Help Best

Every person who works for your company should generate 2.5-3.5x what they're paid. This is called Contribution margin, and it's a basic accounting principle. The 4/9 model is a simplified, actionable rule based on Contribution Margin. Gym owners don't need to understand advanced accounting to benefit - they just use the 4/9 math. Application of that math changes slightly as the gym grows, but the goal is always to set up the gym for the future, without creating barriers to growth down the line.

When a trainer or coach is acting by themselves, with no facility, they can keep almost all of the revenue they create. When they become a gym owner, they enter our world, and they should pay themselves 4/9 of the revenue they generate. The other 5/9 will go to overhead.

Likewise, everyone they hire should be paid 4/9 of the revenue they generate. In this case, with a gym owner employing one other trainer would provide: marketing client streams insurance access to equipment access to space a sales funnel a banking portal (with fees covered) promotional materials administration software for booking and service delivery mentorship In essence, the gym owner covers all costs and does the work to grow the trainer. The value is immeasurable, because the trainer literally couldn't do it on their own. The trainer's income is split like this: 4/9 to the trainer 2/9 to overhead 3/9 to the owner.

When the second trainer joins the gym, the owner's costs increase but don't double, so their contribution of 2/9 is enough to share costs. All positions that deliver the primary service (coaching) should be paid up to 4/9 of the revenue they generate. In Stage 1, Stage 2 and Startup, the gym probably only needs another coach, who should be paid 4/9 of the revenue they generate.

As the gym grows, though, it will eventually require staff that don't generate revenue and don't deliver the primary service. For example, the gym will need a cleaner and an accounts administrator. Now the pay strategy evolves to a Salary Cap: 44% of all revenue covers staff costs. This might require a rate increase to cover the new staffing costs; but most often, the costs are covered as more clients join. The 2/9 portion of the owner's total revenue creates a "pot" from which they can hire first a cleaner, and then an admin. Their income doesn't change, but their EHR improves. In Growth phase, the gym probably needs a few coaches (paid up to 4/9 of the revenue they generate), and two or three roles that don't generate revenue (an admin, a cleaner, and possibly a CSM.) Their compensation and hours are determined by the space left under the salary cap after the owner and coaches have been paid. At this stage, the owner will be making 4/9 of the services they provide and 3/9 of the services provided by all others. If they choose to hire an administrative role, that comes out of the 3/9, and the owner must reinvest their time in higher-value activities, like marketing. They might also choose to do less coaching, which reduces their pay from the 4/9 but increases their pay from the 3/9 generated by other coaches.

At the next level of gym growth, the gym might hire a manager. Now the pay strategy evolves to Contribution Margin: the total revenue of the gym should be 2.5x-3.5x its staffing costs. In effect, staff pay drops to 3/9 or lower - not by reduction in pay rates, but by increase in profitability. This happens through economies of scale: 1 - the gym has more people in its groups, so coaches earn a bit more but the gym profit increases disproportionately; 2 - the admin and cleaning labor doesn't increase as revenue increases; 3 - the gym might share staff across several locations; 4 - some gym staff might become salaried, trading security against a lower share of hourly revenue.

It's important to notice that there are short-term dips in profitability at each evolution. When the gym hires its first coach, the owner makes less on each client than they'd make if they took the client themselves. When the gym hires its first non-delivery role (like an admin or cleaner), they are paid out of the profit account, and the owner makes less in the short term (but buys back their time to do better marketing and sales - Growth phase.) When the gym hires a manager, they are paid out of the profit account, but the gym owner buys back their time to open a second location or invest elsewhere - Tinker phase.)

Gym growth is stunted when the gym pays their staff incorrectly at any stage. In the first stage, if the gym overpays its second coach or trainer, the owner has created no extra margin for the business. The second trainer might reach their target income faster, but the owner will still be stuck training clients for money--essentially competing with their new hire.

