Fitness Business School – Small Group Training with Doug Spurling

Full Transcript

Hey, Pat Rigsby here and in today’s episode, I have a special guest once again, my good friend Doug Spurling. And we are going to do a deep dive into small group training. Personally, I’m pretty biased, but I think this is one of the real kind of unsung opportunities in the industry. And I want to get Doug’s take on it because he’s built a powerhouse gym running this model. So let’s get to it.

Welcome to the fitness business school podcast. The show for fitness business owners who want to grow their income, increase their end impact and improve their lifestyle. Be sure to listen to the end of this episode, because we have a brand new special offer exclusive for listeners. So stay tuned.

All right, Doug, man, this is our second episode here that we’re recording, and I’m, I’m pretty excited because a, I didn’t really tell you what we
were gonna talk about. We’ve kind of been just winging it in some, some ways, but we’re talking about things that clearly you’ve had a lot of success with, have a lot of experience with, and that’s really kind of the segue to what I wanna talk about now. We’ve both talked at length about the
increased competition in the fitness industry and how the market has evolved. And there are franchises popping up in almost every market. They’re not just limited to densely populated areas, metropolitan areas, affluent areas. I know that, man, I’ve seen some of them pop up even in my hometown, which is kind of late a lot of times as far as bringing franchises in. And with that, with people’s now probably increased comfort with seeking out
solutions online as well.

It’s a point in the industry where we need to, like, if we’re gonna build a business, we need to be a little more strategic. It’s not a enough to just throw your shingle out and throw a group up or run a challenge and try to fill up some sort of light industrial space. You have to have a plan. And in the, the kind of I guess, partner episode of this, where you went through the five M’s, we went through a lot of the things you’d look at in crafting a plan,
but I want to be more specific in this and talk about small group training and how that may be a really strong opportunity for a business owner who wants to stand out in our market to build a profitable business, and, um, isn’t exactly sure what that model looks like. So, Doug, let’s, let’s just kind
of talk about small group, but maybe using that same five M framework and talk about some of the pros. So let’s start by talking about the model and some of the pros of that model and how that’s worked for you. So when we talk about, small group personal training, when, when we speak about it, we’re
commonly referring to a four or six to one ratio. So it, it’s kind of that sweet spot between, you know, it’s not one-on-one, but it’s not a large group class. So you’re four to six people. I recommend if you’re brand new to small group and thinking about it, you start with four, obviously it’s just a little bit easier to manage four people, but you can scale it where you’re working with six clients in a session. And so in, in my eyes, it’s kind of the best of both worlds where you can still fit in personalization. So, within the model, you, you look at, programming, we’re programming on a monthly basis.

We’re still tweaking the program to the client, tweaking the template. We’re tracking weights, we’re documenting their injuries, we’re making notes on each client. So you’re still able, for those of us that I know, a lot of us came from the one-on-one world, you’re still able to fit a lot of that kind of what you want for the client into this small group model. But you have the scalability of, obviously, from a revenue perspective, working with four to six people at a time. The
other benefit comes in regards to looking at your scheduling. You know, you’re not having to only work with one client in an hour and only be able to see five to eight people a day. You can work with four to six people in an hour, and you can see 30, 40 people in a day. So, as far as, from, I know a lot of people it’s part of helping people change lives. And so there’s a lot more impact that can be had where if they can get the same results in small group,
you can now help more people because you’re working with much more people in the day.

And then, the final comment on the model would be, what Pat spoke about in regards to franchises, it is really hard to franchise a small group model. Not saying it can’t be dumb, but it’s hard. And so when you look at your local competition, most of your local competition is in the large group model. Not to say there aren’t others, but, you can really create a point of differentiation in your in your local market by having that small group model. So it really is the best of both worlds standing out from the competition, having the impact, by still looking at, we call ’em customized programs. So the clients aren’t having, having
individualized, written out programs, but the program is customized to them. It’s not just a workout of the day. So you’re able to kind of fit in all that you want, give the client all they need and stand out in the market.

Very cool. So let’s move through the process. How, how do you feel like marketing small group may be different may work for somebody might be attractive to a business owner?

