STATE OF THE UNION [ALEX HORMOZI]

Summary

• The gym industry is facing significant challenges, with 25 to 30 percent of independent gyms closing permanently, and this number might rise to 40 or 50 percent.
• Gym owners are struggling due to uncontrollable market forces, such as constraints imposed by the political environment and the shift of consumers to different fitness options.
• In finance, there's a saying that the market strength often trumps the operator's capabilities. A strong market can make a weak operator succeed, whereas even the best operator can fail in a weak market.
• Many consumers have adapted to different fitness solutions due to the pandemic, which means the market for traditional gyms is shrinking.
• Gym Launch is committed to gym owners, not gyms. The goal is to help gym owners use their skills to provide for their families and serve their communities effectively.
• I believe the best opportunity for gym owners right now is to pivot to online coaching, as it offers unlimited lead generation, better margins, lifestyle freedom, and potentially superior client results.
• Online coaching is less constrained by location, time, and lower ongoing operational costs compared to traditional gyms.
• The three primary existing online models before Gym Launch's new model involved outbound messaging, webinars, and online challenges – all of which have limitations and scalability issues.
• The new model Gym Launch supports allows for quick startup, scalable lead acquisition, and includes three roles – sales, coaching, and ownership.
• Sales for the new model are simpler, focusing on selling free trials, supplements, and nutrition coaching, which can be done on a larger scale.
• The online model supports higher client volumes at lower acquisition costs, with greater profit margins and doesn't require physical presence or infrastructure.
• For gym owners with existing in-person facilities, it's crucial to avoid the sunk cost fallacy when deciding how to proceed in the current market environment.
• The current market provides a unique opportunity for online fitness services due to high demand and low supply.
• I encourage gym owners to consider shifting to online services if they want security, consistent client acquisition, and freedom from the constraints of physical locations.
• While Gym Launch will continue to support in-person gyms, the focus is shifting to online models as I believe this offers gym owners the best chance for profitable growth.

Video

How To Take Action

I would suggest pivoting to online coaching as it offers unlimited leads, better margins, and lifestyle freedom. Start by offering free trials to attract clients. You can use the Trainerize app, which simplifies workout and meal plan delivery, and focus on selling supplements and nutrition coaching for additional revenue.

Here's a quick plan:

1. Shift the mindset from gym-centric to serving customers with your skills online.
2. Start offering online coaching services if you haven't already. It can be more profitable than a physical gym. Use social media and online marketing to reach potential clients beyond your local area.
3. Think about your existing skills and how you can package them for an online audience. Adapt your programs for the online platform.
4. Experiment with free or discounted initial offerings to draw in clients. You don't need a big budget; use your current network and social media to get started.
5. Focus on the core services you'll offer – personal coaching, nutrition planning, and accountability – and leverage tools like Trainerize to streamline your process.
6. Remember, it's not about the physical space anymore. Think about how you can provide value remotely. Keep the costs low by not requiring a physical location.
7. Don't let past investments in your physical location influence your decisions now. Consider the online market's potential and how it could benefit you in the long term.
8. Concentrate on building scalable systems, like automating parts of your online coaching with apps and software. This will allow you to handle more clients efficiently.
9. As the market for online coaching is currently in high demand with low supply, take action quickly to capitalize on this opportunity.

By moving your services online, you can avoid many of the hassles and constraints of running a physical gym and open up a new avenue for growth.

