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Running a CrossFit Facility Tips and guidance on how to open and operate a CrossFit gym.

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Old 04-06-2007, 07:50 AM   #1
Joe Celso
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I'm struggling a bit with how to address clients that need a deal (lower price). I'm real short on time and space and the space is not free to me... but I want to help those have the heart but not the cash. My fees/structure are pretty clear (and very fair for the service), but some people don't have the coin. When I fumble because I don't know what to tell them... I look/feel like a dumb@$$.

Any ideas are welcome.
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Old 04-06-2007, 09:18 AM   #2
Darrell E. White
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Joe;

Everyone in every business has to address this at some time or another. The answer to your question depends on answers to some prelinimary questions. Where are you in the "maturation cycle" of your business? Brand new and scrapping for business, building but still room to grow, mature and dominant with limited real competition?

What will you accomplish from discounting? Will you fill time and cover overhead? Increase awareness of your business (discounting as a way to build-up word-of-mouth advertising)? Produce a feeling of goodness and personal satisfaction?

What is the nature of the discounting? How long will it last? Is there a "fair trade" of services that can substitute for the discount? What effect will the duration of the discount have on your business?

Take a few minutes to asnwer these questions for yourself. If this is how you put food on the table answer them with your "businessman" hat on. Answer them in the context of your long-term business plan. Goodwill is an important part of every business plan, but remember that it should be explicitly evaluated within the business plan until you are free to provide that goodwill without jeopardizing the well-being of your family.

Post your answers to these questions and I'm sure that there are quite a few of us who have service businesses who will weigh in with specific thoughts. Good Luck.
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Old 04-06-2007, 02:39 PM   #3
John Seiler
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Great post, Darrell. Five Stars.

Joe,

Since I'd have a hard time improving on Darrell's post I'll just add that you have to remember to cover yourself first. Without that, you go under. Then you can't help anyone.
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Old 04-09-2007, 05:27 AM   #4
Joe Celso
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Darrel/John - Thanks for the replies.

In response to the questions posed:

Maturation? - I would say I'm in-between scrapping for business and room to grow. I want more business and I'm not completely at "capacity" or where I want to be, but my days are pretty long right now. Lack of time is currently the most limiting factor... I'm kinda forced to grow really slowly at this point.

Accomplish from discount? - I've kinda been looking at client volume to be my marketing strategy. That is the reason for some of the discounts I've considered... for others it's personal satisfaction. I like to see the hard working athlete mop the floor with the lazy person that has more talent/resources. Filling time to reach "capacity" is desirable, but if the money isn't all there, it is less valuable to me than SOME sort of free time for myself. I struggle with this. I want my operation to grow, but I'm working a little too much right now. I really like training (don't like my bill paying job)... I realize it's going to be like this until I can transition to training full time, but not sure if client volume aided by discounting (or helping "winners") is the most efficient way to get through. Did all that make any sense?

Nature of discount? - I'm not sure I understand this question. I'm simply talking about lowering the price of my services for some. I've been telling these people to get 1-2 friends to come with them so they can make my time a little more worthwhile... this seems like it will work. I'll have to think about "trading". My space is small so cleaning is a snap... need to figure out how to have them measurably advertise for me.

Thanks again for your feedback!
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Old 04-09-2007, 07:26 AM   #5
Frank DiMeo
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Joe, no one can stay in business for long by cutting their prices repeatedly.
That goes for any business, not just this one.
About a year ago, I raised my private session rates from $35/30 min. to $45/30 min. and client retention has been excellent.
If there are others looking for a "deal" aka something for nothing (almost);I recommend group training.
Hope that helps some.
I would suggest to do a search the posts that Skip Chase has about his "managed" workouts.
I have used that approach for a little while and it looks like it will very worthwhile.
Skip has a LOT of clients!
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Old 04-15-2007, 07:32 PM   #6
Darrell E. White
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Joe:

I just got back from a vacation, my first non-extended family vacation in 3 years (coincides rather nicely with when I launched my new business!). I'll sleep on this and share some thoughts tomorrow now that I know a little more about your situation.

