Fitness Business School – Business Model Planning

Fitness Business School – 151 – Business Model Planning

Show Notes

• Recurring revenue is the foundation of Pat’s success
• There are 3 steps – Business model planning, getting clients, and keeping them
• Today we’re talking business model planning
• 1 – What is the target?
• How much income do you want and when do you need it?
• Having both a benchmark and a deadline is necessary
• 2 – What do you charge to get there?
• 3 – How many members do you need at that rate?
• High volume of low pricepoint or the opposite?
• What do we deliver for a fair value exchange?
• A plan to follow…WOM, promotions, blueprints, etc
• Accountability for that plan
• Community connection – like-minded motivation
• Access to a mentor/leader to address challenges
• Simple is better
• Accountability > stuff
• Losing access is more painful than losing stuff

Full Transcript

Hey, Pat Rigsby here. And in this episode, we’re going to kick off a three-part series that I’m going to call the recurring revenue blueprint. I get a lot of questions about how to start membership programs, and I wanted to really just detail this out step-by-step and instead of holding a one day workshop or something like that, I just thought I would pass it along to you through the podcast. So let’s get started.

Welcome to the fitness business school with Pat Rigsby, the podcast for fitness entrepreneurs who want to make more income, have greater impact, and enjoy more freedom in their ideal business. If you’d like an accelerated route to these goals, email me at [email protected] and put BGA in the subject line and I’ll get you all the details about our business growth accelerator program.

So for the next couple of episodes, we’re going to talk about crafting a recurring revenue business. You know, that’s really been the foundation of my success as an entrepreneur over the past, you know, 16 ish years. And it’s happened in so many different ways. I’ve had over 40 different recurring revenue programs, everything from programs that were under $10 a month up to franchise models, where people were making five-year commitments and paying a percentage of revenue. You know, I’ve done licensing programs, I’ve done print newsletters, DVDs of the month membership site, you name it, there’s all sorts of different things that, that I’ve had in play offline and online. And, you know, there, there are just some fundamental, some foundational things that I kind of go through whenever I am considering starting a new program, basically there there’s like three steps that I go through. I go through bit like business model planning. I go through how we’re going to get clients or customers, and then how we’re going to retain those people since, you know, so much of having success with a recurring revenue business is about retention. You know, it’s not this high ticket upfront revenue model. You have to actually keep people over the long haul.

So I’m going to break it up. Just like those three things that I walked through. I’m going to talk about this through three different episodes. In today’s episode, we’re going to talk about business model planning and really, I think you know, there are kind of three things that I start with and I’m just going to walk you through my process. One, one, the first thing that I think about is what’s the target. If I’m going to develop a new program, how much recurring revenue do I need to create, and when do I need to hit that benchmark to justify the work, the effort you know, really, if I’m going to say yes, do this, I’m having to say no to a number of other things. And there has to be a reason there has to be enough interest in it from a target market. There has to be financial upside for the time invested and you know, the opportunity cost associated with it. So, you know, you need to identify how much revenue you need to make each month from this program to, to make it, to make it go. And then, you know, when do you need to hit that benchmark by? Because there are plenty of people that say, Hey, I want to have a $10,000 a month program, but they don’t have a benchmark. They don’t have a deadline that drives them. And so it kind of forces them to come up with a plan. They just kind of leave it out there as a dream. And then the, the second question I ask myself is what am I going to charge for each client or member to be part of this program? You know, and then the third leg of this is just kind of the flip side of that price point. How many clients or members do I need to have active at that price to reach my target? So, I mean, if we think about business model math, it’s just the monthly target divided by the monthly price point. And that gives us the number of people that we need.

So if you want to make $20,000 a month in recurring revenue, it 200 bucks a month, we need a hundred active clients that same $20,000 a month at $150 a month. We only need 134 clients, but then if we break it down and we say, okay, I’m going to do this at a hundred dollars a month. You know, we need 200 people. So, you know, some of this, you, you kind of have to be self-aware enough to know, okay, my better at selling a fewer number of people on a more expensive program, or is it it’s easier for me to generate high volume and maybe at a lower price point and everybody’s different.I mean, I’ve done it. Yeah. Really all different ways. And then, you know, we’ll get into it more when it comes to the getting clients part, but, and I’ve typically taken different approaches to acquire people at those different price points really under $200 a month, I I’ve used one approach pretty consistently and over $200 a month, I’m used to separate okay. Approach pretty regularly. So if that’s the math, because obviously if we’re talking about this being a business, the model has to work. If that’s the math, we know how much we need to make, we know the price point we’re going to charge. We know the number of clients we need to hit our goal. Then we’ve got to decide what are we going to deliver to justify that price? What are we going to deliver to make it a fair value exchange for the person that we want to serve? Because that’s really what this is, right? We’re solving problems and helping people reach goals in exchange for that fee. So what kind of things can we provide to this person? Well, the first thing that we can do is give them a plan to follow. So if this is a, a fitness-based thing, then we can give them a monthly workout. We can give them or work out of the month.