So the nice thing about marketing small group is typically depending upon where you are in the country or, what your, what your local economy is, you’re probably charging 250 plus per month. West coast LA markets, you’re easily double that. I’m based in small town Maine, so two 50 is a, a good entry point. So, I’m sure we’ll, we’ll talk a little bit more on membership and pricing, but my point is, your client is coming in at a higher price point. So from a
from what you do for marketing, I’m okay doing things like, we do really well with gift cards, giving, giving clients and or people in the community, a hundred dollars gift cards, $200 gift cards to then come in at an entry point where, in large group training, you’d be losing over a month, maybe two months of revenue if you gave away that gift card. So because your average client is paying more per month, you’re able to get more creative with your
offers to get them in the door. Things like gift cards work really well. Also if we look at respect in your local community, if you, we do really well in the small group model, having good relationships with, primary care physicians, physical therapists, all of those complimentary businesses where, if you build a relationship with them and they find out what you’re doing, they have the clients that maybe got hurt doing something else. They have the
clients, if they are familiar with exercise, they don’t want us just stick ’em in a health club or they may not be able to afford one-on-one training. So from a financial perspective, you can mark spending your time kind of doing that gorilla style marketing, where you’re going around and building
relationships with the, with people in the community that have similar clientele. Somebody like a good doc is gonna be much more likely to refer to somebody that runs a small group model where they know the patient is gonna get still good programming, still good coaching, still
good care, still be able to work around injuries and not just thrown into a class. So you’re able to, you know I don’t wanna say leverage, but, but really double down on those, those marketing strategies where those strategies may not work for some of the other models. They work really well with small
group. And then the final thing I would say is, this underlying benefit of it being a small group. So if it’s a small group of four to six people, they’re gonna have in a session, they’re going to have a lot more conversation than if you were in a class of, say, 20 people.

You might, if you’re in a class of 20 people, you might only talk to a neighbor of yours, or if you’re a one-on-one, it’s just you and the trainer. So I do feel like there’s an increased amount of referrals that come from the small group model because they want to have kind of their, say click,
their surrounding of friends, they kind of almost recruit them into their session. So I would say you see an increase in referrals, an increased amount in referrals compared to some of the other models too. So those would be the, handful of things that I would double down on from marketing small group.
All right, so you, you touched on pricing briefly a moment ago, but, let’s talk membership and pricing.

So the biggest thing to account for with small group with membership and pricing is your staff. And so delivering small group personal training, if, if you’re by yourself, to give a rule of thumb, you might be able to get up to 50, 60 clients and if that’s your ideal business, great, and we’ll build pricing around that. If your goal is to work with more clients than that, then you do have to factor in a small group coach is, usually a little bit more
highly paid than somebody that’s just gonna come in and deliver a workout of the day. So you want to be competitive with what you pay them, but the biggest thing is you gotta factor in that cost into your membership and pricing, as far as, small group pricing, that’s obviously gonna range
depending upon where you are in the market. A rule of thumb that we like to use when you’re looking at it per session is you’re gonna be anywhere
between a third and a half and about a half of what you would normally charge for one-on-one private training in your market. So for us, if we charge, a hundred dollars an hour for private training, we might be in that 30 to $40 an hour range for small group personal training, so that, that draws that
nice blend of, you can recruit a lot of people from the one-on-one world and, and kind of in a, in some degree you’re, you’re upselling, but it’s, it’s not positioned like that for them. They’re getting just as good of an experience and, and actually saving money. And then you can get a lot of those clients from
the large group model that may only be averaging, 15 or $20 a session, get them over to this small group model.

So using that as a rule of thumb. And then we of course, want to package that up into a monthly membership where they’re paying, yeah, they might pay for a certain number of sessions, a certain frequency per week, but they’re being billed monthly. We certainly don’t want to
be we want to try to get away from the just pay per session or the punch passes or any of that, that may be common in the large group model, small group model. We really want to double down on reoccurring billing monthly membership and build it off of that taking your
staff into account and that kind of third of what would be one-on-one training. All right, so let, let’s keep this, let’s keep this rolling. Let’s talk management.
So in regards to your people, if you have people delivering the small group people, your team, delivering the small group personal training model, this model is probably the hardest. And I don’t say that in scaring, but in just observing, you do want to, like, you can get away with not having
leadership management in a one-on-one model, right? Because you have your trainers, they might be independent contractors, they might be employees, whatever, but they have their clients, they write their own programs for their clients, they kind of do their own thing. And, that’s fine if it
works, but we also know that that runs into issues as far as, them leaving with their clients and, all the challenges that come with that. But you can get away with not having strong leadership and management in a one-on-one. And I would even make a case for some of the large group models where it’s show up,
deliver the workout that’s planned and go home. And although it’s probably a fine workout of the day product, and there’s certainly a market for that, it doesn’t take a lot of training other than knowing the workout with small group, you, you really are pulling the benefits. Like if we go back to
the model, you’re pulling the benefits of tweaking the template, taking notes on clients, tracking weights.

