Nicole Aucoin (00:04):
Welcome back to the Grow Your Nutrition Business Podcast. At Healthy Steps Nutrition, we believe something as fundamental as nutrition shouldn’t be complicated. We help gym owners and coaches build successful nutrition programs without reinventing the wheel. I’m your host, Nicole Aucoin, registered dietitian and founder of Healthy Steps Nutrition, CrossFit HSN, and HSN Mentoring. I’m also the author of the Basics of Nutrition Coaching, CrossFit Preferred Nutrition Course. I’m going to teach you how to take one step at a time to build a successful nutrition program, where you finally feel confident talking about nutrition to your members and your communities.

Nicole Aucoin (00:44):
Today, we have a friend and our accountant, John Briggs on the podcast. John is the owner of Incite Tax, and he’s on a quest to protect unfairly curated taxpayers from massively overspending on taxes. This model and strategies is what he’s taught for over a decade, and he really gives practical tips to help people reach their financial goals so much faster. He’s also the author of Profit First for Microgyms, which is a great book for gym owners and independent coaches to help them understand what financials really mean, what you should be tracking, and some simple strategies to get you started.

Nicole Aucoin (01:24):
This book, as well as the resources that he mentioned, are linked in the show notes. In this episode, John and I discuss the trends that he saw with the hundreds of gyms that he worked with last year during the pandemic. We talk about why you need to diversify your revenue streams, to allow you to scale your business and help more people. And why you should be tracking your metrics and what they actually mean. If you are trying to do accounting on your own, or you’re looking for someone to help you, I highly recommend you checking out the book and checking out Incite Tax. We will get to this episode with John right after this message.

Nicole Aucoin (02:05):
Did you know that we released a free course called Building a Nutrition Program Into Your Gym? You can actually get three free CrossFit CEUs by completing this course. Click the link in the show notes to get immediate access to this awesome course, to give you practical tips to help you build a nutrition program, increase engagement with your existing members, and increase retention of your nutrition clients. Enjoy that free help and enjoy this episode.

Nicole Aucoin (02:35):
John Briggs, welcome to the Grow Your Nutrition Business Podcast.

John Briggs (02:40):
Thanks for having me, Nicole.

Nicole Aucoin (02:41):
It’s been a while. We did a Facebook live back in the middle of the pandemic last year, and I feel like, oh, it’s been whirlwind since that Facebook live.

John Briggs (02:52):
Yeah, you could say things have been a little crazy. I think everyone would agree with that for sure.

Nicole Aucoin (02:58):
I’m to talk to you. Number one, you’re our accountant, and you guys actually just sent us all of our tax stuff, so thanks for the bill that I just got in my email, that we’ll be paying the IRS, but I’m sure it would have been a lot more if you were not our accountant, and I’m so thankful for all that you guys do at Incite Tax. I’m excited to talk today about gym owners, and profit, and lack of profit, and some, I think let’s start off with some common mistakes that gym owners make in regards to managing money.

John Briggs (03:31):
Okay, let’s start with the most basic one. It’s called Parkinson’s law. I mean, I had this experience. When I graduated from college, the first job I took was as a controller for a door-to-door sales company. Now, controller is just another title for … It’s a basically head accountant. So, you can imagine a boring job for most people. The president of the company comes running in. He’s like, “John, you better lock the doors and hide, and don’t let anyone know that you’re here.” I’m like, Okay. This is the boring job. It kind of feels like you’re being a bit dramatic, especially since the weekend before, we had celebrated as a company.

John Briggs (04:16):
A bear year where we almost did $30 million in revenue, just shy of 30 million in revenue. We handed out checks to sales reps, $10,000, $20,000, $30,000 checks. So, I’m like, “What the heck’s going on?” He’s like, “Well, the owner had been working on that million dollar loan and it didn’t happen. So, all those checks that we just handed out last weekend, they’re bouncing, and all those people are going to come in today to get a new check from you and those are going to bounce too.” The real question here is, how does a company that does almost $30 million in revenue, one, need to take a million dollar loan to even cover the checks, and two, not have the money to actually pay the guys who generated the revenue?

John Briggs (05:03):
Well, here’s what happened. Six months earlier, we were sitting in a executive meeting, and I told them, “Hey guys, let me introduce you to this beautiful, gorgeous, super sexy spreadsheet.” In the spreadsheet, I laid out for them, every sale that we did as a company, we kept 1%, $8, which is a terrible margin. I said, “There’s this new, innovative, fresh ideas sweeping the business community, and I think if we implement that idea here, it’s going to make a big difference. It’s called a budget.” Now, this was pre profit first. I would have called it profit first, but they’re like, “Dude, we don’t need a budget. We’ll just sell more.”

