July 24, 2025 • 20 mins
Tired of watching small mistakes drain your gym's profits? Here's how to stop paying the “dumb tax” once and for all.
In this episode of “Run a Profitable Gym,” Chris Cooper explains how seemingly small business mistakes compound into million-dollar losses over time. More importantly, he tells you how to stop making these gym-sinking errors.
Coop presents three types of mistakes that destroy gym profitability:
- Compounding problems get worse over time. Example: hiring without proper training systems.
- Delaying problems punish you for procrastinating. Example: avoiding necessary price increases.
- Mounting problems are fueled by the increasing momentum of repeated errors. Example: dumping more members into a gym with a broken pricing model.
Chris also gets brutally honest about his own expensive mistakes as a gym owner, and he calculates the real cost of inaction and poor systems so you can see how errors affect P&L statements.
Tune in for the full breakdown and then take action before profit-killing mistakes put you on the path to bankruptcy.
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0:01 - Intro
1:39 - Compounding problems
7:59 - Delaying problems
11:43 - Mounting problems
14:58 - What’s the cost of change?
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
Nobody goes broke and loses their business from
making one big bad decision.
Businesses go broke from athousand small mistakes that add
up until they total over amillion dollars in lost revenue,
wasted time, and unnecessarystress.
Today, let's talk about howthese mistakes compound into
(00:21):
million-dollar mistakes for gymsand how to stop paying the dumb
tax once and for all.
I'm Chris Cooper.
This is Run a Profitable Gym,and if you want to talk more
more about these or share yourown stories, I've shared enough
of mine, go togymownersunited.com.
That's our free group for gymowners where you can engage in
conversation with over 10,000gym owners worldwide.
It's productive, it's positive,and sometimes it's funny, just
(00:45):
like this.
Today I'm going to talk to youabout million-dollar mistakes.
The mistakes that you make inyour business at startup don't
just cost you one time.
They compound, like interest,but in reverse.
So the first example I'm goingto show you here is a really
simple mistake I on pricing.
And that's putting a 15%discount on a$200 membership for
10 clients.
(01:05):
Over two years, that will costyou$7,200.
Now imagine scaling that simplemath across dozens or hundreds
of clients, and you can see howdiscounts delete dollars over
time.
So we're going to talk about thetypes of million dollar mistakes
that gyms make and how theselittle things, I'm only saving
that guy 10% a month, how theyadd up and compound into million
(01:29):
dollar mistakes over time.
Trust me, I've made millionsmost of these and I can share
stories with you about that.
I'll try and do that as we gothrough them.
There are different types ofmistakes that drain your bank
account.
The first is compoundingproblems.
These are mistakes that getworse the longer you let them
sit, like hiring the wrongperson and then failing to train
them properly.
(01:49):
So Let's say that you hiresomebody and you're going to pay
them$40,000 a year, but youdon't train them properly.
And at the end of the year, theyhaven't done anything that you
like.
They're not a good coach.
They're not doing their managerjob.
You've wasted$40,000.
And then if you decide to keepthem, you'll continue to waste
(02:09):
money because you still haven'ttrained them right.
Or if you decide to replace themwith somebody else, you'll be
wasting that money all overagain.
Do you see how these mistakescan really add up and compound?
I've done this several times.
I had an intern who I hired atmy gym, you know,$45,000 a year.
And I wanted him to take overgroup coaching so that I could
work on marketing and sales.
And after the first quarter, hewasn't a very good coach.
(02:32):
And I thought, well, he needs toshadow more.
He needs to read some books.
And so I'd give him thesetextbooks to read and I'd tell
him, come and shadow Tyler, comeand watch charity, come and
watch Mike.
And he'd come and he'd shadow.
And after the second quarter, hewasn't any better.
And so, okay, now I want you inmy classes every day, watch what
I do, take notes.
We're going to debrief afterclass, you know, really going
(02:52):
all in to try and get a returnon my investment.
And again, we were six months inand I had already spent$22,500
on his salary and it wasn'tworking.
And so after the third quarterof him shadowing me, it still
wasn't working.
And I finally took him aside andsaid, Hey kid, get your act
together here.
If you're not a good coach, Ican't keep you after the end of
(03:13):
the first year.
And of course he immediatelylost all motivation to succeed
and just phoned it in for thelast quarter.
And that was it.
And that was 40$25,000 wastedthat I could have taken home to
my kids or applied somewhereelse.
The problem is that if you don'tchange the way that you train
your staff, it doesn't evenmatter who you hire because bad
processes burn out unicorns.
(03:34):
You can hire amazing people, notgive them good training, give
them poor feedback, give them nofeedback, and eventually you
just burn through great staff.
Another similar example would behiring a coach who looks great
on paper but doesn't fit yourculture and then keeping them
for years.
Or another example is committingto a lease that's way too big
and sticking with it because youfeel trapped rather than looking
(03:56):
for alternatives, like talkingto the landlord about downsizing
or even subletting some of yourspace.
Now I've got another chart heretoo.
