How Independent Gyms Can Beat Orangetheory with Craig Patterson

Craig is what we call a CrossFit OG, he’s been in the game a long time. In 2004, he started the MadLab Group, a business consulting network of gym owners, with the main goal to professionalize the fitness industry. Craig is passionate about what he does, and he wants to show independent gyms owners that they can take on the Goliaths of the fitness space.

In this episode of The gymOS Podcast from PushPress, Craig Patterson discusses how independent gyms can take on the Goliaths of the fitness industry.

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Transcript

spk_0:   0:00
Welcome to the Gym OS podcast, helping fitness professionals become better business owners. One episode at a time. What's up, everybody? Dan Weyman, right here from Push Press with another episode of the Gym OS podcast, where we're helping make you a better business professional. One episode at a time. Today we've got Craig Patterson. Where Patty as he's known in the industry, Craig has been working on the Mad Lab group for quite some time. It is a business mentoring program that has a very unique insight on how you should run a gym. However, today we're not gonna talk so much about those. I'm sure if you paid attention to stuff Craig's talked about, you understand that he believes in making the coach is the center of your your business, making sure that they're paid well and making sure that your coaches are incentivized to make sure clients have a great experience because that's gonna trickle into a great business, help you make more profit along the way and create a business that's ultimately sellable, is which, Which is the goal today. We actually talk a lot of things about how franchises work, how private equity and venture capital. Um, creating, creating competing businesses in your market like an orange alert, finishing at 45. And are those really threats to your business, or might they help? We have some thoughts which we dive into in this episode, among other things. So let's just jump to it. All right? What's up, guys? Welcome back to the gym. Noah's podcast from Push Press. Once again, this is Dan. We're here CEO of Bush Press, helping try to make each of you better business owners one episode at a time today I got with you, um, kind of a legend in this space, at least in the CrossFit functional finished space. Um, preg Patti Patterson. I myself, my gym was a member of his group Mad Lab group. Um, many of you probably already know about this group in the past. Um, we're here today to talk about a lot of the aspects of business, the business of running a gym and kind of the stuff that happens under the hood behind the scenes that follow the money type stuff in the gym industry that I know a lot of you guys aren't really thinking about, um, included in this dialogue. We'll start to dive down some of the concepts of how to run. Ah, more professional Jim, how to get your coaches paid a little bit more. We'll give you some tips and tricks on that and maybe give you some resource is to click off to you, too. Get a deeper dive that there's something that you're interested in, You know, like we've been working on parallel paths. And, um, I think we're going to keep reconnecting because both of our passions and mission here is to help Jim owners really raise their businesses. Get paid, get there, get there. Coaches paid help their clients better. Um, so again, like, quickly, why don't you give us a like Give us give us a brief recap like you've been in the cross the space forever. Now you

spk_1:   2:55
know, When did you come along? Well, we were just talking about it like I was a mechanical engineer for a decade and maybe 1/2. I worked for a couple for 200 companies and it was on sustainability. Really. You know, we worked on building design. I started my own cream building sustainably an engineering firm in 2001 and you were looking at buildings that lasted, like 100 years, 150 years, 200 years. And with the return on investments for, like, 25 years long, stuff like that. Like looking at things, you know, we go into architects in schools and hospitals and places that cared about things like that. You went to the developers, they didn't give a shit. They're making money quick, and it turns around and like, I start to see the similarities in our industry, Like what is quick with his long term versus what? A short term. Anyway, I started in 2000 for, um there was only one CrossFit gym at that time outside of Craig's and in Santa Cruz. It was in Seattle and I had friends. I just gotta have sort of a hostile takeover. My best friend of my engineering firm, I busted my ass for 34 years on that thing. And then I was like, I gotta pay out. I was like, you know, I was gonna do down the Seattle and when the day workers, yet it was like, but you couldn't find someone to pay, you know, there was no class or no, You couldn't determine who the coaches were. It was people fooling around on pommel horses and rings and doing pull ups off of bars and, you know, throwing shit. And I was like, Wow, what the fuck is this gonna think? You know, I mean, and then, you know, a few people have trouble together and say, Let's do the workout of the day tells that you go for five people going crazy, doing all kinds of stuff and like throwing the Olympic waits around. I'd never seen Olympic weightlifting in my life for a small town. Anyway, I was like that doctor. No glass one was in town, and that night there was some function. I just met him and we started talking. I talked to him. We talked for seven hours straight, spent the whole next day together, and he convinced me not to go back and started their injuring firm. And that the world needed professional coaches and the biggest health care issues there. Every Western nations gonna be bankrupted by Type two diabetes and fuck obesity. And that was that was the mission. The mission wasn't professionalized coach thing, and also, you know, it's fine. And we're gonna get Jack. That was only 33 at the time. And you know So Greg was a personal trainer. You went down that went down to Santa Cruz and just hung out with in probably every month for shit the next six months. Nine months. I talked to him on the phone couple times a week, sometimes every every day. And I started personally training people. Andi taught me how to be a really good personal trainer. And, you know, I went from charging $5 an hour apart. Teoh. You know, I raised my race that 10 bucks and last half my clients, you get kicked out of every community center, just training people. And eventually, I, uh I gave up my engineering business license and just said, Fuck it, I'm gonna do this full time. And at that point, I was like, I was a high tech office building and they had a nice gym that we bought a bunch of equipment for the open spaces and I started to personal training people, you know, But eventually I got 50 bucks an hour, and then, you know, I trained them. 5 10 15 usually 10 to 15 personal training sessions. And then Greg was, like, at just put him in a little group classes. He was doing the same thing in Santa Cruz. This was he went from, you know, having a whole day full of personal training to having three or four hours and having three people and five people and then maybe never 10 but maybe a smaller groups. And we're kind of parallel past and kind of figuring out how this beautiful thing called CrossFit they developed was going to be implemented into the world's Jim's or what they were going to look likely no one had a clue. Um, how about if I could deliver this thing? You know, it was, like, totally wide open and, uh, ran after a while. I, um I just you know, I had 30 35 clients and they all the personal trainer's got together and kick me out of this space and start my own first gym. So that was 15 years ago, down

