December 2, 2025 • 26 mins
Are you tired of feeling like every month you’re starting from zero in your business? In this episode of Female emPOWERED, host Christa Gurka breaks down one of the most important lessons she learned while preparing to sell her multi-seven-figure studio: not all revenue is created equal.
Christa walks you through her Revenue Ladder — a framework that helps you understand where your income is really coming from and how stable it is. You’ll learn the five types of revenue that exist inside boutique fitness and wellness businesses, how to move up the ladder toward more predictable, recurring income, and why recurring revenue is the foundation of a business that’s sellable, scalable, and sustainable.
Whether you own a Pilates studio, yoga space, or private pay PT clinic, this episode will help you move out of the feast-and-famine cycle and start creating peace-of-mind profits every month.
💡 What You’ll Learn in This Episode
- Why recurring revenue matters more than total revenue
- The 5 levels of revenue quality — from transactional to contractually recurring
- How to move from inconsistent class packs to predictable memberships
- Ways to make leaving harder than staying for your clients
- How recurring revenue increases the value and sellability of your business
- Simple action steps to audit your current income and set 2026 revenue goals
🧭 Key Takeaways
- Contractually recurring revenue (like long-term memberships or subleases) is the gold standard — it gives you predictable cash flow and peace of mind.
- Non-contractual recurring revenue (auto-pays or subscriptions) is still strong, but retention systems are key.
- Repeat or package revenue requires manual renewals — add automation or upsells to strengthen it.
- Cohort and seasonal programs can be great entry points but should feed into long-term memberships.
- Transactional one-offs (drop-ins, pop-ups, retail) should make up less than 5% of your revenue.
🧮 Christa’s Action Steps
- Audit your last 90 days of revenue. What percentage is recurring vs. one-off?
- Set a goal to have at least 50% of your income come from recurring sources in 2026.
- Incentivize upgrades — reward your team for converting package clients into memberships.
- Celebrate retention — spotlight clients who hit milestones or stay consistent.
- Forecast with confidence — use your predictable income to plan hiring, marketing, and growth.
🔗 Resources Mentioned
- Fit Biz Strategies
- Learn about Christa’s Inner Circle Mentorship for boutique fitness and wellness owners
- Get the Revenue Ladder Audit Worksheet (coming soon to Fit Biz Strategies members)
🗣️ Connect with Christa
- Instagram: @christagurka
- Website: www.christagurka.com
- Podcast: Female emPOWERED
🔍 SEO Keywords
revenue ladder, recurring revenue for fitness studios, boutique fitness business tips, Pilates studio revenue, how to make predictable income, fitness business systems, value builder coaching, sellable fitness business, cash flow planning, studio memberships vs packages
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Christa Gurka | Fit Biz (00:51):
Hello, hello, hello.
Welcome back to another episodeof the Female Empowered Podcast.
I'm your host, Christa Gurka,and today we're diving into a
topic all about revenue.
Who doesn't love to talk aboutrevenue?
because one of the things Iwant.
To teach today to talk about ishow not all revenue is created
(01:16):
equal.
Two studios could bring in$10,000 a month and.
Or a hundred thousand dollars amonth.
But one owner sleeps way morepeacefully knowing exactly what
will hit their bank account andwhen each month while the other
is maybe living in the feast andfamine cycle.
Right?
So what's the difference?
The difference is the type ofrevenue they have running
(01:40):
through the business.
And I learned a ton about thiswhen I was selling my business.
And, I'm currently going througha program to be a, A certified
value builder coach, which isteaching people how to increase
the value of their business foran eventual exit or sale or
(02:02):
strategic partnership.
And so these are some of thethings that we're learning in
not.
The program is in that not allrevenue is created equal.
So what we're gonna talk, we'regonna break down for you today,
are the, the different levels ofrevenue quality from the most
stable, the most lucrative, themost sought after by buyers and
(02:24):
investors.
From to the most unpredictableones, right?
And I'll show you how to climbthat ladder so your studio stops
going from zero every month andfeast and famine and more to
like, I know it's gonna hit mybank account.
On the first of every month, andI know going into 2026, I'll
(02:44):
have this much money, this muchrevenue just even just to start
with.
So let's get into it.
Okay.
The revenue ladder, as I like tocall it, is a framework that
helps you see where your incomeis coming from and how reliable
it actually is.
(03:05):
Alright, so I break it down intofive different types of revenue
categories, contractuallyrecurring revenue, non
contractually, recurringrevenue, repeat revenue,
actuarial revenue, and thentransactional revenue.
And as you move up the ladder,the stress for you as an owner
(03:29):
and CEO is less or.
The lower you are on the latter.
The stress for you as a co ismore because you don't have.