And this chart shows howcombined losses from discounts
and low rates can add up to$86,400 over four years.
And that's just from pricingissues.
So, you know, here's an exampleof a pricing issue.
(04:18):
We were working with this gymand they actually had three
locations and one year to fundthe third location.
location, they decided that theywould offer a paid in full rate
for their clients who wanted topay for the next year in full.
So this was like November.
And they said to all of ourclients, hey, if you want to pay
in full for the next year, we'llgive you two free months.
(04:39):
So you know, a bunch of theirclients took them up on it 12 or
13.
They paid in full for the nextyear, the gym owner said,
amazing, I've got all this cashin my bank account, we're going
to fund the opening of my thirdgym.
Okay, but the next year, Whenthey reached November, they had
12 or 13 of their best clientswho said, okay, I'm done paying
for the year.
(05:00):
And so they kept coming forfree.
Well, that created a little bitof a revenue shortfall.
And so the owner said, well,maybe we better do this again.
Let's offer the same thingagain.
And so, of course, you know, heputs it out there and the same
12 people take it and a couplemore.
And the next year, in August,they've run out of money again.
Uh-oh, let's do it again.
(05:22):
And so they get in this...
crazy cash hungry cycle.
And the real problem was thatthey were discounting, not that
they were needing to sell morepaid in full.
And by the third year, the ownerof the gym had realized his
mistake, didn't know a way outof it, had to close down two of
his locations and startedworking with me as a mentor to
fix the problem.
That was costly.
That was an expensive changebecause of course, you know,
(05:43):
only his best clients who wouldhave been there anyway, signed
up to pay for a year in advance.
So he was just taking money offthe table that he would have
collected if he had just waitedfor for no reason, and then got
himself into this viciousdownward cycle that eventually
burned him out.
He wound up selling the gym tosomebody else.
You know, another great exampleof this is when you give
(06:03):
somebody a discount just to kindof get them in the door, right?
Or maybe because you reallyrespect their line of work.
You know, I really respectfirefighters a lot.
Like, you know, when everybodyelse is running away from
trouble, they're the onesrunning toward it.
And early on in my career, Ithought I'd love to give these
people a discount.
And so I gave them 20% off.
And the first month thefirefighter firefighters were
(06:23):
like hey thanks a lot reallyappreciate it not necessary but
thank you the second month theydidn't say anything the third
month they didn't say anythingand after about a year and a
half of this and me giving them20 off every month of a rate
that was already way too low Irealized that I was out
thousands of dollars on these 10firefighters they weren't
attracted by the discounts inthe first place and when I took
(06:46):
them away again I did it astactfully as I could but they
got mad they forgot they wereeven getting a discount and so
they thought that their pricewas going up 20% because they
were a firefighter.
And so I had this kind ofSophie's choice of keep giving
them the discount.
That's not doing anything for meor take the discount away.
Try to keep two thirds of themand make the same amount of
(07:06):
money on coaching fewer people.
Well, it seems easy to just letit ride, let it ride, let it
ride.
But eventually it hits you.
This is unfair to all of myother clients who are paying
more money for the sameexcellent service.
It's also costing me morebecause I'm putting these people
into groups filling up groupswith discounts and I'm needing
to add more groups, even thoughI'm just like breaking even on
(07:28):
the revenue that I'm givingthem.
And so eventually when youfigure out that these discounts
are really hurting yourbusiness, you know, it's a
painful change.
And I'll get to how to workthrough the change of this
later.
But the longer these things goon, the worse it gets, the
harder they are to change, theharder they are to reverse
course.
And if you don't reverse course,you leave it go too long.
(07:48):
They can be the thing that killsyou.
That's the dumb tax.
So the first type of mistakesthat create million dollar
problems are the compoundingones.
The second ones are the delayingones.
Sometimes the real cost comesfrom putting things off.
So for example, let's say thatyou determined after about six
months that a staff personwasn't really a good fit, but
(08:12):
you don't want to confront them.
And so you send them to theirlevel two and you hope that, you
know, CrossFit will fix them.
Or you start giving themevaluations and those turn a
confrontational or you like putthe bad news in the poop
sandwich because you don't wantto give them all the bad news
all at once right and so overtime this person just gets more
and more toxic more and morefrustrated worse and worse and
(08:33):
you don't confront it thereality is that it's very hard
to fix people quite often we'relooking at a person on our staff
and we're like wow they'rethey're not doing a good job and
we need to ask ourselves do wehave a process problem or a
people problem 90 of the timeit's a process problem we
haven't told them exactly whatto do We haven't trained them.
We haven't coached them.
(08:53):
But 10% of the time, it actuallyis a people problem.
And when somebody is toxic, youhave to picture them as like
spitting their toxicity oneverybody else and infecting
them.
And the longer you leave them,the more people they will infect
more deeply and grievously.
And so you have to get them outas quickly as possible.
When you've determined thatyou've got a person on staff who
(09:13):
is a problem, the best next stepthat you can take is to get rid
of them as quickly as possiblebecause they're going to infect
your other staff.