In the second stage, if the gym overpays its coaches and trainers, the owner will not be able to create time to manage clients or billing or learn to market. Client churn will be high; the gym will experience a roller-coaster of growth as the owner keeps reaching their limit as CEO. The gym will hover at 100-150 clients and low profitability for years while the owner gets burned out and the coaches leave to start their own gym.

In the third stage, if the gym overpays its trainers and staff, the gym could actually fail as the owner redirects their attention elsewhere. Since managers can't grow a business - but can only maintain it - shrinking profitability means the owner is quickly pulled back in to 'save' the gym. Or, worst case, they jump to something more profitable and close their gym. Why run a complex, stressful business that isn't profitable just to employ other people?

In 2023, I came very close to selling my gym. I had it all set up: the potential buyer (I had two), the valuation, and even the story to share with others. 

But at the last minute, I decided to keep my gym, because I can use it to help other gym owners.

Thoreau said there are no more philosophers, only teachers of philosophy.

Philosophers from Seneca all the way through Thoreau say the same thing - do not believe what others say. Test things for yourself. Received truths often turn out to be mere prejudices. 

How does that play out in practice, since all of our gyms are different?

We collect data from 15,000 gyms

We look most closely at the 1000 gyms in tBB

We determine what’s working best

Then we practice using it in our own gyms to fill in the gaps. We connect data and turn it into useful knowledge through storytelling. And we can tell stories best from our own experience.

So our mentorship shouldn’t be “here’s what works in my gym” - it should be “here’s what works, and how I used it in my gym.”

Gandhi story about sugar

“A woman and her young son had come to the ashram to speak to Gandhi. She complained about her child’s addiction to sugar. “My son won’t stop eating sugar”, she told Gandhi. “Please tell him to stop.” Gandhi listened to her, and then asked her to come back in two weeks.

Two weeks later the woman and her child sat in front of Gandhi. He looked at the boy and said “stop eating sugar”. The mother was perplexed. “Why couldn’t you have told him this 2 weeks ago?” To which he replied, “Madam, two weeks ago I was still eating sugar”.

Gandhi knew—as we all know—that eating sugar is bad. He did not feel qualified to tell others to stop eating sugar until he’d done it himself. This is the mark of a great mentor, and it’s why I don’t sell my gym.

There are a few mentors who no longer own their gyms in TBB. They have had successful exits, and that experience is also valuable. But the vast majority of us should own gyms, because we love it - and because, like Seneca and Thoreau and Gandhi, we need the experience to help others.

A great question from David Allen last week:

"When should we tell a Growth client to go through the new Stage 1 / Stage 2 courses?"

The answer is: it depends on their goal and their plan.

Here's how I decide.

Building and scaling a 1:1 mentorship practice is hard, because:

The experience of each individual mentor is limited

Collecting and sharing that experience is a challenge, requiring layers of management, money, data interpretation skills and playing "telephone"

This is why most business coaches do 1:many programs. And those programs are more profitable than 1:1, by a huge margin.

However, we do 1:1 because it *can* get the client better results.

When done right, the client gets to their goal faster because of:

• personalization
• efficacy (accountability)
• retention
• focus

The key is that the mentor works within a strong framework and remains focused on getting the client their goal.

In other words, the mentor has to be tailor, not teacher. Data proves what works; those strategies build the framework; the mentor tailors the framework to get the client an outcome faster.

This is meta mentors, strategies, tactics and skills to help other entrepreneurs in about five minutes. Today, I want to talk about clarity. Clarity is often the best gift that you can give to somebody. And it's especially valuable because very few people are willing to do it. The reason that people are unwilling to be clear with their employees, with their mentees with their friends with their spouse, is because it's painful for the doer, the giver, the mentor, the employer. Here's why it's so important.

