STOP Making This HUGE Financial Mistake in Your Fitness Business
Okay, so today I want to talk about the number one mistake I see fitness business owners making in finance specifically that holds them back and also strangles their ability to grow and expand and build that business of their dreams.
So when it comes to finance, so many of us in fitness just, we got in here for the heart we got in here for the people we got in here for the fun, the transformation. And we almost roll our eyes when we start hearing people talk about finance. But deep down, there’s this insecurity, that we don’t really know what we’re doing. And we’re driving our business to the ground. And how is it possible that we’re not making the profit that we want every year, even I see a ton of people in fitness. And this is business in general, but not paying themselves. Because they’re worried they don’t kind of like taking what’s left and paying themselves. And I want to talk about the biggest thing that I see happening, that if we can clarify this and streamline this, this could be a breakthrough moment for you in your business. And that has to do with breakeven, otherwise known as what is your margin? And if you’ve been around the business block once or twice, you hear this and you feel like you should not and be like, yeah, what’s my breakeven? Oh, that margin got to know that margin. But like, Do you know what it is? Right? Okay, if you feel like kind of cringe worthy in that last statement, you’re in the right spot, because I love teaching people about this. I am not even a numbers person. I’m just a total geek about running a better business. And if you can teach me how to run a better business, you have my attention. And if I have your attention, you’re part you’re like me like that. So let’s talk about finances. Here’s what I see happening a lot. And it’s so easy to fall into this trap. But I literally look at it as like, this is quicksand in your business, don’t fall for it. And that is the whole gut instinct, yes to an expense move. Somebody says hey, so and so. And it almost always if you’re like me, it’s almost always when you’re walking out the door. When you’re going to a meeting, when you’re literally in transit, someone flags you down and says, Hey, you know, the my zone thing or the software that we have? Or hey, the cups that we ordered, we need like 20 more? Do you mind if we just put in another order for cups? And you don’t know? Like, I mean, what’s the 20? Or of cups? is it’s like a $200? Expense? Yeah, probably it’s around $200 expense, but you don’t maybe know. And you’re like, Oh, you need 20 of those. Yeah, and you keep going? And you don’t think about it. So 200 bucks, can you afford $200 this month? I don’t know, let’s pretend it’s December. It’s not a great month in your business. Why? Because everybody’s binge eating and in holiday mode. And they’re just not here for fitness. Because why all deal with you in January, December tends to be a super expensive inventory month fine. If you’re super profitable, no problem, buy all the things get ready for the next calendar year, pay less in taxes, I’m here for that. But don’t just make a hip shot reaction to something you don’t really know the data on. And so here’s what I see happening is people going yes to something. And looking later at the month, the accountants like you lost two grand, what. And you go back through your credit card, and you go back into the numbers, and you start highlighting random things that you said yes to. Right. Sound familiar? I’ve done it too. I get it. I’m not here to be the queen of everything around finance. But here’s what I found to be super successful is you need to understand what your break even is. And I am going to link down in the comment a template that I’m just going to share with you because it’s so important to your business. download that and run the numbers, where you want to start with is if you look at the last six months, just take six months, and where all your expenses and itemize them out total in six months. So if you spend 200 bucks on your phone system, then at six months, that’s $600 right? $600 Great, get all the totals down that you want some aggregates there’s something like six months, a year, two years, three years, if you really want to be epic, I would say no more than 12 months to make it more pertinent to today. I don’t want you to total all that up. And in that I’ve actually just done it for you in this in the template, but you get the total and that extrapolates your average monthly spending. And the average monthly spending gives you the total dollars that you can anticipate spending in your business each and every month assuming you don’t make extreme purchases. And so when you know that number and let’s just say it’s 10,000 bucks, let’s just say every month $10,000 is pretty much accounted for between all the different software’s the rent your people some marketing and some of those little things that you forget about like taxes or office supplies or the cleaning supplies, all the little things that you don’t think about. But they add up, let’s just say it’s 10 grand. And you have what’s called cost of goods sold, which is another kind of
roll your I moment. But you have this margin, like, what do you have to pay for every dollar that comes in how much is going right away to paying something before your builders put it to your business, and a lot of people include staff payroll in that number. In professional services, staff payroll, is the bulk, I mean, rent and your people and then fitness, those are typically like the biggest bytes into your budget. And so far, I said staff before his expenses, typically, that’s your administrative staff, your coaching staff tends to go above the line in fitness, right? Everything below are predictable expenses that typically do not change by the month above are all the variables that change relative to volume of the sales. That’s the number, right, that’s the key number. And so if you say, Okay, I have 10 grand every month that’s predictable. But I’ve got a fluctuating doesn’t matter. But for every dollar coming in, I know that, let’s just say 25 cents is going to that trainer 75 cents goes to the rest, then you know, when you say yes to something, you can’t say yes to something unless you’re bringing in enough revenue to cover the difference. So let’s be super simple with the math here. $10,000 in expenses, you pay your coach 25 bucks, per $100, you collect, just say that’s average. And you’re like paid, it’s not averages, like chasing a moving target. Yes, that’s why it’s not in the predictable expense category. And it’s up here, where it’s a percentage, typically where you’re going, let’s just say 20% goes into the pockets of your team. So now you need to say for $100 that came in $20 of that go into the team. And the rest I have for expensive. So before you say yes to the $200 sale, you need to know that that $200, you don’t just need to go make $200 with a sale for a first time client, you need to make $2,200 plus an extra 25% On top of that, right. And so $250 is what you have to go and sell. I prefer having a sales driven organization. What do I mean by that? I mean that instead of trying to cut and trim the cost down and get to be Ebenezer Scrooge with your finances, you say I’m willing to say yes to 10 or 20 more cups, but I know that I need to go and close Joe, who I’d had a beer with last night who was so close to buying. And if I can do that, then that’ll be 200 bucks to Joe. Okay, that’s about 200 bucks. Okay, I’m still shy about 20. But I can tell Joe, that supplement line, oh, don’t get stuck there. Because you only make 40% on the supplement line. Now you still got to work more with Joe Joe’s not there. Joe can’t get you that 250 bucks until you say yes to this, you don’t know how you’re generating enough sales to cover this. And don’t just cover it with product product that you get small margin, if this makes any sense to you, awesome. If this is confusing, I want you to write in the comment section below where it feels confusing. And we can do an entire training on this. My point is it’s very important to not just say yes, in a gut reaction to expenses as you’re walking out the door and to be super responsible to know, Do I really have the budget this month? And am I confident that I can generate enough sales to have that margin taken care of for all those variable expenses. And at the end of the day, I can still cover my overhead is what it’s called for the expenses that typically don’t change. And if you can do that consistently, and you understand that relationship, you’re gonna run a good business. And you can even get profitable because the more nose you say to extra expenses, the more the money trickles down to that bottom line, which is your lifeline as a business owner. Alright, if you liked today’s video, I want to invite you to like and subscribe to this channel because this is the channel where we share tips tricks, give education, small little nuggets that you can have in bite size for to be able to transform your business and really build something and a life that you’re proud of. So like and subscribe, go ahead and comment if you have any ideas for new videos that we could shoot for you that would help you or what you’ve specifically liked about this because I do get into these comments and really enjoy reading your thoughts.
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