Quotes by Alex Hormozi

"In a weak market, a strong operator will fail"

– Alex Hormozi

"Gym Launch is loyal to gym owners, we are not loyal to gyms"

– Alex Hormozi

"Lead generation in a remote environment offers virtually unlimited possibilities"

– Alex Hormozi

"The online setting enables business owners to have freedom with their family and live wherever they want"

– Alex Hormozi

"You will never fatigue the United States's need for weight loss"

– Alex Hormozi

Full Transcript

gym owners uh happy monday hope this uh video reaches you at a good time wherever you're at um this is uh i think this is a very important video that i want to make uh it's been on my mind for probably the last month or two um but it became apparent to me that we needed to um clearly state our position it starts with context of where the industry is at right now and then kind of how uh jim launch sees ourselves best supporting the industry and uh gym owners within it so right now as i see it from the various sources that i've collected 25 to 30 percent of all independent gyms have permanently closed i believe and i said at the very beginning that i thought it would be to 30 but i think i was wrong i think i underestimated how many more gyms would actually not be able to stay in business and so i think that number may climb over the next six months to maybe 40 or even 50 percent of independently owned and operated facilities the reason um that i wanted to start with that is that in the world of investments in finance they have a saying which is in a if you have can pick between a strong operator and a week in a weak market or a strong market with a weak operator in both cases the market wins which is you can be the best you know entrepreneur in the world but if you're trying to figure out something that helps newspaper companies you're probably not going to succeed because newspapers are going out of business and i'm not saying that gyms are newspapers that's not my point the point is more so that just to illustrate growing versus static versus shrinking markets so where do i think the market is going i think the gym industry has a very very rough next year ahead i think that the vast majority of consumers as i said earlier have already had the opportunity to switch to different fitness vehicles i think that the brand of fitness that we have to offer right now given the constraints in the political environment and what we are forced to do whether right or not are our massive constraints on the business right we cannot create the experience that we have wanted to create for our customers we want to create a memorable experience for them and i don't think that the constraints that are there give us that opportunity i also think it creates tons of variability in workforce and labor because we cannot predict uh how if we're going to get shut down again or if it's going to reopen or if there's going to be a spike or there's going to be a new constraint or we have to do temperature thermometers or this type of mask or they have to you know all of these different things massively weigh into and i don't know if you've just to illustrate this for you personally i am not going out to eat at restaurants nearly as much mostly because i just don't feel like dealing with the hassle and i think that that is true amongst many people who are looking at coming back to service-based facilities right now if you're looking at you know if you're a woman and you're trying to get your nails done or you've got your hair done or any of those types of things go in and ask them how business has been right they have the same constraints that you know jim has and many of those people would like to go back and have that desire and yet they have not and so i think what we've done or what what's happened in the marketplace is that we've permanently trained consumers uh to consume or fill this need in a different way and i think just by nature of you know from zero to a hundred if if we had a hundred percent of our clients before this if all of those clients are introduced to a new type of service or a new solution for this need an amount greater than zero will stick with that and so i i think that the market overall uh is shrinking and will continue to shrink for the foreseeable future so um to put this statement open and clear gym launch is loyal to gym owners we are not loyal to gyms my goal is to equip everyone here in this community with the best opportunity vehicle to package their skills to be able to provide for their families and be able to serve their communities in a way that makes them healthier that has been the goal since day one gyms at the time for the last three four years has been a vehicle for that individual which when put together with you know the gym launch system creates a profitable business for the gym owner and creates a superior experience for the customer and helps people get healthy which is the goal to that end gym launch as a company will be pivoting and that is because i believe that the best opportunity for gym owners is remote for a variety of reasons i think that first off from a lead generation standpoint for most small businesses lead generation is the hardest thing in a remote environment or an online environment you have virtually unlimited lead generation you will never fatigue the united states's need for weight loss you won't even fatigue a 50 mile radius for weight loss but a five mile radius is definitely possible right it's much more difficult and i can tell you this right now firsthand on the glx side the people that we're working with for in person versus remote uh they they cycle through the copying creative at three to four times the rate it burns out much faster so there's more effort that has to go in for a lesser volume result at a higher cost uh and the the lead costs if you just think conservatively if 