my Anytime Fitness gym almost failed...

And in that moment, I said, look, if we're going to differentiate ourselves, we got to zero in and double down on the thing that makes us different.

Hey, everyone, my name is Mike Andy. Today I'm going to be sharing with you how exactly I not only saved my gym, but actually made it more profitable. After the COVID 19 pandemic about two years ago, COVID 19 came to the United States and absolutely obliterated the gym industry. We had to close down for three solid months. When we reopened, there were so many restrictions, it was absolutely ridiculous. People have to wear masks. But in addition to that, we had to like do spacers and dividers and it was just absolutely insanity. And then literally after a couple months of being open in that capacity, they wanted us to close down again. We did not close down the second time. I had had enough of it by that point. But for three months, we had to close the doors to the club and we could not accept any payment for memberships that were on a monthly basis. Prior to Covid, we would charge people about 40 to $45 per month for their gym membership. And we had to stop that literally after a week of being closed. And then for the next three months, we did not collect a single dollar in membership dues. So how do we get through that? And then how did we actually, over the past two years, not only come back and save the gym, but actually now be more profitable, make more money in terms of top line revenue, and our margins are much, much improved. So here are the four things. The first one is that what I wanted to do is that when the club opened back up, I wanted to be where we had raised our prices to the point. And this can be used in any business where a customer has to stop when they're making a buying decision, when they're comparing two different products or services and they actually like think like, why is this so much more expensive? In the past, our club had been about $40 per month in terms of cost. Well, our New Year's competition was maybe 20, $30 per month. So it's relatively comparatively the same. And someone would only come to our club maybe if we there a little more convenient to come to our specific location. However, what I wanted to do is actually raise the prices towards like, more 55 or $60 per month to use the gym as a member. Mostly due to the fact that I wanted people to realize that this price discrepancy, they were going to get a different experience and they're going to get a different quality of product by coming to our facility. And so we raised prices literally during the month when we were closed and everyone else was worried about peloton and people working out at home forever. And in that moment, I said, look, if we're going to differentiate ourself, we got to zero in and double down on the thing that makes us different. And we're going to raise our prices, not lower them. We're going to raise them. So I wanted to make sure that the same way that you would take a watch and maybe it's $50 for a watch. Well, the exact same watch that tells the exact same time could be $50,000. If it's just a different brand, it's made in a much more quality manner. And so I wanted to become the Rolls Royce, the Rolex of the gym in our local market. The gyms in our local market could be 10, 15, $20 per month in terms of membership dues. On the low end, I wanted to be on the high end. I wanted people to actually have to stop and not be able to compare apples to oranges. There had to be something different and then use that extra margin to. To do things that none of those other gyms could do. So the first thing was raising prices to the point where people could not compare our product and service against other clubs.

This is what we call the Evolt room. So you got the banner up here and then basically you stand on this, get scanned, and then you get a printout. If you look like this, you're able to see your lean body mass, body fat mass, visceral fat. Just does a whole bunch of really good calculations for scanning your body left and right composition, and then gives you a bio agent, BWI score, a whole bunch of really cool stuff. And you can track this really well. It's better than just tracking just your weight tracks actually like your body composition over the course of time as you're working out. And it's all through bioelectrical impedance. So basically measuring how fast electrical currents go through the body, obviously fat and muscle water are going to affect that speed. So pretty cool stuff.

