Episode 247

Surprising Lessons for Moving Your Gym with Greg Morrone

In this episode, Unicorn Society member Greg Morrone joins me again to talk about the surprising lessons for moving from a smaller space to a larger space in his market.

[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 Return Guests. It’s Greg Morone, who’s founder of a Fit Lab in Hoboken, New Jersey, unicorn Society member overall. Man of mystery, international man of mystery. Welcome back to the podcast, Greg.

Thank you for having me, Michael. I really appreciate it. Yeah. I’m stoked to have you back cuz you’ve been having an epic year of changing things up at the FIT lab and learning so much along the way. And one of the big changes you made this year was moving your location and we were just talking before we hit record here, that this seems to be a thing that Jim owners have to do from time to time.

Hence we thought, let’s. Let’s have a whole podcast about what your experience was, what, positive and negative lessons you’ve learned along the way. And I think I’m excited cause it’s always a good conversation. We’re talking about the kind of logistics of our spaces cause, not often the most sexy part of our work, but it’s really essential that we manage our space as well.

Thanks for having this conversation. [00:01:00] Let’s just start with the basics, which is, what was, what were the triggers? What were the signs telling you that you needed to move? So we probably could have made this move back in 2019, but we, our lease ran into the latter half of 2020.

And then, so 2020 happened and the pandemic breaks out and it was fortuitous that we were in a smaller space with lower overhead. So I had started looking at other Other locations that had a lot of more, a lot more square footage pre pandemic, but then the pandemic broke out and we ended up staying there for three more years.

In the same location. But financially we could have made the move and our membership was getting to the point where we actually felt like we needed the move in order to grow. But, I will say I feel very lucky for that small [00:02:00] space because I didn’t have to lay anyone off. And through the pandemic, I was able to continue hiring.

And we were financially in a strong place to, to make this move now without incurring very burdensome loans. Yeah. But it was past due and as soon as we made this move six weeks ago, we were, we’ve already netted. 10, 10 new members. So it’s been great. That’s amazing. Yeah.

Good for you. And I think it’s a good place to start, which is that for a lot of you, you can stay in your existing, often smaller space, a lot longer than you think. And small space, low rent means less risk. So to time, like during covid, like what a gift that is to not have so much overhead to be worried about.

But can you say a little bit more about some of the actual pain points? How did you what was. Getting you and your clients to think it’s time for a bigger space? What were the pain points you were feeling? Sure. So in the smaller space, we didn’t have a proper lobby area or a, an area where you [00:03:00] walked into the gym and you felt welcomed.

You walked right onto the training floor and then had to go back to an area and during the pandemic, we were holding people up outside, so they were waiting outside in the cold or in the heat before coming in because we didn’t want. Too many bodies in such a small space at that time, and it felt horrible.

As it takes a lot of folks a long time to get the nerve up to join the gym if they’ve never done strength training before, especially. So to see people who might already have some anxiety about going to the gym, waiting outdoors on a busy street, yep. Felt terrible. And I just at the root of it is, yes, I want to grow.

That’s the nature of business is to grow and evolve and I want to do all those things but part of me just want to be able to be a better. Host to the folks that we already did have. So by moving to a much bigger [00:04:00] location, it it’s a warmer environment for people to step into.

They can hang out longer at the end of sessions and finish up conversations they might have been having on the training floor. And I know when it’s cold. And dark out at four 30, that people are gonna wanna show up a little bit early and maybe linger around a little bit longer. So I’m very happy to have yeah, the proper space for that now.

Yeah, that makes sense. So one of the pain points was just, Not feeling like you had a space to really welcome people, for people to really hang out and make friends and gather the space. Just didn’t have enough space for that. I also know from yes, our previous conversations, the other pain points you were experiencing were just not enough not enough space to expand.

You couldn’t really take on Yeah. Another 10, 20 clients or just wasn’t enough room in the building during Sure. During good times. Exactly. So we were turning probably three to four people away. Every month because we couldn’t have a PT [00:05:00] session and a small group training session going on concurrently.

Sure. Just wasn’t big enough. People would be on top of each other. So now having a bigger space, we also increased our small group training from five people to six people. Yep. So that’s more money in the pockets for the trainers. It’s more money for the business, which is awesome. But we can also onboard people during those peak gym hours.

