Reopening the Right Way (ALEX HORMOZI)

Summary

• When determining the number of sessions for reopening, adjust the price to correspond with the capacity restrictions and quality of service provided.
• If you're restricted to operating with few clients, like 8 clients per session including trainers, charge more to reflect the premium service – potentially $300-$400 per month.
• Take advantage of the fact that returning clients will likely accept higher prices due to increased demand and limited supply.
• Strategize reopening by understanding the math behind profitable session scheduling, as detailed in the "Gym Launch Secrets" book, specifically in section two on profit levers.
• Ensure you maintain a minimum of 80% gross margin on your services for a viable business; even small percentage changes can greatly impact the bottom line.
• Use real billing numbers to configure session availability, considering costs and margins, to ensure profitability upon reopening.
• Aim for an efficient schedule that maximizes your resources, possibly starting with 23 sessions per week and scaling up carefully.
• Reset business offerings, like moving from unlimited to two or three times a week, while considering overhead costs to remain profitable.
• Change billing to a weekly or every 28-day cycle to increase revenue without increasing workload.
• Reprice services to align with the quality and exclusiveness offered due to lower capacity, starting with a bare minimum of $167 per month.
• Use this period to tweak offerings, such as removing exercises that use too much space and shortening session times to 45 minutes to increase capacity and lower payroll expenses.
• Trust the math behind these strategies to ensure profitability and provide more value to clients.
• Utilize available resources, such as the free book "Gym Launch Secrets," to guide through the process of communicating changes and restructuring your business.

Note: Always account for actual numbers, not projections or promises, when planning for reopening and scheduling sessions.

Video

How To Take Action

I would suggest starting with understanding your numbers. First, know how many clients you can handle based on your expenses and desired profit. Remember, aim to keep a minimum 80% gross margin on services.

Next, adjust prices to match the quality and exclusivity of your service. If your capacity is limited, charge more. It's okay to set a session price at $300-$400 per month if that's what your service is worth.

It's also smart to change your billing cycle to weekly or every 28 days. This way, you can get 13 payments in a year instead of 12, without adding extra work for yourself.

Look at your current offerings. Switch from unlimited visits to maybe two or three times a week options. This helps manage your capacity and can make your service appear more exclusive. Use this opportunity to get rid of any exercises or equipment that take up too much space.

Think about making sessions shorter. Instead of an hour, try 45 minutes. This increases the number of sessions you can fit into a day and can help reduce your payroll costs.

Trust the math in these strategies to make sure you're profitable and providing value to your clients. Use resources like the “Gym Launch Secrets” book, which you can find for free, to guide you through changes and to communicate those changes to your clients.

Remember, only rely on actual numbers – not projections or promises – to plan your business strategy. If you handle the reopening with these adjustments in mind, you can maximize your profits and offer better service to your clients.

Quotes by Alex Hormozi

"If you're only able to have 10 people per session, then you need to price your services at the price that service would be normally offered"

– Alex Hormozi

"When you have supply and demand in your favor, then it means you can increase your price"

– Alex Hormozi

"You want to make sure that you're making an 80% gross margin minimum on your services"

– Alex Hormozi

"Every percentage point makes an enormous difference"

– Alex Hormozi

"This is like never before will you be able to get this opportunity, so take it"

