State of The Union The Gym Industry & Gym Launch Ep 220



In a candid discussion on the Gym Secrets podcast, the host highlights the challenges facing the fitness industry, noting that 25-30% of independent gyms have closed with potential increases due to market conditions. He argues that despite being a strong operator, unfavorable market dynamics can lead to failure. The host, a staunch supporter of gym owners, announces Gym Launch's pivot to remote services, citing advantages like unlimited lead generation, higher profit margins, and lifestyle flexibility for business owners. Emphasizing the effectiveness of one-on-one online coaching over group workouts, he encourages gym owners to embrace the online model for its scalability and potential for superior customer results, warning that clinging to in-person services will only get harder. He concludes by urging gym owners to consider the shift to online services seriously, as it presents a current golden opportunity within the industry.

Summary Notes

Introduction to Gym Secrets Podcast

  • The podcast aims to discuss strategies for gym owners to acquire and retain customers, increase revenue per customer, and to share lessons learned from failures.
  • The host expresses the importance of the current video, highlighting the need to state their position on the state of the gym industry.

"Welcome to the Gym Secrets podcast, where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons that we have learned along the way."

This quote sets the stage for the podcast, outlining its focus on growth strategies for gym owners and the sharing of experiences and lessons learned.

State of the Gym Industry

  • The host has noticed a significant closure rate of independent gyms, estimating that 25% to 30% have permanently closed.
  • The closure rate is expected to rise to 40% or 50% in the next six months.
  • The host compares the gym industry to the decline of newspapers, emphasizing the importance of market conditions over individual operator strength.

"25% to 30% of all independent gyms have permanently closed... I think that number may climb over the next six months to maybe 40 or even 50% of independently owned and operated facilities."

This quote presents a grim outlook for the gym industry, with a significant portion of independent gyms closing down, which is expected to increase.

Market Dynamics and Business Constraints

  • The host believes the gym industry will face a challenging year ahead.
  • Consumers have found alternative fitness solutions due to the pandemic and political constraints affecting gym operations.
  • Constraints also create uncertainty in workforce management and customer experience.

"We cannot create the experience that we have wanted to create for our customers... It creates tons of variability in workforce and labor."

This quote highlights the challenges gyms face in providing the desired customer experience and managing their workforce due to external constraints.

Consumer Behavior Shifts

  • The host thinks that the market for traditional gym services is shrinking.
  • Consumers have been trained to fulfill their fitness needs differently, which will likely result in a permanent change in behavior.

"We've permanently trained consumers to consume or fill this need in a different way."

This quote suggests that the pandemic has led to a long-term shift in how consumers approach fitness, moving away from traditional gym services.

Gym Launch's Position and Pivot

  • Gym launch is committed to supporting gym owners, not necessarily gyms as facilities.
  • The goal is to provide gym owners with the best opportunities to serve their communities and support their families.
  • Gym launch will pivot to focus on remote fitness opportunities due to the advantages they present.

"Gym launch is loyal to gym owners. We are not loyal to gyms... gym launch as a company will be pivoting."

This quote clarifies that the company's loyalty lies with gym owners and their success, leading to a strategic pivot towards remote fitness solutions.

Advantages of Remote Fitness

  • Remote fitness offers virtually unlimited lead generation and is less geographically constrained.
  • The online environment allows for more consistent and cost-effective lead acquisition.
  • Remote operations enable a better work-life balance for business owners, removing physical constraints and providing more freedom.

"In a remote environment or an online environment, you have virtually unlimited lead generation... The business owner can move and live wherever they want."

This quote discusses the benefits of remote fitness, including the potential for a broader customer base and increased flexibility for business owners.

Business Model and Profitability

  • The online fitness model is more profitable, with fewer temporal constraints and higher margins for business owners.
  • The host has always wanted to scale online fitness due to its financial and operational advantages.
  • Online fitness can potentially offer better results for clients in a one-on-one setting.