They're going to infect yourother clients and they're going
to infect you.
Another really common example ofthis in the fitness industry is
delaying a price increasebecause you're worried that
clients will leave.
But the longer you leave it, theless you can afford to lose
(09:34):
these clients.
The earlier you do it, Eventhough it's painful, the easier
it will be, and a year from now,you could be completely
recovered.
The third one is waiting to hirea mentor until you're desperate,
you're almost bankrupt, andyou're reactive, and you're
like, I don't know what to do.
I give up.
Instead of hiring a mentor whenthings are doing okay.
(09:55):
Look, this was me.
I made all these mistakes, butthis was my most grievous one.
I was bankrupt.
I could not write a check to paythe rent when I hired my first
mentor.
In fact, the check I gave himshould If I hadn't done the
work, it would have.
Don't make my mistake.
Just because things are goingokay right now or you're
treading water doesn't meanyou're doing well.
(10:16):
If you're breaking even rightnow, you are losing time, you're
losing ground, and you arefragile, my friend.
That means you should be workingwith a mentor always to grow
your business.
I've worked with easily 10mentors over the last 10 years
to grow my gym, to grow 2Brain.
Each one of them helps me getover the next step.
stage of my business.
(10:38):
You know, when I was growing TwoBrain, I started off working
with Dan Martell.
I systemized and optimizedthings.
And then I started working withTodd Herman to build out an
Ascension model to help gymowners get the right advice they
needed at exactly the right timein exactly the right way.
And then I moved on to othercoaches to help me improve my
coaching.
And there's been other mentorssince.
As your business grows, itsneeds change and you'll need
(11:01):
different mentors, but you'llnever not need mentorship.
Imagine one of your clientssays, to you, their coach, when
will I not need a coach anymore?
The answer you would give themis, hey, when you're in a rough
state, you're sick, you need acoach to turn things around, do
triage, get you back to level.
When you're well, but not fit,you need a coach to push you to
(11:22):
the next level.
And when you're fit, you need acoach more than ever to help you
keep pursuing the next thingwithout injuring yourself.
And it's the same for business.
The thing with these types ofproblems is that the longer you
wait, the higher the dumptownyou will pay.
The price of yourprocrastination and your fear is
lost money and time.
(11:42):
The third type of problem thatcan create a million dollar
mistake is what we call mountingproblems.
These are mistakes that pile upbecause you try to fix the
problem by just doing more ofthe same, working harder, doing
more.
So for example, you hire staffwithout fixing underlying
systems.
And then you say like, oh, well,they're not doing it.
(12:03):
They need management.
That's not me.
I'm going to hire a generalmanager.
And now you've got two layers ofstaff who don't know what to do
and don't know how to fulfill toyour level.
Another example is just dumpingmore members into a broken
pricing model with differentdiscounts and poor retention.
Hey, in 2018, we were allattracted to the ad agencies and
gym launches that would do thatand new you challenges, right?
(12:24):
But if your underlying systemwas broken, you wouldn't keep
those people.
Most people didn't anyway.
And soon they had come in, theyhad tried your service and they
were gone and never coming back.
This is the reason that I calledmy first blog for gym owners
don't buy ads.com.
Because my first mentor, Denniswisely said, Chris, if you start
bringing in your ideal client,right now, you'll never keep
(12:47):
them.
Your gym sucks.
They're going to see the mess.
They're going to hear the noise.
They're going to see the crazylike power lifters and they're
going to quit and you will neverget them back.
Don't buy ads yet.
Fix your problem first.
And this is a big problem thatwe see with a lot of gyms is
they think that just gettingmore members is going to solve
their problems or getting morerevenue will solve their
problems.
(13:07):
It doesn't.
It exposes the underlyingproblem and it does so when it's
too late and you've burnedthrough potentially good clients
and good money.
Another great example is tryingto incentivize staff with money.
So you pay higher salarieswithout a revenue plan to make
up the difference and you windup working harder for less money
or you give a percentage ofsales to some salesperson or to
(13:27):
your coaches thinking that thatwill make them good at sales.
It won't.
And so these problems cost youmillions of dollars over the
years unless you fix them.
So here's a little chart you'llfind interesting.
This is what happens if youavoid a$10 rate increase for 150
members and you Over two years,that costs you$36,000.
(13:48):
Now that's not$36,000 inpotential revenue money you
could have owned.
That is literally you openingyour wallet, writing a check for
$36,000 to your business andsaying, here you go.
I refuse to raise rates by$10per client per month.
That's where the money comesfrom is right out of your
pocket.
That means you can't afford tomake more opportunities for
(14:08):
coaches.
It means that your kids can'tget the skateboard that they
want.
And it means that you'refighting with your spouse over
the grocery bill, just like Iwas.
Look, Here's the brutal truth.
If you don't change yourbusiness, you will keep paying
the dumb tax forever.
I sometimes, I feel weirdcalling it the dumb tax, but the
reality is that you're notmaking these taxes because
you're dumb.
(14:28):
You're making these taxesbecause you're ignoring them.
