Fitness Business School – Your Business’ Magic Number

Full Transcript

Hey, everyone, Pat Rigsby here and today I wanna talk with you about the magic number you need to
know to create your ideal 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.

I’ve been talking about this concept of creating your ideal business
for seven or eight years now, and, and have really been thinking about it for a few more years than that
because I’ve owned or co-owned over 30 different businesses
primarily in the health and fitness industry. And I’ve built businesses that have scaled up
and been big and successful by a lot of external metrics.
I’ve pursued goals that seem like they would be exciting or fulfilling how many franchisees
winning awards, gross revenue numbers, franchise wide sales numbers, number of franchisees, all those things. And what I came to find is they were often very hollow, right? Like they were just not
exactly what I thought they would be. And in fact, I think, um, it’s very common in our industry, people
pursue the wrong things, kind of assuming that there’s some correlation between the outcome they
actually want, and that top line number. So a lot of people may say, well, hey, if I generate $50,000 a
month in gross revenue, then I’m going to make this much money personally, or I’m going to be able to
afford this type of lifestyle, or I’m going to be able to kind of remove myself from certain day to day
activities in the business and play a better role.

I know that I made some of those mistakes. I vividly remember thinking, okay, when our business
hits this revenue number I kind of had this vision for how my life would look. And
then I remember thinking, Hey, when our franchise makes the entrepreneur franchise 500, that’s
this barometer of success that I kinda had these assumptions about, hey, what, what my life
will look like, how much money I’ll be making, what my role will be? And without exception, I was
wrong. And I, I think that’s a common thing. But when I talk about creating your ideal business, a lot of
times that’s kind of abstract for people because they’re so far into the weeds right now that they, they
don’t know exactly what that, that looks like. A lot of times they’re thinking, well, here are the things I
don’t want to do.

So what do I actually want to do? And that is definitely where
we want to go. We wanna pursue a business that we love owning. We wanna pursue a business that
gives us the lifestyle we want. So what we’ve done is try to tie a metric to that, because if you were to
ask somebody in our industry a lot of times, like, Hey, how much do you earn per hour? They’ll, they’ll
quote you what they earn during a training session. And so they’ll say, well, I earned $75 an hour. But
their effective hourly rate looks very different than that. A lot of times that effective hourly rate, you
know, may be $15 an hour. And so what, what does effective hourly rate mean? It’s how much money
you earn for the number of hours you work in the business.

So, sure, you may earn $75 when you’re training with somebody, but you may not, um, be
earning a specific amount of money when you’re writing programs or when you are posting on social
media, or when you’re doing data entry for clients whenever they enroll or
anything like that. And so all those total hours work. So if you, if you earn a hundred dollars,
but you work 10 hours, then your effective hourly rate is $10 an hour. So what we’ve done is identify
basically a number by looking at a pretty big sample of people who have what we would
call an ideal business. They’re at a place that they’re really happy and fulfilled with
what they’re doing. And, and we, we identify this like, what’s it gonna cost you to live the life that you
wanna live?

And I’m not talking about, driving Lamborghinis and owning private jets. I’m talking about being able to support the lifestyle you wanna have, the, the, the things that, that are
needs, the things that are once the, the, the safety and security that come with savings in retirement.
Um, if there’s a giving component that you feel, um, is important to you, then being able to meet that.
So we, we identify what that number is, and then we divide that by the number of
hours, the people who have these ideal businesses typically work on average. And we, and we come up
with what we call this magic number. And the magic number is basically the desired, um, effective
hourly rate. And quickly we see this gap, right? We see what we want from our business, what our
business needs to yield for us to feel like, man, this is ideal versus where we are today.

Now, what what’s great about this is a lot of people in our industry do get great satisfaction from parts
of their business today. They love the people that they serve. They love being their own
boss. They love having some, some sort of flexibility and autonomy. They’re compelled
to, to make changes in other people’s lives. So they’re getting that sort of fulfillment. But we
also recognize that they’re working hard and they have dreams of their
own, where they want to serve their own family just like they’re serving other people. And so what our
goal is, is then to, okay, let’s identify this, this point where we are this point where we want to go and
know that, hey, if you’re kind of happy now with some of the things that are going on, or if you’re really
happy with some of the things that are going on as we move towards this magic number, then it only
gets better, right?

And you’re gonna see that progress and you’re gonna get motivated. And what’s great is it’s getting
better. Like, we can manipulate that number in a number of different ways. We can find
ways to delegate and elevate your role in the business. We can find ways to generate more money,
because a lot of times people pursue this and think it’s just, Hey, I’m gonna generate more money. And
that solves everything. But the challenge is, well, if you are working more hours, that’s probably not the
the way that you want to go long term. So we work very hard in helping people reach that magic
number, their desired effective hourly rate. And that actual workload that they want to
have, we approach solving that problem in a number of different ways. And it works no matter what
market you’re in, what type of business that you operate.

I mean, you could be in New York or LA or you could be in a small town in Kentucky. It works if you’ve got a one-on-one training business, if you’ve got a group training business, if you’re online, if you’re offline, if you’re hybrid, if you, um, are working outta somebody else’s facility or you’ve got your own big facility, this kind of methodology, this kind of approach works. But the reason I wanted to touch on it in this episode is because look, I’ve been there. I’ve seen growing up in a, a
household where my dad owned an auto repair business. I understand the long
hours and the money stress and the fights and everything else, that frankly, that’s why I didn’t jump
straight into entrepreneurship. And so I was immersed in that. I remember going and working in his
business, um, for a decade on and off, that was kind of my part-time job.

And I’m like, man, I don’t want anything like this. Like, if he goes on vacation, his income goes on
vacation. And over time it became a little bit different. I said, okay, well, I’m gonna build
something to scale so other people are yielding income and offer some flexibility for me. And
so I fell into that trap of bigger, bigger, bigger, and that will cure all. But ultimately, I arrived at what
ideal was for a small business owner. And I, I say that knowing that it’s different for everybody, but
there’s kind of a general framework that applies, right? We have a, a, a lifestyle that we want to, to
have. We want some financial security and we want to be able to provide for the, now we wanna work
with a certain type of client, we wanna play our best role. And I think we want to
not feel like our job owns us, right? We want to have some flexibility. So this magic number is a big step in the right direction for a lot of people. If they’re not people who get that concept of ideal quickly, then this is something that will help. It’ll help them wrap some, some tangibility around it, if you will. So if you’d like to learn what your magic number is and kind of where you want to go, then shoot me an email at [email protected] and just put magic number in subject line and we’ll set you up and we’ll walk through it. We don’t do it with like a calculator or anything because we want to add context. And it’s more important than a number. It’s making sure that you know what that desired
destination is. So that’s how you can use a number to drive your progress.

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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