spk_0:   6:57
quite some time in the industry, So fast forward to today. 15 years later, um, you've been working on the Mad Lab group trying to professionalize gyms and coaches And in this in this quest of things, I feel like you and me and some other people in these positions have seen a lot of industry trends, one trend I really want to dive into cause because to me, one of the reasons I I want to start pushed breast was it pissed me off that merchant account companies were taking advantage of gym owners who were unsophisticated and didn't understand the game of merchant processing, and thus they were ripping them off on their fees. And I could say this because and my first Jim, I thought I was paying 11 in 1.5% processing fees. And when I did the math, I was paying four and 1/2 percent and all this hidden shit was everywhere, and I was getting billed for it, so that really made me mad. 11 concept I like to really dive into, as I'm I'm working here to protect gym owners from industries. Is it the idea? Follow the money right? And one trend we're seeing right now, in my opinion, is private equity is getting involved in fitness. You have some experience in this. Can you speak to some of like what you've seen and maybe some of your experience in terms of private equity dipping their toes into our world, which is fitness.

spk_1:   8:08
Yeah. So, you know, we got criticized in the past for criticizing CrossFit and stuff. You know, I love across that I'll always love it. And, uh, I look at this thing now. I got out of corporate America's. It was ugly. People didn't take care of each other, The shareholders. I mean, I work for a comedy. 7000 please. You know, it was really kissing up to your boss to go up the chain command. It wasn't based on merit. And, uh, you know, there was the way they treated their people. The in their charter, they sure their shareholders first people are second right, which is now you look at orange theory and 45 4 that was curves and becomes yoga and Zuma all these things, all these franchises, you know, we can beat them independent, generous, convey. Eat them in my in my town And a lot of the town's Amanda gyms are in there doing things very differently, and they don't see those guys is a threat at all. We love them, actually, because they're bringing. They're highlighting what expensive products and their insurance. So many people out of there that they're coming to us, right? So I just want to talk a little bit about how those franchises a run. We'll either run the way, and it's like it really is. Dan is simply, um it's an investment strategy. It is not designed to professionalize the coach, that's for sure. It is not designed for the clients. Thio stick around, get what they need and be healthy and stay in a gym for a long period of time. And it's actually not even designed for the, um for the franchise owner themselves to have a long term, sustainable business. I mean, this is an investment strategy, so I'll give you a little story. I've recently only just had a profound conclusion or found understanding. I have. This really works with F 45 Orange theory, and I have some people deep inside those organizations that are explaining to me what the rial play is here. But I should have known this quite some time ago. I mean, I've been telling people that they should be doing it different than the traditional group class model for a long time. I get in a lot of trouble for saying that maybe I haven't said it properly, but I firmly believe there is a better way for the independent Jim or right, and that is looking at long term thinking. So anyway, two years ago, I get a guy who's a private equity guy. I'm doing a speak of speech over London, England. He goes, Listen, man, I want to come to your talk. I want to bring some investors. I'm like, Okay, what are we doing? Here he goes, man, we got this thing. We're looking at a franchise for, you know, all of the u. K. And I just been following you and geeking out for years, and I really love what you do it, you know, I want we want to have professional coaches above, right? And I was like, Okay, so he came to talk and he took me out for dinner after we had a bunch of drinks and and had some nice food. And he says I want interest you these hedge fund guys and so you know, they got me on audience with, uh, a guy was literally a billionaire, you know, it's actually it was really intimidating. Dan, have you ever sat down with a billionaire? I

spk_0:   11:08
haven't yet, But I plan to soon

spk_1:   11:11
and he looked kind of dumpy, and I didn't really want his life. E would be awfully interesting to have that life for a month or something. And maybe, you know, maybe I've become a billionaire. I don't think that's gonna happen, but it was just It was kind of crazy sitting in the room anyway, they started to play. Yeah. This is what we do. We do with a bunch of their franchise, the name franchises. I didn't know if they're English, French, and I can't tell you who these are because my guy will get burnt, but, um, they're there, and they're doing it now, so they come to be in this. Okay, we understand that you really got it running these things and Baba Baba ba ur last guys didn't run it Quite as well as efficient was we wanted. This kind of thing is okay. You know what? Your plan, It goes Well, you know, we're gonna find we're gonna find coaches. Um, and we're gonna come to them with, basically, Do you want to be a business owner? Right, Which, you know, kind of scene that all over the place. And I know with orange tree, it's a little different. It's $100,000. You could buy this, buy all the equipment and franchise, and you get locked into a really expensive lease, this kind of thing. But it s okay. Okay. Says when we get a 50% tax credit from the government for setting up bricks and mortar. Okay, that makes a lot of sense right off the back. And then I was like, Okay, well, how are you gonna run these things? What's your client development process gonna be in there? Looked at me like what? And then my guys kind of like Mike. Whoa. Fun. What are we doing here and there? Like what he's talking about, like and I started kind of hinting around. What kind of old process was they go? Well, we just do We give the we give him a 15 or 20 minutes er doctor nation. But then we throw in a new class. I was like, Okay, what are we actually gonna be doing in this class? And it was, like, sort of like a CrossFit later look like the meat. I was like, okay. And that their own spin on branding And they're still working out the branding and the marketing and the whole world will think the whole message. But it's no much different than what you're seeing out there in North America. It was like, Okay, I know You realize if you do that, you're gonna turn. What we found is you got insurance 70 probably 80% of the clients in the year when they're like, Oh, and then they got Jeannie in the back to go run numbers and they fucked around with that for, like, 1/2 an hour while we talked about all kinds of things. Then they came back and said, Yes, he's He's right. It was like, I go, That's not a problem. You lose 70 or 80% of your clients. You're over a year and the like, but it doesn't turn out to be, I don't know, and they go. We usually pre sell 300 or 400 memberships, and I was like holy far right remind me across it back in 2012 you open a gym, put a shape single on it and 100 people show up. Anyway, so I was like, Okay, well, what about Coach development? Like coach Development? How you gonna pay them and how you gonna train them? And and they're like, I don't get it. I think that we have, like, a 22 a two week course. And then, you know, there's weekly catch ups and this kind of thing I go, how do you pay them? Like it was like, whatever it could be £11 an hour, eight or something like this. I was like, You're you realized all the coaches are gonna leave it, you know, basically twice the churn rate of the clients. And they're like, Yeah, we do what we do Know that. So what I'm like Well, do you understand? What? What I do like why I'm in this room? Because I do that all differently. I go, we take, we take Every client is precious. We don't bring in 300 of time or 400 even 50. A coachman. Probably only Anil. 3 to 5 a month. And that be if I would be a lot, Um, and we take him through a three day assessment. You have a proper consul with him to find out whether there we're gonna do probably another 15 or 18 personal training sessions really get to the bottom of, you know, their health, fitness, wellness, access their pain, make sure they get out of pain, and then they can actually go into a group class. Um, and they see their coach once, Ah, once a month, and they're like, Fuck, that would take too long. We can't do that. And then they go. What about the coach training? I go. It's a two and 1/2 year process, and they're like What? And then they both looked at me That looked up. The guy I was with and they're, like, through their arms up on it was like conversation over that.

