Getting Raw Ep#36 Larry Cohen- Step into Life

Welcome, it's Richard Mark Toutounji. Welcome to Getting Raw. Today I've got a very special guest with me today, founder, CEO, director of Step Into Life. Welcome, Larry.

Thank you, nice to be with you.

It's a really great honor to be here today because this is where it all happens with Step Into Life, and you've got a growing number of franchises now, the largest Outdoor franchise.

Fitness franchise in Australasia.

Australasia. So you've done something right over the years.

Hopefully so, yeah.

I'm really interested to hear more about your story. The first thing I walked in, we saw— I go up the stairs to your office here and I noticed warehouse straight away. I thought, you know what, you don't really think about when you think about fitness, we've got to have a whole warehouse. But I guess you guys are so outdoor that it's turned into obviously a warehouse. a much larger production when I guess when you got just a single trainer and they've got a couple trainers like—

That's correct, yeah. Well, the Step Into Life franchise model, our franchisees have the ability to on-sell a whole merchandise range to the Step Into Life members.

Yeah.

So we also try to create a sense of belonging in our members and they're very proud and loyal to the brand. So whatever the trainers are wearing, they generally want to wear and we supply them with Things that they can use for their own training like fit balls and rubberized resistance bands and boxing gloves and so on. So the warehouse is where we house everything on behalf of our franchisees so they can then supply. So hi, we're in the Step Into Life head office warehouse in Melbourne where we have all of our merchandise range and our stock that our franchisees use to provide to Step Into Life members.

And this is the new kit, is it?

Well, this is being packed for our franchisees that are launching in September. They'll go through training in August, and our warehouse staff Steve is packing all their initial equipment. So everything from their outdoor signage, everything is included, their first aid kits, all the equipment they use to train the clients. They get given their own branded briefcases and bags. Here's an example of the things they use to promote The moat is a lead box that gets folded up. So every single thing you can think of that a franchisee would need is provided to them in their initial investment.

That's great. So fitness has really turned into a— well, the way I see it, obviously you've got a large amount of not just trainers but also clients that are coming to the warehouse. So each one of those is really getting the Step Into Life You know, touch from one location and from one brain.

Correct. So the Step Into Life concept is a very typical franchise concept in that there's brand uniformity and uniformity of service. And so each franchise, the personal trainer's bubbly, vivacious personality varies, but the system they use and the service offering they use is consistent.

Now, I guess you started before, you know, before the whole personal training revolution, I guess, commenced and everybody's out there, trainers out there doing—

Yep.

At parks and they've got trainers under them. I mean, how did that come about? Tell me the story about that.

Do you want the long story or the short story?

Well, you know, I'd love the long story, but let's see what we can get out of it.

Okay. Well, basically in July '95, Step Into Life commenced where I was doing some outdoor training. I was running a typical personal training consultancy at that stage, doing a lot of one-on-one training, working in everybody else's leisure time. Could only earn what I could physically do.

And still, '95, that's, that's like still very early on.

Yeah, definitely, definitely early on. In any case, I placed an ad in the local paper for some group training, a very small 12 by 2 ad.

Right.

And had over 70 phone calls, which was huge.

Yeah.

And that's how it started. It started off with 3 early mornings a week at a local park outdoors. It then grew to some trainers working for me in different suburbs. But then I started discovering the, you know, being an employer and reliability of people issues. And that's where the idea came to give people a vested interest in the franchise. And that's when the franchising model—

And how long ago after '95 did that start?

Franchising commenced in late '99. So,

was it 4 years of trial and error for you doing it personally?

Totally, yeah, totally. It was trial and error. It was, you know, what, how do I create manuals that other people can follow? It was documenting key performance indicators and criteria and all those kinds of things. And really taking out of my head what I was doing at grassroots level and putting it into documentation and systems that somebody else could follow. I

guess who was the mentor for you in the franchising days? What company and person do you look up to and say, okay, this is what I want to be?

Yeah, I was very fortunate. The first lawyer I got involved with going down the franchising route actually proved to be the wrong person, which was beneficial because I learned some mistakes in the early days. But then I was introduced to a gentleman called Chris Nikku of Middleton's Lawyers. who was a franchising expert and was able to take what I wanted to create from a concept and out of the design of what I had and put it into an agreement and how to structure

it.

So he was extremely beneficial.

So he really helped you, you know, get that path and he put that vision into your head, like bring it to light, I guess.