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Old 04-16-2007, 08:33 AM   #7
Darrell E. White
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Alright, Joe, here we go...

Training is no different from any other personal service business when you are in business for yourself. All of the trainers/affiliates here are in the same boat as I am, and we're all the same as the attorneys, hairdressers, and coffee shop owners in town. We need to grow our book of business, and we have bills to pay. Here's how I would (and have) approach it.

You are tickling the important issues by looking at how you do or don't enjoy work, and thinking about how much personal time is necessary for you to thrive as a person (as opposed to a business). One needs to understand the difference between "want" and "need" in all aspects of this equation. As the owner of a very young business many of your "wants" will have to be put aside for a time; call this delayed gratification. A new bike, new boots, or a new helmut may have to wait if the old ones still work (I haven't bought new Gore-Tex for 3 years). Everyone needs personal time. Build the time that you NEED into your schedule and relish any extra that you WANT that comes your way.

Your personal needs, your free time, is one part of your business plan. You DO have a formal business plan, right? What will your business look like next month, in 6 months, 1 year, 3 years, 5 years? If you don't plan it, dream it, it's less likely to happen. CF the business is the result of a very bright man dreaming about something much, much bigger than just training extraordinary athletes. Take a Sunday afternoon off by yourself and write down your goals, dreams, and plans. I do that periodically; I call it "blue skying", my staff calls it the tyranny of the yellow legal pads!

Discounting is a means to an end and must fit within your business plan. There is one unbreakable rule for service business, however: THERE IS NO SUCH THING AS A LOSS-LEADER, THERE ARE ONLY LOSSES. A discount is taken from your profit margin and should never go below that which is necessary to pay your bills.

What is your billing structure? What are you charging for private and group lessons? How did you set those rates? Did you do market research? Ask guys like Frank or John? I would suggest that you do some or all of above, and in addition look at how much it takes to cover your fixed overhead each month. Remember that higher fees will produce revenue with less work, lower fees with more work will produce more potential work-of-mouth marketing.

Alright, Darrell, now give me some concrete ideas! How about setting a fee where 50% of the fee covers your overhead with a schedule that's only 25% full (you mentioned that your space is inexpensive). Give a 25% discount to everyone for their first 6 months; give 50% off for groups of 2 or three, 65% off for groups of 4 or more. Give $$ off coupons for referrals. Gradually decrease the discounts every 6 months so that you are full charge for everyone except truly special cases in 24 months. And don't quit your "day job" until you are CLEARING 125% of your present bills paying salary.

Remember that the last paragraph only works if you do the preliminary stuff first!

"Make no small plans; dream no small dreams." John Muir.

Good Luck.
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Old 04-16-2007, 12:56 PM   #8
Damien Del Russo
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Very nice post Darrell.
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Old 04-17-2007, 06:19 AM   #9
Joe Celso
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Yeah, Darrell, thank you! I do need to get a bit tighter in my plan/goal setting. I "blue-sky" quite often and I've loosely developed numerous business models, but I've yet to develop a formal plan that is complete with timelines... merely developed operation models and calculated what I'd need volume-wise to make an ACCEPTABLE transition as well as what I'd need to earn the living I'd like.

125% of salary is... I've got more blue-skying to do!

Thanks for the input.
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Old 04-17-2007, 02:50 PM   #10
Sol Agramont
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An acquaintance of mine once told me that once you run a discount, people will want to run with discounts until they run you out of business.

I considered offering discounts for the first month's fee but decided not to out of advice from a couple of people who have been running their own facility for a couple of years. They told me that people would say yes to the first month, but then would "perceive" the regular fee as "too high" and eventually drop out after another month or so. When they stopped doing that their drop out rate decreased and continued with a steady amount of signups.

I guess you have to think thoroughly how offering discounts could potentially help or hinder your long-term plans for your own business.
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