spk_0:   15:17
That that meeting was over right there.

spk_1:   15:18
Yeah. It's got a lot of the room of my guys. What'd you tell him That for? I go. It I go. Bullshit, man. What the fuck did you bring me the meeting for? This is what I'm doing. Or trying to professionalize the coach and before I got into the room, though. Dan, What they really explain? Waas, listen, we don't care about any of that. We concerned those clients we can share in those coaches. We need 20% return on investment each year for five years, maybe seven. If it doesn't go right, we're out all right, hasn't it? That's the whole set up. And it was like it was shocking. It was It was a fucking dude. I didn't talk for a couple hours. I was trying to program, and it was glad thistles. What drives our industry? This is these air, the investment strategies that drive our whole industry. And it just

spk_0:   16:03
so I actually wanna, like, really dive into that Because, like you said, this is what's driving our industry and what what the small mom and pop breaking mortar does is they look up chained to these orange theories as role models because they assume they've got it all figured out. But what gym owners don't realize is the private equity is behind these companies, and and if you actually research it, private equity companies own massive orange theory franchise groups, right? Like regions they only care about like you said, Short term return on investment. They don't really care. Like, to the extent that they care about the client getting results is how long they're gonna pay him, right?

spk_1:   16:42
Yeah. I mean, I can't speak to the whether they're good people or bad or evil or not, But it is. I'm not

spk_0:   16:47
saying they're good or bad. It's just their incentive there. Their direction is different.

spk_1:   16:51
Will you look at it? They need to take on. So you go. So now, now I'm, like, flabbergasted. I don't know what to think about it. And I'm actually really slowly and it takes me a long time. And then once I get it, I'm like a dog on a bone. But you know, e no. Maybe six months ago, eight months ago, with a new guy that joined us, He's like, Man, I've been following you for years and I have actually sold. He actually was recruited coaches for Ornish theory, and he knows everything that goes on them. He's not doing the franchise thing for years, and he opened up his own gym. He's like, I know I gotta do it differently. He goes, I love what you're doing? I love the client development process and retaining 80%. Your client's having a long coach development process where they can make you $100,000 a year and this stuff so do for on board. And I just started talking more and more about my own stories doing they're doing. The sesame goes block. It's pretty clear, man. We used to pre sell 300 membership, sometimes 400 before they opened. How in the hell are we gonna handle doing it The way you do it? And I go from a fair enough And he goes, Well, we gotta do is have a really simple system. Super simple. Anybody can. Anybody can implement it. We have to have really simple coach training, and we have to have a really simple payment of the coaches, and we need to build a handle. More importantly, I'm gonna roll that handle 300 members they want, right, and you know, the branding and the marketing is so attractive that we confined members for years to come into that thing, you know, and then we can also find, you know, coaches to come in because it's shiny and braid and people love it, right? And I go over, Do you know? And he's like, Yeah, I don't know, you know? And I was like, it just It is basically two different industries. Damp one's assuring machine. That is, to get a handle a ton of volume to yet. Cheryl is value back. The other one. We're trying to professionalize the industry. We want to be on this. This is the biggest thing right here. We want to be the gap between 45. For foreign theory, you're fucking global gyms and the health care industry. Because the most critical application in human endeavors right now is there a lot of sick people, right? All the way from, you know, type two diabetes, obesity, all these kinds of things. No fucking endocrinologists in their life is going to take their client and tell them to go to fucking orange theory. Right? No Physiotherapists was working on or orthopedic surgeon like me. We worked a lot of surgeons. It seems like neurosurgeons to they're not gonna describe their client to go into that, you know, they're going to get killed, right? They're not gonna get a terrible experience. I mean, that thing is for the hip new crowd and 20 somethings and 30 somethings like New Bar opens up and the capitalize upon that. We need I to me, I want to be the gap and, you know, we've got coaches in my facility. I got four of them. They've been there for more than 10 years. My first coach, T Bear, was an engineer with. He's been there 15 years. He's got a mechanical engineer. It's a civil engineering degree. He can talk directly to doctors, and you can talk like I got. He's got three Dr patients right now. They're sending him clients, and, you know, we doing studies on Type two diabetes in West Virginia? We're doing that stuff in the government cure cell. You look what they're doing like I've got Coach, is that you know, they're they're basically physiotherapists, and then they take people, put him in the general population over six months, right? So anyway, the tent, the horn. But I really think that's the two different industries. One needs the assess. That critical application, which is do the health care system, is gonna be collapsed in every Western nation and 20 years with way. It's going. We know weaken. You can cure type two diabetes in 90 to 120 days with proper exercise and diet. But again, it is the drug companies that are the ones that are talking to the doctors. Right,