Recurring revenue that you cancount on and expect each and
every month.
So let's talk about what thegold standard is.
So the gold standard iscontractually recurring revenue.
(03:53):
This is like the holy grail,okay?
It's revenue that is secured bya long term contract agreement,
maybe one year, maybe threeyears.
All right?
So a client.
Maybe a company has committed topaying you for a set period of
time, regardless of whether theyuse it or not.
(04:17):
Think of, corporate wellness.
So corporate company X, Y, Z.
has a contract with you, anannual contract with you, where
they're gonna pay you$10,000 ayear to provide services for
their team, whether those peopleuse it or not, and they're
locked into that contract,whether they spend a thousand
dollars a month or whatever itis, it automatically renews
(04:40):
until they cancel.
Okay.
And you as a business owner canforecast this revenue months in
advance.
So you know, if somebody signeda 12 month contract or a three
year contract with you, you knowthat you're gonna have this
revenue coming in, whether theypay monthly or whether they pay
(05:01):
annually or bi-annually.
You know, you're gonna have thisbig chunk of change coming in
all the time.
Okay.
Another type of rev, contractualrevenue is maybe you sublet a
room in your business to aphysical therapist or a
chiropractor or a massagetherapist, and they're.
They're legally bound in acontract with a lease for you.
(05:22):
So you will have this revenuecoming in each and every month,
right?
Why is this a gold standard?
Because when January 1st rollsaround and you have, you are
locked into a three-yearcontract, you already know what
some of your year is gonna looklike because you have this
guaranteed revenue coming in.
You're not replenishing revenue.
(05:44):
You're building on what's.
Already there.
So it gives you leverage whenyou talk about things like
budgeting, hiring new staff,selling the business, because
buyers can now predict cashflow.
Okay?
The other thing that makes thistype of contract really great is
(06:04):
the stickiness.
To change, right?
The discomfort to cancel thecontract.
So think of our schedulingplatforms.
Why we, when we wanna migratesoftware is, it is really sticky
because the cost of that.
The emotional bandwidth and costis really heavy.
(06:25):
So we will be locked into thesecontracts for years and years
and years, even if we don't loveit, because the cost of leaving
and going with a new company isreally hard.
So I don't know that we get thatso much in our industry because
people could go to anotherfacility, but again, If they,
one way you can make this happenis if your studio is so good at
(06:48):
customer service, they provideyou, there's a full-time front
desk person that makes yourschedules for you.
There is, there's always peopleat the studio to help you.
There's free parking involved ifyou leave and have to go to
another facility.
Maybe they don't have all ofthose add-ons and specialties,
and so sometimes you're maybeit's a little expensive, but I
don't wanna lose this or.
(07:10):
Maybe I have a founding memberrate and I don't wanna lose that
membership, so I'm gonna stickwith it for the long term.
Okay.
So that is what we callcontractually recurring revenue.
Now the next tier down, which iscommon in our industry, is
non-contractual recurringrevenue, which is really, even
though some people are well,they have a contract, but it's
(07:31):
months and months so it, theycan cancel it within 30 days.
It does auto renew.
But they can cancel it, which isa good thing because they have
to self opt out.
So in other words, the revenuekeeps rolling in unless someone
takes specific action to stopit, right?
So these are your monthly autopays, your on demand
(07:53):
subscriptions, all of thesethings.
So your monthly.
Eight session classes thatrenews every month, or your
maintenance or your PT packagesor your online class
subscriptions, right?
Clients like this because it'seasy, it just auto pays every
month.
You like it because it gives youprediction, predictable cash
flow.
(08:13):
the problem is it's notbulletproof because clients can
cancel any time.
So they can cancel just with 30days notice.
That's why a solid retentionprogram and engagement.
Program in your business mattersso much to make sure that you
keep the churn low and you'reconstantly making sure that
(08:33):
you're plugging the bottom ofthat funnel where people aren't
just canceling monthly.
Okay?
Your job as the owner of yourbusiness is making staying
easier than leaving, Maybethere's a switching costs.
maybe if they cancel, when theyre-up again, they have to pay a
(08:54):
re-enrollment fee.
And so maybe they don't wannacancel.
Maybe they'll just freeze it fora month or something to that
effect.
track your churn or retentionever, whichever way you want to
look at it.
Your retention should be 85 to90%, and your churn should be
less than 10%.
So churn means people leaving.
(09:15):
Retention means people staying.
So you want your retentionaround 90%.
So your monthly churn is lessthan 10% of your membership.
But one of the things you can dohere is think of ways that you
can make leaving harder thanstaying.
Maybe if they leave and theycome back, it's a new price.
Maybe if they leave and comeback, they have to have a
(09:37):
re-enrollment fee, or there's acancellation fee for leaving.
