5 Dos and Donts when setting up your affiliate - Your thoughts?

[Jason M Struck]

I have made trades with professional photographers and website designers.

this plus facebook and groupon have pretty much entirely made my marketing plan.

systems!

replace yourself!

have rules. stick to them.

LOVE.

LOVE.

LOVE.

[Matteo Pagetti]

Originally Posted by James Gordon

Hi Matteo,

Instead of guessing at what your monthly rate should be, start by deciding what you want to earn as a trainer/ box owner. From there, work backwards to get your monthly rate.

Example: To live the kind of life that you want, you need to take in $100 000 per year (just using round numbers). Next, figure out your overhead expenses (include EVERYTHING; rent, utilities, insurance, staffing, bank fees, affiliate fees, management system, savings for future equipment, web site, toilet paper....) and add that to your $100k. For argument, let's say it's $50k, so you would need to bring in $150k to meet your goal of $100k take home.

$150000/ 12 months = $12500 monthly. If your goal is to run a small studio with 100 members, they would need to AVERAGE $125 monthly to reach your goal income.

Obviously, this is a simple exercise, but it gives you a starting point. If your market won't support the monthly fee, you need to change the model to meet your income goal. Increase the number of clients, or lower overhead. Also, this is all pre-tax. You would need to factor in the tax situation for your area.

Good luck!

James

Hi James and thanks for the reply!
yep, the numbers you mentioned are the same that are in my mind.
the main problem here is the monthly rent for the location...I've found 200 square meters and per year is about 20k.
BUT, our goal is not to reach huge numbers in members, but an higher level of service (teaching, facility, class sizes, no rebound of members...)
I've over 2 year of experience/frequentation in other boxes and the main problem is there...
We don't have a large amount of budget to choose directly a more larger place, but the one we choose is in a strategical zone, as mentioned...nearest the fashion district, showrooms, offices, a large park in front of the structure, schools and swim pool...
we don't want to play with globe gyms, because we know that our service is, let me say, exactly an another world...excellence, for give it a name.
so, I assume that my open monthly fee is around 120/130 euros.
spot on classes granted (we plan to use zen planner to manage this) and no rebound on the door, no wait for barbells and so on...
the main problem for us is to make understanding this model to the customers.

thanks again for your reply and suggestions are welcome!

Matteo

[Adam Morden]

Here's a few more - I agree with the posts by James and Brendan
Do:
1) Create a culture/brand that reflects what you love and want to work out in. If you're hyper competitive - build a competitive gym with a competitive culture, if you're more the hippy chill out man kinda person, make a more chilled out environment. it comes down to being authentic - people can smell a fake from a mile away.
2) Offer a variety of membership options. Not everyone wants to CF 3 on 1 off, some (many) people prefer to train 2 or 3 x a week - give them that option.
3) Build your website as a way to attract new clients, and make sure it fits your market and clientele. IE if your market is primarily older professionals getting back in shape don't put up a black website with skulls and death metal playing =)
4) Focus on keeping the clients you have rather than on getting new ones all the time. Adding just 2 clients a week will give you more than 100 at the end of your first year if they all stay. Some affiliates near me loose over 10 per month. Treat people right, and focus on THEIR goals and be their friend.
5) Offer specialty classes, but only if you're passionate about them. For example, I love boxing and have done it for years, so we also have some boxing classes at my box, but I don't like dancing so I won't add zumba =) People love variety - and I've added a ton of members because I offer more options of what to do than other boxes in the area

Don't:
1) teach early in the morning, mid day, and at night (a triple split) it will mess you up and you'll burn out and do a poor job of coaching, anything more than 1 split in a day tends to be really hard on the schedule.
2) partner with people if you can avoid it. It can work, I've tried a bunch of options, but it's always easier with 1 person calling the shots. You are better to hire a trainer than partner with another person. lots of friendships have been lost to business partnerships failing
3) sleep with clients - I can't believe how often this happens in the fitness industry. It will cause a ton of ill will and problems no matter how well you think it will turn out. (I'm sure there is an exception, but they are rare)
4) "build it and they will come" do your research first and know who your potential clients and market are.
5) Ignore Personal Training. PT is a very lucrative way to start your business and improve your coaching skills. Even in established gyms there is the potential to increase average client value and gross revenues by adding personal training options.

[Matthew Whittemore]

Thanks for your input Adam, really appreciate it. It's all getting closer now, warehouse is just awaiting equipment and the green light email from CrossFit HQ!