And that means, you know,unfortunately the mistakes are
avoidable and that's what makesthem dumb.
It makes no sense to continuewasting money like this when the
result could add up to millionsof dollars.
Here's what to remember.
When you give somebody discount,that discount doesn't go away.
There's no limit to it.
(14:49):
Bad hires will not fixthemselves and sometimes can't
be fixed.
Grandfathered rates keep eatinginto your margins forever.
Okay.
Now I want to talk to you aboutlike what change costs, because
let's face it, making mistakesis crazy expensive.
Changing can cost you too.
change does cost something, butit's always cheaper than paying
(15:12):
the dumb tax forever.
For example, you might hire amentor like our team of mentors
at Two Brain Business, andyou'll pay that mentor because
this person is a professionalwho's dedicating their time and
attention to helping you.
But you'll stop paying the dumbtax, and the speed at which you
act determines how quickly youwill save your business.
The big thing that you have toremember when it comes to change
(15:32):
is that once you understand thechange has to be made, the
faster you can make that change,the quicker you can get results.
There's a reason that whenpoliticians come into office,
they make all their big changesin the first six months, because
hopefully by the time reelectioncomes around, their clients,
right, their electorate willhave forgotten about all the
chaos and turbulence.
(15:53):
And so a lot of us just we avoidmaking change because we don't
want to make people mad and wedon't want confrontation.
This is a bad time.
There will never be a good time.
Nobody is coming to save you.
It's time to make change rightnow.
And as soon as you know thecorrect change to be made by
working with your mentor,looking at your metrics and
saying, here's what has to bedone, the best thing you can do
(16:15):
for your business, for yourfamily, for your staff, for your
members, and even for yourself,is to enact the change right
away.
There's always a best way to doit, and that's why we're called
Two Brain Business.
The left side of the brain isknowing what to do, and the
right side is knowing how to doit best.
Doubling your pricing for yourcurrent clients is not a good
(16:35):
idea, but increasing yourpricing for your current clients
by 15% at a time over maybe acouple years if you have to do
it, that is a good idea, andit's so important that it's
almost mandatory.
You're probably underchargingand the people that you're
comparing yourself to are alsoundercharging.
The difference is that if youfix your rates now, three years
from now, you'll still be hereand they won't.
(16:58):
Your business will not changeitself.
If you don't change yourbusiness, it will fail.
Only you can save it and youwill be culpable if it does
fail.
So look at the costs in thecharts that I've shared with
you.
And the goal here was just toshow you like these things add
up over time.
And I really want you to takehome the message that you need
to take ownership of yourbusiness.
(17:19):
I don't just mean on paper, likeyou're the sole proprietor or
you're the CEO.
I mean, own it.
I mean, nobody's coming to saveyou.
I mean, take the wheel.
I mean, learn the skills thatyou need to learn to actually
run a business instead of justhoping that being a better coach
might save me.
That won't happen.
Now I've got a little exercisefor you called the wallet test.
So I want you to pull up yourclient list and I want you to
(17:41):
look at one client who's gettinga discount right now, or even
somebody that's getting like ascholarship, but those things
are still going around.
Next month, instead of givingthem a discount, charge them
full price and then reach intoyour wallet, take out the cash
difference and give it to them,physically hand it to your
client.
So if you're charging$100 amonth and you're giving somebody
20% off, next month, charge themthe$100 and take$20 out of your
(18:05):
wallet and keep doing that everymonth until you get tired of
paying the dumb tax.
The dumb tax has nothing to dowith your intelligence and
everything to do with yourwillingness to just let things
ride because they don't hurtenough to change them.
(18:39):
The mistakes that kill thesegyms are not giant catastrophes.
They're tiny cuts compoundedover time, bleeding your
business dry, leaving yoususceptible so when the landlord
does increase the rent by 10%,it doesn't knock you out of
business.
The key is to stop paying thedumb tax now.
Get some clarity, raise yourrates if you have to, change
(19:01):
your class times, eliminateunnecessary discounts, whatever
you have to do, make the changesso that you stop paying the dumb
tax and save your business.
Call a mentor.
The biggest dumb tax ever thatI've ever paid was trying to
figure out everything on my own.
No, I opened a business so thatI could be creative and be a
problem solver.
(19:22):
Well, that's great if you'redesigning your logo.
It's not great if you're tryingto set your prices or a mistake
that could haunt you for thenext 10 years.
It's not great if you're tryingto determine who your ideal
audience is so you don't attracta What happened in my gym?
Every mistake that you make atstartup will take you six months
(19:43):
and about$100,000 to fix.
But if you don't fix them now,they will compound over time and
get worse and worse and worse.
And the only thing worse thanpaying the dumb tax is paying
interest on the dumb tax.
If you're waiting for somebodyto step in and save your
business, Good news, bad news,you are it.
And the first thing that youshould do is call somebody who
knows how to guide you throughthe changes that you need.
(20:05):
I'm Chris Cooper.
This is Run a Profitable Gym.
Look, I am so tired of seeinggyms fail.