spk_0:   20:46
Right, Right. So there's an interesting analogy that you made me think of as you were speaking there. Um, that I think kind of it kind of relates to what we're talking about. Not necessary to the doctor and medical thing you're talking about. But just in general, we are. We're operating on different planes. So in orange theory, a big box, global, Jim or whatever who are trying to maximize sales, maximize profit, maximize. You know, customers coming through versus across the gym is akin to, I would say Starbucks. Right. Um, when Starbucks first came out, everyone in the industry is I pay attention to just the financial industries in general. Everything industry was like, Okay, all the mom and pop coffee shops are done, gone. Right? And that kind of did happen for a moment, right? Almost all of the small coffeeshops went out of business. Starbucks took over, but what happened was they just created a whole generation of people like that. Love coffee became addicted to coffee, needed coffee every morning, stop by Starbucks every morning. And then what happened? People who said this coffee isn't actually that good. It's They've made a system where anybody could just come in, pour an espresso and serve me a coffee. And it's as a result, it's not good experiences, okay? And it's very manufactured, right? And that's, in my opinion, what unordinary fitness might be right now. Now we have blue blue bottle coffee coming up. Intelligentsia, we have all these third wave roasters that are coming up, and now they're focused on experience. They're they're focused on product. They're focused on delivering a better a better overall product than a Starbucks would. But now they've got 10 times more customers because Starbucks introduced the idea of drinking coffee to this degree to the world. Right, right. So a lot of people look at this trend and they go like, oh, boutiques are in trouble because orange theories air coming in that 40 fives air coming in. There's a place and Starbucks are doing just fine. With the advent of blue bottles, right, they're probably doing better than ever. There's this. There's a place for both of them. But like you said, I think personally what the product that boutique gym owner is gonna put into it because they care about their clients and they care about their coaches and they care about their community is gonna be different than the product that rolls in on a franchise train. And therefore you can actually capitalizes a gym owner in the boutique space Thio Orders of Magnitude more by actually placating and learning from these orange theories doing what they do. Well, this is kind of my working thesis. Learn what they're doing, adopt some of that stuff in your gym and keep focusing on the community and the customers to the degree that you do and and you're gonna actually be way in a way better spot in a couple years. Then you will be. Then you were before it went. So he came in. How do you feel about that kind of concept?

spk_1:   23:22
Slowly. I mean, I never go to Starbucks. Only time I ever get star boxes that someone gets it for me because in Vancouver and most urban centers now you could get away better a cup of coffee that tastes better. We better experience. You go in there like I just came from one of meeting Tom my my top coaches and Vancouver here. We made it this little coffee shop over here. My son Braxton came in with There's a nice pie book. Their damn like you loves this ice by thing A little kids come in there and they look at this book. The late brand brag. I remember taking tape over there fixing it up. So we ordered the new ice by book. Braxton signs name brought it over to the coffee shop owner. They have a little place for it in Scott Cracks written on it, and all the other kids are allowed to play with it. And, you know, I just I was That wasn't even the setup. They did that. Just when we show up this morning, that's not gonna happen, Starbucks. No way you wouldn't allow. Well, I mean, and the churn the turn of the people in there would just be forgotten about, you know, Next thing you know, his book could be sitting in the garbage were thrown on the floor or something, which would devastate you. Independent gym owners can can win this game. I fuckin love. We could easily win this game that easily. It's hard, right? But we have to do things differently than they're doing. I mean, if we started following them, the worst thing I see on the forms and that people start trying to follow, um, we're trying to follow fuckin, like your theory. And I'm like, Dude, don't you realize that thing's gonna be fucking shut down in seven years, right? All the all the people that started that invested in that are out, you know? And you can like people used to laugh at curves. You remember how many fucking curves there were at one time?

spk_0:   24:58
Oh, yeah, there was. I think I was over. There were I feel like there's over 5000. They're everywhere.

spk_1:   25:04
So I mean, that was happening. Great. Was stoked about that, right? Greg was like, Well, look what they're doing. We could do that, too, because he had that dream of going to 10,000. Jim's quickly and stuff. But when I look at it like I have had one woman who was a Curt Schilling, three curves that she came into mind you, right, like 5 2006 And, you know, people pooh poohed it because it was machines and all this kind of stuff, But I believe curves and still be around if they're independently owned and they operated it differently. I'm like, I'm sure, you know, I mean, now you got a fitness protocol. This is potent and powerful. Is CrossFit sometimes So it's too potent and powerful. And I think, you know, the world is softened that thing up around the edges. In the last 20 years, when I started doing, we killed each other. Now I go into my gym. It's not like that at all. I think most gyms we're learning moderation there, learning that you can't have, you know

spk_0:   25:57
it's about. It's about selling to the longer tail now, right? Like you're not telling that to the policeman and ex military. It's about, you know, getting people healthier