John Briggs (05:46):
Here’s the problem, and this is where Parkinson’s law … This whole story illustrates Parkinson’s law. The law says, the demand for something expands to match its supply. Set in a different way, your cash, the expenses you spend will always expand to match the cash available to spend. So, the number one mistake most owners make is that they have one bank account, one business bank account. That business bank account is your giant pile of supply of cash, and your expenses are going to continue to increase to match that supply, to match the amount of money you have to spend.

John Briggs (06:32):
That’s why we wrote the book specifically for gym owners, is because there’s an easier way, and it’s a way for us to say, look, we’re not going to fight human psychology. That’s what Parkinson’s law is based off of. No way are we going to try to say, we’re going to overcome that, but let’s put some boundaries around it. Let’s give ourselves a fake reality that we have less money to spend than we actually do, and then we’re going to see some real improvements with the cashflow and how much we have available to do other things other than stressing out about it being gone.

Nicole Aucoin (07:06):
It’s such a valuable story going from, most gym owners are not in the position of the company that you worked for, $30 million. They’re excited to have a couple hundred thousand dollars in their annual sales, but it’s so true. As you grow, your expenses will grow. If you don’t have a way to manage the cash, you can justify buying literally anything.

John Briggs (07:31):
Anything.

Nicole Aucoin (07:32):
Oh, I need that. We need to have that today and I’m going to buy it, and if the money’s in there, great, it happens. Right?

John Briggs (07:42):
Yeah. The thing is like, I use that story because obviously I haven’t met a gym owner who’s doing 30 million in a single location, but it doesn’t matter then how many zeroes are behind your deposits. This problem prevails whether you’re doing $50,000 in revenue or $50 million in revenue. We need a way to control it. What I love about the system is look, the pandemics sucked and it caught a lot of people with their pants down. All of our clients who ran the profit first system, they’re still in business. They weren’t without stress during the period, but because of the way they manage their cash leading into this crisis, it got them through it.

John Briggs (08:23):
Because they follow the system, it also helped them make like changes really, really quickly to adapt to what they were going to be forced to be doing in their business for the next few months or half a year, or almost a full year.

Nicole Aucoin (08:36):
I think we all were forced to look at, line by line, what are our expenses, and what do we really need, and what can we cut down or out? I mean, we all did that. I know that we did that personally. It was important because we didn’t know. There were so many unknowns. I think another thing, and you talked a little bit about it in the book is gym owners that only had group class revenue struggled a lot more than gym owners who had diversified revenue.

John Briggs (09:07):
Yeah. This is just, guys, it’s just based on data and what we see. The gyms that have the most success have at least three primary revenue streams so that they’re not depending on anyone. The group revenue, personal training and nutrition, right, Nicole? You identified this problem early on. When you did, we found that the gyms that brought on your services started becoming way more profitable and sustainable or stable as well than the gyms who were just even doing group training and personal training, and especially that’s highlighted with the crisis that we’ve all went through.

John Briggs (09:48):
I don’t foresee a time where the government’s ever going to force gyms to close again, but it’s not to say it can’t happen, and if it does, man, having a service that you can offer virtually is really important. Anyways, so just a plug for the nutrition, that has been a great way for people to keep some revenue coming in without having to have social distancing.

Nicole Aucoin (10:13):
It’s interesting. I was talking to one of the gyms and he actually came on as a mentor during the pandemic because he’s just an amazing human, but his gym is in Ireland. It’s been open for a total of three months in the past year off and on. He’s in the middle of the third shutdown right now.

John Briggs (10:31):
Oh my goodness.

Nicole Aucoin (10:32):
Open for three months. So, nine months he was closed in the past year. It’s insane. He said to me the other day, he said, Nicole, I’m not even focusing on fitness right now, because if I’m forced to shut down again, I know that I can easily handle adding more nutrition clients, and I don’t want to sell people on fitness that I’m going to have to eventually convert them to virtual, and then they’re paying for a service that they’re not expecting, and it made sense. He’s grown and doubled the size of his nutrition program since the pandemic started, because that’s where he’s guiding every single new person to.

Nicole Aucoin (11:10):
Whether it’s our program or not, thinking and really understanding how you can add value and increase the average amount that your members are paying per month, which through individual nutrition, coaching is a really great strategy for gym owners.

John Briggs (11:25):
Yeah, and even like, so right now in our gym, we’re on week three of our nutrition challenge. We follow the HSN model and look, that was a nice, easy way. We have 15 people on it, I think, some 10 to 15. That’s an additional, whatever that math is $2000-ish.

Nicole Aucoin (11:47):
Then you’ll convert some people over to ongoing coaching and have them as an increased average revenue member per month, right?

John Briggs (11:55):
All of it is being done virtually, which means, to go back to your point and mine in the book, I don’t have to use floor space and I don’t have to threaten my capacity for each class period by adding this revenue. So, that becomes a really great revenue for me to add, because now I can blow that up as much as I want and to the capacity of our coaches who do that versus being limited, because even now, we’re in Utah and we’ve had … I think we’ve been pretty fortunate with the way this pandemic is gone, but we’re still limited to how many people we can have in a class.

