Ryan Vaughn explains why gym owners should use percentages instead of fixed dollar amounts for budgeting, since percentages adjust automatically when income changes. A financial assessment compares your spending on payroll, equipment, and owner compensation against gyms hitting 20% to 40% net income, showing where you can improve.
In this tip, I wanted to go over a question we get, because in a lot of our tips we're talking about allocating money. Hey, you have an income account, it goes into different accounts. Well, it bears to reason that one of the questions people get is, what— how much of that income do I put into each account? So we like going off of percentages. Because percentages can fluctuate with the income level. If I commit to just a flat amount that I'm putting into each account, those needs might change and I might end up having a distorted amount of money in an account that doesn't need to be. So we like percentages. But how do you figure out those percentages? You do an assessment. So in the book Profit First for Microgyms, we walk you through How to do an assessment step by step. We even have free resources on our website where it will help you run an assessment. What this assessment is going to tell you is how your gym compares to the financially fit gyms that I researched and looked at the financials in order to determine what percentages should be going into these different accounts. I figured Hey, if there's gyms out there that are doing above 20% net income, those are pretty good. And guess what? We found some in the 30s and 40s. What are they doing? How, how much are they paying themselves as a percentage of their income? How much are they spending on equipment as a percentage of their income? How much are they paying their team members as a percentage of their income? So there's an assessment you want to run, and in a quick tip video there's just not enough time to walk you through that, but we do have resources out there. If you don't know where to find them, please shoot us an email and we'd be happy to point you in the right direction. And then once you run the assessment, that assessment will compare your numbers to these financially fit gyms that I looked at, and you'll be able to see where you line up and which areas you Maybe want to focus on and improve. Or maybe it'll let you know, hey, you're killing it, so you should pat yourself on the back and keep saving lives through your providing health and wellness to your members. Okay, if you enjoyed this tip, please share it with a friend, subscribe to our YouTube channel. We appreciate you very much and grateful for your time. Thank you.