Something like that.
So non contractually recurringrevenue is great.
Not as great as contractuallyrecurring revenue, but it's
really, really good and buyerslove it.
It's consistent cash flow.
Okay, now you have what we callrepeat.
Revenue.
This is where most studios startat least, and where a lot of
(10:01):
clinics and boutique fitness andwellness businesses really live.
They're selling packages, right?
So they're selling 10 sessions,or eight sessions, or 12
sessions or one-off sessions,right?
It feels good for PE becausepeople do come back.
But every time they finish apackage, they have to manually
(10:21):
decide to buy again.
So technically you start fromzero, maybe every month or every
two months until they take theaction again.
Right?
So.
One of the drawbacks for thisis, yes, it's great, but there's
no, so we're in the monthlymemberships, it's use it or lose
it.
With these, it could take them ayear to finish their attendance
(10:42):
sessions, depending on theexpiration dates or whatever,
two months or maybe they skipand there's no kind of incentive
for them not to skip, andthere's no incentive
(12:39):
necessarily.
For them to re-up, at least witha membership, they have to self
opt out.
But here it automatically comesto an end.
So when you have this type ofrevenue, repeatable revenue,
it's still good, right?
Because you're selling your it.
you're selling out in advance,you're getting some buy-in.
But what's really important isthat you have very.
(13:02):
Robust systems and processes toget people to renew this
package, right?
Whether it's automated ormanually what if someone's
traveling or they get busy andthey forget to come back for a
couple weeks?
What type of systems andprocesses do you have in place
so that these are recurring asmuch as possible, but it's not
(13:24):
automated, so it's not as greatas.
Recurring revenue.
So how do you get some of thepeople that are in this type of
revenue to go to a recurringrevenue model?
One?
Well, one great way to do it isto train your team, whether
that's your instructors, yourclinicians, your administrators,
your sales office to say toJane, Hey Jane, I've noticed
(13:46):
that you've really been comingpretty consistently twice a
week.
A lot of our clients that are asconsistent as you find that they
save money with our eightsession per month.
Auto pay.
It renews automatically, but itit, you actually get it for a
little lower price point persession and you get priority
booking your, we open theschedule to our members 24 hours
(14:06):
before it gets open to thegeneral public.
Would you like me to switch youover?
So having your team be proactiveand being Jane comes really
consistently, let me see if Ican upsell her into a monthly
recurring membership versus ajust a 10 class pack.
Okay, so the next tier down isyour cohort or season based
(14:28):
programs, which some of us have.
Okay.
You think of a six week prenatalseries or a new year, new you
challenge or a, A postpartumprogram or maybe you just sell
sessions and that's what, how Iknow some studios that they're
we have a six week cohort.
We used to do a cohort forPilates, for neurologic
(14:50):
conditions, and we ran it in sixweek increments.
So cohort or seasonal basedprograms are the next tier down.
It's consistent, once you getthem they're gonna.
Pay whether they show up or not.
But you're always refilling thebucket with new people.
(15:10):
'cause usually once someone doesthe series, they're not doing
the series again a lot of times.
Alright, so how can you turnthese semi recurring offers or
these little series into ongoingprograms, right?
How can you have an eight weekprogram that renews.
(15:31):
Every time automatically.
How can you move up the ladderby having a one-time series of
cohort just automatically rerenew?
And what do you have to do toentice and incentivize these
people to be I want you to stayin this cohort, in this series
for as long as possible.
Okay.
(15:52):
Or how do you move them from aseries into a long-term
membership, right?
Maybe they go from a postpartumseries and then now they go into
a long-term membership into yourclass.
So what does that process looklike in your studio so that
you're moving them from a notsuper consistent, type of
(16:13):
revenue model to a veryconsistent revenue model.
So if you think of it in termsof this is a great way to get
them in.
Maybe a lead magnet, an entrypoint, but then how can you move
them up the ladder to that typeof recurring revenue model,
whether it's monthly or evenbetter, six, 12 month, recurring
contracts.
(16:34):
And then the bottom of the tierare basically like your drop-ins
or your pop-up classes or thingsthat are very unpredictable one
time.
Once in a while it happens.
So you might have a great monthbecause you have all these
drop-ins, but there's noconsistent, there's no
necessarily commitment for themto come back.
(16:57):
So things again, your drop-insessions, your one-off sessions,
you do a pop-up class, how areyou, this is the lowest most.
Most least that doesn't makesense, least predictable form of
revenue.
And buyers definitely don'toftentimes even consider this
the form of revenue.
So if anything, this smallportion of your business should
(17:21):
be really small, 2%.
3%, right?
If you're talking about yourretail and your pop-up programs,
they should be more value adds,someone gets to do something fun
versus a large portion of yourrevenue and your business model.