7:00 AM 6:00 AM five o’clock at 5:00 PM and 6:00 PM the onboarding process is going much more smoothly. Got it. And that had been an, a pain point for years and years. Got it. Got it. Yeah. So those are great signals to look for our listeners. If you’re not sure if it’s time to move or not, if you really, you don’t have enough time to create the ex enough space to create the experience you want.

Of welcoming people. Having people be linger, hanging out. If you feel like you can add more people to your model and you don’t have the space if you’re turning people away because you don’t have the space. I think those are all really common pain [00:06:00] points. So you decided it was time to leave? Yeah.

How did you decide what kind of space you needed next? How did you decide how much square footage or how much you could afford to grow? That’s often a place where people are like, I don’t know. Do I wanna double my square footage and can I double my rent? So how did you decide what kind of leap you wanted to make?

Yeah. I gotta give business for unicorns a shout out here, because I think part of my hesitancy to move to a bigger location was just a little bit of lack of confidence. Yeah. Yep. I bootstrapped that first space for as long as I could and it served us well. But it wasn’t until that I felt like I knew how to track KPIs.

And how to properly on onboard new trainers and all of these things that I have the confidence to take a big swing at a much bigger space. So the route that I ended up going was I. Not increasing rent spend too much, but I did [00:07:00] heavily invest on fixing up a much bigger space. So I sunk about $80,000 into fixing up a very old end dilapidated space.

But it did check a lot of boxes for us. It’s only four blocks away, so we lost zero members. Amazing. Moving from one location to another. Yeah I wanted it to be, Walkable for our current members. So we didn’t have a high rate of attrition. I wanted more space so that we could, as if we already touched upon a welcoming lobby.

But I also wanted a bigger space to foster innovation for. The, my team. Yeah. For trainers being able to be more creative with the on, on training floor experience for our members, that’s still very important to them. Yeah. So I, it was very important, not just for growth, but for, I, I felt like the team deserved it.

I felt like our members who have been with us for six and seven years [00:08:00] deserved it. But to answer your question, yes I went the route. Of not increasing rent spend too much, but investing and fixing it up and the rent is so low that I can very aggressively pay down my debt over the next 20, 23 to 26 months.

Got it. Good for you. And did you wind up taking a loan? Yes. Yeah I got a personal line of credit, which was surprisingly easy. I went with Wells, who I’ve been banking with for 30 years, and I was able to apply for it online and within. Four days, they gave me a six figure line credit. Yeah.

Amazing. Yeah. Good for you. And I think too many people don’t consider a line of credit when they really should, especially for build out costs like you were incurred. Like your rent wasn’t going up a ton. It was going up a little. But you knew you’d be able to capture more clients quickly given that you were in your same market.

And the fact that line of credit is one that you can use and pay back in a flow doesn’t require to [00:09:00] use it. Yes. And spend it all at once. Yes, and also what I’ve learned through this process. Obviously I’ve looked at different avenues to get my hands on cash, and I know that SBA loans help a lot of folks out, but the nature of SBA loans right now that from the banks that I spoke to is that you have to justify.

Yeah. Everything that you’re spending it on, and they have to cut the check for you. So from a timeline perspective of wanting to get this place open and not continue to string our members along, It just felt very inefficient to, to go throughout of an S B A. Yeah. Good for you. Good for you. I’m glad you’re able to take that risk.

You, you were only on the hook personally for the risk, which I think can make sense in the situation given that you were so confident in it. And I love that you were so confident because you’re in business model better than ever. You’re tracking the KPIs, what levers employees to, to use to grow the business.

And I think that’s just a testament to all the hard work you’ve done over the last several [00:10:00] years. Yeah. Yep. Yeah. So let’s just talk about what it’s been looking like on the other side. So you find the space cost a little more. You’re waiting to invest in the actual physical space.

Can you just talk a little bit about how’d you make those decisions about what to invest in, in the space? It wasn’t a whole lot of sexy stuff, I’ll tell you that much. It really often isn’t. Yeah. And thus when, if a member hears how much we spent on it and they luck around, they’ll be like, It’s nice, but I don’t know if it’s $80,000.

