Profit Made Simple: Master Your P&L for Gym Growth

There is a profit and loss document. Now stop before you hit Skip Fast forward . Go to the next, you know, sexy podcast. This is the tool that's gonna give you control that's gonna put you back in the driver's seat. That's gonna make you feel like, I've got this. There was a time years ago in my gym when I was scared to look at my bank account.

I couldn't look at any financial document because I felt like the business was out of my control and I was scared to see what was coming next. Like I couldn't bear to look, so I wouldn't even check my bank account the day before the rent came out. Like I just, I don't wanna know, and I know it seems irrational. Maybe you've been there too, or maybe you actually like tracking your metrics. I hope that's true.

I know some gyms and two brain who like to do that now, but you still have this sense of like, well, let's see what happened last month. Let's hope for the best. Oh, and it's a nice surprise some months and oh, what happened there some months? We wanna get ahead of that. We wanna take control. And the tool that I'm gonna talk you through is the most basic financial document there is the profit and loss statement.

And you don't have to be scared of it, okay? You can go lock yourself in a room now. Go ahead, you know, close the doors, put on your headphones, don't let anybody know what you're doing or watch this video at 3:00 AM so nobody else can possibly walk in on you and see your numbers. Keep it a secret. I'm gonna show you what you can do with a profit and loss statement. This is not gonna be an accounting course.

I'm not trying to turn you into a bookkeeper. I'm trying to give you control of your gym so that you can stay in control, keep the gym growing, and keep growing it for 30 years and keep helping people. Profit and loss statement is just basically your scorecard for one month at a time. And usually you would look at this for the previous month . So it's your previous month's scorecard.

Ideally, you would look at this with your bookkeeper, but just like changing the oil in your car, even though you might never be the one doing the bookkeeping for your business, you should know how to do it. You should know enough that you can pick the right oil, that you can ask questions of the oil technician and that you can make good decisions.

I'll tell you , there's a lot of people who, once they get comfortable with the p and l, and that's really the name of the game here, I want you to get comfortable with it. That means they're comfortable asking their bookkeeper questions. Like, why is that number higher? Why is that number lower? Why is that number so high all the time? Why aren't some of the sales reflected?

That means, okay, I'm, I'm taking control of my business. I got this. And it also means that you don't get the crazy surprises at tax time. What do you mean I'm being audited? What do you mean I own the IRS $2,000? Those things don't happen. If you're familiar with the p and l now , you don't need to be a bookkeeper, but you just need to be comfortable.

Consider this the first step in financial literacy in your business. I'm gonna make this as simple as I can. I'm gonna make it fun. I'm gonna make it easy. A lot of people will watch this and ask me for a template. So, you know, go to gym owners united.com, find me in that group. Send me a DM on Facebook and just say, Hey Coop , can I get that model P and l?

Okay , profit and loss, and I'll send you a copy of this. I'm gonna to show you how to set it up because they're not always the same. You can set it up basically any way you want. We give gyms in two brain a p and l model just like this that they can use, that just ties things in with our dashboard nicely. It ties things in with QuickBooks and it also lets them play around with numbers.

It lets 'em ask, what if, what if I had 20 more clients? What if my a RM was 20 bucks higher, right? When you're comfortable with this, it means you can play with it. This becomes your sandbox. It's no longer just a tool that you're scared of or a report that you have to, you know, kind of look at through one eye squinty. It becomes the steering wheel, it becomes the thing that helps you make decisions.

It becomes the thing where you can, you know, make decisions with no cost . You can practice, you can play, you can, you can say, what should my next opportunity be? Okay? Enough. I'm gotta zoom in here a little bit because I, I just want you to see like what these numbers mean.

So the first thing is on a p and l that you get from your bookkeeper, it , it might look a little bit different than this, but there are a few big metrics that we want to track on your p and l . Like, I wanna know how many members you have, right? A bookkeeper that's not familiar with your gym is not gonna tell you how many members you have. They're gonna tell you how much revenue you brought in.

If those revenues came from like, you know, your memberships or personal training or T-shirt sales or whatever, that's probably it. We wanna go a little bit deeper. And so we recommend that you set it up just like this. Net paying members, you wanna keep an eye on that. The average price of a membership.

So if you just took all of your people paying a membership and you added up all the membership revenue and you divided by the number of people in your gym, that's your average membership price. But if you don't wanna even do that math, just look at your membership tiers. What's the one that most people buy? Okay, plug that number in here. This is not your a RM, right?

Don't include people who are buying like extra personal training or extra supplements or whatever. This is just like the average membership price at your gym . If by the way you want a p and l that's more set up for a personal training studio, just ask me for that and I'll send you over a copy of that too.

The layout's gonna be identical, but the starting numbers will be different so that you've got a better scope, you got a sample, you got a model, right? Then I want you to think about your retention rate. Okay, well, you know, what if my retention rate last month was 98%, how's that gonna affect my numbers?