You do not want to build abusiness model around one-offs.
(17:44):
It is.
Really hard to predict, toproject, to forecast, to budget,
and so it really matters if youwant to have a sustainable
business where you're notalways, always, always chasing
new buyers.
Okay?
I will try to encourage to thebest of my ability to have.
(18:10):
A large percentage, hopefully50% or more of your revenue in
some sort of recurring, whetherit be contractual or
non-contractual recurringrevenue.
I also love that if you're doingmonth, monthly, auto pays that
they renew on the same day eachand every one month, whether
that be the first of the monthor the 15th of the month.
That way on those days, you knowyou're gonna get$20,000 in your
(18:34):
bank on that day.
You can also.
schedule, your credit cardpayments around that and things
like that.
So, you, you're managing yourcash flow in a much more
predictable, efficient way.
So why does this matter?
Why should you care about it?
Well, high quality revenuepredicts your cash flow.
(18:58):
You can predict I'm going to get$50,000 on the 15th into my bank
account.
So I know that I'm starting fromthis amount and everything I do
above that is just more, okay.
It's better for hiring andplanning per purposes,
budgeting, forecasting morefreedom and flexibility for you
(19:21):
as an owner, and it certainly,certainly.
Provides better value forprospective buyers and
acquirers.
Alright.
Low quality revenue, thoseone-offs, those transactional
types of revenues is you'realways chasing new sales.
(19:42):
There's no predictability.
You don't know what's coming in,when they're gonna come back.
If they're gonna come back.
There's a lot more stress inyour business.
And unstable cash flow andinconsistent pay for yourself is
one of the.
Biggest reasons.
Business goes out of sale,business goes out of sale.
(20:04):
Business goes businesses closeor go out of business, and it's
certainly not the type ofrevenue buyers are looking for.
When your revenue, when yourintake income is based on
recurring or some sort ofcontractual revenue, you buy
yourself time.
(20:26):
To innovate, to grow, or evensay, I'm not, I'm gonna wait on
this new customer conversionstrategy until I get it really
honed in.
'cause I know that every, therevenue I'm bringing in each and
every month is enough for me tohit my expenses and my, and my
profit goals.
So I'm just gonna, I'm not asstressed about.
Launching this ad campaign orthis lead generation campaign
(20:48):
because you already know I'mgetting this revenue in, I
really wanna make this next.
Initiative or ad campaignreally, really viable and make
it work really well before,really hone in on the nitty
gritty and make sure it's asoptimized as possible.
All right, so what do you dowith all of this information?
number one, I would.
(21:09):
Audit your current revenue.
So look at your last 90 days orsix month or even year to date.
Look at, we're almost to the endof 2025.
So look at your entire year.
What percent of your incomecomes from either contractually
recurring six month or 12 monthcontracts of people autopay or
that month to month recurringtype of revenue?
(21:33):
Aim for something 50% of yourbase would be ideal.
Then the next thing is, wheredoes the rest of that revenue
come from?
How much of it is contractual?
How much of it is cohort base?
How much of it is repeatablerevenue?
your class packs?
And then maybe set an initiativefor the beginning of 2026 where
(21:55):
you're I'm gonna take all of my10 session, 10 class pack
clients and see if I can upgrade50% of them to a monthly auto
pay.
What kind of messaging and howyou're gonna do that, whether
you do it with a promotion,whether you do it with someone,
talking to them when they comeinto the studio and emails and
(22:15):
follow ups and text automations.
But set an initiative foryourself where you're gonna try
to take 50% of your repeatablerevenue customers, people that
are buying packs, and turn itinto some sort of monthly
recurring package or PLA or autopay.
All right.
Reward, consistency.
(22:36):
Celebrate members who hitmilestones.
Six months, 12 months.
A hundred classes.
300 classes, most consistentclient of the month.
They are your stable revenuebase, and people will want to be
like them, so reward them.
So they keep doing, it's likegiving, I don't, this sounds
(22:57):
horrible.
I don't wanna, s.
Compare our clients to dogs, butwhen your dog does something
really well, your pet doesn't,you give'em a cookie.
Do more of that, right?
So when your clients do stuffthat you want them to repeat,
reward them, praise them.
So other people can see it too.
'cause they want cookies also.
Okay, so I want you to remember,revenue isn't just about how
(23:19):
much you make, but also abouthow secure your cashflow your
income really is.
How consistent is it?
How much can you count on it atthe beginning of every month or
at the beginning of every year?
Alright.
How can you get fromtransactional type of revenue?
(23:41):
To the top of more recurring andeven contractual type of
revenue, how can you do that?
Set an initiative.