– Alex Hormozi

Full Transcript

going everyone uh welcome back so i want to make this uh video because i uh in our community was talking yesterday about the math behind how to know how many sessions you should have uh as you're reopening to make sure that you are profitable the issues that's going to come up is a lot of different states they have different recommendations some of them are based on percentage of capacity uh you know reopening through covet some of them are uh you know limited to 10 people or it's the greater of the two or the lesser of the two excuse me um and so what that does is it it it creates a lot of issues for most gyms because the profit model is not built for large group training to not be able to do large group training all right and so what i mean by that is if you're charging let's say five dollars a session or ten dollars a session for what it would work out to in terms of the attendance for your hundred dollar a month clients if you're only able to have ten people per session at your facility that would include you and probably one other person so now you're down to eight now if you're providing one-on-eight service it doesn't make monetary sense for you to to be in business right so even though you get permission to open back up it doesn't mean that you're necessarily going to have the profit to be able to do so so if you were to come back to your full client schedule uh when you come back you probably won't be profitable and so this is how you reopen the right way okay so there's two main components to this and i'll go through each one as in depth as i can all right the first is what i was mentioning just now if you're only able to have 10 people per session then you need to price your services at the price that that service would be normally offered so if people are normally paying 129 a month at your facility or 150 a month or whatever for unlimited and you're only able to have 60 people a day at your gym if you had six sessions a day for example those sessions you can't even have 60 because you're going to be included in that so now you're talking you know 50 people a day that you can service which means you can only service 50 customers all right so if you're having a one on eight scenario then you need to charge 300 or 400 a month for that service as long as that happens now here's the good news the people who will want to come back are going to be itching to come back not everyone is going to come back but the people who do want to come back desperately want to come back and so they'll likely you'll have the supply demand curve in your favor meaning there's more people who want you then there is availability of time for you to be able to train clients all right and so when you have supply and demand in your favor then it means you can increase your price right and so those things work together for kind of scenario one okay if you are limited and can't do like that many people per session etc okay you need to adjust your price to reflect the level of service being provided not just letting people back into their old price because it doesn't make monetary sense okay now what i'm going to do is talk about the second piece which is how do i know when it makes monetary sense so one of the things in the gym one secrets book in section two which is the profit levers which i would highly encourage you to read before you reopen because it'll allow you to fix everything that you did wrong in your gym this is one of the biggest opportunities of all time for people who own a gym because right now society is giving you permission to change all these things in your gym at once and then restart the right way with the right price points the right hours the right amount of people per session all of those things done right so that you can maximize the profit and capacity of facility all right so this is like never before will you be able to get this opportunity so take it please take 35 minutes and read section 2 of the gym on secrets book it's free plus shipping go read it all right now here's the here's one of the biggest pieces that i have to provide for you okay you want to make sure that you're making an 80 gross margin minimum on your services all right this is this has been a rule of thumb that we've used at gym launch forever if you are running on that then you will be able to make a profit and have a good business if you do not and you're like well we're at 75 i'm telling you every percentage point makes an enormous difference so let me give you an example if the average gym is running on twelve and a half percent margins per year all right that's the average gem if you go from 75 to 83 margins then you added eight percent to your bottom line so if you went from 12 to 20 that would be a very big deal right it'd be almost twice as much money so these percentage points matter all right so for us now mind you you can set the number whatever you want my rule of thumb is minimum 80. if you want to be at 85 or 90 by all means go for it all right you could it's your business you can set it up the right way but let me walk through a simple math example to explain to you exactly how many sessions you can know by math that you can reopen at any given moment okay so if you have let's say 150 customers before this and then you reach out to all of them and only 100 want to come back cool so let's say those hundred who have said yes i want to come back you can build my card now all right are billing at a hundred dollars a month i don't recommend that price point but i'm saying if that is what they're saying then that's what we're going to work off of for the for the money math all right so that's ten thousand dollars a month of recurring revenue that you have built in now if you're running an 80 gross margin that means that on the cost of delivering the services that doesn't include rent that doesn't include admin it doesn't include marketing just your hard cost of fulfilling a session all right is 20 or less of what you are paying or what you are making okay so what that means is if you're making ten thousand dollars a month for your services then it should cost you two thousand dollars a month or less to fulfill those services so if we know that we only have two thousand dollars that's earmarked for payroll for fulfillment of those services and you know it costs you twenty dollars per session then it means you have a hundred sessions that you are able to fulfill on per month now if we're going to be smart about this then we're going to divide our 100 sessions by 4.3 which is how many weeks there are per month on average which means we have 23 sessions per week that you're going to be able to fulfill all right given the number of people and the amount of revenue that's being brought in that is already happening all right don't go off of promises i'm begging you go off of reality all right you're going to have like some people's cars won't go through because things have changed over the last two months some people say they're going to come