Nicole Aucoin (12:31):
I think most gyms are. We are too, and we’re in Florida. This makes complete sense. I’m excited that you’ve got a challenge going. That’s awesome, and I’m more excited to hear about the conversion rates, ongoing coaching after the challenges is over. I want to go back to what exactly you guys do with profit first. So, having that separate bank account, understanding that no matter how much money you bring in, you’re going to find expenses to take that money away. The profit first model kind of what it says, take out the profit and then the rest is what you have for expenses.

John Briggs (13:07):
Yeah. The model works this way. It follows the concept of the envelope system, if anyone’s familiar with that, except instead of separate envelopes, we recommend them being bank accounts. We suggest, I call it the essential seven. Yes, if you’re hearing this and you’ve never heard this concept before, I am suggesting you have seven business bank accounts, and no, your accountant should not be blowing up your rates because you’re adding more bank accounts. It’s not that much additional work. Here are what the essential seven are. One account is your income account. It’s sole purpose is to receive customer deposits. That’s it.

John Briggs (13:49):
Then you’re going to have a team member expense bucket. This is because it’s one of your top two expenses as a gym. We want to make sure we set aside that money when we’re allocating income. Then we have a owner’s pay account. This is for owners who work in the business, in the day to day. Not for owners who are just investive like investing in passive owners. So, we have the owners pay, because too often, gym owners get burnt out because they’re not paying themselves enough, and the world needs you to stay in business, which means we need to give yourself the highest likelihood of success, which means you’ve got to pay yourself market rate and you got to do it first.

John Briggs (14:32):
Another account is your profit account. The profit account is for all owners and it’s designed to reward you for the risk you’re taking to be the owner. Your other team members are not taking that risk. Therefore, you should be setting aside money so that, at least once a quarter, you give yourself a profit distribution because you took that risk. Then we have tax account. As Nicole mentioned, they owe a little bit, and we have it down as much as we can, but guys, when you’re profitable and successful, you are going to pay something.

John Briggs (15:08):
Let’s set it aside throughout the year, instead of waiting until the end of the year and wondering, how am I going to come up with that money? Then of course, we have your operating expense account, which is the one you already have. Then for gyms, we also recommend an account for equipment. There is wear and tear and you might as well be setting aside a little bit of money every month for those times when you need to replace the rower or the air assault bike. The beauty about that account is, as you start setting aside some money and you’re growing, you also are setting aside cash to buy the new rower, to expand your facilities, instead of, oh, we really need to grow. I need to buy an extra rower, but where am I going to get the money from? You’re already setting it aside.

John Briggs (15:49):
As I mentioned with Parkinson’s law, because you’re separating money into these separate accounts, you will find a way to run your business on the money leftover just in your operating expense account. Yeah, it for sure going to force you to look at your current expenses and analyze and decide, yeah, these probably aren’t adding anything to my profitability. They’re probably not adding anything to customer experience. I need to cut them.

Nicole Aucoin (16:14):
I think that’s so important. I’m going to put all of those different account titles that John mentioned, and I highly recommend that you read the book, because he really goes into a deep dive, and the cool thing is he compares everything to nutrition, which is awesome. Thank you, John, for doing that. I’ll link it all in the show notes so that you guys can understand and kind of wrap your head around it. I hear so many times from gym owners that they aren’t paying themselves, and you’re right, the world needs you in business so that you can help more people and really figuring out, what is your role in the company?

Nicole Aucoin (16:50):
I think that’s an important thing to talk about, right? Maybe as gym owners expand, you have to find your own role and replace yourself and some roles that can easily be replaceable, right? You don’t have to wear all the hats as a gym owner. You’re a gym owner.

John Briggs (17:05):
Yeah. I definitely don’t wear all the hats. Man, I think it’s one of the most important things that we have to talk about, because if we really think through this, what we’re not talking more about, or what we’re not talking enough about in the industry is the idea of burnout. I’m telling you, burnout happens because you, as an owner, don’t pay yourself what you need to. Plain and simple. Think about it, the owner who’s paying himself enough to live his life, he enjoys what he’s doing obviously on the business side, when he’s not stressed out with his personal living situation and the quality of life that he wants, why would they ever have a reason to burn out and feel like, this isn’t worth it anymore.

John Briggs (17:52):
I’ve never seen it happen. Yeah, sometimes they’re like, you know what? I’m maybe not as passionate as I thought I was, or I found a new passion I’m more passionate about. I’m not saying that’s not going to happen, but I’m telling you, if you’re not paying yourself enough money, you are already in the risk profile of burnout. If you think about, I think about this, what does the gym owner do for the world? It’s probably in my mind, one of the most important things that happen within our society. Because you give people the gift of health.