spk_1:   26:08
round foundations to change the whole world. And it's a great, more potent, um, exercise for the golden shipments and curves. But let me let me explain something like, if I got this simple thing like this when you went into this, but I've been working on this thing for a couple of months. We're gonna release this pretty soon, but it's the five shifts that independent gym owners conduce you to be the franchises, and the 1st 1 is like just simple, short term thinking versus long term thinking. You need to look at this differently than them they're looking at. This is a quantity game over 5 to 7 years. People that run it, they're designing it are pushing this thing right. We need to shift away from quality of mass scale ability. You know, I think it's still thinking in a decent facility. It used to be clean, you know? But you don't You don't need to worry about the every fucking napkin and blanket there, every piece of equipment being labeled that the brand. I mean, that's not that's what they need to do. You don't need to do it. You can do in a totally different way. It's gonna be way cheaper and way better, right? So the goal is to develop a sustainable business, one that retained If you keep your clients and keep your coaches step one, keep your clients their precious right. So that's called retention so in every business you're ever gonna be in right every business. I mean, that was unfortunate company. It was. Keep the client and charge as much as you can, right? So that line of charge of much as you can might sound unethical, but it's really you need to provide a service that their high value servers that they are going to keep on paying for for life. So, yeah,

spk_0:   27:45
let me let me drop you right now just to interject. For gym owners, that's a huge concept. You need to think it's not about just raising your rates for the sake of raising your rates are charging them as much as you can for the sake of that doing. So you need to put a product in front of them that's so valuable to them that it's worth more money to them, right? And that opens the door to charging them more money.

spk_1:   28:05
I mean, I'll go down the path of a little bit down the path of what we do because, you know, I've been studying the data for 15 years and unconvinced that this is the way to do it. But I mean, if you look at what franchises air trapped into a model that they can't get out you can't get out of. I gotta put people straight into a group class where I gotta do some little group on ramp or some little indoctrination. They can't get away from that. There's no way they could do Ah, really hands on experience one on one with a client because they will never build a scale it fast enough. Think they need to sell 1000. These franchises, they make all their money selling franchises. They don't make money from the gym's being successful, right? That's not of their hands. They make their money selling franchises. So if they had to slow this whole thing down and take it every client one at a time, right? Do a three day assessment with him. Get to make a real relationship with him. I mean this thing, what we're trying to do all comes down to basically deep, meaningful relationships on. You might even want to get his corneas to say love, and it builds community like anything. It retains its clients at 80% a year instead of 20 or 30 like they have to do, They'll be lucky if they get 30% retention rate. Really lucky doing what they dio so you can do it differently, Which is how we do it is we do a one on one assessment, one on one console to see if they're a good fit, you know, I mean, a lot of coaches just turned people down. If you're new and struggling and hungry probably can turn anybody that I know I started, I couldn't turn. I got all kinds of freaks and club footers and hair clippers that I learned to love, you know, And I got more choosy with my clients as I went, but at the end of the day, you know, if you can give him that one on one awesome experience and they're willing to pay you, you know, 275 bucks for a three session, um, you know, assessment. And then after that, we you know, you really get into their lives and we do another 12 or 15 or 20 personal training sessions, usually an average is around 18 total. And when you do that, they make these deep, meaningful connections that last right and they change your whole community I mean, when they finally get around to a group class, we sell hybrid memberships where they see their coach once a week or every two weeks or once a month. I think the maximum where you can. You're calling this off a coaching facilities once every six weeks. Right? That changes the group class dramatically. Now you got people that are really well trained that have been nurtured, fostered, and the group class changes completely from one of you know where you go. If you went to Orange Theory, it's like, Oh, nobody knows each other And it's like fucking is different group every day, and that's gonna turn where yours won't, right. And then you know that that first shift the long term thinking versus short term thinking and doing stuff to retain your clients. And if they're paying you $3 a month and they're not leaving, you're gonna have a good business, right?

spk_0:   30:53
Let me actually tell you another factor of that, too, is creating these really relationships with your customers is going to do something else other than just stop turn. It's gonna create referral systems, right? So you could start naturally getting customers out of your customers because they love you so much. They value their relation so much, and they want their friends to experience that too

spk_1:   31:14
100% down, like 70% of our new clients. We never run every the challenges. We never run ads and, you know, we got a couple 100 Jim's or network that are on hold it in different states of training. Most of them just focus on organic stuff and referrals. Your reputation is everything. If you're not losing clients, they're having great experiences. They tell people that if their heaven coming in, they're having a terrible experience and their 70 or 80% of leaving a year that builds another reputation, you know, feeling. If you look at what orders theory, we're at 45 or any of these things, they're gonna eventually create a negative perception for people to go there. And for coaches that work there, you couldn't do those things in a small town like they have to just be run differently. And the irony is, I have 45 start in Australia. They're not doing so well over there. I'm told so much so that we have Jim's coming to us and we're actually changing their whole model in the side of it. Specific ones. I can't say. I don't know what I'm gonna get trouble for that when they're gonna get in trouble. But they fight their head office all the time, right? We just really interesting that with a place where it came from, gyms are moving over to what we're doing because those gyms

spk_0:   32:27
or that those gems of the most mature now because that's where they started. Yeah,