Maybe one quarter, you're justgonna say, we're gonna try,
we're gonna try to upgrade,convert 50% of our class packs
into some sort of monthly me,membership, auto renew, maybe
(24:03):
run a.
A, incentive bonus that says ifyou could, right now you have, a
hundred clients that are on 10class packages.
If you can convert 50 of thoseto memberships, maybe everyone
gets some sort of a bonus.
Your admin team, yourinstructors, everyone gets some
sort of a bonus.
objectively look at what thatnumber should look like or a
(24:23):
prize or going to dinner ortaking an overnight somewhere.
There's all sorts of stuff thatyou can do Upgrade and
incentivize and, inspire yourteam.
So I hope that was interestingto you.
It was really interesting to mewhen I was learning this and how
I was trying to, with some ofthe stuff we're doing in some of
(24:45):
our higher ticket mentorshipprograms, where we're really
helping these businesses thatare looking for an eventual
exit, whether it be this year orin the next.
Three years, how can we makethat money as recurring and
consistent as possible so thatwhen buyers do come in to look
at it, they, they can look atthe future and be we know that
every month this company isbringing in$50,000, or every
(25:07):
month we know this company isdoing$80,000 and recurring
revenue.
They love it.
It makes it really consistentfor them.
All right, so I hope you enjoyedthis episode.
It was kind of fun to record.
I love teaching new topics andmaterials.
that's all I got for now.
So until next time, my friends,bye for now.
I.
Hello, hello, hello.
Welcome back to another episodeof the Female Empowered Podcast.
I'm your host, Christa Gurka,and today we're diving into a
topic all about revenue.
Who doesn't love to talk aboutrevenue?
because one of the things Iwant.
To teach today to talk about ishow not all revenue is created
(01:16):
equal.
Two studios could bring in$10,000 a month and.
Or a hundred thousand dollars amonth.
But one owner sleeps way morepeacefully knowing exactly what
will hit their bank account andwhen each month while the other
is maybe living in the feast andfamine cycle.
Right?
So what's the difference?
The difference is the type ofrevenue they have running
(01:40):
through the business.
And I learned a ton about thiswhen I was selling my business.
And, I'm currently going througha program to be a, A certified
value builder coach, which isteaching people how to increase
the value of their business foran eventual exit or sale or
(02:02):
strategic partnership.
And so these are some of thethings that we're learning in
not.
The program is in that not allrevenue is created equal.
So what we're gonna talk, we'regonna break down for you today,
are the, the different levels ofrevenue quality from the most
stable, the most lucrative, themost sought after by buyers and
(02:24):
investors.
From to the most unpredictableones, right?
And I'll show you how to climbthat ladder so your studio stops
going from zero every month andfeast and famine and more to
like, I know it's gonna hit mybank account.
On the first of every month, andI know going into 2026, I'll
(02:44):
have this much money, this muchrevenue just even just to start
with.
So let's get into it.
Okay.
The revenue ladder, as I like tocall it, is a framework that
helps you see where your incomeis coming from and how reliable
it actually is.
(03:05):
Alright, so I break it down intofive different types of revenue
categories, contractuallyrecurring revenue, non
contractually, recurringrevenue, repeat revenue,
actuarial revenue, and thentransactional revenue.
And as you move up the ladder,the stress for you as an owner
(03:29):
and CEO is less or.
The lower you are on the latter.
The stress for you as a co ismore because you don't have.
Recurring revenue that you cancount on and expect each and
every month.
So let's talk about what thegold standard is.
So the gold standard iscontractually recurring revenue.
(03:53):
This is like the holy grail,okay?
It's revenue that is secured bya long term contract agreement,
maybe one year, maybe threeyears.
All right?
So a client.
Maybe a company has committed topaying you for a set period of
time, regardless of whether theyuse it or not.
(04:17):
Think of, corporate wellness.
So corporate company X, Y, Z.
has a contract with you, anannual contract with you, where
they're gonna pay you$10,000 ayear to provide services for
their team, whether those peopleuse it or not, and they're
locked into that contract,whether they spend a thousand
dollars a month or whatever itis, it automatically renews
(04:40):
until they cancel.
Okay.
And you as a business owner canforecast this revenue months in
advance.
So you know, if somebody signeda 12 month contract or a three
year contract with you, you knowthat you're gonna have this
revenue coming in, whether theypay monthly or whether they pay
(05:01):
annually or bi-annually.
You know, you're gonna have thisbig chunk of change coming in
all the time.
Okay.
Another type of rev, contractualrevenue is maybe you sublet a
room in your business to aphysical therapist or a
chiropractor or a massagetherapist, and they're.
They're legally bound in acontract with a lease for you.
(05:22):
So you will have this revenuecoming in each and every month,
right?
Why is this a gold standard?