Obviously in this small group model, you can, you can really attract that client who, they may need some of the benefits of one-on-one, whether that be most commonly due to injury. You can service those clients in a small group model. That means, all that said is, that
means that your team has to be really well trained. So we recommend in a small group model having a meeting rhythm with your team so that you’re all on the same page on what the program is. You’re all on the same page with how you’re progressing and regressing. We’re all on the same page of how we
take notes, how we, how we’re tracking, our tracking, our injuries, all of those variables become very important and certainly stand as a differentiator to the public, but internally really needs to have strong management in place in order for it to scale. So we’ve kind of worked through everything else. Now, let’s talk about one of the, the other kind of, I think key points and perks about the small group model.

Let’s talk money. So when done right, the small group model is, is the most profitable model because you’re able to
service more clients than one-on-one. So your revenue’s higher, but you have better margins than the large group model because you’re making more per client. So, when we look at our, our money as a whole, so this is not necessarily looking at membership and pricing, this is more so looking at the
money coming into the business. I would just want you to take into account the, expenses that come along with a small group model that you may not take into account with some of the other models. So, for example, we recommend a financial model that is 40, 30, 30. So 40% goes towards
payroll, 30% goes to your expenses, and 30% goes profit slash taxes slash in your pocket. And so in order to have the 30% that we all want, which is the profit and the retained earnings, we have to have a really clear picture on the 40, which is our payroll, and the, and the first 30, which is our expenses.

So with the small group model, you are generally speaking, going to have a little bit higher payroll as you grow your team, because as I said they’re generally, a little bit more, you know, better compensated than in order to stand out in the competition than the, person that’s just coming in and delivering a Group X class. So you will have a more expensive payroll also, if I’m servicing 30 clients in a session as opposed to four to six over time, I’m gonna need more people to work
with the clients. But you’re also generating more revenue, but just understand your payroll’s gonna have more expenses. And then under base operating expenses, you don’t need to, but you may have other expenses, like maybe you choose to spend a little bit more on continuing education
because you’re able to use that as a point of differentiator where you can work with maybe a niche market in, a lot of our gym owners that we work with, work with specialized populations whether it be injuries or that that kind of rehab population, very underserved market, and you can service them in a small group model, but maybe you have some more expenses on the continuing ed so that your coaches are up to par on that stuff.

You also may choose to, when we go back to the model in regards to notes and programming, you may have a software, a programming software that helps with that compared to, with one-on-one or large groups, you could probably get away with writing that on a spreadsheet or writing it on a whiteboard and be okay in the small group model. It’s certainly worth consideration looking at a software to help track this stuff, but marginally it’s not
gonna, it’s not gonna change your business from the expense side, just take that into account. But overall, very, very profitable model. Both the impact to the clients and the financial reasons of why we run it. But we love the 40, 30, 30 model to run in as a financial
model for this gym business.

All right, so for people who wanted a little bit of a deeper dive in the small group, which we get questions about periodically or for people who are just trying to find the best path forward to, to build a durable, profitable business that is resistant to increased competition, that is something that gives you a point of marketing differentiation. Hopefully this was a, a, a pretty, pretty good kind of first snapshot of where small group might fit and how it might be the, the right model for you. I is, you build your ideal business. So if you’d like more information about small group training and how we can help you
put that into action in your business, just shoot me an email at [email protected] and I’ll get you over the details. We actually have a pretty thorough special report that you can get it and it does a deep dive into a lot of what Doug just covered and much more. So thanks for listening and we’ll talk to you soon.

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