spk_1:   32:33
but you say one more thing to that. Like if you have, if you don't lose your clients and they pay a lot of money, that's a really good place, right? But it's even simpler that if you look at, like, what if you base every decision on this? So I know, Dan, we want to get people good hard core things to go away from. And if you never joined man lab at school, I I really want to professionalize this industry. So it's hard. It's hard to push it in a certain way about a lot of people looking at doing PT first now, but essentially boiled down every decision. Dan, in three things I have to work for the clients, has to work for the coaches and has to work for the business like we did sustainability and Bill buildings where, you know, we looked at 25 year life's plate. 25 year return on investment of decision we're making. I think the same thing has to apply for gents. What do you want? 10 years and now 15 years now, 20 years now. And it's only a five year for now. I need a look at it. What do we want? Five years in that? Well, I want my clients to stick around and want my coaches to stick around. I want to make money. Right. So the client gives the wind, coach, neither win the business or needs to wear. Then how do you measure that? Well, if the clan's heir sticking around I'II retention. They're paying a lot of money. Every client value clients were doing good. I'm not gonna pay $3 a month. Uh, if they're not getting what they need right then that Portman if you're doing that part right, then it goes down to the coaches how the coaches win. Well, shit. The dollar for our you know, they need to be paid at least as good as a journeyman electrician's. I'm looking at 40 $45 now. So how do you do that? You can't pay them by the class or any of this stuff, Really, because it's not in the incentive this center has to be tied to the client. The client's sticking around, and they're paying a lot of money. Like we tie. We tried the coaches compensation and the training and everything directly to the client's success. And you got something that at the end of the day, if the coaches could make 60 in some markets. 80 and some market 101 110 Tom did 111,000 Vancouver last year in new housing crisis. Um, they're gonna stay, and then that's what changes the industry. Then you got coaching around for five years, 10 years, 15 years, hopefully 20 or 30 then they can bridge that gap to build, to talk to a doctor or a physio or whatever, and then you're truly making a difference in the world. And then the last piece is the business needs to make mine right. You set this all up in the business doesn't make money, it's gonna fail. So our measurement is a 20% people, right? And last year, mine. I wish I could talk what? Every gym in our network, But we have a few. They're better than us now. Fine financially, because I'm often the this other side of the business. But, you know, we're almost a 1,000,000 for 19. 40,000 last year, at 9.8% right after everybody's paid, everything is far from paid. There's a night that's a good business. That's a business worth invest again. As it turns out, I'm getting my 20% return on investment. It took 10 years, and every year it gets better, you know? So it's It's a long game at the end of it. Can you sell this business? The guy with that franchise After seven years, all the equipment's beaten up on all that fancies shiny stuff is beaten up. The reputation of the place is beaten up. Coaches don't wanna work their clients tonight. I don't know. I've already heard about that. Can you sell that? You know what I mean? Is that thing sellable? You think seven years, 10 years. Then

spk_0:   36:00
maybe to another bag holder, you know?

spk_1:   36:02
Yeah. I mean, where is yours? Like mine? I know I can sell it for five times E, but I've already got approval by the business developed making candidate five times. My even at my butt is, you know, 99.8% of a 1,000,000. That's that's a 1,000,000 bucks. Yeah, right. So I got one thing that has its reputation, has its integrity, has its dignity and has, you know, it's now a great business to sell and that that's what I'm passionate about. I'm really passionate about coaches succeeding my from it might World is coaches, my three of them. One of them, I'm sure, hates me. Actually, he appreciates me. The other three of my best friends, You know what I mean? Like, I get passionate about it because I really love what we're doing here has made a difference in the world. And it really pains me when I see an appendage. Homeowners trying to play the game that franchise is doing is it Doesn't, you know, just you need to have that enlightenment that that game could be beaten,

spk_0:   37:01
right? So when the one thing I want to die. Then that came up a little bit back was about about so. Ah, lot of Jim's don't think of their coach as the centerpiece of their business. And in reality it is. And, um, if we want to talk about bridging the gap between wellness provider physio, whatever and, um, and somebody's health just someplace that they can refer to or even the client's referring very rarely, I feel I mean, it happens. But you're if you're connected with an individual person like let's say I'm connected with my barista per se at this coffee place and and he or she is super good to me, knows my coffee. He knows what I like on Monday versus Wednesday, etcetera, etcetera. Um, I would be more likely to say, like, Hey, you want a good coffee? Go talk to Cheryl at this coffee company because she kicks ass as opposed to go to this coffee company, right, referring someone to to your gym for when your clients is doable and easy. But if they're connected to your coach and their coach loves them and knows their movement patterns and knows our weaknesses and noser strength and knows their goals and is working with them passionately. I will be 10 times more likely to be so, like, go see Joe at Torrance training Lab. You know, because I have that personal connection,

spk_1:   38:11
right? Well, that's great. That's that's been the dream of ours to show every other Jim how to do that. Because what it is is it's if you can stick around in the industry for 10 or 15 years, you make those relationships at a deeper level deep within your community, all the way through to the doctors and physios in this kind of thing from the coffee shops have is they can't keep their people either, because that model still runs on minimum wage. Right, So they get along with people gonna let. I mean, I have a local bar I went to religiously, maybe too much for three or four years. A celebrator winds to take my whole team there. We rack up like sometimes from $500.800 dollar bills. When I was going through the city of Vancouver like they were trying to shut me down for two years until I turned everything to do with school that I mean all that staff has turned over three times. Now, I don't even care to go to that place. As I know, no one's gonna know me in there and I don't bother going back and that, Oh, that they

spk_0:   39:09
actually let me give you a better example than cause this is actually perfectly in line and actually paints the picture, right? A local accounting firm or a local real estate agents firm. Right. Let's talk about professional service providers who are actually building relationships with their clients, which is what our coaches should be doing right. You don't go like you don't go like, hey, go sell your house to re Max. You go like, go talk to Joe Johnson at ReMax because he kicks ass. And that's what you need to make your coaches do at your gym, right? Like, create that relationship and become the sales person