Yeah, exactly. Yeah, you know, I'll give you an example. You know, when I was trying to create the franchise system, I knew that if I did a certain amount of promotion, promotional activity each week, What the results would be, how many phone calls would happen, and so on. And he said to me, well, you know, you can't put into a franchise agreement, go do 10 hours of promotion, because how are you going to know if they did that?

Sure.

So we had to come up with clever ways of how to, you know, document what had been experienced in the business into the business model.

Okay. And so, you know, it just grew. And it was the— I guess the first— I mean, it was the first of its kind in fitness. Yes. Yeah. Okay. And so that was Do you think that was one of the growth, being first in such a thing?

Actually, the opposite. It was very difficult being first because, you know, Melbourne weather is, as you know, from an outdoors point of view—

Who starts an outdoor business in Melbourne?

And in the middle of July.

Right.

So, you know, people looked at me like I had 2 heads. They thought I was crazy. But the reason why I knew it would work and it would grow was because The members, what we call the members, the public loved it. The social dynamics, the group dynamics. You know, when one person missed a session, the others would be, hey, you know, where were you Wednesday morning? And that whole dynamic was very different to one-on-one training.

Yeah.

And did a lot of the work for the trainer. So, that's why I knew it would work. It just took— it needed time for people to cotton on to the idea of outdoor training, outdoor business, you know.

And how many locations do you have at the moment?

There's 158 franchises throughout Australia and 2 in New Zealand.

And just cracking that market in New Zealand now, yeah?

Yeah, well, we had our first franchise launch in New Zealand actually 3 years ago, but there were some things that needed to be created to grow. So you may be aware we have a master franchise structure and they look after each state, and I wanted to duplicate that in New Zealand. So there were a couple of things. I mean, you know, everyone likes to think of Australia and New Zealand as a 6th state. Don't tell the Kiwis that. But it's very different. It is a totally different market. So I had some things to learn.

I mean, you've got new systems, new, I guess, rules and regulations in the country and stuff like that.

Totally, yeah. And I'm a very firm believer from a business point of view too, you've got to walk before you run. You've got to do the right thing by people and make sure things are tried and tested and work. And you don't just tell people to roll something out that you haven't tested yourself.

Sure. So I guess going along this path, '95, 17 years of this path, there must have been some times when you thought, geez, where is this going to get to? Was it always the vision to grow it as big as possible when you started this?

Yeah, it was always the vision to try and have Step Into Life outdoor group personal training represented in most major communities across Australia. But like any business, I mean, 10 years was not profitable. I was living on credit and believing in the dream. So yeah, there was definitely ups and downs.

But how do you get through that part? Because I think that's a big thing. A lot of people going into business are the same, especially trainers, that they're pushing, they're pushing, they're pushing and hoping that dream pays off one day. Hoping the late nights, the credit card, the no money, the paying the staff pays off one day. How do you get over that point and think, yeah, this is what we've created now?

Well, you know, you just said something that I think is absolutely key, which I think a lot of personal trainers Or business people don't have, they don't have a clear why. They don't have a clear vision or why they're doing what they're doing. They focus in their everyday business lives on the how and the what.

Sure.

And no matter how much you focus on the how and the what, if you don't have a clear why you're doing something, you're not going to get there. Your vision has to be very, very clear and, you know, where you're heading has to be extremely clear. The steps you take to get there is the how and the what.

Sure.

The other thing I find a lot in our industry is this identity crisis. Are you a personal trainer

or

are you a business person? A personal trainer in my mind is the qualification. You're not a personal trainer. You're a business person who sells personal training. And that identity crisis I find throughout the industry.

And that's probably the thing that's killing, I guess, people that are trying to Get the business going, but they can't really be a personal trainer, they're going to be a business person.

Exactly. You need to have, you know, in our industry, if you're a qualified trainer, you need to have the business acumen, the marketing, the accounting, all those things. But the point I'm trying to make is it's more of the mindset of how you see yourself. If you see yourself as a personal trainer, your business will only ever grow to that level.

If

you see yourself as a business person that sells personal training, or your business sells personal training,

It's a very, very interesting topic what you're talking about there because, I mean, that's where trainers— when trainers become or start personal training, they think about that personal training. But I guess that's where your company comes in to actually say, guys, you can be good trainers.

Absolutely.