"And financially, the model is more profitable, period... many people achieve superior results in a one on one setting compared to a group."

This quote emphasizes the financial benefits of an online fitness model and suggests that it can lead to better client outcomes compared to traditional group settings.

Personalized Coaching vs. Group Workouts

  • Personalized coaching is preferred over group workouts for better results.
  • One-on-one attention is deemed more effective for changing someone's life.
  • The choice between group workouts and personalized coaching reflects the value offered in the marketplace.

"Many of you have hired TKN have worked with Trevor, have worked with an online coach, whether on the strength side or the nutrition side or body composition or whatever. And you did that because you knew the one on one attention allowed you to get a better result."

This quote emphasizes the effectiveness of personalized coaching over group workouts, highlighting that individual attention leads to better outcomes in various aspects of fitness and health.

Business Model Considerations

  • The online coaching business model offers a more profitable approach with better fulfillment for the end user.
  • Fixed margins and the lack of necessity for physical space (rent) are financial advantages.
  • Covid-19 prompted the exploration of online business models due to necessity.

"And so I already said there was enough of a case from business standpoint to make that argument. But on the fitness component side, I believe that the actual fulfillment is better for the end user and is more profitable."

The quote discusses the advantages of the online coaching business model from both a business and fitness perspective, highlighting profitability and user fulfillment.

Online Business Models Pre-Covid

  • Prior to Covid-19, existing online business models were not scalable without superior skill sets, authority, or significant effort.
  • Three primary online models are identified: outbound messaging, webinars, and online challenges.
  • These models are effort-intensive and difficult to scale, making them unsuitable for widespread adoption.

"For example, there are three primary models that exist in online today, excluding the GLX model that I'm going to talk about. Vehicle one, outbound messaging."

This quote introduces the three primary pre-Covid online business models, setting the stage for their analysis in terms of scalability and effort required.

Analysis of Pre-Covid Online Business Models

  • Outbound Messaging: Requires extensive daily effort and is difficult to scale.
  • Webinars: Fatigue from webinars and high cost per application make this model less profitable and scalable.
  • Online Challenges: Effort-based, inconsistent, and difficult to scale, with no massive companies using this model exclusively.

"Simply put, you have to spend two, three, 4 hours a day outbound messaging people. Does it work? Yes. Does it require a ton of effort? Yes. Can you scale that? Not really."

This quote critiques the outbound messaging model for its high effort requirement and limited scalability, which are significant drawbacks for business owners.

The Preferred Online Business Model Post-Covid

  • The current preferred model allows starting a new business quickly with regional trust and a free trial front end.
  • It does not require high skill levels for sales and is easier to outsource compared to high ticket sales.
  • The model has been tested and proven within the community, showing that it can be scaled effectively.

"And so I could not put my weight behind it because I knew that if I were to implement one, two, or three, or all three of those together, the vast majority of the people in our community would not succeed, period."

This quote explains the rejection of the previous models due to their lack of scalability and the difficulty for community members to succeed using them.

Lead Acquisition and Sales in the Preferred Model

  • Unlimited leads provide consistency for business operations and cash flow.
  • Lead nurturing has been solved at scale, allowing for efficient management of a high volume of leads.
  • Free trial sales can be made by individuals with a low skill set due to the low-risk nature of the offer.

"So the front end, we know that the acquisition is easier because we have unlimited leads. That's massive."

The quote highlights the importance of easy acquisition and unlimited leads in the preferred business model, which contributes to consistent business operations and cash flow.

Conversion and Profitability

  • The trainerized app and free trial model have been proven to be effective for scaling.
  • Initial sales with supplements and follow-up offers are structured to break even or profit from the first transaction.
  • By day 30, the conversion rate and profitability are expected to match previous performance.

"And then by day 30, you will be able to convert those customers at the same price as you were able to before in a"

This quote suggests that with the right tools and sales model, businesses can expect to convert customers efficiently and maintain profitability within a month.

