How Do I Pay Myself: Advice For Gym Owners

Hey guys. So we have been surveying all of you and collecting that data, and that is basically the inspiration for the things that I talk about here. So I wanted to share, I wanted to share my thoughts on one of the responses we got. So the goal of this micro gym owner is they want to be able to pay themselves because they can't pay themselves right now after they pay their expenses. And then we also ask, what are 1 to 3 things that you're frustrated about right now with your cash flow management? And this same person said, I'm not really frustrated with my cash flow management right now. So let me highlight this. This gym owner can't pay themselves after paying their expenses, and they're not frustrated with their cash flow management. I wanted to talk about this because this is a problem. If you're not paying yourself enough money, a livable wage, you should be frustrated. Don't let this ginormous superhero willpower that you guys have as gym owners take over or mask the emotion. that you don't really need to be paid. Like, I know that you work harder than other entrepreneurs as a just a general category of gym owners compared to other entrepreneurs. The amount of discipline and willpower and ability to push through tough times, you guys have that. Uh, I think to say— they say you have that in spades. I don't even know what the hell that means, but I think that's a phrase. That means you have a lot of it. And often because you have that ability, you can go months, years without paying yourself a livable amount of money. Sometimes nothing. Sometimes you even will take on full-time jobs to supplement the fact that your gym isn't making money because obviously you have to put food on the table. So I wanted to talk— I wanted to first highlight that that is a problem if that's your way of thinking as well. I can't pay myself after expenses should directly lead to a frustration in the way cash flow is being managed. Now, that's not to say, even as the author of Profit First for Microgyms, I know that cash flow management is not the all Uh, the all-over, the end goal, the only solution to growing your gym. It is a component in your ability to create profitability and long-term wealth and a legacy. Sometimes operations need to be fixed, sometimes coaches need to be replaced, culture needs to be improved, standard operating procedures need to be created, revenue streams may be— need to be analyzed. You need to bring in some other revenue streams, maybe all of that stuff, great, could have a purpose. Marketing can have a purpose. But if you're not managing your cash flow, all the efforts of those other things could be in vain if you're not managing the cash the right way. So in this case, let me give a few tips or ideas, suggestions on if you're in a scenario where after paying your expenses, you can't pay yourself. Because I want that to lead to frustration because frustration leads us to change. It should at least, right? Because most of us don't want to keep in, uh, keep experiencing a scenario that frustrates us. We try to change those. So first step to do is reverse that statement in general. I can't pay myself after I pay my expenses. Okay. If that's the case, pay yourself first. Then look at the expenses that need to be paid. This is one of the reasons why the Profit First methodology works really well, is because if you follow the steps in the order that it's recommended, you pay yourself first. Now, when you're looking at the remaining money left over to cover the expenses, and in this case we know that the remaining money isn't going to be enough, it will not be enough to cover all the expenses. That means your gym is communicating to you it can't handle that load. It's like a new person coming in, uh, who's maybe hasn't worked out for a few years and trying to— they're going to try to PR a 400-pound back squat. They're not going to support that load. Your business, if when you're running the Profit First system and you don't have enough cash left over in your operating expenses account to cover the current bills that are due, your gym cannot take the load of those expenses. It's screaming at you saying, hey, lighten the load a little bit. Let's take some, let's take some of the stuff off. This isn't healthy. So, uh, if you want to do that, which I hope probably you do, um, we never want unnecessary expenses. You got to analyze them, and that does take time. So set aside time. One of the reasons we like the Profit First system is because when you're allocating money from your income accounts into your separate buckets, paying yourself first, as part of that time you're dedicating to allocating money into the different buckets, you're also looking at the expenses from the last 2 weeks or the last week, depending on how frequently you are sitting down to do it. But you're just looking at that last short window of expenses because the expenses are fresh and you can be able to answer the question for yourself. Did I get anything out of this? Is this an investment or is this an expense? We want investments. We don't want expenses. Do I have multiple music streaming services? Do I Have equipment that I don't actually need? Did I fall for the shiny object syndrome? Do I have coaches that are not performing? Am I utilizing my space, my actual space, in every possible way that I can? Do I have enough capacity where I can sublease some of it? Whatever it may be, looking at every single expense— is this a good investment? Even to the thing of like toilet paper. Oh, how much toilet paper am I buying? Uh, is there a cheaper option? Hand soap. Like, I mean, wait, those little expenses add up. In fact, just last week I had, um, Chris Thorndyke on and we were going over some of his numbers and I really liked just the simplicity of the generic statement that outside of rent and paying your coaches, most gyms have $2,000 to $4,000 in other expenses. Let's try to get those other expenses down as much as possible. And the only way to do that is if you actually are looking at what you're getting out of those expenses. Is there a way for you to get the same thing for less money, or is what you're paying for not actually adding to your members' experience, or increasing your ability to bring on new members. So that— so just to recap, if you can't pay yourself after paying expenses, first pay yourself first, then force yourself to use the money left over to cover the rest of the expenses. By so doing, you will identify expenses that are not as important Because if I have, say, $2,000 in the bank in my operating expense account that I can use, but I have $3,000 of expenses, I'm going to pick the most critical $2,000 of expenses to pay right now. The other $1,000, hopefully with the changes we make, we'll be able to afford those. And so the next time I sit down to allocate money and to look at the Bills and the money that I have to pay the bills is the same thing happening again. At that time, I'm going to pay the most critical bills first. You will soon identify the expenses that you keep pushing off, meaning they are not as critical as the other ones that you chose to pay. And if they're not as critical, there's a possibility they're not even necessary. So just— that's just a line of thinking you can use. And then of course, look, if you can't pay yourself enough after paying expenses, or better, like I'm suggesting, pay yourself first, you don't have enough money to pay your expenses, then there's a revenue situation as well. And you wanna look at doing that. You for sure have the capacity to figure out how do I increase revenue and how do I cut my expenses? You can look at both at the same time. You don't have to isolate those. And only do one at a time. So that is not my expertise as a cash flow management person. I'm not going to be the best resource for you to figure out what revenue streams you should be looking at. Certainly we can help you understand which revenue streams are profitable, and, and we have resources like that up on our webpage anyways. So those are some thoughts for you. Ultimately, please Find that desire that you need to pay yourself consistently a livable amount, always. If not, it should frustrate you. So remember, profitability is a choice. Um, have the courage and wisdom to choose it.