Nice. And it’s honestly the building’s 125 years old. It’s a historic landmark, which presents its own challenges with permitting, but a lot of it was, Sound attenuation could be a good neighbor. Yep. And to fix up the mistakes of other contractors. There was and I don’t think that this is uncommon in our experience, especially in more urban areas, is that once your general contractor gets in there, they’re [00:11:00] gonna be like, there’s all these live wires just dangling in your ceiling.

And I don’t feel good about walking away from this project without fixing those. So it was a lot of that. Yeah. And with inflation, the price of materials is still high. It’s not as bad as it was a year and a half ago. Yeah. But rubber flooring, oh my god it’s two x what it was even four years ago.

Yeah. But we did invest in some new equipment for sure. To make it feel like, Hey, there are these new toys to play with and to improve. The training experience itself, but a lot of it was, again a new dropdown ceiling sound attenuation, bringing things up to fire code. So that’s and all that stuff does cost a lot of money.

Yeah, 100%. And those things are not often sexy, but especially if you’re in an urban area, big cities in the northeast places in Jersey and New York and Boston and Philly, we often have a lot of old ass buildings [00:12:00] when people have done some shoddy work on top of shoddy work. And safety is number one, right?

Yes. Safety’s number one. And the fact that we often, another big. Concern for gyms is pissing off our neighbors. So doing some good at sound attenuation early before the space is busy Yeah. Is really critical. And then you get to spend some of your money on things that have a direct impact on your trainers and your client experience.

Some fun toys. Yes. Yes. Making the space really functional and usable, making the space organized. Cause I think if you can open on day one with a place where everything has its own home and everything’s organized in a way that makes sense, then you really, you’re setting yourself up for success ongoing and, Yeah.

One, one of the important things going into a new space too, is to have a team culture where you’re setting the expectations that things are gonna go wrong. That there are gonna be bumps in the road on getting it open, and then even when it’s open and you bought new equipment, it may take a little while for you to settle on where.

Everything’s [00:13:00] permanent home is gonna be in the space. Yeah. And just having a culture of, hey, things are gonna go wrong, we are going to change things, and that’s okay. This is all an opportunity for growth. Let’s not freak out because change is scary for everyone. Even if it ultimately results in more money for your team without them needing to do more work.

It’s still a little bit scary. And even for a handful of members, they might just not like change. Yeah. Or that four and a half extra minutes of walking to the gym bums ’em out. So they may not be as excited as you are about the new space. So all these things are just having a culture of this is okay.

We expect this and it’s still gonna be great. Yeah. Good for you. I think that’s amazing, Greg. Cuz when you can get in front of it like that and let them know, Hey, we’re gonna be experimenting. Everything’s gonna be a first draft, there’s things that’s gonna go wrong, we’re gonna talk about this on an ongoing basis and make decisions once we’re in [00:14:00] there.

It does set the expectation for there to be a little shaky ground for a little while. Let me, let’s pull that string a little bit more, which is, what are a few bumps you did experience during this move? That other people might anticipate. The one thing that I took for granted and caused me the most anxiety was I took for granted that you hire a general contractor and thus they know the landscape of the municipalities permitting process and all the nuances that entails.

And that was not the case. And that probably that alone, my general contractor not being on top of that. And the fact that a lot of these municipalities don’t have. A sheet of paper that they can send you and say, Hey, here are the things that have to get checked off in order for you to open.

So it felt like every step of the way, it was like, oh yeah, you did this. But now you have to do that, and [00:15:00] that’s gonna take anywhere from 17 to 28 days. And they’re like, I’ve been telling my clients that we’re gonna open on such and such a date, and it keeps getting pushed back. So what I would say to any gym owner that’s looking to move or open their first brick and mortar, go directly to the town.

Ask them for best practices. Ask them for everything that needs to happen permitting wise from beginning to end. And you take ownership of that and don’t rely on your general contractor to, to inherently know that’s. Stuff. Yeah, I think it’s a great tip, Greg, because it’s, you’re right that not all contractors are great at that part.