Online Revenue Model for Gym Owners

  • The new model allows gym owners to generate recurring revenue without the constraints of physical gym space.
  • Owners have built significant recurring revenue within a short period, ranging from $3,000 to $40,000 a month.
  • The online model is not limited by a geographic radius, unlike traditional gyms.
  • The model is based on a combination of effective ads, copy, creative, and placements.
  • There are three roles in the online model: the seller of the trial, the coach, and the owner.
  • Sales processes are simple and can scale, with customer retention at high price points.
  • Gym Watch is committed to aligning with this profitable model for gym owners.

gym setting, except you have far more of them, you acquired them for less, and they're staying at a higher profit margin.

This quote emphasizes the advantages of the online model over traditional gym settings, highlighting increased quantity, lower acquisition costs, and higher profit margins.

This model, if you give it one month, two months, three months, four months, it is going to be far superior to the revenue and profit that you were able to make at the gym, except it has no signs of slowing down.

The quote suggests that the online model's revenue and profit potential will surpass that of traditional gyms and continue to grow without slowing down.

You do not have to be constrained by your geographic five mile radius.

The online model eliminates geographical limitations that traditionally bound gym businesses, allowing for a broader market reach.

There's only three roles that exist in the model. The person who sells the trial up front, the coach, and that's it.

This quote outlines the simplicity and efficiency of the online model by reducing the roles to three key positions.

Most people can make that sale. These sales are not complicated, but can be done at absolutely massive scale and retain a customer at a $2,000 price point where you can acquire them in high volume very consistently.

The speaker highlights the ease of making sales in the online model and the ability to maintain a high customer value and consistent acquisition at scale.

Business Strategy and Profitability

  • Gym Watch is focused on serving gym owners with the most profitable business model.
  • The speaker's goal is to run a profitable business that grows quickly.
  • Aligning with successful models in the B2B space is crucial for customer success and profitability.
  • The speaker is transparent about being a capitalist and aligning with profitable ventures.
  • The online model is presented as the best opportunity for gym owners to maximize ROI.

And very transparently, I'm going to be doing this because I believe that I would like to serve a marketplace that's going to grow and make the most money.

This quote reflects the speaker's transparent intention to serve a growing and profitable market.

My goal is to run a profitable, wildly profitable business that grows fast.

The speaker states their personal goal, which aligns with the profitability and growth of the business.

I have to align with a model that I believe has the highest likelihood of success and profitable growth for my customers.

The quote shows the speaker's strategy to choose business models that offer the highest success rate and profitability for their clients.

  • The online model is currently more effective in acquiring clients than traditional methods.
  • The rest of 2020 is predicted to be challenging for physical gyms, with uncertainty for 2021.
  • The speaker believes the online model is the best vehicle for gym owners to utilize their skills and achieve ROI.
  • The sunk cost fallacy is a significant consideration for gym owners deciding whether to transition to the online model.
  • There are options for gym owners to transition out of physical locations, especially given current economic conditions.

Simply put, it is easier right now to get 50 new online clients than it is to get 50 in person clients.

This quote compares the ease of client acquisition in the online model versus in-person methods, favoring the online approach.

The rest of 2020 is going to be shit for gyms in general.

The speaker provides a blunt forecast for the gym industry, indicating a tough period ahead for traditional gym businesses.

I believe that this is the best opportunity vehicle for you to package your skills, serve your community, serve your family, and in terms of ROI on your time and your capital and the skills that you need to train your team on this model, I believe, is more scalable, more profitable, and will have higher ROi over the next six to twelve months than the in person model.

The quote expresses the speaker's belief in the superiority of the online model in terms of scalability, profitability, and return on investment compared to the in-person model.

That being said, if you still need to make decisions about it, you have a couple of different versions that you can handle this with.

This quote suggests that gym owners have multiple strategies to consider when transitioning from a physical gym to an online model.

Online Services Demand and Supply

  • There is a current high demand for online services with low supply.
  • A golden opportunity exists for those who move their business online.
  • The speaker believes this window of opportunity may not last long.