30 of people are not going to like people already have excuses to not going to the gym when they have no constraints but if you add even a little bit of friction towards something that they already kind of don't want to do then that constraint may double and that's pretty much what we're already seeing the lead cost on average across all the markets for in person is about 30 for many people that does not and that's for a free offer right not even paid right that's average now some people might be better some people worse but this is just on average what we're looking at and so when we take these things into account right we can get way more leads at a way lower price with less effort and more consistency factor one factor two the model itself how difficult is it to implement how much margin remains for the business owner uh how does it enable the business owner's lifestyle uh in an online setting or remote setting the business owner can move and live wherever they want they don't have to be in a single area they can have freedom with their family they don't have to show up at the gym at four o'clock in the morning they don't have to be there until nine o'clock at night they don't have to drive in for an appointment to have that person no show and then have another one at seven o'clock at night that they just sit there and wait for right a lot of those things that we've had to deal with as gym owners and small business owners in a brick and mortar setting no longer has to exist all right and very frankly i have always wanted to figure out a way to make online work at scale why because you're no longer geographic constrained you're far less temporally constrained and financially the model is more profitable period and as a like just from the business setting that would probably be enough for me but on top of that many people achieve superior results in a one-on-one setting compared to a group workout setting right many of you have hired tkn have worked with trevor have worked with an online coach whether on the strength side or the nutrition side or body composition or whatever and you did that because you knew the one-on-one attention allowed you to get a better result right if you had to change someone's life and you if they signed on and somebody in your family were going to die what way would you train them if you had the option of group workouts or one-on-one coaching online if you had to which one would you do because if you say group workouts but then you'd start doing the one-owner nutrition that's not the model that's not the question the question is which would you because that is realistically what we're offering in the marketplace all right and so i already said there was enough of a case from a business standpoint to make that argument but on the fitness component side i believe that the actual fulfillment is better for the end user and is more profitable on top of that you have fixed margins in the business you do not necessarily need to have rent now if you have to deal with the fact that you have rent then that's a separate issue but the business model itself is not constrained by the sunk cost of decisions that have been made in the past and the reason that i did not have an online business model until covett hit was one because we didn't have to but two because no model that i could find and i looked at everyone's out there could be done at scale by anyone without a superior skill set without having an authority or having a following or requiring an inordinate amount of effort for example there are three primary models that exist in online today excluding the glx model that i'm going to talk about vehicle one outbound messaging right we have the cold messenger training i bought two or three ten thousand dollar courses i took all the best findings and i put it into a course for 37 right you guys all have access to it fundamentally why is it not something that i see is enormously valuable because it requires effort right simply put you have to spend two three four hours a day outbound messaging people does it work yes does it require a ton of effort yes can you scale that not really right and so that is opportunity vehicle number one and if you've seen all the gurus over the last 70 years the reason none of them have an enormous business is because the vehicle is not that good it's okay right with an okay vehicle you can build an okay business all right so that's vehicle one vehicle two is doing a webinar so it's building out a sales presentation that edifies you generating traffic online to register for the webinar watch the webinar pushing to an application that they then schedule a call with you so you can do a two thousand three thousand dollar plus sale typically those models do not make a ton of money one because the webinar is fatigued two because the cost per application is extremely expensive you're looking at 100 applications many times three some of the people who are who i know in that space who are experienced only get one to one two to one up front on their ad spend with a high ticket sale and that's the people who know what they're doing that doesn't seem like a model that i would scale to others third model is doing an online challenge model what that means is not the way that we're talking about it but they do group challenges so that's where you tell everyone to sign up for a group it's a five-day challenge you make content day one through four and then you make a pitch on day four and try and get a pitch on day three it doesn't matter the point is is that you're trying to solicit people from a free group where you provide value where you're somewhat edified to then get on the phone with you to buy some stuff right and that model is again a very effort effort based model it's very stop and go it's very clumpy um and in my opinion it's very difficult to scale which is why you