In a candid discussion, the speaker shares a cautionary tale about the pitfalls of rapid expansion in the gym business. After successfully growing his first gym in Huntington Beach to 250 members, he impulsively invested a quarter million dollars in a second location, only to realize that fancy equipment doesn't equate to increased profits. He emphasizes that the real value lies in exceptional customer service, which enables micro gyms to charge premium prices and retain clientele. The speaker advises gym owners to prioritize financial stability by saving profits, avoiding unnecessary reinvestment, and ensuring the business generates substantial net income before considering expansion. His key message is to focus on building a sustainable business model that offers financial, geographical, and temporal freedom, rather than being lured by the status of owning multiple locations.
Is going on. Everybody, happy Thursday. Hope you're having an amazing week so far. We're now three quarters the way through the week over the hump, and I want to make this video for you because I saw somebody recently who's actually in my group who's not taking my advice...
This quote sets up the context for the advice Speaker A is about to give, indicating the motivation behind sharing their experience.
So after I had my first location, so for some of you who don't know me that well, my first location was in Huntington Beach, California. It took me about nine months to get it from nine months to get from zero to 250 active recurring members.
Speaker A provides background on their success with the first gym location, highlighting a significant growth in membership over a nine-month period.
And on my second location, I spent a quarter million dollars... at month 15 of being in the gym business, I opened up my second location and spent a quarter million dollars, which was basically everything that I had made up to that point.
The quote reveals the financial scale of the investment in the second gym and the timing of this expansion in relation to Speaker A's business experience.
It was just such a terrible, terrible decision because the second location, I was like, this one, we're going to do big. We're going to do it right. I'm going to put all this equipment in there, right?
Speaker A expresses regret over the decision to heavily invest in facilities, implying that it was not aligned with the successful aspects of their business model.
...you and I, as micro gym owners, will never be able to compete with LA fitness and 24 hours fitness and equinox on the basis of facility... But what's the one thing that makes us money, right? It's service. It's high quality, amazing customer service, amazing customer experiences.
This quote underscores the core message that service, not facilities, is the key to profitability and competitive advantage for micro gyms.
It made no more money than my first gym did. And that's mind blowing to me.
Speaker A shares the outcome of the second gym’s performance, indicating that the investment in facilities did not translate into increased revenue, contrary to their expectations.
"let me save you a quarter million dollars and don't do that. Don't just think that all of a sudden, because you have the money, you should go spend it on more equipment."
This quote emphasizes the importance of not impulsively spending on business equipment just because the funds are available, suggesting a more cautious approach to financial management.
"Stack the cash, put it in your bank account, save it. Okay? That's the point. The point of owning the business is to make money."
The speaker highlights the goal of business ownership, which is to make and save money, not to continuously reinvest it to the point of having no savings.
"And they're like, I'm just reinvesting. And then at three years or four years, all of a sudden they have a couple of bad months, or a trainer leaves and takes half the business, or whatever."
This quote illustrates the risks involved when business owners do not save profits and instead reinvest everything, which can lead to a precarious situation during downturns.
"Like, every time you don't take money out of your business, you're doubling down. It's like being at the casino and putting your bets on the table and being like, I'm going all in again."
Comparing the act of continuously reinvesting to gambling, the speaker warns against the risky nature of not securing profits outside the business.
"I think Ty Lopez said, one of the beautiful things about humans is that we're the only species that is able to learn from other people's mistakes rather than making them ourselves and then learning real quick."
The speaker encourages learning from the mistakes of others as a unique and valuable human ability, which can prevent making the same errors oneself.
"Guys, you guys already know that I don't run any ads on this and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers."
The speaker explains that the podcast is ad-free and not monetized, and the main request is for listeners to share the content to assist other entrepreneurs.
"And the only way we do that is if you can rate and review and share this podcast. So the single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It means the absolute world to me. And more importantly, it may change the world for someone else."
This quote is a call to action for listeners to engage with the podcast through ratings and reviews, highlighting the ease of doing so and the potential significant impact on others.
"Now, the last piece that I'm going to talk about here with regards to blowing money is that this happened. I'm really just making this video for"
Although the speaker does not finish the thought, it is clear that the intention is to caution against wasteful spending, or "blowing money," based on personal experience or observation.
"If you're making money, keep making money. Like, if you're at month right now, go up to 110. Go up to 120. Don't think. Okay, we just went. So, in the last three months with working with us, we've taken our EFD from 25,000 to 45,000 a month, which is great."
This quote advises gym owners to focus on increasing their current earnings rather than diversifying too quickly. It also shares a success story of a significant revenue increase over three months.
"Don't immediately say, I'm going to open a second location."
The speaker warns against the impulsive decision to open a second gym location before ensuring the first one is financially stable.
"You should be able to maintain this for six straight months, minimum, maintaining a solid margin, stacking cash into the bank account, and then feeling financially secure."
This quote outlines a recommended timeframe and financial strategy for gym owners to follow before considering expansion.
"Because a lot of times people forget the point of the business is to make you money. That's the point, right?"
The speaker reminds the audience that the ultimate goal of a business is to provide personal financial gain.
"Otherwise you scale issues. If you feel like you're working 40 hours a week and you have one gym, you work 80 when you have two, that's what happens. You scale problems, all right?"
This quote highlights the risk of doubling one's problems and workload when scaling up from one to two gyms without proper preparation.
"You can learn from my quarter million dollar mistake. Don't do it too soon."
The speaker reflects on their own experience with a costly mistake to caution others against hasty business expansion.
You should literally be on. You should be bored out of your mind at your gym for six to nine straight months. Cashing in 2020, 5000 a month. Take home before you open the second location.
This quote advises gym owners to ensure their current gym is highly profitable and stable for a significant period before even thinking about opening another location.
our egos get involved, our status gets involved because we want to say, hey, I have four gyms, I have three gyms. I have two gyms. Whatever. But who cares, right?
This quote highlights the trap of allowing ego to dictate business decisions, emphasizing that the number of business locations is not as important as the quality of life that the business provides.
The whole point we got into this business was for freedom, financially, geographically, and temporally. That's what virtually every entrepreneur gets in this business for.
This quote encapsulates the essence of entrepreneurship, which is to create a business that allows the owner freedom in various aspects of their life.
All you have to do is double down on your customer service, giving an amazing experience so you can charge premium prices and take home a fat margin.
This quote advises gym owners to concentrate on enhancing customer service to create an exceptional experience, allowing them to charge more and increase profit margins.
You could also, if you feel like it, follow me on Instagram. We just started a new Instagram account.
This quote is an invitation to the audience to engage with the speaker on social media, indicating a step towards building a personal brand and online presence.