Fitness Business School – The Magic Number

Full Transcript

Hey, Pat Rigsby here, and in this episode I wanna talk with you about a magic number that can transform your business. 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.

After owning businesses for about two decades and coaching business owners
for, I guess, 18 plus years now, it, it’s, it’s been interesting to see how people would measure success or
how they would kind of forecast their, their future and then say, okay, well, I will be happy when
blank. I’ll be happy when we have 150 clients. I’ll be happy when we’re recognized in the local
paper as our town’s best gym. I’ll be happy when the business does $200,000 annually in revenue. I’ll be happy when we move into this type of facility or some other kind of, I don’t wanna say arbitrary metric, because obviously for those people, there may be some relevancy and there may be a really loose correlation. But I mean, I’ve been through, through that same thing, right? Like, I’ve been at that point where I thought, okay, when we get to a hundred clients in my first training business, we’ll, we’ll be, we’ll be good, or 200 clients, or 300 clients. And that number kind of kept evolving. Then I remember thinking, okay, when our business does seven figures, then we’ll have made it. And then other things, like I, I knew when I got into the franchising world, I thought, man, I will have made it when we’re recognized in the entrepreneur franchise 500.

And I think what I learned along the way was that all these kind of arbitrary metrics or types
of recognition or whatever else, they were really kind of inaccurate indications of, of where we
were successfully as a business or how I would feel about being a business owner. And so, you
know, a few years back, it, I mean I guess it’s been seven or eight years now, I set on this
path to create my ideal business. I had built a number of businesses. I had grown companies to, you
know, a pretty significant size from where we started. I mean, significant relative, but from
complete bootstrap startup to 275 franchisees, and hundreds and hundreds of additional clients, and a
staff of like 40 people, but bigger didn’t necessarily correlate with better or what I
was actually looking for in a business.

So I started to think about, okay, well what’s important to me as a business? And I got
into the idea of yes, I want financial security and still the ability to create experiences
and enjoy the lifestyle that I would have at the moment. So that balancing act of being able to have
security for the future, but enjoy today to work not an unreasonably low
number of hours, but not to feel like I am owned by my business. So a more manageable workload,
and then doing work that was fulfilling working with people I enjoyed working on things that I was
good at and was fulfilled by doing. So I’ve explained this to people and, and this concept of
an ideal business has really resonated with a lot of people over the years, primarily in the fitness, sports
performance, health landscape.

But even outside of that, I mean, I’ve spoken on the topic in non fitness industry events, I’ve
coached people outside the fitness industry on it, and I think it’s been well received,
but in some ways I think it’s abstract for people because they still come to me saying, well, I need to get
to a hundred clients, or I need to make my business revenue needs to be $20,000 or $40,000
or whatever per month. And what I’ve recognized is there’s not really a way to directly correlate any one of those other metrics with what we would consider ideal. So what I’ve done is craft a magic number that basically is this, fluid type of thing that could work for any type of model that could
work for a business owner. Whether you want to be a solo printer or have a big team, whether you
wanna do one on one training, small group, large group, doesn’t really really matter online, offline. but a number that we need to focus on that is basically kind of tied to your effective hourly
rate. If you’re familiar with this, your effective hourly rate is basically how much money you earn divided by the actual number of hours you work. Because when I talk to a fitness business owner, a lot of the time they will say, well, yeah, I make $75 an hour, because that’s what they charge for their
training sessions. But if you look at all the work they’re doing in their business they’re not
being paid for entering data into their client management system. They’re not being paid for the time
they’re doing program design separately or something like that. And so maybe this person is earning
$80,000 a year, but if they’re actually working 55, 60 hours a week, and
they’re only actually being paid that $75 an hour rate for maybe 15 of those hours a week, now the
numbers start to look a little bit worse.

And that effective hourly rate’s probably down under 20 bucks an hour or something like
that. And it’s hard to have your ideal business when you’re earning under $20 an
hour for the hours you’re actually working. So what we did was go and look at what the most
common small business owners we’ve worked with over the years,
when they come to us they’re working at least about 55 hours a week whereas, you
know, I talk to the people who are owners of their ideal business, and usually that number’s a little
closer to 35 hours a week. And those business owners that are doing pretty well have some vacation time built into their life. So the number of hours they’re working
annually is significantly lower, but for the time they’re working, they’re earning significantly more.
So how much do do we need to earn per hour to, to have our ideal business? Well, that’s where it’s fun,
because I think in, in my world, that number, man, it could be anywhere depending on what, what you
are actually looking for, what ideal is for you, what kinda lifestyle you wanna live, okay, what kind of
costs are you gonna have for your cost of living, your, where you, where you choose to
live, the type of residents you have the type of car you drive, the other expenses you have, do you
have kids? Are you paying for college tuition? Are you taking vacations?
Are you spending money on other type of entertainment expenses? So like, what do you need to
personally earn? And obviously if you are in New York or Manhattan, I mean, well in
Manhattan or LA or San Francisco, then the, the costs associated with your ideal being there are
probably pretty different than they’d be in Louisville, Kentucky or in Indianapolis or in Cincinnati, Ohio or something like that.

So what we’ve done is come up with this kind of cool formula that I can’t really articulate probably
very well in a podcast because it’s very much number focused, but just identifying, okay, what’s the
lifestyle that you aspire to have? What are the costs associated with that, you
know, and factoring in things like savings and retirement. So how much do you need to earn? And, you
know, how much do you need to earn per actual hour worked? If you want to have a, a, a career, a
business that doesn’t feel like it owns you, that because maybe, maybe you need to earn
$150,000 a year to have your ideal lifestyle that may be a piece of the puzzle,
but it’s not the whole puzzle because the quality of life associated with earning that type of income
while working 35 hours a week is very different than the quality of life associated with earning that kind of income if you’re working 80 hours a week.
So we’ve factored this into a formula that’s very personalized very much unique to
you. So I’m, I’m really excited about it. We’re testing it out with our clients now and pretty, pretty
excited if you’d be interested in testing it out yourself obviously we wanna make
this a pretty personalized experience, so we can’t take a, a huge volume for, for taking people through
this and eliciting the right data. But shoot me an email [email protected]
and just put magic number in the subject line and I’ll set you up and we’ll walk you through and figure
out exactly what you need to have your ideal business, what needs to be in place. And we’ll also figure
out kinda where you are now as far as your effective hourly rate so you understand the, the distance
you have to cover to get there, and it becomes really this tangible, meaningful thing that hopefully can
be a motivator for you because it’s pretty simple to create a roadmap if you
know where you’re trying to go and where your starting point is.
So that’s something I wanted to share today. A little bit different than a lot of common podcasts,
but I think this can be a true game changer for a lot of people because having clarity is a real key in, in
the pursuit, the execution of what it takes to build your ideal business.

Thanks for listening to this episode of the Fitness Business School. Before you go, I have a quick announcement. When I first connect with a fitness business owner they almost always ask me, “How can I get more leads or how can I get more leads and client?”

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