Some of them actually farm out the permitting and contracting part. Some of them expect you to do it. So I think it’s great to, to learn what the rules are in your area. I’ll add another suggestion, which is when you’re looking for a contractor, this is something we fail to do and. Now we’ll do more is is, talk to their references, talk to other people and ask them how do they handle the [00:16:00] contracting?

How do they handle the budget? Yes. How do they handle work orders? Just have other past clients walk you through how things went. Because when you talk to a contractor, they’ll tell you how easy it all is, right? They’ll tell you, oh yeah, we got that. We handle that. We’ll work on that for you.

And that’s just, not always how it goes. And whether you’re doing a construction project on your house or a piece of commercial real estate, you’re always told to add 20% onto the estimate. Yeah. And to the timeline that they’re giving you. In my experience it’s been much higher than that.

Yeah. And one piece of advice that I would give is, Do pay for the unsexy stuff first and then hold off on ordering your equipment until all of that work is done. I know that as gym owners if you love train the training experience. You want to buy some toys and some of the fun stuff sooner rather than later cuz it gets you excited.

But I would hold off on that for as long as possible [00:17:00] to see where your budget is at as you approach opening. Yeah, I think that’s a great tip, Greg, cuz so often you’re right, people get excited and that’s the first thing they purchase, right? Just run over to perform better. Put everything in the cart.

And hit purchase and it’s whoa. We actually haven’t gotten through a lot of stuff that’s essential to opening, right? Yes. Does your heating and air conditioning work, is your flooring in place then installed? Does the water functioning, the bathrooms, do all of that first.

I think it’s a great tip. Yep. Yep. The price of your equipment is not going to fluctuate a lot. Not as much, yeah. But the price of your electrical, your plumbing, that they might uncover some. Unseemly things that cost you. Yeah, potentially tens of thousands of dollars. Yeah, 100%. Paul, this was a great walkthrough.

I’m so excited for you. Let’s finish with this. Maybe your final thoughts are, what are all the things that are better now? What are all the things that are better now that you’re in the new space and and better for you, better for your team, better for your clients? I know you mentioned a few with this call, but let’s end on a high note.

Yeah, [00:18:00] it we’ve had more walk-ins than ever before. I, and I don’t know if that’s, that we’re just in a busier foot traffic area or if pictures of the space that we post on social media are more appealing than they were in a 900 square foot space. But we also we also simultaneously started using kilo at the exact same time that we opened the new space.

And that’s, Four x our weekly leads and what’s helped us net 10 people in, in five weeks, which for us we’re now sitting at 121 members and. We’re probably gonna be maxed out at 1 35. So for us to, to net that many folks in a relatively short amount of time is a lot for us. And very, very happy.

Yeah. Yeah. Good for you. Congrats. I’m glad that you can create the experience you want for your clients. Now you can create a better more playful experience with more options for your team. And it sounds like, you’re getting people in the door and in part Thanks. [00:19:00] Kilos. A little kilo commercial.

Yeah. Yep. I do just wanna finish up and say that I am very grateful for the small space It served us well. Yeah. I am proud to have bootstrapped for as long as we did, and I recommend that to anyone who’s opening their first brick and mortar, who doesn’t know how to track their KPIs, who doesn’t do quarterly planning, all the things that we do in business for unicorns.

If you are not familiar with that stuff right now, smaller, less expensive is probably better. For me, I had did, I done did that for 10 years and it came to a point where I wasn’t utilizing all this skill. The marketing tricks sent awesome stuff that we learned in business for Unicorn. Yeah, don’t go overboard early.

But for us, it was the right time. Good for you. I think it’s a great note to end on. Thanks for sharing your wisdom, my friend. Congratulations again on the move and I’m sure you’ll do something amazing [00:20:00] in the next few months and we’ll have you back on the podcast. So thanks for sharing your wisdom.

Dear listeners. All right, if you found this valuable please leave us a five star review and a review everywhere that you listen to your podcasts. Honestly, it helps us find more listeners just like you. And so if you’ve got an ounce of value from this podcast ever, Please right now go leave us a review wherever you listen to your podcast, preferably on Apple Music and email me michael fns.com.

Let me know what you want me to talk about next, or who you want me to talk to. Thanks again, Greg. See you on the next one. Y’all have a good day. Thanks so much.