John Briggs (18:26):
While I talk so much about profit, look, I say this, and this is a good contrast to where I want to go with this idea, profit is not about getting rich. It can certainly lead to that, but it’s the necessary fuel for your business’s healthy survival. If that’s the definition of profit that I’m looking at, guess what? Health is a person’s individual profit, and that’s what you give them. So, if you burn out and you close, and I can tell you, the data shows, when a gym closes, a lot of those members don’t find a new fitness home.

John Briggs (19:02):
They need you to stay in business, and if you’re not profitable, you literally can’t stay in business. You have to have money left over every month. It’s a simple business principle, has nothing to do with your passion or your great ability to help people lose weight and get fitter and healthier and happier. It’s just simple numbers. You have to have profit to stay in business.

Nicole Aucoin (19:23):
If you’re a gym owner who’s never paid themselves ever, what do you recommend?

John Briggs (19:30):
The first step is they probably want to look at the expenses that they’re bringing on. We got to free up some cashflow. In fact, we have … I took, one of my chapters, I go over nine questions of how to analyze expenses. We’ve created that into a handout, if you will. So, if they go to incitetax.com/wealth, they can download that resource. I would start there. Most clients, not just gym owners, clients, regardless of industry, we often can find about 10% right off the bat of expenses that can be cut. That’s a big number for a lot of gym owners. So, I would start there.

John Briggs (20:15):
The second thing is set aside money to pay yourself first before you start thinking about paying your bills, and actually, give yourself that money. Transfer it out of the account so that you can’t see it anymore. It’s now in your personal account or the separate owner’s pay account and start forcing yourself to live off of the lower number. I promise gym owners will find the creativity to make it work.

Nicole Aucoin (20:41):
I can definitely agree with that for sure. I think we’ve all been there. I remember starting Healthy Steps Nutrition. I didn’t pay myself at the beginning and it was frustrating. You’re working so hard, and you just want to help people, but no gym owner that I know, besides you, has a background in finance. This isn’t what I went to school for. I remember, when I first started Healthy Steps Nutrition, I would wait till the last freaking second to do my taxes, the first couple of years, and as soon as I could hire someone, that was the first thing that I hired is like, get the taxes away from me.

Nicole Aucoin (21:14):
I’ll be responsible for making money and someone else be responsible for managing it and dealing with it, like I can’t do it. I think so many gym owners hold on to so many different things that also causes burnout, right? If you’re not loving a part of your job and you can afford someone to take over that part of your job, imagine how much more time you would be able to invest in things that you do love to help grow your business. Most gym owners don’t think like that.

John Briggs (21:42):
Yeah. They don’t, and we want them to, right? Every dollar you’re spending, you really should be thinking, is this an investment into my business? If you can’t answer that it is, then you really don’t need to spend it.

Nicole Aucoin (21:54):
Yeah. I love that. And really figuring out, like I challenged gym owners to sit down and write, what are all the tasks that you do on a daily basis? Do you love them or do you hate them? And let’s figure out how to get the tasks that are on the hate list off of your plate so that you can spend more time doing what you love to help grow the business.

John Briggs (22:15):
Yeah, and I love that technique, and I always emphasize, when they’re done with that … Because I mean, really, you could get really geeky with it, because I’m an accountant and I would add numbers. Like, here’s this task, I hate it. I could replace it for dollar amount here. By the end, you can actually see, what’s the monthly cost to get everything you hate off your plate. If you’re going to leverage your money to do that, which I recommend you do, you have to use that time that you just saved to work on your business.

John Briggs (22:48):
It’s one thing, we do see owners sometimes take themselves out of the coaching rotation a little too quickly, because they’re frankly, just on the verge of burnout. They’re like, I need some time for myself. Look, that’s great. If you can afford that, that’s awesome. But most of the time, when we’re starting this process, they can’t quite afford that yet, and so they take themselves out of the rotation, they’re giving up the cashflow, but they don’t actually use the time that they freed up, that hour they freed up to actually work on the business, to meet with new members, or to try to get members to come into the door. So, please use that time wisely until you are to the point where it’s comfortable and you can take some additional time off.

Nicole Aucoin (23:27):
I think that’s an important thing to think about. I know my mentor, Michael Hyatt, has this desire zone quadrant thing, and it’s like, what are you really good at? And what do you love? Those are the things you’re going to hold closest to you, and then on the opposite spectrum, what are you not good at and you hate? Those are the things you get off first. When you get those things off of your plate first, you should be spending more time on the things that are going to make your business money. In our business, Jason, who runs the gym, my husband, his best time is spent calling and following up with leads as fast as they apply.

Nicole Aucoin (24:04):
Because the sooner we follow up with leads, the more effective we are at getting them to come in and sign up for members. If you don’t have a system for that, people will fall through the cracks.

John Briggs (24:15):
Yeah. No, for sure. It’s awesome he identified that, right? That’s a great use of his time. I’m sure there’s other things that gym owners can identify that they’re not great at, or they don’t need to do.