back and then don't some people are like actually gotta wait for my kids blah blah blah all right go only off of reality go off of what goes through so you get everyone in you start their billing and then you see what happens and then you dictate the schedule right if you can do that if you can't then you're gonna have to down downgrade your estimation by how much you were making before with all the cancellations included and then drop another 10 just in case and then use that as the number to base this off of so 10 000 2 dollars for payroll that means if we're getting twenty dollars a session that's a hundred sessions we divide that that's per month by uh the number of weeks in a month which is uh four point three so we have 23 sessions per week okay and so you can allocate those let's say that we've got five days a week monday through friday that might be normal hours all right so on those days let's say we did four sessions a day two in the morning two in the afternoon so now we got 20 we got three left over and so we can go three on saturday right in the morning if that's what we wanted to do right and so just like that you can get your payroll you can get your business to a point where you have an 80 gross margin or higher right and so like i said that is the minimum but that is the way that you can know in your gut that you're opening up in a position to be profitable now if you've done the math and you're like you know what i can only have 10 000 a month recurring and my rent is six well then you're probably not going to start out profitable anyways and so at that point you're going to have to make harder decisions of like do i want to uh do you want to do a big pre-sale and then get another you know 50 or 100 people pre-sold on a trial to to be able to monetize this um and that's where cash is really important right but big picture most of you don't have that situation um and if you did have that kind of rent then hopefully your revenue is higher than that and hopefully your price is higher than that etcetera but that's how you that's how you can figure this out and most people do this wrong most people are like i'm gonna try and open up as many available times right or the worst scenario you can have is and this is what i feel like it's gonna happen for a ton of people is i'm gonna be limited to 10 people per session i've got 100 clients i'm going to increase my overhead so that i can have 10 sessions a day so i can see all my clients and there goes your margin forever and then how do you transition back and having to cut sessions right it's not a good way to do it start as little as you can start with two sessions eight start with ninety percent margins right that's fine it's okay start with 90 margins work at two sessions a day and work your way back start at three sessions a day whatever right and so from there um this is one of those beautiful opportunities that if you ever had that session that never really had good attendance right cut it right cut it get your margin back right and uh like i just want everyone like think kovit like sure there are things that you probably wish didn't happen okay but but take what you can right right now you can click reset on your business these are the five things that you need to do right now all right i'm going to give you the the cliff notes on what you need to do one you need to switch from unlimited to two or three times a week as your main offer all right because right away that'll double or triple your capacity two you need to switch your billing to a weekly cadence now it doesn't have to actually be weekly but it has to be on a weekly bi-weekly or four-time or every four-week cadence why because if you do it on every 28 days you're going to get 13 billions a year instead of 12 which means you get an extra almost eight percent in top line revenue for the same amount of service right what that means is if you have a 12 margin you get another eight percent now you're at 20. all right almost doubles how much you make just from that one change all right each of these levers is like that okay so unlimited to two to three times a week you're going to switch to a billing a cadence of weekly bi-weekly or 28-day cycles you're going to change your pricing to match your service all right which means when you make these adjustments typically uh when you limit people's sessions fewer people show up which then means that the number of people per session goes down which means your value goes up and so that means that you can build more believe it or not because people change it changes the value proposition to the end user so just remember that you're not cutting sessions you're adding value by making it more personalized because the sessions are going to be smaller and more controlled okay and so when you do that my minimum recommendation is 167 all right that's my minimum bare minimum bear bear bear bear bare minimum uh which works out to 39 a week all right bare minimum most people will be at 49 a week or 59 a week or 69 a week okay and that's what you can do for those uh and that's what the overall pricing would be so if you did it at 49 a week uh 49.99 don't forget your 99 cents all right which means you're gonna be 199.99 every 28 days all right beyond that if you typically have uh exercise is that you use that you've wanted to get rid of because they take too much space up and they eat too much square footage this is the time to get rid of those things and take them out of the programming in terms of your sessions instead of being 60 minutes cut them to 45 all right it'll also increase your capacity and decrease your payroll so all of these things are things that you can do right now doing it the right way starting with the right price with the right services the right amount of sessions the right margin so that you can actually come out of this profitable or even more profit than you did before every person who goes in and tries to increase the amount of sessions they're doing keep the pricing the same and then have more individualized service that they're going to do is going to go out right the math doesn't support it and so just like if i can give you one thing just trust the math right you will be able to make a profit be able to provide more value your customers and actually get through this so you can grow your gym which hopefully is your goal so um that's uh that's that's part one of how to reopen the right way is structure everything properly um i'll probably make another video on how to how to market and sell before that but right now make sure to get this stuff right if you get the book there's a letter inside the book on how to communicate the changes um you can literally copy it go for it um it's my gift to you uh but yeah if you don't know where the book is just go to alexisbook.com um there's a free book there i think it's on amazon too if you do by the way leave a review lots of love um anyways happy wednesday wanted to make sure i got that out for you and uh keep being awesome [Music] you