And you can do what you want to do. Because I think being a personal trainer, people come into the industry, it's very attractive. You know what I mean? It's working with people, with communities. But they don't really think about the business side of it. And I think a lot of people say you've got to be, you know, have more business mind, but, you know, possibly you can just be what you're good at as a personal trainer.

True. Well, look, and again, there's many, many fantastic systems in the fitness industry, but the reason why Step Into Life is successful is because we, we take somebody that's got the right people and communication skills, that's got a personal trainer qualification, we give them our style of training, we give them all the pre-choreographed training programs for outdoors. But the key things we give them are the, the business systems and the business acumen. So we've created a complete business structure that they don't have to have an accounting background or marketing background, all those things they don't have in order to run a successful franchise.

And that's really the, I guess, the key for people wanting to stay in. And I see the trainers that are training with Steps Into Life, they do all have their unique approach.

Yeah.

Um, and, and they're all the Steps Into Life trainers. How do you, I guess, How do you find the right people for your team? I mean, that must be very hard.

Yeah, look, the recruitment process in any successful business is difficult, and we've tried to make our recruitment process more robust and more— I guess not trying to prevent— put in place obstacles for people, but to really make sure they know what they're getting into, and we educate them, and we have orientation days and so on. But the recruitment process starts off with an informal presentation where we We present our entire business model with nothing to hide. And then we move on to an interview stage and we also do personality profiles. We do assessment, trainer assessments to see their, what we call, inter-trainer skills out there in the public. So we really try and go through a process where both we know what we're getting and what they're getting.

And I think it's also important too, I mean, there's so many different fitness crazes all popping up all the time. And, you know, there's all these different things to get into. Put your money into this, put your money into that. But I guess your model, again, as you said, the vision hasn't changed. And if people are serious about the business, they go, okay, well, let's invest into the business and invest into themselves. Is that where you, I guess, see that the quality is coming to as well? Because they're here for long-term, not—

Totally. And look, let's be honest, there's franchise systems in Australia that, you know, you can go and become a franchisee at a major fitness center. But let's be honest, you're not really a franchisee. You don't really own the business.

No, you can't sell the business.

Exactly. If you leave one day, the members belong to the club. You know, Stepping Into Life has a franchise term of 10 years, and our average lifespan of our franchisees is around 5 to 6 years. So it's a partnership. We are not successful unless they are successful. And we don't, you know, we want to recruit people who want to be part of our brand and grow and be successful and be happy. You know, it's not the type of thing we want people to get into for a year and then And when they

do eventually move on after 5 and 6 years, is it— do they then go and sell that franchise? Is that what they do?

Yeah, so they get a return on their investment. It's their asset. They've built up that asset over time. And just like any other business, their accountant will value it based on turnover and profit and so on. And then that's their asset to sell and reap the reward from.

Well, it's good. It makes sense. So you go to work and you've got to get the asset from it and then you get paid. So tell me, what's been the struggles of of your path and journey so far and how you sort of came to this stage. What's been the biggest struggles for you getting going? I mean, are you from a business background or?

No, not at all. I come from a— I was a professional tennis player, born and raised in South Africa and went to the States on a tennis scholarship. Got a degree in exercise science and sports psychology. But in a lot of ways, I actually think my sports background was a huge benefit to business because being a goal-oriented person and taking yourself out of your comfort zone in sport is identical to being in business. You, you're never going to achieve anything without taking a risk and believing in yourself. So there's a lot of commonalities, I feel, between sport and business. But wow, there's been some, some huge challenges over the years. I mean, as I said, for the first 10, 11 years of this business, it was not profitable. Yeah,

that's a long time for a business not being profitable.

It is, it is. I mean, it's all about economies of scale, you know. You have to have enough franchisees and enough franchisees doing well For that reward to be positive.

Sure.

When, you know, in the early days of the business, first 10 years, I invested heavily in software which was not available in the marketplace at the time.

Yeah, of course not.

So that our franchisees can monitor the members and track them and all sorts of reports and so on. So that was quite capital intensive.

Sure.

And then as you mentioned before, you know, the warehouse that you see out there, we, you know, we try to be in the cutting edge of development and And give our franchisees the access to those things to on-sell, and they don't hold stock. We hold all the stock for them,

right?

So they just obviously reap the reward of being able to grab it and on-sell it and make a profit, and then the branding's out there.

So it's been capital, you know, heavily capital to get it to where it is today.