You know, what, if I focus the next quarter on bringing my retention rate from 90 to 95%, how will that affect my numbers? You can do that. I'm gonna show you how in a moment, how many new clients did you get last month? Like we really do wanna know this and so that's why we have it in our profit and loss statement.

Then, hey, what, what is the average price we charge for on ramp , ramp up , whatever you call it on at your gym, you know, your onboarding process, what do you charge for that? And that is going to factor into your revenue, right? If you got five new people and they're paying 300 bucks for your on-ramp program, that adds $1,500 to your total revenue and boost your a RM up. Oh , interesting.

Next, we wanna track your secondary revenue. So your secondary revenue is the second most popular thing you sell. If the most popular thing you sell accounting for most of your revenue is group classes, then maybe you also sell some personal training or some nutrition or one of those things, right? And they account for a little bit of secondary revenue. All right ? What's your third revenue stream? Tertiary?

Well , so I sell group classes, I sell personal training and I sell supplements. Okay? Supplements are the third biggest revenue stream. That's your tertiary revenue. And then if you do anything once in a while, a special event, a nutrition challenge , uh, you know, a throw down or whatever, put that in here on the months that you do it, you can fill in.

By the way, if you wanna just copy ours, you can fill in any of these gold cells , okay? You can change those numbers and the other numbers will automatically update. Next, what do you pay your coaches per class? How many classes are you running in a week? Okay , you can change those numbers.

Staff overhead is if your staff are employees , uh, and you're paying employee taxes or you're withholding taxes if you're paying , paying a healthcare for them, like what percentage does that add onto your class rate? Okay , your staff overhead percentage, you should probably know that, but if you don't, this is a great icebreaker with your bookkeeper. Hey, I've got a new p and l model.

Do you mind using this every month? And by the way, what is my staff overhead rate? Now, if you're using subcontractors, there's a good chance that staff overhead rate is zero because they're gonna be responsible for their own payroll tax, withholding their own health insurance, et cetera . Now these numbers, 21% of revenue, I just put that in there so that you would see like how important these things are for you.

This total revenue is going to be a sum total of how many members you have times your membership price, plus new people coming in, buying on ramp plus your secondary revenue streams and your tertiary revenue streams and your special event, okay? Your A RM is going to be this number divided by how many clients you have. This is the average revenue that each member's paying , alright ?

What's really interesting here is we're breaking down your revenue streams. You need to know where the money is coming from that's coming into your gym because you could have traps, but more than anything else, you wanna know like, what will happen if I add 10 more clients? Will that actually solve my problem? Because sometimes when you add more clients, you also add expenses.

So the next section after revenues is expenses. Revenue is all the money coming in. Now we wanna break down all the money going out. I'm gonna show you a little trick you might see when you're looking at this spreadsheet, you might notice that there's line 17 here in row 33 here. Where's, where's 18 through 32? Well, what I did here was just hide them on you.

So if you right click, you get down to unhide and all of those things will break out. Now you wanna break your expenses out because you wanna know where your money is going. Trust me there , there's certainly times when you're gonna feel like the only people making money from my business are the government and the landlord, right? And that drives you bananas. And so you wanna know where that money is actually going.

If not, what will happen is you'll have a month that's pretty good and you'll spend money really freely. Let's get a new barbell . Yeah, for sure. Let's get some new signage , let's run some ads. Then you'll have a bad month and you'll be like, oh no, I'm outta money. Crack down, stop everything. No more paper, no more toilet paper, no more cleaning solution. You mop with the hot water.

You know, you turn the heat down, no more supplements, whatever, and you're struggling to make payroll. And this is what I mean by taking control of your business. You , you won't feel like your business is just happening to you, right? Like you're not a victim of your business anymore. You're the master.

So what you're gonna do is break down all these expenses and you're gonna look at your bank statement and you're gonna say, okay, I paid this for affiliation or my franchise fee or whatever. I paid this to my cleaner. I paid this for events, I paid this for insurance. Here's what I spent on marketing ads last month, okay? And this is gonna sum up your total expenses.

Now you can play around with this, Hey, what if I had a smaller space? What would happen? You know, my rent would go down to 3000 and my expenses will go down to this. Oh, that's neat. Okay? And then, you know, you can always just hit undo if you need to.

Now knowing what your expenses are, it helps you take control of those expenses too, because we all have money going out to places that we just kind of forget about where we don't audit. So sometimes you actually can cut expenses like, what am I doing buying all these office supplies? Or can I cut that down? Or Why am I buying 250 bucks worth of supplements every month?

Can I work with somebody from the two brain marketplace and have them put the supplements in for free? I'm selling them on a consignment and keeping a commissioner, whatever, right? So the key here is not like, what can you cut? It's how can you get a better return on your investment? So for example , uh, utilities, you know, how can I get a better return on our utilities?

Well, we could turn the lights off at night, you know, that kind of thing. Um , you know, we could get rid of that old water machine that probably drinks up more electricity than we make back by selling water. That kind of thing. You know, software, boy, I'm paying 700 bucks for this software a month. Am I actually using the features or should I switch? You know, that's what knowing these numbers means to you.