And I'm so tired of it because Isee them repeating mistakes that
are avoidable, that we've beentalking about for a decade now.
And I even see other businesscoaches giving people bad advice
just because they don't know anybetter.
The reality is that you need totake control of your business.
(20:26):
And that means first acceptingthat is not going to change
unless you make the change.
And second, learning the thingsrequired to run a business, like
how to read a profit and lossstatement, how to look at your
metrics, how to talk and coachyour staff.
These things are crazyimportant.
And if you don't do them, yourbusiness will be gone and then
you can't help anybody.
Nobody goes broke and loses their business from
making one big bad decision.
Businesses go broke from athousand small mistakes that add
up until they total over amillion dollars in lost revenue,
wasted time, and unnecessarystress.
Today, let's talk about howthese mistakes compound into
(00:21):
million-dollar mistakes for gymsand how to stop paying the dumb
tax once and for all.
I'm Chris Cooper.
This is Run a Profitable Gym,and if you want to talk more
more about these or share yourown stories, I've shared enough
of mine, go togymownersunited.com.
That's our free group for gymowners where you can engage in
conversation with over 10,000gym owners worldwide.
It's productive, it's positive,and sometimes it's funny, just
(00:45):
like this.
Today I'm going to talk to youabout million-dollar mistakes.
The mistakes that you make inyour business at startup don't
just cost you one time.
They compound, like interest,but in reverse.
So the first example I'm goingto show you here is a really
simple mistake I on pricing.
And that's putting a 15%discount on a$200 membership for
10 clients.
(01:05):
Over two years, that will costyou$7,200.
Now imagine scaling that simplemath across dozens or hundreds
of clients, and you can see howdiscounts delete dollars over
time.
So we're going to talk about thetypes of million dollar mistakes
that gyms make and how theselittle things, I'm only saving
that guy 10% a month, how theyadd up and compound into million
(01:29):
dollar mistakes over time.
Trust me, I've made millionsmost of these and I can share
stories with you about that.
I'll try and do that as we gothrough them.
There are different types ofmistakes that drain your bank
account.
The first is compoundingproblems.
These are mistakes that getworse the longer you let them
sit, like hiring the wrongperson and then failing to train
them properly.
(01:49):
So Let's say that you hiresomebody and you're going to pay
them$40,000 a year, but youdon't train them properly.
And at the end of the year, theyhaven't done anything that you
like.
They're not a good coach.
They're not doing their managerjob.
You've wasted$40,000.
And then if you decide to keepthem, you'll continue to waste
(02:09):
money because you still haven'ttrained them right.
Or if you decide to replace themwith somebody else, you'll be
wasting that money all overagain.
Do you see how these mistakescan really add up and compound?
I've done this several times.
I had an intern who I hired atmy gym, you know,$45,000 a year.
And I wanted him to take overgroup coaching so that I could
work on marketing and sales.
And after the first quarter, hewasn't a very good coach.
(02:32):
And I thought, well, he needs toshadow more.
He needs to read some books.
And so I'd give him thesetextbooks to read and I'd tell
him, come and shadow Tyler, comeand watch charity, come and
watch Mike.
And he'd come and he'd shadow.
And after the second quarter, hewasn't any better.
And so, okay, now I want you inmy classes every day, watch what
I do, take notes.
We're going to debrief afterclass, you know, really going
(02:52):
all in to try and get a returnon my investment.
And again, we were six months inand I had already spent$22,500
on his salary and it wasn'tworking.
And so after the third quarterof him shadowing me, it still
wasn't working.
And I finally took him aside andsaid, Hey kid, get your act
together here.
If you're not a good coach, Ican't keep you after the end of
(03:13):
the first year.
And of course he immediatelylost all motivation to succeed
and just phoned it in for thelast quarter.
And that was it.
And that was 40$25,000 wastedthat I could have taken home to
my kids or applied somewhereelse.
The problem is that if you don'tchange the way that you train
your staff, it doesn't evenmatter who you hire because bad
processes burn out unicorns.
(03:34):
You can hire amazing people, notgive them good training, give
them poor feedback, give them nofeedback, and eventually you
just burn through great staff.
Another similar example would behiring a coach who looks great
on paper but doesn't fit yourculture and then keeping them
for years.
Or another example is committingto a lease that's way too big
and sticking with it because youfeel trapped rather than looking
(03:56):
for alternatives, like talkingto the landlord about downsizing
or even subletting some of yourspace.
Now I've got another chart heretoo.
And this chart shows howcombined losses from discounts
and low rates can add up to$86,400 over four years.
And that's just from pricingissues.
So, you know, here's an exampleof a pricing issue.
(04:18):
We were working with this gymand they actually had three
locations and one year to fundthe third location.
location, they decided that theywould offer a paid in full rate
for their clients who wanted topay for the next year in full.
So this was like November.
And they said to all of ourclients, hey, if you want to pay
in full for the next year, we'llgive you two free months.
(04:39):
So you know, a bunch of theirclients took them up on it 12 or
13.
