I run a CPA firm (Quoach.com, pronounced 'Coach') that exclusively serves affiliate gyms. We exist to help gym owners mature into strong business owners. Gym owners are rockstars when it comes to learning the art and technical aspects of WODs, but may feel afraid to tackle their financial numbers. Here are some common reasons why gym owners are afraid of their numbers – and why they shouldn't be.
- They think the numbers part of a business can be delegated to someone else.
- They fear numbers are too difficult to understand.
Owners struggle to make sense of the numbers.
It's true that others can effectively keep track of your figures, but it’s essential to understand them on your own. Numbers are a measure of the health of a business. Just like we track our back squat PR because it tells us if our strength is improving over time, the numbers for your gym do the same thing. They tell you what’s working with your business over time and what’s not.
Any new challenge can be extremely intimidating to those who don't understand it. Just as every WOD has infinite scaling options to make it accessible to anyone, it's the same way with understanding financial information. You may fear that finances are beyond your scope of understanding, but they’re not.
Even if you do get a great CPA to take care of your numbers for you, you may still feel anxious about interpreting your financial data. Knowing numbers and understanding how to apply that data are not the same thing, and some box owners fear this disconnect. Even though they've been shown their profit and loss statement, they still don't understand what to do with that new knowledge.
Now that we've identified some common fears, let's talk about how to take the fear out of those numbers. Similar to the data we need to track our fitness over time, we need tools to track our financial progress. Using products like MINDBODY and Xero together make tracking your progress easy. They do some of the work for you so that you can begin understanding the health of your business. Following our three points above, let's take the fear out of numbers:
Understanding numbers is key to your profitability.
As a business owner, it’s critical to put in the time to understand how your numbers affect your gym operations. Own your numbers. Tell your accountant that you want help understanding what the numbers mean, and if you can change anything about your business to make your box more profitable.
Summarized financial numbers are all you need.
Many CPA firms will upload a complete Profit & Loss Statement or Balance Sheet online for you to look at. But you don't need all of that to become a mature gym owner. You can understand your numbers by looking at summarized data that fits on a single page. Have a conversation with your CPA so that they understand which numbers matter and truly represent how well your gym is performing.
Numbers like Total Revenue by Month, Total Profit by Month, Retail Sales by Month, Monthly Member Recurring Revenue, Average Profit Per Member, and Coach Labor % to Revenue are great metrics to start with. You can even add nonfinancial metrics like Member Attendance History and Upcoming Contract Renewals. It’s much easier to understand numbers and figures if you break it down into manageable chunks of information.
Having a financial coach can be a game changer for the growth of your business.
Someone who will ask you the right questions and help you interpret your numbers on a regular basis is invaluable. Financial coaching, just like WOD coaching, can give you the cues on your progress and offer guidance when necessary. You can understand your numbers, but you still need help to take it a step further. Don’t be afraid to ask for help until you get what you need to understand your numbers.
You may be a great athlete and coach, but running a business takes an entirely different set of skills. By removing the fear and angst around finances and metrics, teaming up with a trusted accountant, and committing to understanding how to process your gym’s numbers, nothing can stand in your way.