don't see any massive online weight loss companies that just do these five day online challenges and i'm going to say massive i'm saying real massive not like small personal biases i'm saying real big businesses and so because of that those are the three models that i saw that existed for people who did not have a following and it was not a consistent acquisition model and so i could not put my weight behind it because i knew that if i were to implement one two or three or all three of those together the vast majority of the people in our community would not succeed period it is what it is all right so the reason i like the model that we have now is that after all the trial and error that we've been able to create we can start a new business which is essentially what this is overnight because in a semi-regional marketplace so if the same state is you you have a certain amount of trust that exists with a free trial front end it does not require a tremendous amount of skill in order for you to sell it or scale the sales to someone else try and outsource a three thousand dollar high ticket fitness sale you're not going to be able to do it well i can promise you all right if you're having trouble outsourcing a 200 sale try a three thousand dollar sale it's not going to happen all right so the front end we know that the acquisition is easier because we have unlimited leads that's massive for consistency of business operations and for consistency of cash flow all right on the sales side or so on the lead nurture side allen has already solved this problem at scale up to this point you couldn't get 800 leads a thousand leads a month and have any any any dream of being able to work that lead flow without two to three full-time people not gonna have it right with alan we can do that and we can set the price at fixed so you always know what it costs to get a new customer right on the phone period for the sale itself for a free trial sale someone with very very low skill set can still sell a free trial on the phone it is such a low risk offer and so the magic of the model is the fact that we have now found out after this whole community has tried and tested it that the trainerized app that we've built out my accountability right when paired with a free trial person in the model that we espouse which is supplement sale number one and then abandon hope number two right both of those sales are easy enough that you can scale them and break even or come close to it on the first transaction and then by day 30 you will be able to convert those customers at the same price as you were able to before in a gym setting except you have far more of them you acquired them for less and they're staying at a higher profit margin you no longer have to do sessions there's no rent that you're that you're you're forced to do and ultimately there are many of you who over the last month have built out three or four thousand dollars a month recurring revenue that's in 30 days right for those of you like marcia and hopefully didn't mean to call her out here she's built up 40 000 recurring revenue rawls built out another 40 000 in recurring revenue and she's been doing it as well all right this model if you give it one month two months three months four months it is going to be far superior to the the revenue and profit that you were able to make at the gym except it has no signs of slowing down right you do not have to be constrained by your geographic uh five mile radius if you've had the desire to impact your community in a much bigger way if you've had the desire to not be constrained to the five miles around the location of your gym that's only uh valuable to you when your ads are converting because you have the combination of ads copy and creative and placements that are actually working in this specific market at that time with the promotion made which is real talk how it works right if instead of having all that you can virtually have an unlimited front end and all you have to do is tweak the skills on the back end that you can consistently create because there's only three roles that exist in the model the person who sells the trial up front the coach and that's it right and there's you as the owner and so as long as you and if you wanted to at scale you could have one person just all three right um but the point is is that each of these roles getting someone to sell free trial is not difficult getting someone to convert on a same-day offer they don't even have to pay on that day which is like hey normally it's 59 today it's 49. you don't have to say yes right now or so you don't have to pay right now just say yes right now you want to use the card java file many people can make that sale for the nutrition hey don't need to buy all these things i changed you get this stuff to get started right great most people can make that sale these sales are not complicated but can be done at absolutely massive scale and retain a customer at a 2 000 price point where you can acquire them in high volume very consistently all right and so i need everyone so i wanted to at least clarify this for everyone in terms of where jim watches position is in this marketplace we are going to be serving gym owners and we're going to be serving gym owners in the way that we know best and we're going to align ourselves with the model that's going to make them the most money and very transparently i'm going to be doing this because i believe that i would like to serve a marketplace that's going to grow and make the most money because the more money you make the more money i make and you know that i'm a capitalist at heart and always have been transparent about my intentions right my goal is to run a profitable wildly profitable business that grows fast right and so to that end if i'm in a b2b space i have to align with a model that i believe has the highest likelihood