They paid in full for the nextyear, the gym owner said,
amazing, I've got all this cashin my bank account, we're going
to fund the opening of my thirdgym.
Okay, but the next year, Whenthey reached November, they had
12 or 13 of their best clientswho said, okay, I'm done paying
for the year.
(05:00):
And so they kept coming forfree.
Well, that created a little bitof a revenue shortfall.
And so the owner said, well,maybe we better do this again.
Let's offer the same thingagain.
And so, of course, you know, heputs it out there and the same
12 people take it and a couplemore.
And the next year, in August,they've run out of money again.
Uh-oh, let's do it again.
(05:22):
And so they get in this...
crazy cash hungry cycle.
And the real problem was thatthey were discounting, not that
they were needing to sell morepaid in full.
And by the third year, the ownerof the gym had realized his
mistake, didn't know a way outof it, had to close down two of
his locations and startedworking with me as a mentor to
fix the problem.
That was costly.
That was an expensive changebecause of course, you know,
(05:43):
only his best clients who wouldhave been there anyway, signed
up to pay for a year in advance.
So he was just taking money offthe table that he would have
collected if he had just waitedfor for no reason, and then got
himself into this viciousdownward cycle that eventually
burned him out.
He wound up selling the gym tosomebody else.
You know, another great exampleof this is when you give
(06:03):
somebody a discount just to kindof get them in the door, right?
Or maybe because you reallyrespect their line of work.
You know, I really respectfirefighters a lot.
Like, you know, when everybodyelse is running away from
trouble, they're the onesrunning toward it.
And early on in my career, Ithought I'd love to give these
people a discount.
And so I gave them 20% off.
And the first month thefirefighter firefighters were
(06:23):
like hey thanks a lot reallyappreciate it not necessary but
thank you the second month theydidn't say anything the third
month they didn't say anythingand after about a year and a
half of this and me giving them20 off every month of a rate
that was already way too low Irealized that I was out
thousands of dollars on these 10firefighters they weren't
attracted by the discounts inthe first place and when I took
(06:46):
them away again I did it astactfully as I could but they
got mad they forgot they wereeven getting a discount and so
they thought that their pricewas going up 20% because they
were a firefighter.
And so I had this kind ofSophie's choice of keep giving
them the discount.
That's not doing anything for meor take the discount away.
Try to keep two thirds of themand make the same amount of
(07:06):
money on coaching fewer people.
Well, it seems easy to just letit ride, let it ride, let it
ride.
But eventually it hits you.
This is unfair to all of myother clients who are paying
more money for the sameexcellent service.
It's also costing me morebecause I'm putting these people
into groups filling up groupswith discounts and I'm needing
to add more groups, even thoughI'm just like breaking even on
(07:28):
the revenue that I'm givingthem.
And so eventually when youfigure out that these discounts
are really hurting yourbusiness, you know, it's a
painful change.
And I'll get to how to workthrough the change of this
later.
But the longer these things goon, the worse it gets, the
harder they are to change, theharder they are to reverse
course.
And if you don't reverse course,you leave it go too long.
(07:48):
They can be the thing that killsyou.
That's the dumb tax.
So the first type of mistakesthat create million dollar
problems are the compoundingones.
The second ones are the delayingones.
Sometimes the real cost comesfrom putting things off.
So for example, let's say thatyou determined after about six
months that a staff personwasn't really a good fit, but
(08:12):
you don't want to confront them.
And so you send them to theirlevel two and you hope that, you
know, CrossFit will fix them.
Or you start giving themevaluations and those turn a
confrontational or you like putthe bad news in the poop
sandwich because you don't wantto give them all the bad news
all at once right and so overtime this person just gets more
and more toxic more and morefrustrated worse and worse and
(08:33):
you don't confront it thereality is that it's very hard
to fix people quite often we'relooking at a person on our staff
and we're like wow they'rethey're not doing a good job and
we need to ask ourselves do wehave a process problem or a
people problem 90 of the timeit's a process problem we
haven't told them exactly whatto do We haven't trained them.
We haven't coached them.
(08:53):
But 10% of the time, it actuallyis a people problem.
And when somebody is toxic, youhave to picture them as like
spitting their toxicity oneverybody else and infecting
them.
And the longer you leave them,the more people they will infect
more deeply and grievously.
And so you have to get them outas quickly as possible.
When you've determined thatyou've got a person on staff who
(09:13):
is a problem, the best next stepthat you can take is to get rid
of them as quickly as possiblebecause they're going to infect
your other staff.
They're going to infect yourother clients and they're going
to infect you.
Another really common example ofthis in the fitness industry is
delaying a price increasebecause you're worried that
clients will leave.
But the longer you leave it, theless you can afford to lose
(09:34):
these clients.
The earlier you do it, Eventhough it's painful, the easier
it will be, and a year from now,you could be completely
recovered.
The third one is waiting to hirea mentor until you're desperate,
you're almost bankrupt, andyou're reactive, and you're
like, I don't know what to do.
I give up.
Instead of hiring a mentor whenthings are doing okay.