Nicole Aucoin (24:26):
A cleaner.

John Briggs (24:28):
A cleaner. I like adding the dollar figure next to the tasks you don’t like to do because you can identify, that’s actually not that expensive for me to replace. Let me start with that. Because sometimes those can save you a ton of time and they’re not that expensive.

Nicole Aucoin (24:43):
The cleaner that cleans the gym, we pay $35 a week. That’s nothing, in my opinion, to not have to deal with cleaning the bathrooms and scrubbing the showers. That’s not something that Jason nor I want to do that. I love this. I think that’s a really important topic. The other thing that you mentioned in the book that I think is really important, that I would imagine some gym owners don’t do is, you talked about KPIs, and for people that don’t know what that means, key performance indicators. What should we be looking at in regards to key performance indicators for gym owners and in gyms that are looking to add nutrition programs too?

John Briggs (25:26):
Yeah. Anytime we can find a number that’s going to help us predict the future, we want to look at those. We also don’t want to look at too many at a time. I find too many people rack their brains of, oh, what’s the right one to choose? Oh, before I do this, I need to understand it. Just pick three or four. Let’s start with three. Just pick three and just start tracking it. If you’re not getting any value out of it, then you can switch them. There’s no rule that says, once I establish what KPIs I want to look at, I can’t change it.

John Briggs (26:02):
There’s a few we really like. Average revenue per member is a great one, and what this number tells you, I mean, it’s as simple as your total revenue divided by your members. That’s going to give you average revenue per member. The goal is, whatever your last months average revenue was, you want it to be higher this month. By adding additional services like nutrition that have a better margin for you, you can see that number go up. When someone comes in, and I just am doing group training, great. I might have some onboarding classes, but now it’s $130 a month or whatever the price is.

John Briggs (26:42):
If I then can get to sign up for some nutrition coaching at the same time, okay, now my average revenue per member is now $200 or whatever. That’s a good one. Length of engagement’s another great one. How long are your clients staying with you? I would track this for members that have canceled and your current member base. The ones that canceled, you kind of use that as a number that you want to see continue to increase.

John Briggs (27:10):
Look, we’re never gonna get to the point where we have 100% retention. It just doesn’t work. People move. They love you, but they’re still going to move and change jobs and things like that. But you want to see that number go up. So, just with those two examples, just tracking it doesn’t do anything for you. It’s the comparison of that number to something else. Usually, it’s previous number, that then you want to pay attention to, because whatever the difference is, that’s forcing you to ask yourself a question, why did it change? If it went up, which we want, but you want to know, why did this go up?

John Briggs (27:48):
What did we do? Did I run a nutrition challenge this month? Oh, I actually ran a nutrition challenge last month and we converted so many of them. That’s why that went up. You start identifying what was the actual activity that boosted that revenue. Now you can say to yourself, I need to do more of that. Maybe if we were only doing a nutrition challenge once a year, I’m going to do it twice a year now. Or maybe they like challenges and I can find a different type of challenge that can push them and they’re interested in.

John Briggs (28:19):
Vice versa, if the number goes down, crap, why did it go down? We stopped asking this question in the onboarding or the interview process for prospects, whatever that is. The number’s great, but you have to ask the question, because then that leads you to the activity that led to the change, and that’s then what you focus on, either improving or doing more of.

Nicole Aucoin (28:39):
I think that’s an important piece of the puzzle. You have to interpret the number, right? Like, you have to understand, what are you doing differently to affect the numbers going up or down? Systems like, I know you were worked with Zen Planner in the past. We work with Push Press. It’s so easy to track the numbers with Push Press, because you click one button and it generates those reports for you. So, it’s so simple. Convert it over to a spreadsheet and then go ahead and track it. I know for us working with you guys, you guys give us a report every single month.

Nicole Aucoin (29:13):
I can see, how much should we bring in this year, compared to how much did we bring in last year, and what is the difference? It’s important for me to know, because I think any business owner needs some goals. If you don’t have goals, you’re going to go nowhere. Look at your numbers. They don’t have to be amazing today. Just make one step in the right direction to improve the number, and I think a lot of times we try to throw so many things at the wall, but then you can never out what’s actually working.

Nicole Aucoin (29:42):
If you could track things and just change one thing at a time, you can see, okay, is it working or is it not?

John Briggs (29:48):
Yeah, and with that, there’s one thought I have too. I feel like a lot of gym owners get hung up on this idea of industry standard as well. I want to give people permission to not worry about it. I’m an accountant, and I think there’s a lot of value in data to see, oh, 150 members, X amount per thing, and you’re going to be profitable. That’s great. Or we know that we want your rent expense to be under 15%. We’d love to see your net income above 20%. Those are numbers that we have, but sometimes people are like, what’s the industry standard? How much revenue per square footage should I have? Or what should I be paying my coaches, or what’s industry standard on what I should charge?

