The Best Studio Business Model
In this episode, Matt and Rick discuss the best studio business model for these crazy times. Should you go all virtual, stick with the brick and mortar model, or a hybrid of the two? Check it out!
Gyms across different states have been unfairly targeted with the shutdowns, without any relevant data showing that they are responsible in any way for spreading the virus. Some gyms have been closed again which is very frustrating. In the episode, we look at the kind of business model you need moving forward.
First off, we believe that in-person gym training will not go away. People will still need to come back to the gym for the social and community aspects of it. However, you also need to have virtual training in place for circumstances such as these and for those people who may prefer it.
You need to be equipped with the technology, staffing, and structure to go virtual. So, the best business model is a combination of the two; live training and virtual. For clients who prefer to come to the gym, you have to build their confidence with the cleaning, and social distancing protocols.
Having the tools and expertise to pivot in either direction should be the goal of any gym. That way, whatever happens, you don’t lose your members because you can’t really predict what will happen in the future as we have learned so far. In addition, coming out of this, we’ll have some people who will prefer to continue training virtually. This creates another income source for your gym
- The implications of gym getting closed again across different states (00:53)
- In-person training in the gym will not go away (05:42)
- Being equipped with the technology, staffing, and structure to run both live and virtual training (07:08
- Having the right tools to service personal training clients (11:19)
- Why franchises will be forced to disclose how COVID affected their financials going forwards (20:18)
- How a hybrid model works best to service all personality types (23:15)
- Being ready to pivot quickly in either direction by having the right assets in place (25:51)
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Mentioned in this episode
The Best Studio Business Model
At this time because of another wave of COVID, Some states are reclosing some facilities and businesses. One of those businesses that are being reclosed is gyms.
It’s funny because a lot of our friends and folks that we know in the industry are actually on the news. So one is the CEO of mountainside fitness and he and I spoke at an event together a year, two years ago. Great guy, owns 18 clubs in the Phoenix area. All around Arizona and he’s actually suing to petition to stay open until they can get to this final court date to decide whether it’s constitutional or not to be able to just close the business.
“Give me a break”
The argument is the same thing for my buddy Matt Pack who owns a place down in Miami. He was on the news talking about yes regarding my business I will pivot. We’ll do what we have to do but give me a break.
I think the “give me a break” thing stems from the fact that there are no relevant data to point towards gyms. I try to see it from both sides. When I look at it from the gym side, the entrepreneur side, I get it. And I’m defensive as well because I’m in the fitness industry. I don’t understand. I haven’t seen any data that would support that gyms are spreading COVID any greater than any other town. Especially our model, where you’re getting 12 people in here at a time all spread out.
Fitness facilities are expendable
It’s an easy thing to close. It’s an easy target. People think of tons of people breathing all over each other. The fear is “you have to do something because your cases are spiking.” No one’s talking about the fact that there were protests, which I’m down for protests, but the fact is if you cram a bunch of people together for good reasons or not the virus is going to spread. As a reaction to that, to just point at specific business and say to them but not all these other businesses must close is a bit much.
Gyms are drastically different
I do understand both sides of it though because I think from someone who’s maybe not affected by this and they are maybe on the side of being more nervous, they might just see any movement to shut anything down as a positive. And any resistance to that is self-serving. Maybe they view it as “it’s all about this entrepreneur making money.” However, I can tell you I know the guy from the mountainside. He’s a great man. He’s not requesting to stay open for a money grab.
He laid out all the things they’ve done while they’ve been closed in Arizona. They donated all their parking lot space for testing and they did all of these things to help the community right. Like retained all their staff, which was about 1500 employees. Did all these protocols remove cardio equipment, put in cleaning protocols. All these things to reopen were done, only to have the government say, Yeah, no, gyms. He’s just unfairly targeted. I don’t think that if you’re on the side of being more nervous and you think that gyms are being self-serving, and staying open, I would say that’s not true
There is no right answer right now about all the people at Home Depot. There’s no bottom to this thing of how many businesses in different ways and then there is the conflicting data. I mean, it’s all over the place.
At the end of the day
I think what I want to talk about is the environment that we have. We have seen a spike in cases which is not surprising. I think if you just look at going from locked down to not locked down regardless, you’re going to see it. All that being said, those are things out of our control. All the things you can try to let go of, the things that you can’t control, and so I can’t control a virus or spiking virus. What we need to control is what is this thing going to look like? What kind of business model do we need moving forward?
We are just in a new world where there are fear and anxiety to say it’s in 25 20% of the population. That’s a good chunk. I mean, we only get 20% into health and fitness facilities for the most part. So what is the answer? Is it virtual? Is it online only? Where do we think it’s headed based on what we think?
Personally, I think it’s gonna be a combo for a while. Let’s back up a minute. I don’t think that live in-person training is going away. I don’t think it’s possible. You need more social interaction than just digital. Facebook and Google and data analytics and behavioral science and all the things that go into making that addictive. It’s so new for our brain. It’s just not natural. We haven’t evolved into that. We crave human contact, like person to person.
There’s no way you’re gonna ever just stay home forever. You just can’t. It’s just not part of human nature. We are social animals. An online Social Forum can give you a little bit of that, but it’s not quite enough. In some ways, it is actually a little bit unhealthy. I think in-person training, we’ll come back. When it will come back? I’m not really sure. We’re still up and running. We’re at about 80% capacity, which we’ve been stuck here.