The second thing that we did the club in order to make it stronger after two years of COVID is that we changed the billing frequency. Now, this is in every business, the determining factor of what should we charge a customer and then when should we bill the consumer. And so in the past, we had charged them on a monthly basis. What that meant is because it's on a subscription model where they have to sign a contract for 12 or 24 months to become a member is that I would get 12 billing cycles for the year. Now what we did is we switched to biweekly because first off, it lowered the perceived cost to the consumer because instead of charging $50 per month, $25 every two weeks, even though it theoretically is about the same amount, it seems a lot cheaper in the mind of the customer. Especially when those biweekly prices that we have are comparable to the monthly prices of our competitors. Now, by changing the billing frequency from monthly to biweekly, we didn't just double the amount of times that we bill someone in the year. We actually made more money by simply charging biweekly. Here, let me explain. So if I'm charging someone monthly, that mean I'm able to bill them 12 times in the year. Now I switch to biweekly, it doesn't go to 24. Do the math. If there's 52 weeks in the year and I bill every other week, means I get 26 billing cycles in the year. Essentially I get two extra billing cycles when I charge on a bi weekly basis. Essentially, if it's $25, that means an extra $50 per customer per year. Which means if I have a thousand consumers, 1,000 gym goers, and I'm able to get $50 from every single one per year, that's $50,000 in extra revenue. And by the way, I didn't do anything. And in the mind of the consumer, $25 biweekly is almost the same as $50 per month. In reality, it made the club an extra $50,000 in sheer profit simply by changing the billing frequency. The third thing that we did at the club was cut out our least profitable customers. Now, when it comes to the gym industry, there's what's called PPV or pay per visit. And these are sponsored programs from insurance companies that typically pay a couple dollars per time someone visits the club. The problem with this is if someone does not use the facility, we wouldn't make a single penny. So even though they would come in, we would sign them up, Maybe we'd make 50 or $60 on the signup and we'd sell them a key fob to be able to get 24. 7 access. Because the money was not coming from them, but rather insurance company, There was no urgency for them to even use the facility, see great results, or become part of the community. Therefore, they might sign up and use the club once or twice every year or never show up again. And we didn't want that for the community, the club, and we didn't want it for the fact that someone could literally be a member and pay us a dollar or $2 per month, while at the same time there's someone else that signed a 24 month contract and is paying us 50, $60 per month out of their paycheck. So I didn't feel like it was fair that one person pays $50, $60 per month and yet they have wait on a restroom or a shower or a treadmill when we got really busy because someone was using the facility that was literally paying a couple dollars to be there. And potentially we might get $10 a month from them if they use this on a weekly basis. So what we did was weed out those PPV pay per visit members. We cancel all the insurance programs. And that made a lot of people unhappy because a lot of these people are older silver sneaker members and individuals that are on a fixed income. So what we did is a compromise is we offered a lower monthly subscription cost for members to switch from pay per visit into an actual subscription and an actual membership that we controlled and was not going to a third party like an insurance company. Another reason why we did this is during COVID 19, when we were closed down, these insurance companies that would have these programs with the gyms literally charged us money to keep the program open and then advertise to our members with free at home videos to be able to keep their workouts going. It was absolutely crazy. A lot of gym owners hated it and it put a lot of really bad taste in our mouths as gym owners. When the people that are supposed to be telling members to come to us, we're telling them not to come into the gym and rather just stay at home, therefore saving the insurance company money, but absolutely not in the best interest of the gym owners. We also cut out trial passes. So in the past, people would always advertise seven day passes that were free. And the idea was that you'd be able to get someone in to use a facility and and they try it out and they'd like it and they'd sign up for a membership. The problem was like literally less than 10% of people that did a trial membership became a member. Yet you'd have to have them sign a waiver and you'd have to make sure that they came in the club only during staffed hours. Now what was kind of funny is the fact that because of COVID 19, we were able to use that as an excuse as to why we were not allowing trial members because all of our other members have a key fob we have security clearance, we have a picture of them and all the rest of it all. Whereas these trial members, we didn't know who they were really, and we didn't want them in the club during the pandemic. Well, we just kept that right on going. We realized that having trial members was not the best interest of the club. It was usually used by students, people on vacation, and people that just wanted a quick workout, not people that would potentially become members down the road. By doing this, it also allowed our staff to focus on our members and not constantly chasing the next trial member, the next person that comes in for a day or two. And they were always the one making the issues in the club and causing the headache. And so we just immediately cut them out, therefore eliminating a lot of the time wasted signing them up on the trial passes as well as cleaning up after them. They were the ones that would leave the bathrooms and the showers always looking gross and we'd have to end up cleaning up after them. So it was just overall win, win. And we kind of used Covid as a guise for getting rid of the trial pass. The fourth and final thing that we did to save the club and actually bring it back to making more money today than it did two years ago is that we focused on training. And when we focused on training, not only did we hire back all the trainers, we actually hired an additional trainer. During COVID when we were closed down, we hired another trainer. The reason we did this is because I realized instead of trying to raise the cost of the membership incrementally by a couple dollars, what I should be trying to do is instead of getting 50 or $60 per month from a member, I should make the value of that customer 500, $600 per month by offering very intense tr, whether you personal training or group training. So we actually more than tripled the price of our group training packages. In the past, we would charge $99 per month to be part of a group training package. We changed that to over $370 per month. After COVID 19, you say, well, why did you do that? Well, all of a sudden we were able to have smaller groups. The trainers were able to spend more time with the member and therefore they got better results. They were held to accountability and they were able to have better scans. We invested in a scanner that did a body scan and would get all of and water weight and all the different metrics of the body. We invested all of that to make the training experience better. You can't just slap a Rolex logo onto a $50 watch and expect it to sell for more. You do have to make the product better. And so during that time when we were closed, not only do we renovate the gym, make it better, buy more equipment, we also purchased things that would make the training experience a lot better for the customer. And we really started to advertise the fact that we were a training facility. We weren't just a hey 247 gym. We were going to really try to focus on selling the customer that would be worth 400, $500 per month instead of just the regular gym goer. That would be about 50 to $60 a month, effectively 8, 9, 10 Xing the amount of revenue we could get from one customer. When you have a constraint like you do in a gym with space, the goal is to maximize the amount of money that you can get from every single customer. For the gym, we only have so much space. It's about 7,000 square feet. You can only fit so many members inside. So once you hit saturation and you filled the gy, your goal shouldn't be trying to sell more memberships, it should become how do I take an existing member and make them of a higher value. So not only do we more than triple the price of our training packages, we also invested in supplement programs to be able to take an existing customer and sell them supplements that would allow them to become a higher value to the gym. Two years after Covid, I'm very happy to say that our team has been able to sell back to pre Covid levels of membership and our training is about 2 to 3x more in terms of revenue per month that we get from that plus the supplement sales. We're now much more profitable, make more money in terms of revenue and looking forward to the future has for the club. If you want other business tips or advice, check out mikeandy.com also if you're looking to start a gym and you want to grow up past half a million dollars in revenue, check this video out here where I give more detailed information about what I've learned over the past few years of owning this anytime fitness location.

Sam.