John Briggs (30:29):
Ultimately, what I love about KPIs is you actually aren’t necessarily worried about industry standard. You’re just worried about improving yourself. The same thing you’re asking your members to do when they come into the door. Hey, look, you’re 300 pounds, and I see that you just looked at that guy who just did a muscle up. Let’s not worry about him. Okay? Right now, you’re here, you’re winning. Let’s start doing some squats to a bench and whatever, and you’re going to win. It’s the same idea with your financial numbers.

John Briggs (30:57):
Wherever you are right now is a great place to start and just improve it from there. At some point, you’ll become an elite gym and then you’ll be able to set your own industry standards.

Nicole Aucoin (31:07):
I love that. And just knowing like what success looks like for your gym is different than what success looks like for my gym, right? I want 50% of our members to be nutritional-only clients. I don’t want a gym with 250 members. That’s not part of our perfect day. I want 250 nutrition-only clients, and less than that, because I don’t want as many people. So, you just need to figure out like, what does success look like for you? For every person, it’s a little bit different, but you have to track your numbers to understand where you’re at.

Nicole Aucoin (31:39):
I think so many people don’t do that, because the idea of it is overwhelming. If you have a software that tracks them for you, copy them into a spreadsheet and then just keep tracking, compare from the month before.

John Briggs (31:50):
Yeah. Well said. You should track this and there’s no reason you can’t have a software that does this for you. They’re out there and they make it really convenient. We also tell people too, when it comes to looking at, what metrics should I be following? What KPIs should I have? There is a cost reward analysis you need to do like, oh man, this number would be really awesome, but it would take a lot of time and effort to actually figure it out. May not be worth looking at frequently. But other simple things, like you mentioned with Push Press, if you can just do things with a click of a button, why not look at those every once in a while or frequently?

Nicole Aucoin (32:25):
With our mentoring program, that’s the first thing we ask, like, okay, tell me how many leads you had. Where did those leads come from? How many people signed up? Of those people that signed up, did they sign up for nutrition? Did they sign up for nutrition and fitness? Are they coming from? If you don’t know, how are you going to be able to improve those numbers? Or let’s say, John, you and I both do free intros at your gym and you are getting everyone to sign up for nutrition and fitness and I’m getting no one to sign up for nutrition and fitness, we’re doing things differently.

Nicole Aucoin (32:54):
The way we’re guiding people, like let’s get on the same page so we can both get people signed up for nutrition and fitness. Just figuring out so everyone’s on the same page is important to help you build a more sustainable business and be able to help more people. Right?

John Briggs (33:09):
Yeah, totally. Again, the metric tracking is only to lead you to ask the questions you need to about the results you’re seeing, and then the results should lead you to the behavior that needs to change.

Nicole Aucoin (33:23):
I love that. Talk to me about what you guys do. I mean, you work with hundreds of gyms around the US, right? Talk to me about what you guys do at Incite and what’s different. I mean, I can tell you from personal experience, but I’d love for you to say like, how do you help gyms get more profitable?

John Briggs (33:44):
Well, we first, a lot of times start with getting the base accounting done the right way, because crap in, crap out, from a nutrition standpoint, we might look at a hundred calories of Oreo cookies versus a hundred calories of grapes. Well, yeah, they’re the same hundred calories. Your body’s going to respond very differently probably to the grapes or first, the Oreos. It’s the same with your accounting. Your metrics that you’re tracking, and the results you see are only as good as the information you put in.

John Briggs (34:14):
So, the first step we do is we clean up the past to make sure that going forward, we have the right foundation. Then from there, we send monthly reports to people to give them insight into the different things. You mentioned one of the things we love to show in the report is how much money you made this month compared to how much money you made last year during this month. So that you can see, is this up or down? Then, profit first, obviously we help our clients [inaudible 00:34:45] profit first. Some like to read the book and they DIY it, which is awesome.

John Briggs (34:51):
Others feel like they need more support, and we’re here to provide whatever level of support a gym owner needs, whether that’s just a quick meeting to clarify a few things from the book, or if it’s full on, we will actually go into your bank accounts for you every week, or twice a month, and transfer the money for you and give you updated reports that way. Then of course, the tax side, we are always trying to help increase people’s … The amount of money that gym owners can keep, and a lot of that can come through proper tax structuring and tax strategies.

Nicole Aucoin (35:24):
Which you’ve helped us a ton with all three companies that you help manage for us, which is amazing, and highly, highly recommend everyone over at Incite Tax. You guys are so helpful and quick respond, which is amazing. You guys have such great customer service over there. One final question, and then I’ll let you have some final thoughts. I’m sure we can get down a huge rabbit hole, but this always comes up. Contractors versus 1099s versus employees, for nutrition coaches, what’s the best strategy there?