We’ve had people continue to freeze. We still have virtual going a small percentage as well. That being said right now it is helpful to do a bit of both. Be equipped as a business to have the technology solutions, and staffing and structure to run both live training and virtual.
Live training, we already talked about, we beat this dead horse already. Which is social distancing, use your own equipment, stay away from each other, do all the things that you need to do to build consumer confidence on the cleaning stuff everything exactly, and all the clean cleaning so that you, you can feel confident and being open right and that you’re not actually being part of the problem. You’re part of the solution.
I was on an online forum the other day and I saw someone said, Hey, like we’re just not down to do virtually any more. It’s too exhausting. For my instructors, hour after hour after hour of repeating the same workout at home, on a zoom call.
I thought you’re just running again and you’re running a class-based format. Now you’re trying to run online classes. Here’s what I’ll say about that particular play. If you’re going to do online classes, you’re only doing it viably as a strategy to maintain your current client base. Let’s sat that there’s the trust in the relationship that you had through the brick and mortar in that relationship.
They’re okay taking a class-based format because they already know you. They already know if it was based on classes only as an option. There are 1,000,001 Digital options already out there from the peloton to Nordic track to the mirror to the total.
What I think is a differentiator just like it is for us in the brick and mortar in virtual is to do your training one on one training. First of all, you have to have digital assets to do it. So you know, we have the Alloy app, which is perfect for this because you can pull food into it, you can pull wearables into it and integrates with all those. You can hold people accountable to several different types of metrics, whether it be nutrition, activity, steps, strength, training workouts, and more.
When we talk about getting new members, it gives you the ability to actually have a kind of evaluation process, sit down with them, you’re able to create goals, habits, and everything that they can see. Which is like you said, you’re not gonna get people that aren’t working on gyms just to resume workouts, like they’re not going to just come to join your gym for a video.
Basically what I’m saying is if your instructors are exhausted then your format is off. I don’t think That’s a viable solution for, for clubs long term, if you want to take your brand outside your four walls, doing free classes is fine for brand building, but it’s not sticky. You’re not going to have anybody stick around.
If you want to have a viable Virtual Training business, you need to service it in a more personal way. Think about one on one training being serviced virtually. You have to have the right vehicle. I like the app. It’s amazing and works really well. I’ve got a buddy who does a lot of online business and helps other trainers and fitness centers understand he uses our app as well. That’s all he uses. It’s the perfect tool for these times.
Having the perfect tool
Having the perfect tool to be able to train your clients, it’s customization, you’re giving them what they need, based on their health history is huge. What we also did find that works really well as you know, as we talked about, is community. We are a small group.
We would actually have zoom meetings just to hang out so that people could talk and see each other not zoom workouts, but like just literal social gatherings that we do. In addition to that, we are doing them every day, but it’s an easy way to sit down with six people to see each other all the time. It’s awesome.
Together with a group of people and see how they’re doing, or two, if you’re building an online-only community having forums, right where you can communicate like so that you’re bringing them into the fold of this family. So you’re giving them what they need as a coach, and you’re doing zoom calls or whatnot, so they can see your face, and you’re coaching them personally on their goals. And that’s been happening for a long time. It’s just more prevalent and relevant now.
Another idea, you might have a private Facebook page, you might have a private forum on your website, something like that subscription-based, and you’re getting together with groups of people.
We talked about in other podcasts how this pandemic is really forcing things to happen quicker. Maybe something that would have happened several years down the road but now it’s like well we are ready now.
Speaking of a franchise, one thing that we’re forced to do, (which is really cool moving forward, it’s really gonna help us is in your Franchise Disclosure documents) in the FTD there’s something called the item 19. That’s where you disclose any financial information that you want to take to the general public. You can pick and choose what that is. Right now we’ve got industry-leading return per member. What we do is what everybody spends every month in the industry-leading retention, which we can prove based on statistics.
New FDT standards
One thing that is now going to be in everyone’s FTD, which is really interesting, is how did COVID-19 affects the finances of your business. So imagine, you know, six, eight months from now we have a potential franchisee who should be shopping, they like the idea of being in gyms or being in fitness. They’re comparing us to say, a large box model or us to a Bootcamp model. When you compare the revenue discrepancies during COVID, like how were they affected? How negatively were they affected during COVID? We were so excited to hear that we were going to have to put that in.
For us being able to pivot to the app and online was very favorable. On paper, we have all these digital assets that are going to allow people to pivot if needed more to run a hybrid model, whatever that may be. They can actually do both in their community. And again, just by pure like having a tool they’re used for maybe an extra add on value add service turns out to be the perfect tool for this wacky time period that we’re in.
We’ve been open the longest since the shutdowns
We were the last shutdown and the first open so we’ve had probably the least impacted. Which is to say that we have been very fortunate. Cases are spiking here just like everywhere else. So we’ll see what happens. However, we feel very confident that we have the tools and assets in place to pivot and go in either direction. Being prepared in this way allows us some flexibility because of what we have in place.
I think that’s where every gym needs to be right now, I’m very grateful that we are in a small studio model. We can pivot quickly like a speedboat, not a giant battleship. I think right now you can slide back and forth, between digital and face to face. You need to be able to service both and I think that is going to be the way it’s going to be for the foreseeable future.