(09:55):
Look, this was me.
I made all these mistakes, butthis was my most grievous one.
I was bankrupt.
I could not write a check to paythe rent when I hired my first
mentor.
In fact, the check I gave himshould If I hadn't done the
work, it would have.
Don't make my mistake.
Just because things are goingokay right now or you're
treading water doesn't meanyou're doing well.
(10:16):
If you're breaking even rightnow, you are losing time, you're
losing ground, and you arefragile, my friend.
That means you should be workingwith a mentor always to grow
your business.
I've worked with easily 10mentors over the last 10 years
to grow my gym, to grow 2Brain.
Each one of them helps me getover the next step.
stage of my business.
(10:38):
You know, when I was growing TwoBrain, I started off working
with Dan Martell.
I systemized and optimizedthings.
And then I started working withTodd Herman to build out an
Ascension model to help gymowners get the right advice they
needed at exactly the right timein exactly the right way.
And then I moved on to othercoaches to help me improve my
coaching.
And there's been other mentorssince.
As your business grows, itsneeds change and you'll need
(11:01):
different mentors, but you'llnever not need mentorship.
Imagine one of your clientssays, to you, their coach, when
will I not need a coach anymore?
The answer you would give themis, hey, when you're in a rough
state, you're sick, you need acoach to turn things around, do
triage, get you back to level.
When you're well, but not fit,you need a coach to push you to
(11:22):
the next level.
And when you're fit, you need acoach more than ever to help you
keep pursuing the next thingwithout injuring yourself.
And it's the same for business.
The thing with these types ofproblems is that the longer you
wait, the higher the dumptownyou will pay.
The price of yourprocrastination and your fear is
lost money and time.
(11:42):
The third type of problem thatcan create a million dollar
mistake is what we call mountingproblems.
These are mistakes that pile upbecause you try to fix the
problem by just doing more ofthe same, working harder, doing
more.
So for example, you hire staffwithout fixing underlying
systems.
And then you say like, oh, well,they're not doing it.
(12:03):
They need management.
That's not me.
I'm going to hire a generalmanager.
And now you've got two layers ofstaff who don't know what to do
and don't know how to fulfill toyour level.
Another example is just dumpingmore members into a broken
pricing model with differentdiscounts and poor retention.
Hey, in 2018, we were allattracted to the ad agencies and
gym launches that would do thatand new you challenges, right?
(12:24):
But if your underlying systemwas broken, you wouldn't keep
those people.
Most people didn't anyway.
And soon they had come in, theyhad tried your service and they
were gone and never coming back.
This is the reason that I calledmy first blog for gym owners
don't buy ads.com.
Because my first mentor, Denniswisely said, Chris, if you start
bringing in your ideal client,right now, you'll never keep
(12:47):
them.
Your gym sucks.
They're going to see the mess.
They're going to hear the noise.
They're going to see the crazylike power lifters and they're
going to quit and you will neverget them back.
Don't buy ads yet.
Fix your problem first.
And this is a big problem thatwe see with a lot of gyms is
they think that just gettingmore members is going to solve
their problems or getting morerevenue will solve their
problems.
(13:07):
It doesn't.
It exposes the underlyingproblem and it does so when it's
too late and you've burnedthrough potentially good clients
and good money.
Another great example is tryingto incentivize staff with money.
So you pay higher salarieswithout a revenue plan to make
up the difference and you windup working harder for less money
or you give a percentage ofsales to some salesperson or to
(13:27):
your coaches thinking that thatwill make them good at sales.
It won't.
And so these problems cost youmillions of dollars over the
years unless you fix them.
So here's a little chart you'llfind interesting.
This is what happens if youavoid a$10 rate increase for 150
members and you Over two years,that costs you$36,000.
(13:48):
Now that's not$36,000 inpotential revenue money you
could have owned.
That is literally you openingyour wallet, writing a check for
$36,000 to your business andsaying, here you go.
I refuse to raise rates by$10per client per month.
That's where the money comesfrom is right out of your
pocket.
That means you can't afford tomake more opportunities for
(14:08):
coaches.
It means that your kids can'tget the skateboard that they
want.
And it means that you'refighting with your spouse over
the grocery bill, just like Iwas.
Look, Here's the brutal truth.
If you don't change yourbusiness, you will keep paying
the dumb tax forever.
I sometimes, I feel weirdcalling it the dumb tax, but the
reality is that you're notmaking these taxes because
you're dumb.
(14:28):
You're making these taxesbecause you're ignoring them.
And that means, you know,unfortunately the mistakes are
avoidable and that's what makesthem dumb.
It makes no sense to continuewasting money like this when the
result could add up to millionsof dollars.
Here's what to remember.
When you give somebody discount,that discount doesn't go away.
There's no limit to it.
(14:49):
Bad hires will not fixthemselves and sometimes can't
be fixed.
Grandfathered rates keep eatinginto your margins forever.
Okay.
Now I want to talk to you aboutlike what change costs, because
let's face it, making mistakesis crazy expensive.