of success and profitable growth for my customers and so for the foreseeable future that is where gym launch is going to be focused we're going to be focused on bringing the online revenue to everybody here and i can tell you that if you have been on the fence it is not going to get easier if you're if you're if you're clinging to in person it is not going to get easier now is there anyone in this marketplace that i believe is better at running in person no why because they all bought my book to try and build their whole temp coaching program right like the business the business mentality the business models behind that system are running in parallel we're using the exact same skill sets the exact same choreography of sales the only thing that's changing is that we're filling through an app instead of in-person workout that's it that's all that's changing and so if you have the same five thousand dollars to spend on marketing if you spend that same five thousand dollars in for online clients you will make more money simply put it is easier right now to get 50 new online clients than it is to get 50 in person clients and i don't see that trend changing any time for the rest of 2020 right and it and the thing is is what i do feel is known is that the rest of 2020 is going to be [ __ ] for gyms in general what is unknown is whether 2021 is going to get any better and so it's i feel like i've been i've been holding this back um i've been hinting at it i've been alluding to it but i have not been able to be transparent in the fact that i believe this is the best model for this community i've been always loyal to gym owners and i believe that this is the best opportunity vehicle for you to package your skills serve your community serve your family and in terms of roi on your time and your capital and the skills that you need to train your team on this model i believe is more scalable more profitable will have higher roi over the next six to 12 months um than the in-person model the the fallout questions that happen as a result of that is well what do i do with my my in-person business so there's something called a sunk cost fallacy in economics which basically means because i've invested xyz before this moment i'm going to use that to cloud the current decision at hand right and so it's like if i've spent uh i'm trying to um hopefully everyone knows what sunk cost is but it's basically you have a cup you have you've made an investment that is irrelevant in the in the variables of the current decision in front of you right and you're using that like i committed to you know like i spent money on xyz and all right hopefully you get the point that being said if you still need to make decisions about it you have a couple of different versions that you can handle this with all right one is that you can simply walk away from your gym and deal with the ramifications of that i don't think that the court systems i don't think that evictions and creditors are going to be hitting hard on businesses that so clearly were affected by this i think that we'll have if there's ever a time that you'd be able to get out of a lease this would be it this would be the time where you would be able to get out virtually scot-free and many of you already have the second solution is that you make enough money in the online setting that you can pay for it because if you think about it you have the same five thousand dollars that you're going to spend you have you're gonna have to spend it on whatever business you're doing right if you spent it on the superior opportunity vehicle you will make more net money doing that and then you can still like you will make more money doing that even though you have this gym as your anchor if you spent five thousand trying to fill the gym up because you have it versus spending five thousand dollars on something else you will make more money and still be able to cover the cost better because the opportunity vehicle is superior think about it let it sink in right and so anyways um my entire my entire goal is always to make people the most money possible is to get is to give them the freedom they want give them the security they desire and i believe that this is the best way for us as a company to do that and so all of my focus will be to that end i do think that we are actually on the precipice and we're currently in a golden opportunity era where there's this huge amount of demand for online services and there's not a lot of supply i don't know how long that window is going to happen but for the people that take action now most of you already have but if you were on the fence this is the time to take that action what you don't know is that many of our seven-figure gym owners the top guys you see in this group have pivoted 100 online some of the guys who hear me talk about their names all the time they've already sold their gyms and they've pivoted 100 percent to just going on because they sell all the math they didn't let their emotions cloud the judgment now i understand that everyone listening to this is human makes emotions emotional decisions and then puts logic to them later so let me just speak to your emotions if you have the desire for more security if you have the desire for less unknowns in the future if you have the desire to not have to worry about acquisition not worry about where your next customer is coming from worry of whether or not your lead cost is getting too i worry about whether you're going to have to have just another creative another home run to save the month right if you if you don't want to have those concerns right you want to be able to travel with your family you want to be able to leave your gym for god's sake you know i didn't take a vacation for five years i never even left because i was so afraid i went back for for christmas and every single year for three straight