This post originally appeared on the OPEX blog and can be viewed here.
It is a noble profession to get to help people change and enhance their lives. Through fitness and nutrition as well as through support, a professional coach often becomes the linchpin for a large number of their clients. What could be better? So why do so many gyms struggle so much to grow their businesses or succeed financially for the long run? There is never just one problem but one of the largest places we have seen people struggle with is with their numbers…all in. If you do not know your numbers you will eventually go down.
I am not here to be a downer, I am here to build your awareness of why some businesses succeed and why others do not. Let’s break down business success for a moment. For the scope of this article, I am not going to discuss fulfillment of your job. I will make the assumption that you love what you are doing and that you also see the deep value of what you are doing with your clients on a day to day and month by month basis. If we remove the fulfillment aspect of business we get to a few big topics:
- Financial success (owner) – you need to earn enough money to eat but you also need to earn enough money (over time) to potentially support you, your family, your coaches, and any staff that you bring on.
- Coach success – how are your coaches doing not only financially but also with their clients? You cannot have coaches babysitting and not driving quality results to themselves, their clients, and to the business.
- Client success – you need to give tangible results to your clients. They need to lose/gain weight, get stronger, avoid injury, and enjoy the process of learning how to do fitness in the most authentic way possible for them.
When you think about those three large topics, if any of them are not solidified you will be on a shorter leash as a business owner. The goal is to build consistency of success for all three of those stakeholders; The client, the coach, and the owner.
So, what do you do to build consistency in those areas? It is a simple planning session and then it’s a bit more granular number of projects to make the results of your planning visible to you as the owner:
- Plan which numbers you need to see that determine your success as a business
- Implement projects to create process so that you can consistently see those numbers throughout your business
Planning what you need to track:
In general you want to break down your business in a few categories:
- Incoming clients – this would be the advertising and marketing section of your business. How effectively are you “speaking to” your audience? How many people see, click, and convert from your articles, podcasts, opt in forms etc?
- Sales – once you have sales opportunities (prospects), how effectively do you close them? You need to know both volume and conversion percentages on this.
- Retention – if you do not know how many clients start, you are in trouble, but if you do not know how many clients stay with you on a monthly basis, you will eventually fail to grow or fail entirely. But, you also need to know your retention by coach so that you can track the effectiveness of your coaches.
- Financials – What is your monthly revenue? Your expenses? Your rent expense as compared to your revenue? Essentially you need an ongoing ncome statement to show you where you are but it is also helpful to have a balance sheet (even if you are running cash accounting) so that you can make sure that you are in a good cash position and so that you know any assets and liabilities that you have.
At the core, those are the keys and you need to track them all. For the scope of this article, we are not going any deeper than that because the vast majority of the fitness arena does not track these numbers.
Implementing these metrics into your business
In reality, much of this for small business is about some sweat equity in setting up your processes to see these numbers consistently. Let’s run through a few pieces that can help you get setup:
- Advertising – Use the systems preexisting in Facebook, Google adwords, Google analytics, and your CRM system (whether that is Mailchimp, Infusionsoft, Front Desk, etc…). But, what you also need to do is to keep a running total of what these numbers show you so that you can determine monthly aggregates and then ongoing averages so that you can see as you improve or fade. There is plenty of fancy software that can help with this but get it setup in Excel or Google sheets up front so that you can see what you really find value in tracking over a few months. As money begins to come in you can then decide to sexy up your metrics
- Sales – Same idea as the ongoing tracking for your advertising and marketing, the key is merely to track what is going on up front and then make it more complex as you need it to be. That is a key point…Do not make your numbers more complicated than they need to be. We’d recommend Excel or Google Sheets up front for this as well so that you can see numbers as well as reasoning behind why people sign up/don’t.
- Retention – You need to first make sure that your system allows for you to track by the coach. If you are running a normal group setting where coaches have different clients every day you will find this awfully difficult to track the reality of what is going on. But, if you have an aligned system that you can track client by client, all you need to do is to keep running totals of how many clients your coaches have, how many they get in, and how many they lose and you will have your retention stats. Take the total for the company and you are in business.
- Financials – You do not want to do this in Excel unless you are a bookkeeping wizard. It gets too complicated and there is too much room for error. Setup something like Quickbooks or reach out to inexpensive bookkeepers (note, I didn’t say cheap, I said inexpensive because your business is probably very simple from an accounting standpoint). Make sure that however you track this that you smartly work with a company or accountant to ensure that your taxable income is correct at year end. The last thing you need is to have the IRS headache
Was this a very simplistic representation of what to track and how? Absolutely it was. But, if you aren’t already doing it, you are leaving yourself open to failure more so than you should. Let’s say that you generally have 95% retention on a month by month basis but for the last three months it has dropped 10%. If you know that you can see clearly what has happened, which coaches are struggling, and you can make decisions to fix the issue. If you do not see this happening, you will just guess how many clients you have and it’ll take you additional months to even recognize that something is broken within the system.
Get your numbers setup…you will be happy about it much sooner than you think!