Because when January 1st rollsaround and you have, you are
locked into a three-yearcontract, you already know what
some of your year is gonna looklike because you have this
guaranteed revenue coming in.
You're not replenishing revenue.
(05:44):
You're building on what's.
Already there.
So it gives you leverage whenyou talk about things like
budgeting, hiring new staff,selling the business, because
buyers can now predict cashflow.
Okay?
The other thing that makes thistype of contract really great is
(06:04):
the stickiness.
To change, right?
The discomfort to cancel thecontract.
So think of our schedulingplatforms.
Why we, when we wanna migratesoftware is, it is really sticky
because the cost of that.
The emotional bandwidth and costis really heavy.
(06:25):
So we will be locked into thesecontracts for years and years
and years, even if we don't loveit, because the cost of leaving
and going with a new company isreally hard.
So I don't know that we get thatso much in our industry because
people could go to anotherfacility, but again, If they,
one way you can make this happenis if your studio is so good at
(06:48):
customer service, they provideyou, there's a full-time front
desk person that makes yourschedules for you.
There is, there's always peopleat the studio to help you.
There's free parking involved ifyou leave and have to go to
another facility.
Maybe they don't have all ofthose add-ons and specialties,
and so sometimes you're maybeit's a little expensive, but I
don't wanna lose this or.
(07:10):
Maybe I have a founding memberrate and I don't wanna lose that
membership, so I'm gonna stickwith it for the long term.
Okay.
So that is what we callcontractually recurring revenue.
Now the next tier down, which iscommon in our industry, is
non-contractual recurringrevenue, which is really, even
though some people are well,they have a contract, but it's
(07:31):
months and months so it, theycan cancel it within 30 days.
It does auto renew.
But they can cancel it, which isa good thing because they have
to self opt out.
So in other words, the revenuekeeps rolling in unless someone
takes specific action to stopit, right?
So these are your monthly autopays, your on demand
(07:53):
subscriptions, all of thesethings.
So your monthly.
Eight session classes thatrenews every month, or your
maintenance or your PT packagesor your online class
subscriptions, right?
Clients like this because it'seasy, it just auto pays every
month.
You like it because it gives youprediction, predictable cash
flow.
(08:13):
the problem is it's notbulletproof because clients can
cancel any time.
So they can cancel just with 30days notice.
That's why a solid retentionprogram and engagement.
Program in your business mattersso much to make sure that you
keep the churn low and you'reconstantly making sure that
(08:33):
you're plugging the bottom ofthat funnel where people aren't
just canceling monthly.
Okay?
Your job as the owner of yourbusiness is making staying
easier than leaving, Maybethere's a switching costs.
maybe if they cancel, when theyre-up again, they have to pay a
(08:54):
re-enrollment fee.
And so maybe they don't wannacancel.
Maybe they'll just freeze it fora month or something to that
effect.
track your churn or retentionever, whichever way you want to
look at it.
Your retention should be 85 to90%, and your churn should be
less than 10%.
So churn means people leaving.
(09:15):
Retention means people staying.
So you want your retentionaround 90%.
So your monthly churn is lessthan 10% of your membership.
But one of the things you can dohere is think of ways that you
can make leaving harder thanstaying.
Maybe if they leave and theycome back, it's a new price.
Maybe if they leave and comeback, they have to have a
(09:37):
re-enrollment fee, or there's acancellation fee for leaving.
Something like that.
So non contractually recurringrevenue is great.
Not as great as contractuallyrecurring revenue, but it's
really, really good and buyerslove it.
It's consistent cash flow.
Okay, now you have what we callrepeat.
Revenue.
This is where most studios startat least, and where a lot of
(10:01):
clinics and boutique fitness andwellness businesses really live.
They're selling packages, right?
So they're selling 10 sessions,or eight sessions, or 12
sessions or one-off sessions,right?
It feels good for PE becausepeople do come back.
But every time they finish apackage, they have to manually
(10:21):
decide to buy again.
So technically you start fromzero, maybe every month or every
two months until they take theaction again.
Right?
So.
One of the drawbacks for thisis, yes, it's great, but there's
no, so we're in the monthlymemberships, it's use it or lose
it.
With these, it could take them ayear to finish their attendance
(10:42):
sessions, depending on theexpiration dates or whatever,
two months or maybe they skipand there's no kind of incentive
for them not to skip, andthere's no incentive
(12:39):
necessarily.
For them to re-up, at least witha membership, they have to self
opt out.
But here it automatically comesto an end.
So when you have this type ofrevenue, repeatable revenue,
it's still good, right?
Because you're selling your it.
you're selling out in advance,you're getting some buy-in.
But what's really important isthat you have very.
(13:02):
Robust systems and processes toget people to renew this
package, right?
