days from now, instead of being 1500 bucks behind your projections for this year, you’re gonna be. $2,500 ahead of your number, however, you’re only getting two training sessions in a week instead of the four.
And he said, not worth it. Without hesitation. He said, that’s not worth it at all. And I was like, dude, you’re beating yourself up over a thousand dollars in revenue and you can’t see through the big picture that part of what you are investing in is balance. [00:07:00] And it is clearly important to you based on the pace with which you just answered that.
And so what I think people need to be doing is asking themselves, what other benchmarks am I looking at in making sure that I have quality of life and sanity and showing up here every day? Because to, it seems like almost everyone I talk to, it’s purely top line and bottom line dollars, that’s all they think about and they can’t appreciate how important.
The hole is in their sanity and their, like the person that they come to work as. Yeah, I think it’s a great, it’s a great first recommendation, Pete, which is yeah, track and benchmark yourself against your own performance, but have enough key performance indicators that gives you a complete picture of more than just the dollars.
Right? And the perfect example of this is in unicorn study, we recommend people track weekly and monthly metrics. And we just added a metric, which is number of hours on the training full floor for the owner. And so we’re asking everyone to track week by week how many hours the owner [00:08:00] spent on the training floor.
It’s another one of those key performance indicators that gives you a really clear picture. ’cause if you’re the owner, are you cool with making maybe just you know, 5% more than you did last year, but being off the training floor an extra 10 hours per week. Versus, you making 20 times more than you did last, 20% more than you did last year, and you working more on the training floor.
Most people will take that trade off, right? And there’s some transitions in the business, certainly when it comes to the owner being off the floor more. But you’re gonna have to be okay with making a little less revenue or a little less profit, depending on how that plays out over time in exchange for some other number that you really wanna chase, which is maybe more time to, with the family, more time.
To be in the office more time doing marketing and sales, right? And those kind of trade-offs, you won’t have the context for them if you’re not tracking some of those metrics as well. Similar with client visits or, total, total number of. [00:09:00] Clients frozen, right? These are metrics that are not necessarily a dollar or cent metric, but they add a lot of color and they help you tell a more full story about what’s going on with the business.
And I think that’s a great first recommendation for like, how do you overcome having these benchmarks that are just like shallow and unhelpful. And Can I share one thought, building off what you just said that is maybe not benchmark related. I love it. Go ahead. We, the people that we work with often wanna optimize and they take this mindset like if some is good, more is better.
And when it comes to minimizing your time on the training floor, as an owner, I don’t know that everybody should aspire to take that number to zero. And so there is, there’s definitely a lot to be said for. Taking the number down there is such a thing as too much, but there’s also such a thing as too little because I think that it’s a good idea for our gym owners maybe yourself excluded for showing face in the space with some degree of consistency and having their finger [00:10:00] on the pulse of the operation.
Yeah, 100%. I feel like I talked to more and more unicorns side members these days who are the people who started their gyms because they wanna be on the floor all the time. Their favorite thing is working with the clients. That’s a thing that they, and they really struggle to find the motivation and interest to do anything off the floor.
I. Anything in front of a computer. And so those folks, yeah, they should probably find a business partner or other people who are gonna do all the behind the scenes stuff for them, and they should just be on the planning training floor if that’s really where their passion is. But I think, yeah, you’re absolutely right that I don’t, certainly don’t want, I.
To suggest on this podcast that number should be zero for everyone. ’cause for some people it should be a hundred. It should be most of your time. In fact, I just had that conversation with someone today who was like, yeah, I actually do wanna be with my clients all the time, so I’m gonna find a business partner, who’s gonna do behind the scenes stuff.
Great. Yeah. Yeah. Great. So I’ll give you another thought. Yeah, I think there’s a pretty significant chunk of our listening audience that are gym owners who started their [00:11:00] gym. Say after January 1st, 2019. I don’t know that any of them yet know who they are performance wise. Yes. For the reason we initially discussed.
And so you don’t have enough data. You don’t have enough data based on like the real consistent world functioning well if there is a such a thing anymore, but certainly those covid years are useless data for most of us. Exactly. They’re useless, like you just can’t benchmark against them.
Good news. Yeah I was gonna say, the good news is I feel based on my experience, which is now in excess of 16 years of doing this since January one, I have felt a degree of normalcy consistently. And so what you are doing right now as a gym owner, if you’re one of those people who didn’t have any kind of benchmarks for kind of what I’d call normal years consistently.
The good news is you are laying down the foundational. Benchmarks right now. Yes. The way your business is performing [00:12:00] is maybe exactly who you are, and so this time next year, I’m gonna change my tune. I’m gonna say, how are you doing on July 18th when we’re recording this against July 18th, 2023?
Because that is a. Fairly normal representation of I, of who I think you maybe should be barring any unforeseen circumstances or pandemics popping up between now and publication. Yeah, I think that’s a hundred percent spot on Pete, right? Like for those of you who started in 20 19, 20 20, 20 21, yeah, those numbers are probably just really strange for you, but, As of this year, you’re really starting to collect data that hopefully will be more representative of future performance than those years were I’ll share another tip.