And I learned this lesson from my own gym. Years ago, I had this trainer named Jared. And Jared was a nice kid, you know, showed up on time really well presented. The problem was that he was very quiet, meek, shy, you couldn't really put him in front of a group and the position that I had was for a group coach. And so with his personal training clients, he was okay. And then I put them in front of a group and it would be boring, be silent and be dead. People would complain, people would shift, they'd go to other groups, they'd write me an email. And so after about three months of this, I said, Okay, Jared, it's time for your evaluation. And I said, You're doing well, you could do with a little bit more presence. Okay, so notice that I'm not being clear, right? I'm giving him like a hint or telling him something that makes sense in my brain. But he's probably interpreting it completely differently. So three months passed, and he's no better. We do another evaluation, Jared, okay, man, things are going well, I really need you to get loud in groups. So I want you to shadow Tyler, I want you to do what Tyler does, okay. Again, not directly making the connection, hoping that he will pick up on what Tyler is doing and take the right lesson from it didn't work three months later, he's still way too quiet in groups. The groups are boring, and people have given up on them. I meet with them again, Jared, Look, dude, to be a group coach, you have to be able to project your voice. You have to have onstage presence you have to present. Pretend that you're being an entertainer that you're on stage, you have to be loud. Got it? Yep, I can do that. No problem. Now at this point, we're nine months in and I'm thinking, this kid has a d minus, I'm going to fire him. He's thinking I'm a B plus, I've got one little thing to correct. But everything else is great. Finally, with two weeks ago, in his contract, I said, you know, the best favor that I can do this kid is to tell him he's on the hotline. And so I snagged him in between classes. And I said, Jared, look, I know, this isn't an evaluation period. But I got to tell you, if you can't get louder and more present in classes, I'm not going to renew your contract in two weeks. And it was a shock. And the big lesson here is that you're better to give people bad news, especially as it's happening than to have it be a shock later. Now, how does this translate into mentorship? Well, as mentors, we are always walking this fine line between empathy, and directness. And I know some of us are more comfortable being direct, some of us are maybe too comfortable. And we could use a little bit more empathy. But a lot of us are too comfortable being empathetic. And instead of telling people the real reason that they need to do something, we couch it, right, we dance around a little bit, we give hints, we're not clear. And when we're not clear, we're not actually helping the client, because there is nobody else in their life, who will give them this level of clarity that we are literally being paid to do. To brain is all about that dichotomy of empathy, and clarity. And sometimes the best favor that you can do to people is with people is to give them the clarity that they can't get anywhere else. You can be tactful, you can be polite, you can be caring, but ultimately, if we don't get them absolute clarity, and make sure that they understand what we're saying, we're not doing our job. Here's an example. I have a gym owner who is moved out of state, he has left his gym in the hands of his general manager, a general manager, by nature is not going to grow a gym, they're an operator, they can fulfill up to a standard, they can live by the playbook. They can hold other people maybe up to the standard of the playbook. They can't do that and be the marketer. If they can be an amazing operator and an amazing marketer. They should probably be an entrepreneur. But in this case, the gym is slowly going downhill. This happened to my gym, and I know that the conversation I needed to have when it was happening was one of clarity. And so the conversation has to be Listen,

client gym owner, your GM is not going to grow your gym, you have two choices. The first is you take over the marketing and you take on the responsibility for growing your gym. The second is you sell it while it's still worth something. Now that sounds harsh, but let's face it, every single month that goes by that I don't give him that kind of clarity is a waste of time because every single month that goes by the gym becomes worth less he gets more frustrated, more distracted, the general manager gets more and more burned out and he loses more money. It's

Some point the biggest gift that we can give people is absolute clarity and great mentors with experience know when it's time to give that gift Hope it helps thank you for your service.