Whether it's automated ormanually what if someone's
traveling or they get busy andthey forget to come back for a
couple weeks?
What type of systems andprocesses do you have in place
so that these are recurring asmuch as possible, but it's not
(13:24):
automated, so it's not as greatas.
Recurring revenue.
So how do you get some of thepeople that are in this type of
revenue to go to a recurringrevenue model?
One?
Well, one great way to do it isto train your team, whether
that's your instructors, yourclinicians, your administrators,
your sales office to say toJane, Hey Jane, I've noticed
(13:46):
that you've really been comingpretty consistently twice a
week.
A lot of our clients that are asconsistent as you find that they
save money with our eightsession per month.
Auto pay.
It renews automatically, but itit, you actually get it for a
little lower price point persession and you get priority
booking your, we open theschedule to our members 24 hours
(14:06):
before it gets open to thegeneral public.
Would you like me to switch youover?
So having your team be proactiveand being Jane comes really
consistently, let me see if Ican upsell her into a monthly
recurring membership versus ajust a 10 class pack.
Okay, so the next tier down isyour cohort or season based
(14:28):
programs, which some of us have.
Okay.
You think of a six week prenatalseries or a new year, new you
challenge or a, A postpartumprogram or maybe you just sell
sessions and that's what, how Iknow some studios that they're
we have a six week cohort.
We used to do a cohort forPilates, for neurologic
(14:50):
conditions, and we ran it in sixweek increments.
So cohort or seasonal basedprograms are the next tier down.
It's consistent, once you getthem they're gonna.
Pay whether they show up or not.
But you're always refilling thebucket with new people.
(15:10):
'cause usually once someone doesthe series, they're not doing
the series again a lot of times.
Alright, so how can you turnthese semi recurring offers or
these little series into ongoingprograms, right?
How can you have an eight weekprogram that renews.
(15:31):
Every time automatically.
How can you move up the ladderby having a one-time series of
cohort just automatically rerenew?
And what do you have to do toentice and incentivize these
people to be I want you to stayin this cohort, in this series
for as long as possible.
Okay.
(15:52):
Or how do you move them from aseries into a long-term
membership, right?
Maybe they go from a postpartumseries and then now they go into
a long-term membership into yourclass.
So what does that process looklike in your studio so that
you're moving them from a notsuper consistent, type of
(16:13):
revenue model to a veryconsistent revenue model.
So if you think of it in termsof this is a great way to get
them in.
Maybe a lead magnet, an entrypoint, but then how can you move
them up the ladder to that typeof recurring revenue model,
whether it's monthly or evenbetter, six, 12 month, recurring
contracts.
(16:34):
And then the bottom of the tierare basically like your drop-ins
or your pop-up classes or thingsthat are very unpredictable one
time.
Once in a while it happens.
So you might have a great monthbecause you have all these
drop-ins, but there's noconsistent, there's no
necessarily commitment for themto come back.
(16:57):
So things again, your drop-insessions, your one-off sessions,
you do a pop-up class, how areyou, this is the lowest most.
Most least that doesn't makesense, least predictable form of
revenue.
And buyers definitely don'toftentimes even consider this
the form of revenue.
So if anything, this smallportion of your business should
(17:21):
be really small, 2%.
3%, right?
If you're talking about yourretail and your pop-up programs,
they should be more value adds,someone gets to do something fun
versus a large portion of yourrevenue and your business model.
You do not want to build abusiness model around one-offs.
(17:44):
It is.
Really hard to predict, toproject, to forecast, to budget,
and so it really matters if youwant to have a sustainable
business where you're notalways, always, always chasing
new buyers.
Okay?
I will try to encourage to thebest of my ability to have.
(18:10):
A large percentage, hopefully50% or more of your revenue in
some sort of recurring, whetherit be contractual or
non-contractual recurringrevenue.
I also love that if you're doingmonth, monthly, auto pays that
they renew on the same day eachand every one month, whether
that be the first of the monthor the 15th of the month.
That way on those days, you knowyou're gonna get$20,000 in your
(18:34):
bank on that day.
You can also.
schedule, your credit cardpayments around that and things
like that.
So, you, you're managing yourcash flow in a much more
predictable, efficient way.
So why does this matter?
Why should you care about it?
Well, high quality revenuepredicts your cash flow.
(18:58):
You can predict I'm going to get$50,000 on the 15th into my bank
account.
So I know that I'm starting fromthis amount and everything I do
above that is just more, okay.
It's better for hiring andplanning per purposes,
budgeting, forecasting morefreedom and flexibility for you
(19:21):
as an owner, and it certainly,certainly.
Provides better value forprospective buyers and
acquirers.
Alright.
Low quality revenue, thoseone-offs, those transactional
types of revenues is you'realways chasing new sales.