[Justin Okeson]

James,
Excellent post. I am conducting a feasibility analysis right now and I am wondering what your (or anyone else please) thoughts/experience is/are on the following items:

1) Is it better to lease equipment than to buy outright when first starting out
2) What is your customer attrition rate (what % of customers do you loose each month)?
3) What are your best marketing strategies, and your thoughts on groupon/living social strategies?
4) Does consumer demand justify offering different membership options (two days a week vs. unlimited)?

Thanks a lot for everyone's thoughts and responses!
Semper Fi

[Adam Morden]

Originally Posted by Justin Okeson

James,
Excellent post. I am conducting a feasibility analysis right now and I am wondering what your (or anyone else please) thoughts/experience is/are on the following items:

1) Is it better to lease equipment than to buy outright when first starting out
2) What is your customer attrition rate (what % of customers do you loose each month)?
3) What are your best marketing strategies, and your thoughts on groupon/living social strategies?
4) Does consumer demand justify offering different membership options (two days a week vs. unlimited)?

Thanks a lot for everyone's thoughts and responses!
Semper Fi

1) I think it is better to start off small enough that leasing wouldn't be needed, I've started 3 affiliates and the equipment cost to start of the most expensive was only $11,000 and it opened with about 45 members - Pre-selling your services so you have money in the bank on opening day is super helpful.
2) I've seen this vary tremendously by gym and time of year, as well as the culture you create and foster in the box. We'll have months go by with no cancellations, then at the end of the school year we might loose 5-10 members who are moving away after graduating. Annually we average about 5-6% churn.
3) groupon can be great or it can put you out of business - I've seen it do both to affiliates around here. I'll write a longer post about it later on. Our best marketing has always been member word of mouth. and like Skip Chase used to always say - talk to people about your affiliate everyday - I try to give out 5 business cards each day to someone I haven't talked to about the gym before.
4)Definitely we offer 1,2 3, and unlimited options - it increases average client value while not forcing your clients to pay for more services than they plan on using. We don't do punchcards for the most part

[Brian Strump]

Originally Posted by Justin Okeson

James,
Excellent post. I am conducting a feasibility analysis right now and I am wondering what your (or anyone else please) thoughts/experience is/are on the following items:

1) Is it better to lease equipment than to buy outright when first starting out
2) What is your customer attrition rate (what % of customers do you loose each month)?
3) What are your best marketing strategies, and your thoughts on groupon/living social strategies?
4) Does consumer demand justify offering different membership options (two days a week vs. unlimited)?

Thanks a lot for everyone's thoughts and responses!
Semper Fi

1. I would start with what you can afford. If it's nothing, then it's time to start saving. Do you mean financing? Not leasing? I know some companies offer equipment financing. I think that could be an option for some.
2. I agree with Adam. Some months we'll have 1-2, other times 8-12. On average, I'd say 5-6%.
3. We have never done either. I've heard good and bad stories. If there were a time to do it, it would be when you just open the doors. If you have 75+ members, I can see how an influx of 100-200 new members(for a month, that don't see the value) would be difficult to handle, especially if you are not prepared for it(more coaches available, and increased class times)
4. We offer unlimited and the punch card on our website. We have always done it that way, and it's worked well for us. If a CURRENT member asks me about a lesser option, I'll work with each on an individual basis. Currently, that's 4 members of 200.

[Erin Hamilton]

Originally Posted by James Gordon

Hi Matteo,

Instead of guessing at what your monthly rate should be, start by deciding what you want to earn as a trainer/ box owner. From there, work backwards to get your monthly rate.

Example: To live the kind of life that you want, you need to take in $100 000 per year (just using round numbers). Next, figure out your overhead expenses (include EVERYTHING; rent, utilities, insurance, staffing, bank fees, affiliate fees, management system, savings for future equipment, web site, toilet paper....) and add that to your $100k. For argument, let's say it's $50k, so you would need to bring in $150k to meet your goal of $100k take home.

$150000/ 12 months = $12500 monthly. If your goal is to run a small studio with 100 members, they would need to AVERAGE $125 monthly to reach your goal income.

Obviously, this is a simple exercise, but it gives you a starting point. If your market won't support the monthly fee, you need to change the model to meet your income goal. Increase the number of clients, or lower overhead. Also, this is all pre-tax. You would need to factor in the tax situation for your area.

Good luck!

James

Hi James!

Thank you for this quote. I am working on opening up a gym with my husband and this has been the most helpful post I have read so far! I appreciate your and everyone's thoughts. I think the community between affiliates, coaches and members is one of the biggest thing that makes Crossfit so great!
Erin