John Briggs (35:57):
I always have to say this. The tax code is complicated, and therefore, the word always or never, it just doesn’t belong in this conversation. It really does depend on the situation of the relationship between the business and the worker. So, if you are providing more flexibility to them, then it makes sense for them to be a contractor. If you’re requiring they do things like, at the time you want it to be done in the exact way you want it to be done with the tools you’re providing and equipment and you’re giving them, then they’re probably an employee.

John Briggs (36:37):
That being said, I feel very strongly, unless you’re in the state of California, that if you wanted to pay your coaches as contractors, there’s ways to do that. Now, that being said, I also … We have a GM for example, and he’s an employee because we want to control what he does. We want to make sure he is at the gym during the times we want him doing the gym. He doesn’t get to choose which classes he attends or coaches like. I’m saying there’s a trade-off there. When it comes to nutrition coaches, really what they’re looking at too is, is this income the purpose of your gym?

John Briggs (37:24):
Most gym owners can say, especially if they have a physical location, that the exercising, the workouts are the main part, and the nutrition is supplemental. So, you’re already at an advantage to be able to pay your coaches as contractors that way. State of California says everyone is an employee, basically always. I mean, anyways, some of this has gone to the Supreme court, I won’t go into the details. It’s boring and ugly and upsets me. But even if you’re in the state of California, based on the California rules, I do believe you could have a coach who you pay as an employee to do the fitness stuff.

John Briggs (38:02):
If they’re also a nutrition coach on top of it, the nutrition pay could be to their nutrition business. You could outsource that service to their business entity, because it’s not the main primary function of your gym business. That being said, when I talk about it this way, sometimes people are like, “Well, you’re just stealing money from these contractors, you greedy person.” Honestly, I’ve done the math many times, and I’m telling you, independent contractors pay less in taxes than employees, if they do it the right way. For sure-

Nicole Aucoin (38:40):
Setting it up as a business, instead of setting it up as paying it an individual, right?

John Briggs (38:46):
Yeah, exactly. For sure, if they do it the wrong way, they could end up paying more taxes as a contractor, but if they do it the right way, and most competent accountants should be able to help them identify how that pay should be structured, their take-home pay is way higher as a contractor than it is as an employee. Sometimes it just takes an explanation to them. We do that all the time. We will sit down with … We’ll do a webinar, and the gym owner will set it up and we talk to their coaches, just so the gym owner can benefit. It’s a benefit on both sides. They avoid paying payroll tax and the contractor also avoid reduced payroll taxes and reduced income taxes.

Nicole Aucoin (39:29):
I think you’re right. You just have to look at, what exactly are these people doing, and how much control do you have, and how much control do you not? We have nutrition coaches in the past that have been set up as 1099s. We have nutrition coaches and dieticians in the past that have been set up as W-2 employees. It really just depends on the relationship that we have with them. We have a photographer, she’s on a retainer that’s a monthly retainer, and she has full control. I want some pictures delivered at the end of the month. She’s a contractor.

Nicole Aucoin (40:01):
I don’t tell her how to take pictures. I don’t give her any training on how to take pictures. She does it on her own time, delivers them by the end date of the month, and that’s it. We’re done. Just figuring out, how much control do you have versus how much control does the contractor have? I mean, right off the bat, nutrition coaches are setting their own hours of the month. They’re working on their own schedule. That’s one of the main things with contractors versus employees.

John Briggs (40:27):
Yeah, totally. Our nutrition coach is a nurse. So, she works three, 12 hour days at her W-2 job, and so we haven’t … Those rotate constantly. She sets her own schedules, she decides when to bring … Like, when she’s meeting with clients, all that stuff. We literally have zero control over doing, other than we’re saying, we want to offer this service and this is what we’re willing to pay you if you give it to our members.

Nicole Aucoin (40:58):
Yeah. I love it. So, super simple. If you are listening to this podcast and you’re like, oh my gosh, I’ve been handling my accounting for way too long and I’m ready to pass it off, I highly recommend John and Incite Tax. If you’re thinking, I want to hold on to this a little bit longer, the least you should do is buy the book, Profit First for Microgym owners. There are so many great nuggets in there. I just looked at it right before we jumped on this podcast to pull some things out of it. It’s an awesome book that just puts things in layman’s terms. I think I get super confused by accounting and I have a minor in business.

Nicole Aucoin (41:34):
I don’t speak that language. You are the expert. We pay you to handle all of our things and make us not pay as much money in taxes at the end of the year. Awesome. John, thank you for coming on the podcast. Any final thoughts before we jump off?

John Briggs (41:50):
Just that I don’t want profit to be a dirty word for gym owners. I understand that the nature of what you do and the passion that drives you is to improve the health of people, and you really would be totally fine doing it for free. I get that. I just want you to know that you won’t be able to do that forever if you aren’t paying yourself and you’re not having a sustainable profit. So, you can have a profit and serve your greater noble purpose of changing humanity. You can do both at the same time.