(19:42):
There's no predictability.
You don't know what's coming in,when they're gonna come back.
If they're gonna come back.
There's a lot more stress inyour business.
And unstable cash flow andinconsistent pay for yourself is
one of the.
Biggest reasons.
Business goes out of sale,business goes out of sale.
(20:04):
Business goes businesses closeor go out of business, and it's
certainly not the type ofrevenue buyers are looking for.
When your revenue, when yourintake income is based on
recurring or some sort ofcontractual revenue, you buy
yourself time.
(20:26):
To innovate, to grow, or evensay, I'm not, I'm gonna wait on
this new customer conversionstrategy until I get it really
honed in.
'cause I know that every, therevenue I'm bringing in each and
every month is enough for me tohit my expenses and my, and my
profit goals.
So I'm just gonna, I'm not asstressed about.
Launching this ad campaign orthis lead generation campaign
(20:48):
because you already know I'mgetting this revenue in, I
really wanna make this next.
Initiative or ad campaignreally, really viable and make
it work really well before,really hone in on the nitty
gritty and make sure it's asoptimized as possible.
All right, so what do you dowith all of this information?
number one, I would.
(21:09):
Audit your current revenue.
So look at your last 90 days orsix month or even year to date.
Look at, we're almost to the endof 2025.
So look at your entire year.
What percent of your incomecomes from either contractually
recurring six month or 12 monthcontracts of people autopay or
that month to month recurringtype of revenue?
(21:33):
Aim for something 50% of yourbase would be ideal.
Then the next thing is, wheredoes the rest of that revenue
come from?
How much of it is contractual?
How much of it is cohort base?
How much of it is repeatablerevenue?
your class packs?
And then maybe set an initiativefor the beginning of 2026 where
(21:55):
you're I'm gonna take all of my10 session, 10 class pack
clients and see if I can upgrade50% of them to a monthly auto
pay.
What kind of messaging and howyou're gonna do that, whether
you do it with a promotion,whether you do it with someone,
talking to them when they comeinto the studio and emails and
(22:15):
follow ups and text automations.
But set an initiative foryourself where you're gonna try
to take 50% of your repeatablerevenue customers, people that
are buying packs, and turn itinto some sort of monthly
recurring package or PLA or autopay.
All right.
Reward, consistency.
(22:36):
Celebrate members who hitmilestones.
Six months, 12 months.
A hundred classes.
300 classes, most consistentclient of the month.
They are your stable revenuebase, and people will want to be
like them, so reward them.
So they keep doing, it's likegiving, I don't, this sounds
(22:57):
horrible.
I don't wanna, s.
Compare our clients to dogs, butwhen your dog does something
really well, your pet doesn't,you give'em a cookie.
Do more of that, right?
So when your clients do stuffthat you want them to repeat,
reward them, praise them.
So other people can see it too.
'cause they want cookies also.
Okay, so I want you to remember,revenue isn't just about how
(23:19):
much you make, but also abouthow secure your cashflow your
income really is.
How consistent is it?
How much can you count on it atthe beginning of every month or
at the beginning of every year?
Alright.
How can you get fromtransactional type of revenue?
(23:41):
To the top of more recurring andeven contractual type of
revenue, how can you do that?
Set an initiative.
Maybe one quarter, you're justgonna say, we're gonna try,
we're gonna try to upgrade,convert 50% of our class packs
into some sort of monthly me,membership, auto renew, maybe
(24:03):
run a.
A, incentive bonus that says ifyou could, right now you have, a
hundred clients that are on 10class packages.
If you can convert 50 of thoseto memberships, maybe everyone
gets some sort of a bonus.
Your admin team, yourinstructors, everyone gets some
sort of a bonus.
objectively look at what thatnumber should look like or a
(24:23):
prize or going to dinner ortaking an overnight somewhere.
There's all sorts of stuff thatyou can do Upgrade and
incentivize and, inspire yourteam.
So I hope that was interestingto you.
It was really interesting to mewhen I was learning this and how
I was trying to, with some ofthe stuff we're doing in some of
(24:45):
our higher ticket mentorshipprograms, where we're really
helping these businesses thatare looking for an eventual
exit, whether it be this year orin the next.
Three years, how can we makethat money as recurring and
consistent as possible so thatwhen buyers do come in to look
at it, they, they can look atthe future and be we know that
every month this company isbringing in$50,000, or every
(25:07):
month we know this company isdoing$80,000 and recurring
revenue.
They love it.
It makes it really consistentfor them.
All right, so I hope you enjoyedthis episode.
It was kind of fun to record.
I love teaching new topics andmaterials.
that's all I got for now.
So until next time, my friends,bye for now.
I.
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