My wife has been delivering a workout of the month, too, her members for over a decade she’s then delivering follow along workouts where she shows them what to do, and then they can follow along with her to do it. And that simple plan to follow has kept some people around since gosh, I mean, I think you know, since, since somewhere around 2007 or 2008, and then, you know, the, on the business coaching side of it, I mean, we give people a blueprint to follow as far as what promotions to run, what newsletters to send out you know, how, how to sell prospects into becoming clients. We give them really simple plans to follow. And I’ve done that with every business coaching solution that I’ve offered from low-cost membership sites all the way up to franchises. And it’s really just varied based on the, the level of interaction, the complexity and the depth, right? So we can give somebody a plan to follow and we can do it with about anything. I mean, if you are doing nutrition, you can give somebody a meal plan to follow. If you’re helping somebody build different habits, you can and give them a kind of a blueprint to, to, to determine and adopt each new habit. So, so giving somebody a plan to follow is a very common and easy one.

The second would be accountability to help them stick to the plan. W with most people at this stage, age of kind of where things are online and really the access that people have to so much information, it, it’s more likely that they already have enough information to craft a plan. That doesn’t mean that you can’t sell a plan. There are ways to make your plans and more valuable. But what I think we see very regularly is even though people have so much access to information to develop a workout, to develop a meal plan, to, to market their business, whatever it’s going to be, they don’t stick to the plan. They may start, but they don’t stay with it very long. So providing some degree of accountability to help them stick to the plan would be another great offering that you could weave into the membership that you have. I’ve seen one business that I can think of that I’ve done a couple of coaching calls for build a multiple seven figures and your revenue stream simply by providing daily accountability to the clients that they serve. So accountability is a really viable option.

There are some great tools out there to help you do it. If you want to do it on a more technology focused level. And you know what I mean? But you could also, even depending on the offering, you could even do it in a lower tech fashion and just text people or call people with something and regularity. And then, you know, the next thing that I think that we should probably consider and what we’re doing and deliver is providing a community to support this person and allow them to feel connected. Like-Minded people that are going to help them go through the challenges that they’re facing that are going to help motivate them, inspire them to, to you know, make them feel like, like they belong. I think that, you know, through the pandemic we saw how valuable community can be for so, so many people and, you know, when people don’t respond well to it when it’s throttled back or taken away.But beyond that, you know, like in my world of doing business coaching, being an entrepreneur can be kind of lonely because you don’t have a bunch of coworkers that are just peers. You’ve, you know, you’ve kinda gotta be the boss and you don’t have somebody to answer to. So having a community of like-minded people can be really, really valuable.

And then the final thing that I think is really valuable to deliver in any sort of recurring revenue program is some sort of access to, to you or to a coach or to a mentor or leader Tuesday solve their problems and address their challenges. That can be virtual sometimes. I mean, I’ve been doing mastermind groups for over a decade. We do person events that also really kind of you know, address that community part, but making sure that people just aren’t left to their own devices and just giving them stuff is another way to maximize the value of what you offer. But if you think about what’s valuable information at this stage of the game is not the most valuable thing early on in my membership site days, you know, you can just put information behind a paywall, and that would be a lot of the driver for the, for, for the value of the membership. But now you can find almost anything online on YouTube, on any number, number of just knowledge kind of focused websites, plenty of information available.

So these things, having a plan to follow accountability, community, and access to solve their unique problems, they’re going to be the more valuable things that you can put into place. So we’ve talked about setting your targets. We’ve talked about what you’ll deliver. Let me give you a couple quick tips before we wrap up this first episode in this three episode series, the first is simple as is better, right? The more somebody can stick to the plan, the the more likely that they stay, I think overwhelm is probably one of the biggest killers of recurring revenue based businesses, especially online businesses. I think one of the reasons my wife has had such longevity with some of her members, the workouts are easy for them to follow. They can do them at home. They need like a stability ball mat and a set of dumbbells, and they can do about anything. And they’re 15 minutes a day, simple is better. Second accountability is likely more valuable than stuff. And if you’re going to, to give people stuff, getting them closer to the goal line, to the finish line, that’s what they’re looking for. The person who is like, if it’s a nine step race or a 10 step race, and you get them to step nine, because you give them the tools and the templates and the exact plan to follow, that’s more valuable to them than education. People are a little less interested in learning in this format and they need to be kind of moved closer to the execution implementation stage.

And then you know, kind of just going back to what we talked about, what you will deliver accountability. It doesn’t have to be nagging and it doesn’t have to be heavy labor on your part. Sometimes accountability is just as simple as making sure people know you’re watching people having an appointment for something. I mean, in the, the local training kind of business landscape, the accountability that comes with just knowing that there’s a nine o’clock session, and I know people will expect me there. So I need to show up that that alone has value. And then finally the pain of loss is a big piece of this, right? Like just like fear of missing out is a stronger motivator than prospect of gain, losing access to interactive things, not being able to be part of a community, not having that, that accountability, not having access to live events, that sort of stuff is far more painful than just losing access to stuff right there. Their stuff is readily available. They can download videos and PDFs and podcasts, all they want. So losing access to the interactive side of things is way more painful. So if you aren’t valuing the interactive part of what you do as the priority in your recurring revenue business or this, you know, a new program or even a current program, I would shine more of the spotlight on that because that, that loss of interactive stuff, whether it be coaching or accountability or community that’s the stuff that, that likely will keep them keep them on track, keep them compliant, keep them as a member more than about anything else. So that’s the first piece of the puzzle. That’s our business model planning. We’ll be back in the next episode with how to get clients, talk to you then.

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