Nicole Aucoin (42:26):
I love it. I think you said it perfectly in the middle of this podcast. You said, “Profit is not about getting rich, it’s the necessary fuel you need for survival.” I think that’s so true and important. It’s a business, you’re in the business to help people, but you also have to be able to bring home a paycheck and pay your bills. Thank you for all that you do. I know that you’ve taught me so much over the years, and you continue to teach many gym owners around the world how to make their business more financially stable.

John Briggs (43:00):
Well, thanks for having me, Nicole. I really appreciate it.

Nicole Aucoin (43:07):
So many awesome nuggets in that episode from John from Incite Tax. Let’s talk a little bit more about metrics. At HSN Mentoring, we focus on a few key metrics, and John’s right, you shouldn’t compare it to industry standards or what your neighbor next door doing, or what the best gym is doing. You need to compare your numbers against yourself. Similar to the CrossFit Open, we compare our scores to how we’ve done in previous years. Let’s talk about what these numbers are that we recommend tracking.

Nicole Aucoin (43:37):
Number one, your leads, and where are they coming from? If you’re spending money on advertising, but you’re not getting any leads from it, something is happening. Why are you continuing to spend money on the advertising? Once we have leads, then we want to know how many people signed up and what are they actually signing up for? Are they signing up for nutrition and fitness? Are they signing up for nutrition only? Are they signing up for fitness only? And what are your goals as a company? I know our goal as a company is to have, not a ton of ton of members. We’d rather have less people that we can focus on.

Nicole Aucoin (44:08):
Really give them an exceptional experience and create the lives for our coaches that they’re really looking for. So, we want to be able to track those metrics with what people are signing up for. Then we want to know what’s the average revenue per member per month. So, how much money is each person spending at your gym? What’s the average revenue that’s coming in. If you’re having that are paying for nutrition only, or nutrition and fitness, or fitness only, obviously the clients that are paying for nutrition and fitness are going to bring up your average revenue per member per month.

Nicole Aucoin (44:41):
Then we want to look at length of engagement. This is such an important number to look at. I remember starting as a nutrition coach and dietician, when I was starting Healthy Steps Nutrition, my length of engagement, frankly, it sucked. The reason why it wasn’t good is I didn’t have the systems to keep engagement and really show clients the value beyond the first month. I wasn’t keeping it simple. I was trying to give them too much information at one time, they left feeling overwhelmed. You want to track your length of engagement. Really, what this means is, how many people are you converting to ongoing nutrition coaching if you’re really focusing on nutrition?

Nicole Aucoin (45:18):
If you’re running a nutrition challenge and you’re bringing in all this revenue one month, one of the nutrition challenge, but you’re not converting anyone to ongoing coaching, how are you really able to continue to support them achieving their goals and you’re not making any reoccurring revenue? We want to look at that conversion rate to ongoing coaching, and how many people, how long they’re staying per month.

Nicole Aucoin (45:41):
Lifetime value. This is another awesome number to track. With Push Press, you can track all of these numbers really easy using the nutrition reporting app powered by Healthy Steps Nutrition. Let me talk a little bit more about length of engagement. If you aren’t converting clients, your LEG, your length of engagement is not going to be good. There’s no point spending a ton of money in advertising if you’re going to lose your clients after one month, two month or three months. We need to work on retention first. We need to make sure that we’re giving our clients an exceptional experience so that we don’t have to start at zero clients every month or every three months if you require a three month commitment.

Nicole Aucoin (46:23):
If you aren’t able to close leads, why even get more? We need to focus on the sales process and make sure we have that dialed in before we’re spending money on advertising. We spend very little dollars on advertising. Our advertising really comes from, how we get leads is number one, the free help that we provide and client referrals. So, making sure that you have your systems in place, so you’re not just dumping money every single month is really important. At the end of the day, you really need an easy way to track these numbers and the systems to scale your program.

Nicole Aucoin (46:56):
John and I briefly touched on the financials in this episode, but if you’re looking for more help, the first step would be to buy his book. Understand what you’re looking for, or go to incitetax.com and see how they can help you. Thank you so much for tuning into this episode. Again, I’m your host, Nicole Aucoin, the founder of Healthy Steps Nutrition. At Healthy Steps Nutrition, we provide a turnkey solution to save you time and not reinvent the wheel when it comes to building a nutrition program from scratch. HSN Mentoring starts with a training process that includes online my modules, homework, and six mentoring calls.

Nicole Aucoin (47:31):
The training teaches you how to set up your business, but we provide you ongoing support to help you grow your nutrition program, all using our simple habit-based approach. It’s pretty easy to get started. You book a free call, we learn a little bit more about you, and from there, if it’s a good fit, then we prompt you to sign up for the program. You get instant access to the training and one year’s worth of marketing content so that you can keep nutrition to be a consistent part of your message. I hope you enjoyed this episode. If you’re looking for that turnkey solution, feel free to book a free call, and make sure you subscribe so you don’t miss another episode.