This is meta mentors, strategies, tactics and skills to help other entrepreneurs in five minutes or so. Today I want to talk about evidence based decision making. This is a core value at to brain we make our decisions, and we build our curriculum based on evidence. And I'm going to talk about what evidence means the hierarchy of evidence. But first, I want to start off with skepticism, and cynicism. as mentors, we have to maintain a healthy sense of skepticism all the time, but we can't lapse into cynicism. So here's the difference. A skeptic is someone who wants to see evidence before they accept what you're telling them. A cynic is somebody who rejects everything you say, before they hear the evidence. And even after they see evidence, they still won't accept it. Both of these come from Greek philosophy, it's very hard to balance both with so much misinformation out there on the internet. And in the fitness space, as well as the business coaching space. There are people out there who are actually trying to fool us. So I think a lot about how to maintain a healthy sense of skepticism, wanting to see evidence before you make up your mind about something without lapsing into cynicism, where you just don't believe anything. Anybody says, in a lot of business coaching masterminds, you get a ton of people who exaggerate their experience or exaggerate their success, they want to be helpful, but they want to fit in, they want to sometimes even impress other people. Now in our Tinker program, it's a little bit different, you don't get a lot of this, because everybody going into Tinker has already shared their numbers with their mentor, and Jeff, and I filter people based on their mindset. But this is really rare. And in most business coaching programs, this doesn't happen. In most business coaching programs, you have a few people who are super legit, and they're worth sticking around for. But they're hard to identify. And you don't really know who's good, and who's telling the truth, even without digging and sticking around for a long time. So here are a couple of tools to identify first, who is actually legit in a mastermind, and then I'm going to share you how to make decisions based on evidence and the value of different types of evidence. So first, people who are trustworthy in a mastermind, generally are open about their mistakes. So often, they'll share their mistakes before they share anything else. If you are talking to somebody, and they're like, I'm doing great, and they never share a mistake, you should be skeptical of every single thing. They say. Second, the people who say I've made a mistake will usually be very specific about that mistake. And they've learned from it. So they can say like, here's what I would do differently. Now. Third, they knew how to correct the mistakes, and they had corrected it. So it's okay to be skeptical of somebody who says I screwed this up. And you know, my gym is bankrupt. I wish I'd known that five years ago, but they've never actually fixed the mistake. So they don't know if what they're telling you is actually the truth. Okay? So it's really important here that we maintain an attitude of healthy skepticism, meaning we want to see evidence before we teach something to our clients, or before we support it. So there are five basic levels of evidence. Now, skepticism is what really gave rise to the scientific model that we're all taught in like the third or the fifth grade, or whatever. And really, this scientific model should be applied to media should be applied to social media, it should be a tool to help you evaluate claims. Unfortunately, most of the time, it's just taught in kind of like this rigorous laboratory setting. And we don't think about it outside of science class, but our kids and us as mentors need to learn this more than anything else. So the bottom level of evidence is a media claim, you read something in a newspaper, you read something online, and it's like, is that actually true or not? Right? You really cannot accept anything that a media person is telling you without further evidence anymore. So if you know the journalists write something, and they point to three studies, okay, that's a little bit better than what we get in the news most of the time. The level up from that is personal experience. And we sometimes refer to this as n equals one n is just like the number of people in your evidentiary study, right? So when I was starting to brain, or even before that, when I was working for three to one go or writing, writing the first book, everything that I was talking about was N equals one it was, here's what I did. Now, I had no idea if that would work for anybody else. And so when the first client from New Jersey called me and she wanted to sign up, I was like, I don't know, I don't know if I want to take her money, because this is what worked for me. That's what I've been sharing on this blog, but I can't really say for sure if it's gonna work for you. She talked me into it and just said, like, you know, it's worth the investment of 1200 bucks or whatever it was to see if this does work. And it did. And then I took a few more clients and you know, out of 10, the things that worked for me worked for eight or nine of them. So, n equals one experience is more valuable than