Changing can cost you too.
change does cost something, butit's always cheaper than paying
(15:12):
the dumb tax forever.
For example, you might hire amentor like our team of mentors
at Two Brain Business, andyou'll pay that mentor because
this person is a professionalwho's dedicating their time and
attention to helping you.
But you'll stop paying the dumbtax, and the speed at which you
act determines how quickly youwill save your business.
The big thing that you have toremember when it comes to change
(15:32):
is that once you understand thechange has to be made, the
faster you can make that change,the quicker you can get results.
There's a reason that whenpoliticians come into office,
they make all their big changesin the first six months, because
hopefully by the time reelectioncomes around, their clients,
right, their electorate willhave forgotten about all the
chaos and turbulence.
(15:53):
And so a lot of us just we avoidmaking change because we don't
want to make people mad and wedon't want confrontation.
This is a bad time.
There will never be a good time.
Nobody is coming to save you.
It's time to make change rightnow.
And as soon as you know thecorrect change to be made by
working with your mentor,looking at your metrics and
saying, here's what has to bedone, the best thing you can do
(16:15):
for your business, for yourfamily, for your staff, for your
members, and even for yourself,is to enact the change right
away.
There's always a best way to doit, and that's why we're called
Two Brain Business.
The left side of the brain isknowing what to do, and the
right side is knowing how to doit best.
Doubling your pricing for yourcurrent clients is not a good
(16:35):
idea, but increasing yourpricing for your current clients
by 15% at a time over maybe acouple years if you have to do
it, that is a good idea, andit's so important that it's
almost mandatory.
You're probably underchargingand the people that you're
comparing yourself to are alsoundercharging.
The difference is that if youfix your rates now, three years
from now, you'll still be hereand they won't.
(16:58):
Your business will not changeitself.
If you don't change yourbusiness, it will fail.
Only you can save it and youwill be culpable if it does
fail.
So look at the costs in thecharts that I've shared with
you.
And the goal here was just toshow you like these things add
up over time.
And I really want you to takehome the message that you need
to take ownership of yourbusiness.
(17:19):
I don't just mean on paper, likeyou're the sole proprietor or
you're the CEO.
I mean, own it.
I mean, nobody's coming to saveyou.
I mean, take the wheel.
I mean, learn the skills thatyou need to learn to actually
run a business instead of justhoping that being a better coach
might save me.
That won't happen.
Now I've got a little exercisefor you called the wallet test.
So I want you to pull up yourclient list and I want you to
(17:41):
look at one client who's gettinga discount right now, or even
somebody that's getting like ascholarship, but those things
are still going around.
Next month, instead of givingthem a discount, charge them
full price and then reach intoyour wallet, take out the cash
difference and give it to them,physically hand it to your
client.
So if you're charging$100 amonth and you're giving somebody
20% off, next month, charge themthe$100 and take$20 out of your
(18:05):
wallet and keep doing that everymonth until you get tired of
paying the dumb tax.
The dumb tax has nothing to dowith your intelligence and
everything to do with yourwillingness to just let things
ride because they don't hurtenough to change them.
(18:39):
The mistakes that kill thesegyms are not giant catastrophes.
They're tiny cuts compoundedover time, bleeding your
business dry, leaving yoususceptible so when the landlord
does increase the rent by 10%,it doesn't knock you out of
business.
The key is to stop paying thedumb tax now.
Get some clarity, raise yourrates if you have to, change
(19:01):
your class times, eliminateunnecessary discounts, whatever
you have to do, make the changesso that you stop paying the dumb
tax and save your business.
Call a mentor.
The biggest dumb tax ever thatI've ever paid was trying to
figure out everything on my own.
No, I opened a business so thatI could be creative and be a
problem solver.
(19:22):
Well, that's great if you'redesigning your logo.
It's not great if you're tryingto set your prices or a mistake
that could haunt you for thenext 10 years.
It's not great if you're tryingto determine who your ideal
audience is so you don't attracta What happened in my gym?
Every mistake that you make atstartup will take you six months
(19:43):
and about$100,000 to fix.
But if you don't fix them now,they will compound over time and
get worse and worse and worse.
And the only thing worse thanpaying the dumb tax is paying
interest on the dumb tax.
If you're waiting for somebodyto step in and save your
business, Good news, bad news,you are it.
And the first thing that youshould do is call somebody who
knows how to guide you throughthe changes that you need.
(20:05):
I'm Chris Cooper.
This is Run a Profitable Gym.
Look, I am so tired of seeinggyms fail.
And I'm so tired of it because Isee them repeating mistakes that
are avoidable, that we've beentalking about for a decade now.
And I even see other businesscoaches giving people bad advice
just because they don't know anybetter.
The reality is that you need totake control of your business.
(20:26):
And that means first acceptingthat is not going to change
unless you make the change.
And second, learning the thingsrequired to run a business, like
how to read a profit and lossstatement, how to look at your
metrics, how to talk and coachyour staff.
These things are crazyimportant.
And if you don't do them, yourbusiness will be gone and then
you can't help anybody.
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