I think that’s really crucial for great internal benchmarking and, I think this is one that I give a ton and I might wanna spend a little more time like really rebranding this, but I think most people have a hard time learning from. Past performance because they don’t [00:13:00] make good notes about what happened.
Like I’m a big fan of people actually doing, you know what, maybe I’ll start to call like a metrics journal, right? It’s not enough to look back at the number of revenue and the expenses and the profit and the visits in June of last year. If I didn’t make any notes about why I think the way they were, the way they were, And that happens all the time.
Like even M F will look back at numbers from last year or the year before and that’s so weird. Why was that number that way? That year crushed, or that year was terrible, or that month was amazing. That month was such an anomaly. Why? And we’ll have no idea. We didn’t make any good notes about what was going on during that time.
What the, what was happening in the market or the world, what happened in our team, right? Oftentimes these numbers go wildly up and down when someone leaves your team or just joins your train team, and is training where if you expand locations, move locations, sometimes your numbers are wildly different.
If you. Change a service, increase your [00:14:00] rates, right? All of the thing, all a lot of decisions we make are really meaningful to our key metrics and will change the way our numbers look dramatically. But we often don’t make notes that’s what happened. And so we look back and try and compare ourselves.
We’re not looking at the full picture. So I think the thing that’s really actionable for all of you, and this is maybe super tactical, Suggestion is in every spreadsheet where you have a key metric, there should be some columns in those spreadsheets for your assumptions, for your lessons learned, like a notes field.
Where you can write in, oh, this is the month where we increased our rates. So we saw extra terminations because our rates went up and we let some people terminate or or this month we had a ton of new leads. We had way more leads than we ever had. It’s because we did that $1 promo. That $1 promo was really driving lots of leads that month, or, or we lost a ton of revenue this month because we had that trainer leave unexpectedly and a lot of their clients left with them.
But if I don’t make those notes, as they’re happening, maybe once a month [00:15:00] when I’m looking at my numbers or our weekly, weekly review of key metrics, if I’m making those notes regularly, I’m gonna look back at those key metrics and they just won’t be able to tell a full story. So I think some people actually do need to have a kind of a key metrics journal, or at very least columns in their spreadsheets where they record some of the narrative of what happened in the business.
I think when we do that well, both M F and business unicorns. Then I can confidently look back and judge our performance based on past performance, knowing some of the details about why it was that way. Is that making sense, Pete? Absolutely. Look, we’re gonna have an opportunity to obliterate our February number next year as it relates to our pitching instruction.
And it would be very easy to superficially say, we collected X amount of dollars in February in 2023, and look at how well we’re doing in 2024. But then if you were, you came and you said, Pete, come on you’re leaving something out. There’s no way you outperformed by 50% year over year without changing anything.
And I said I did forget to mention that our [00:16:00] pitching coach left to work for the Mets on February 6th, and we had about a 10 to 12 day window where we were bridging the gap and really Patching it together because we’re just burying some important stuff. But there are all kinds of variables like this that come and go, be it price changes or employee defections or I don’t know, significant changes in the model.
In our case, in our part of the country, there are times where our numbers really shift based on weather. Yes. If we have a string of bad snowstorms in a February, yes, it can take 10% of our revenue right off the table, and stuff like that needs to be acknowledged before you start kicking yourself over numbers not being exactly where you wanted them to be year over year.
Yeah, same. And even the summertime in New York, if it’s nice in the summer, early on, new Yorkers leave the fucking city. Like they just flee. And if there’s a really, they’re really nice. Early few months of summer, our revenue could be way down. We could have a way up on freezes way up on terminations.
And if I don’t make a note that, oh, this is a really sunny summer, I’ll look back and be like, [00:17:00] where the fuck did everyone go last year? What happened? So I think that I think I’ve made my point and maybe beaten. With the hammer, but I think you gotta take some notes. I think the theme of what we’re sharing here is that if you wanna do internal benchmarking, and you should, you have to think about the whole context.
Think of key metrics that are not just money oriented. Take some good notes about your about it, and any other tips here? Pete, before we wrap things up don’t lie to yourself. I have a bad habit of. Taking wins and patting myself on the back when in reality some variables were stacked in my favor.
Sure. Like we just had an agreement with a club program where they agreed to spend almost $20,000 with us next year. That means we’re gonna get a couple of big checks at random moments. It’d be very easy for me in those months. To pat myself on the back and be like, we crushed it. We outperformed by four K this month, but I collected five from some company that I might not have a win with next year.
And [00:18:00] we all deep down know it when we get those little wins that might notable. Don’t measure against those wins. Yes. I love that. Yeah, keep track of that stuff. That would go in my notes, that would go in my assumptions, that would go in my lessons learned column to oh yeah, this money just fell in our lap.
I can’t take credit for that. Yeah. We have a habit of using those notes to justify our losses. Totally. And not to justify our wins. Yeah. Said. Let’s leave it there. Let’s leave it there. Friends, this was a great episode. Thanks for the great conversation, Pete. If you found this valuable, please let us know by leaving us a solid review anywhere you listen to your podcast.
Leave us five stars, tell why you love this podcast. It really helps us find more listeners just like all of you. So thanks for listening, and I’ll see you on the next one. Bye, Pete. Good chat. Talk soon.