spk_1:   39:42
totally. And my my point being is that the way the industry is paying their people now doesn't work. Same his way has the coffee shop will work for them long term with that right now that say it won't work? I get a lot of trouble with this. People want to criticize being stuff If you're dude, if you just want to have it, you have a simple system is really simple to figure out, and you're putting a lot of your own energy into it, and it's It's a good job and you're happy with that. Cool. Right now, I know there's a There's a whole industry of software and consultants and marketing companies and everything. They're all tied into that old model, which is the volume game and bringing in a lot of people and having coaches build except a lot of people at one time. Fine. Do you think my job? My mission is to find people like than other people that think similarly to me tow us to make a difference in this industry. And, uh, if it if it coaches with the clients are leaving and the coaches air leaving. More importantly, if the coaches are leaving, I think the coaches leave because two reasons the clients leave and that's really depressing. Um, I know every time something leaves our gym a second unit funeral and I know my coach will sit down with that person, dig into everything in their life and find out why they're leaving or how we fail them. Or maybe they're in trouble or the Boris like we fight. You know, we get into this some team stuff, right? We're You know, if a coach is watching the clients leaving, you can't make an effect. He's not paid on that effect. Even if he did make that effect, they still gotta go, teaches class and make 20 bucks. And in that hour, it's depressing. And, uh, the coach will leave, you know? And then that's the rial. That's that's the real tragedy of the unis tree. And, you know, you look at our industry. They're mostly just talking about marketing. You know how to get more leads in and stuff like this. Every marketing company that turns into a business consultant, they're not business consultants there. When you get leads, I mean, I

spk_0:   41:39
think I think the like. One of the other reasons coaches leave for my from my vantage point, and I feel this is same for Jim own a lot of gym owners is everyone's like one life event away from quitting their passion. So, like there'll be a lot of coaches, I'll see that you know they're young they might live at home or whatever. They don't have huge bills, and then they get their girlfriend pregnant or their wife pregnant, or they marry somebody or whatever. And then it's like, Okay, it's under your time to be a really adult now. I can't work for 25 bucks an hour and I gotta go right Or Or they go into the Fire Department and Police Department, which seems to be the CrossFit coaching seems to be a theater for Police Department and Fire Department employees. From my vantage point,

spk_1:   42:17
yeah, I mean, there's nothing wrong with that stuff. I just you know, we talk about cross that press. It's a lot of things to a lot of people, like there's 24 hour across that. There's, you know, there's the one like Bird doing, which is the highest end of the market, and there's one in the middle, and there's the one that's doing, you know, the one that's doing in a park. I mean, it's just such a broad spectrum that cross it means now it's What we're talking about is an independent is a professional, independent gym. So I'm on an advocate professional, Jim, that has professional full time coaches and professional full time owners, Right? I mean, we do have some Internet work. We have a one great Jim that those over a $1,000,000 a year, and it's got all the professional coaches and it's run by financial people. But those people are in their mentoring, the people, you know. But anyway, I gotta have one thing to that. That last event, like one big event away from quitting. I don't say this stuff. We don't put a very good job of telling people what we do because it's some of it's so sensitive. You don't know if you have permission or not, you know, And so I know I have had a coach that had I had to take leave personal leave for nine months and we paid him stable. Take care of that and you made $5000 a month. All the other coaches took care of his clients these classes and he came back right and that was 56 years ago. He's still there, another coach. They had a terrible loss, you know, you lost. He lost his son and he went on bereavement leave for a solid nine months again, And I'm telling you, during that time people in a community in these clients, fellow coaches, they never cooked a meal and then didn't claim the house. We had people going there that people are community arranged this to have head on him for the times. It's beautiful. It's only a few years ago. It's one of my one of my favorite people. The world need went through this tragedy right? And their community, like clean their house, cooked the meals, did everything they could so these people could grieve. It's a terrible tragedy. And, uh, we paid him to stay home, you know, And everybody took care of his clients and coaches, and he made that money legitimately. It wasn't like I could take it out of my pocket that was still there, like it's almost like a paid vacation, right home, 3500 4000 month. Not working because that was the profit from his Try the people, right? So when you saw that one event away from disaster like, I don't think those two people could have went through in anything worse, To be honest, there's still here, right,

spk_0:   44:43
and that's all very specific, too, to the mad lab model, which I mean, honestly, I've inspected a lot of models. I think I think many models can work. And I definitely think the Madlock model can work too high, sick, like, ah, high level of success. But it is also a high level of work. So that's the, uh, you know, nothing comes Nothing. Nothing great comes without without putting in some work, right?

spk_1:   45:07
Right. Little communion, I would say and working. But it's working. Smart would ask Mark.

spk_0:   45:12
I think it requires a little level of organization and sophistication, which I think everyone could. Everyone who wants to be a real business owner can grow into and should growing, too. Um, yeah, like your perfect client isn't every gym owner. I'll tell you

spk_1:   45:26
that. I mean it. We're probably maybe I want to talk about it being a top 10% of people that really want to go after this industry for prefer for full time living. And, you know, I really don't want to get the stream of criticism around. People want the part time coach and you get a part time. You know, Jim owner, and you're doing your thing with CrossFit do. That's fine, you know? I mean, it's fine. I'm just looking to do my thing. I'm not looking to embarrass anybody or criticize anybody. A lot of people want what we're doing, you know, that's for me. I don't need to be criticized for it either. You know, like we're trying to do the right thing here. Yeah.

spk_0:   46:05
I mean, there's just different ways to run your gym and, you know, your model is is for some, like, honestly, your model for somebody who wants to step away from the gym, maybe entirely let the gym run itself, sell it for five times the earnings later on down the road. Make make their coaches Ah, livelihood. Maybe let their coaches buy it off like it's a different model from the other gym models. And it's fine.

spk_1:   46:24
I mean, I've trained a bunch of guys. Jim Garth Cooke just recently is like a man. I'm just bag from this. I need it. I need to get out. Okay, let's give me to year's build up your coaches, and we're gonna find someone divide and we did, and they sold it five times. Even on both sides were happy a year later. And the guys who bought it are up 25% already in nine months. Right, But another one's in Austin with West. Kimberly came to be five year said, Okay, I'm going to get I want to move away from town. Like, you know, there's people that just want they need a move. And, you know, they supported Tim and John v, Evan and me to the same kind of deal, and there are, like, 50% in three years, and they're happy, you know that. That's fine. Um, I mean, I'm gonna want it. I'm not gonna want to do this my whole life either. But I would like to build this, sell it, retire on, you know? All right,

spk_0:   47:15
well, we're we're gonna We're gonna cut it short here or not Kind of short. We're at 45 minutes already. So pretty. A pretty solid episode.