"I do think that we are actually on the precipice, and we're currently in a golden opportunity era where there's this huge amount of demand for online services and there's not a lot of supply."

The quote highlights the speaker's view that there is a significant imbalance between the high demand for online services and the limited supply, marking a critical moment for businesses to transition to online models.

Success Stories and Strategic Pivots

  • Several seven-figure gym owners have successfully pivoted to online models.
  • Top performers in the group have sold their physical gyms to focus on online services.
  • The speaker emphasizes the importance of not letting emotions cloud judgment in business decisions.

"What you don't know is that many of our seven figure gym owners, the top guys you see in this group, have pivoted 100% online."

This quote provides evidence of successful transitions to online models by high-earning gym owners within the speaker's community, suggesting a trend and a successful strategy.

Emotional Appeal and Decision Making

  • The speaker addresses the emotional aspects of business decisions.
  • Concerns about security, customer acquisition, and operational stress are common among gym owners.
  • The speaker relates personal experiences of stress and not taking vacations to emphasize the benefits of an online model.

"So let me just speak to your emotions. If you have the desire for more security, if you have the desire for less unknowns in the future... this is the time to take that action."

The quote appeals to the emotional side of decision-making, suggesting that an online business model can offer more security and predictability, which are desirable outcomes for business owners.

Market Readiness for Online Training

  • The marketplace now understands and is ready for online training services.
  • There is a shortage of skilled professionals, like gym owners, in the online space.
  • The speaker encourages gym owners to offer their expertise online to meet market demand.

"And there is a massive, massive shortage of professionals who have the skill set. Like gym owners."

This quote identifies a gap in the market for skilled professionals to offer online training services, suggesting an opportunity for gym owners to fill this void with their expertise.

Business Model Execution and Belief

  • The speaker has a strong belief in the robustness of the online business model for fitness.
  • The model includes compelling front-end offers, the ability to sell free trials, supplements, and continuity programs.
  • The speaker has a track record of making successful bets in the fitness industry and asks the audience to consider their argument.

"This thing is just about as robust as the original gym launch model."

The speaker compares the new online business model's robustness to the original gym launch model, implying a strong belief in its effectiveness and profitability.

Operational Simplicity and Client Fulfillment

  • The online model simplifies operations by automating client fulfillment and eliminating physical maintenance concerns.
  • The speaker argues that the online model is easier to manage than a traditional gym.
  • The discussion emphasizes the freedom and reduced stress associated with running an online business.

"The only thing you really have to do is just make sure that you're fulfilling the clients using the app that automates 80% of it anyways."

This quote explains how an app can automate a significant portion of client fulfillment in the online model, simplifying the business owner's responsibilities.

Industry Leadership and Trust

  • The speaker expresses confidence in their company's industry leadership.
  • They argue that their success and size are proof of their superior business acumen.
  • The speaker encourages trust based on their track record and experience.

"I can tell you without any drop of doubt in my mind that we are by far the best."

This quote is a bold statement of confidence in the speaker's company, suggesting that their success is indicative of their superior ability in the business.

Decision Making and Company Direction

  • The speaker is transparent about the company's focus on online fitness.
  • They acknowledge that the choice to pivot online is up to the individual but believe it aligns with most gym owners' skill sets and desires.
  • The future of fitness is believed to be online, and the company is positioning itself accordingly.

"The question is just whether or not you want to take the jump."

The speaker poses a rhetorical question to the audience, encouraging them to consider making the transition to an online business model.

Conclusion and Support

  • The speaker reiterates support for clients regardless of their choice to stay in-person or go online.
  • The company will continue to release helpful content for gym owners.
  • The speaker aims for transparency and alignment with the audience on the future direction of the fitness industry.

"We're still going to release plays. We're going to release the stuff that we do to help gyms because that is what we've always done."

This quote assures the audience that the company will continue to provide support and resources to help gym owners, even as they shift their focus toward online fitness models.

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