Just a claim that you read in the media or a claim that somebody makes on Facebook. The next level above that is a quantitative survey. So basically, that's where you say, okay, here are 10 gyms, and all of them did go reviews, and eight out of those 10 saw an uptick in their retention or upsell, or whatever that is, okay, that's a quantitative study. So we're actually looking at numbers from a bigger sample size in to brain where you'll see this is when we want to test something. So we want to test doing done for you paid ads, or we want to test maybe like the NC fit coach, like a pro program. You know, we do this probably three or four times a year where I'll pick 10 mentor gyms, or offered to 10 mentor gyms. And then we'll say, Okay, here's what we're testing. Here's what we're measuring. And this is like what we want you to report on. And usually that cost something so for like Coach like a pro, it cost me five grand to find the answer. But that's still good, because I want at least quantitative data before we make a decision on whether we recommend it or not. The next level above that is a cohort study. So this is where now it's no longer self report. It's a quantitative survey is like when you give people a survey, and they just answer. So you know, when we asked you how much money did you make last year, you're probably not going to answer right down to the penny, right, you're gonna round up or round down or ballpark or approximate, we're still going to get a number is probably going to be close. But we don't know how close the next level above that as a cohort study. And this is where you take a pretty large sample size, and you measure the results. So you set up kind of a controlled experiment, and you track what happens. So they're not self reporting anymore. And this is what we do in state of the industry. So instead of the industry, we actually take data from WaterFire pushpress, team up kilo, we take the numbers that the gyms are putting into the system, instead of asking the gym owners, how are you doing? If you ask a gym owner? What's your retention? They'll overestimate if you ask a gym owner, how profitable are you, they'll often underestimate. We want to know the actual numbers. And so we do a cohort study by partnering with the software providers and getting the real numbers. So when we say the average gym owner makes $32,000 a year, like we know that to be almost entirely true. A meta analysis is when you take a bunch of cohort studies. And you dive into the data of all of them. And you see like what is common. Now you'll never see this in the fitness industry. Even just doing a cohort study in the fitness industry is brand new to brain is the first and probably the only people who would do this. But if somebody like IHRSA did it, you know, maybe they could do a CT study, CrossFit could do it. Both of these people sometimes do quantitative surveys where they'll send like a survey out to their affiliates or their gyms or whatever. But they never do a cohort study because they don't have the data.

The meta analysis is where you would take a cohort study from CrossFit and a cohort study from Ursa and a cohort study from maybe the NSCA. And a cohort study from all the 45 franchises. And you put all those together and you say, what is the average gym owner making? What is What are they making? If they are self employed? What are they making, if they're a franchise, and now it'd be a meta analysis, and that's the gold standard. Unfortunately, very few of those exist. Now, if we're talking about fitness and health care, of course, it's much, much easier to find a meta analysis. But what's really important here is that you understand,

like what makes good evidence, something that you read online, it's, you can just assume it's probably not true or not even pay attention to it. If somebody's sharing their personal experience that's more valid than somebody sharing an opinion. If somebody has a quantitative survey, hey, we surveyed 30 gyms and here's what we found. That's better than an N equals one experience. If somebody has a cohort study, like we actually took data that Jim's actually reported, instead of just asking Him to fill in the blanks, that's way better and that's, you know, the best we've seen in fitness, and then a meta analysis as the gold standard. The key here though, is to know the difference to have filters to be skeptical until you see evidence but also flexible enough to change your mind in the face of evidence instead of being a civic Hope that helps thank you for your service.

Vietnam story

8-year-old-easy

Al of our clients are educated and smart. But they're distracted and stressed, and their mental capacity is reduced to that of an 8-year-old. They need to be fed one crumb at a time.

You're better to make it too simple than not simple enough

My trick: pretend I'm programming a robot. Do this, then this.

But here's one way you can practice: brushing teeth, teach it to an alien, someone who's never seen a toothbrush before.

Dan Sullivan story - just do the work

Our challenge: we're all a bunch of people who can just do the work. We're the 12% superachievers and our clients usually aren't.

How do you help people focus?

• Increase frequency
• decrease complexity

Higher speed, lower drag