spk_1:   47:22
Pretty good.

spk_0:   47:23
Ah, there's one key topic that I want everyone out there listening to. You have to understand in today's conversation, actually, as many. But I'm gonna fall. I'm gonna hone in on one because, um, this one, I think is isn't is one of the important ones. If you haven't read the book David versus Goliath, I would suggest you read it because right now, in our industry, we have we have a Goliath, we have Goliaths coming in and they're playing a different game. And if you know the fable, everyone knows of Abel, David versus Goliath. You know, David's is huge warrior whose hand to hand combat guy and, ah, David David challenges him. But what Goliaths assumes is he's gonna fight hand to hand, and David starts picking them off from far away with a slingshot. And the reason I tell this story is because as these Goliaths enter our world, who are backed by millions of dollars of money and have these big, fancy, shiny gyms and are running a different model than you are, if you try to fight them with their tactics, you will lose. If you try to embrace what you do well, if you're a slingshot or when when this big Goliath is a spear fighter, you need to fight him with your sling from 30 yards away, right? So hone in on what you do well, figure out howto fight Goliath not on his terms, but on yours, and you're gonna be fine. And that's why I am personally so excited. That orange theory then is eh? 45 all these franchises air coming in because they're gonna raise the tide for everyone. And then as long as you understand how to fight them on your terms, you're gonna do just fine. You don't need 501,000 clients like they dio, right? These guys need a lot of clients. You need a lot less you can do just fine. So with that, we're gonna wrap up this episode. Thank you, Craig. So much for coming on. I mean, you This guy has so much information that I wouldn't employ anyone. If Craig has time in his schedule, just take 30 minutes and talk to him. He'll drop so many Knowledgeable. Like I've learned a lot from him over the air. Smart dude knows his shit. Very passionate about helping gym owners, which is why I've got him on the show today. Um, Greg, you have any last words? Oh, if people want to learn more about what you're doing, this model you're doing where can we have them go?

spk_1:   49:28
Well, it's interesting. I've been kind of working on something for two months. And I know you got a hold on me because we haven't talked for a while and you listen to Mike spoke, So I'm building the thing. I was called The Five Shifts to build a professional Jim, and it details out how independent gym owners can beat franchises on it. Sze gonna be an e book and a webinar. So I know this is probably back like a couple of weeks, so you go on man lab group dot com. You'll build a fine. It's going to call the five shifts. And if you just gm us way, don't have any bots anymore. You'll be talking directly to a person, probably Mike Manning, um, on how to get you that information. So it's free training that probably a 45 minute webinar that really goes into what this is all about and what we can do to beat those guys, you know? I mean, like, I I'm here for the independent gym owner. The win, bro. Dan, I agree with you totally with what you just said. They're laughing. Wait

spk_0:   50:23
a minute. We will win this game. All right, guys. So they have it I would encourage, even if you are are, are not interested in engaging in any any type of business consultant, mentor, whatever. I would encourage you to go check out this free webinar on their website. At least get to understand the things that are being said. I'm a big believer that you soak in as much information as you can and be smart enough to throw away the things that worker don't work for you and and sponge up the things that do work for you. All right. Another episode done. Thank you all so much for joining us every episode. We're working hard here to turn you into a better business owner at the Gym OS podcast from Push Press until next time. Keep on grinding, guys. There we go. Another episode fresh off the press and into your ears. Hopefully, you like that one. Ah, I've known Craig for a long time. I used to be a mad lab client at my gym myself. Um, and I truly believe he's here to help, and he wants gym owners to do better. That's why I had him on the show he's had. I feel like he's had a rough go of it sometimes on social media, because he feels so passionately about what he does. Um, sometimes sometimes people, people take offense to it. And I I want to defend that. Like, I think you need people who are passionate about what they're doing. And they're They're passionate about you as a gym owner to be in the seats that he's in, um, trying to drive this industry forward. It's honestly, really no different than you standing on a soapbox preaching to your community because you believe so much in the product that your building and that it can help your community. Um, that's really no different than what he's doing. And I and I've seen firsthand Ah, lot of gym owners catch hate from the people in their community because they feel like whatever fitness thing you're selling isn't necessarily the best thing for them, and this gym owner really believes that. So try to see things in the in the light of that, Um, Patty really, really wants to help gyms, and he has been in this industry and he has been exposed to a lot of things for a lot of time, so anyway, hopefully, enjoy that episode. Ah, if if I'm a believer that as long as you pick one or two little things out if not 100 big things out of an episode, it's worth your time listening to because all those things stack overtime, all the knowledge and information you gather, process and digest stacks. And that's what's gonna make you a better business owner over time. So I hope you got something out of that. If you did, make sure you give us a like you give us five stars. Whatever podcasting, engine or platform you're listening to us on. Make sure you give us the thumbs up. Let me know you're enjoying these guests. Let me know that you're enjoying the content that we're putting out. Give us a subscription, like make sure you subscribe. So that way, this stuff gets dropped right to your podcast listening device. As we drop them, we're going to start releasing them a little bit early for our subscribers so you can catch them over the weekend as opposed to Monday when we're going to release them to the public. So you had another reason why you're gonna want to subscribe if you want to get this stuff hot off the press. All right, guys, I hope you enjoy this until next time you guys keep riding on your business and I'm gonna be here going back for you guys.