Yeah, largely like that. And then the other struggles have been, you know, the learning curve in franchising. Our franchise lawyer said to me, you know, Like every franchise system does, you're going to choose some of the wrong people in the beginning. And I said, no way, that's not going to happen to me. I'm not going to make that mistake. And lo and behold, you learn, you know, in franchising who you should and should not choose. So that was difficult. But we've also, on the other side of the coin, had, you know, some great success stories and made some business decisions which have really made a dramatic difference to the business.

Where's Step Into Life going now? Because I mean, I see As I mentioned before, there's so many different chains and so many different exercises, prescriptions, and ways to do things. I mean, when you get into the Step in Life model, I guess you've got the clear structures you can and can't follow. How do you keep up with that, the new trends of fitness? You've got the business side down pat, but how's the new trends going?

Well, you know what? The words new trends in fitness, if you really analyze, it's a lot of some of the old stuff being repackaged and rebranded. But so our expertise is in the outdoor space. We're experts in outdoor group personal training.

And if

there's a new trend or a new piece of equipment that's being used, you know, take for example battling ropes or kettlebells. So instead of using kettlebells in the outdoor space, we use handled medicine balls. We've introduced battling ropes. We came up with specific outdoor ropes that suit our business. We have a program we run called Endure It. Which is like our boot camp type style program. So we developed our own boot camp rifles, which are basically weighted poles that all fit into each other so we can do team building exercises.

And these are designed by you guys?

Yeah, they were designed by us. Had them made. They're made out of metal, prefabricated metal. And so, you know, there are various trends and things happening, but we've also innovated our own in the fitness, you know, in the outdoor space.

Sure, sure. Tell me some, I guess, some structures in here. We're in the head office in Melbourne. Each month So when someone wants to master franchise, they have their own office and their own, you know, marketing they have to take care of. How does that work?

Yeah, okay. So you're correct, our head office is based in Melbourne where we are now, and we have a team of 8 in our head office. And about 6 years ago, we had franchisees all over the country, and they knew we were just a phone call away, but they wanted localized support.

Sure.

So the Master franchising is also a very typical franchise structure where you have somebody who has a vested interest in that territory, that state. They provide the day-to-day support, ongoing business coaching and training, and they also have a responsibility for recruitment of new franchises.

Sure.

So, that, that again was one of those business decisions that dramatically changed the business because franchisee performance improved dramatically because it was localized. We have ongoing training. When we roll out new training choreography, they all get together and network and do that together. So there's a lot of benefits to be gained by that localized support.

Well, it sounds great, and I think it's a great success story.

Thank you.

It's really interesting to know that anyway, that's, I guess, trying to get to that end goal, it's important to stick with it and realize that it is a long journey to get there if you want to take it that next step.

Yeah, we need to build fitness professionals and business professionals in our industry. And people who are successful in business, it doesn't happen overnight. And that's why I say we can qualify lots of personal trainers, but what I like to try and give back to the industry is creating successful business people that use the fitness industry space to be successful and use their people skills to be successful.

Excellent. Thank you very much for the insight. We'll put something on the screen there where I guess people interested in becoming part of your team or doing a franchise can get there. So I'll get that information on the screen here. But thank you for your time.

No problem at all. If I could just mention, we do have a work experience program for trainers who'd like to come and try out what we do.

Okay.

And then they can then progress into being an assistant trainer with us and then perhaps the franchise.

So that is, I guess, a method to get them into the model, the franchise model as well.

Yeah. Yeah. So we, you know, let them come along and observe. And there's an assistant trainer program where they can work for a Step Into Life franchisee. And then if they wish to step up and be their own boss and—

What a great model because you don't have to take that investment, actually have a look first and then go from there.

As I said, we're a very transparent company. We want people to be happy and successful. So if they're not happy with what we have to offer—

I think at the end of the day too, you're in here every day and working the business, which is most important.

Absolutely. Yeah, still very passionate about it and love it.

And are you still a personal trainer or not?

I think I'm still qualified.

Registration's coming up.

Registration's coming up. Yeah, look, I ran the First Step Into Life franchise for 14 years. in Caulfield, and then my assistant trainer took it over.

Sure.

So I do miss that aspect, but I love the coaching of our business people as opposed to necessarily training of the clients and members. Thank

you for your time, Murray.

No problem at all. My pleasure.

Thanks, guys. We'll see you next time.