years came back after two days because i couldn't handle the stress of being gone right and so if you don't want to deal with that i do believe that there is a time winder that we're in right now where the entire marketplace understands now what online training is and there is a massive massive shortage of professionals who have the skill set like gym owners right like us we are all very experienced fitness professionals if you compare us to some guy who's interested in fitness on instagram right or compare us to uh even even just some of your trainers right we're more experienced than they are and so if you want to do the market a favor let people work with the best professionals and that's you because they're going to do it anyways and they might as well work with you so anyways um to wrap this up uh that is what all of my direction is going to be on is going to be on executing the model because this model now is as clean as a whistle in my opinion you don't like this thing is as just about as robust as the original gym loss model the front end offer is compelling we will always be able to get people to sign up for free things for weight loss period that is something i can bet on second do i believe that people can sell free trials at scale with low skill yes do i believe that you can sell supplements to people who want to uh lose weight in a in a in a one step in upsell environment yes do i believe that uh getting people to stay on continuity at 49 a week thirty nine dollars a week fifty nine dollars a week is something they will do for one-on-one training and support yes do i now believe that people prefer or value or get a superior experience from a one-on-one customized uh meal plan customized workouts in groups online yes i do and because of those beliefs that i have and you may not share those beliefs but i've made some pretty big bets in the past in this space and most of them have been right and so i'm asking you to at least factor that in if it's something that you're still on the fence about that you at least consider the the argument that i'm giving you right now um because genuinely my interest is in making you money and so our interests are aligned it's just a question of whether you believe the vehicle that i'm talking about right now is the best way most of you already made this call but that is what we're going to be doing with jim launch and it's been it's been very transparent that the people who run that simple model can scale and can make a lot of money because the only thing you really have to do is just make sure that you're fulfilling the clients using the app that automates 80 of it anyways and that is so much easier than having to worry about trainers sleeping with clients and broken equipment and cleaning out the bathrooms and getting the right music like all of that stuff is gone now or it has the opportunity to be gone if you make the choice um obviously the choice is yours we will support you at gym launch independent of what you choose if you want to rock in person we will help you all right we've done it and i honestly think you're like having seen and talked to most of the people in this industry with half of them being ex-clients of mine slash ex-employees of mine right with half of them being that i can tell you without any drop of of doubt in my mind that we are by far the best not even clubs like there's not like oh yeah we're like we are ages we are eons above and the proof of that if they were as good at business as we are then they would be bigger than us but they are not and so i would say trust the people who've been doing this the longest and doing this the best with the biggest uh biggest reach and biggest data set all right if you want to stay in person we will try and set you up for the best success but given your skill set and your desires and your and your wants and needs i think that that same skill set desires and beliefs would be better packaged in this vehicle the question is just whether or not you want to take the jump all right so anyways uh for those who have made the jump i think you made the right uh the right the right call hopefully this entire video is just reinforcing that belief for those who have made that jump uh for those of you not hopefully this um at least give you some transparency you know why we're gonna be talking more about online why it's going to be my focus and all the clients that we're going to be bringing in are all going to be gyms who want to go online and or you know experienced fitness professionals who want to go online and scale um because now for the first time ever that's possible right you couldn't do this without an authority you couldn't do this without a following before this but now you can so um that is that is my perspective um i hope that provides value to you i hope that provides clarity in the direction of our company and where i believe that the fitness industry is going and where we're going to be aligning our company and we do that because we want to align on the winning side and i think that that is going to be the winning side um no one 50 years from now would say if you're thinking about it known 20 years from now i'd be like man who would have thought that in-person gyms were going to survive this long right that online fitness was not going to be bigger 10 years from now than it is now right i don't think anyone's going to make that argument and so i think that it's um it was time for me to make that that make that line in the sand for us as a business of what we are going to focus on um and that is what we are going to focus on so anyways lots of love um as always we're still going to release plays we're going to release you know the stuff that we do to uh to help jim's because that is what we've always done but i just want to be honest about what i see so that you can be on the same page [Music] you