And you know, just looking at this list, I've done this so many times with, you know, hundreds of gyms. Now I can go through this and save you a thousand bucks a month right off the hop, right? Like this insurance number is probably too low, but why are you running events that don't make you money? Like, you know, there's one thing for there for sure. Second, a lot of gyms are just way too big.

They're not using their space efficiently. They've got 200 square feet set aside for this messy, stinky coaches lounge or whatever, like sublease that to a massage therapist, right? So auditing your expenses is a great way to get a better ROI on , uh, on your whole business and make more money for yourself. So now what I'm gonna do is I'm just gonna hide these things again, okay?

So that I, I can keep everything kind of on one screen for you, but you know where they are. The next expense that you have, and this is probably the best investment that you'll ever make, is your staff pay. So you're gonna put in here a couple of things. First, you wanna know what your salaries are. So salaries are an expense that's not tied to revenue.

You pay that money out to a person, whether they bring in any new revenue or not. If the gym gets closed for a snowstorm like minded today, a salaried person is getting paid no matter what. If the gym is closed for a snowstorm and a personal training , uh, coach is getting paid per session, they don't get paid today either. So you wanna put your salaries here. These next two are actually auto automated .

Uh , they're automatic calculations and it's just, you know, your class rate by the number of classes that are being coached by the other coaches. That's what it is, okay? This coach other is your secondary plus your tertiary revenue times four nines , okay? So it's automatically figuring that out for you. This is another salaried role , but it's probably a part-time role .

So if you're paying a cleaner, an admin like that, money goes out every month no matter what. Now again, this is a gold sell , so you can change it if you want to go ahead, see what happens, you know, change it back. If you want to hit undo, I'll , I'll give you a tip. Don't be scared to break this.

Even if you're not like familiar, comfortable with spreadsheets, you can break this and then you just close it, don't save it and reopen a fresh one. Start over or hit undo like nobody's watching. There's no giant scoreboard keeping track of your reps here, right? It's not a video game. You can play with it. Now, down here I've got this one time expense.

So maybe you put two 50 bucks aside every month to buy one new barbell or something like that, okay? You can just put a zero in that if you want to. What this is gonna do now is it's gonna give you the total costs for your gym to run every month.

So if something happened and you had to like just pay to run your gym exactly the way it is , you had no growth, you had no losses, this is what it costs you to run your gym every month. That takes into account all of your expenses that I had broken out earlier and all of your staff expenses, okay? So this is what it costs you to run your gym. Now let's talk about how much you earn from your gym.

So we wanna know a couple things, like how many classes are you coaching out of that? 50, we wanna know what you would be making if you paid yourself as a coach, and then what you'd be making on top of that as a salary. So if you're coaching classes, you should pay yourself the same as what a coach is getting paid to run those classes. And that's what this calculation does. It just multiplies that class hourly rate.

We had 30 bucks up here. You can change that if you want to times the 17 classes that you're coaching. Pay yourself as a coach while you're coaching. Pay yourself as an owner with a salary. When you stop coaching, you're only getting paid as the CEO when you are coaching. You should be getting paid for both, okay?

So if you're not taking a salary on top of what you're being paid to coach, you can make this a zero too . Okay? No problem. See what happens there. And then here's where the rubber meets the road. Okay? So here's what you're actually paying yourself. Now, this is, you know, basically taking your, what you're getting paid for, coaching what you're getting paid as a CEO and then multiplying it by 12.

That's what you'd be making per year. Net income after owner pay, that's the profit. So watch what happens here. If you take away your own salary, all that money is just gonna jump straight into profit, right? That that money is coming in. Either you're taking it outta the business or it's staying in the business, whatever.

But I would rather you just pay yourself honestly, because at the end of the year, and here's the breakdown, your recurring expenses are 36% of your revenue. Your staff pays 35%, your operating profit is 29%. And that's even, you know, broken down here a little bit more. The bottom line here though, is this line, okay? You wanna know like what you're actually getting paid and what's being left over .

There are certainly times where if your business isn't doing as well, you can run in the red, you can lose money for a month and still be okay. But let's, let's try just changing this up a little bit. So for example, let's imagine that , uh, something happened, you didn't prepare for the November exodus and you lost 10 clients. What happens? Well, you can see that revenue changed right here.

And you can also see that expenses basically stayed the same because you're still running the same amount of classes, you're still paying the coaches, the lights are still on, you know, you're still paying for the heat, you're still paying for the rent, right? But if we go all the way down here, what we'll see is like, hey, , you're losing money every year. Now, okay, so what do you do to stop losing money?

Well, you might have to take a pay cut. So what happens if we go down a thousand bucks a month? What happens if we go down 1500 bucks a month? Okay, we're back in the black, we're not in the red anymore. So if you lose 10 clients, basically that means a $1,500 pay cut per month, or you know, you go from 90 some thousand down to 81,000 per year, right ?

Well, hey, let's, let's go back and get those clients back and there's our one 50 clients again, okay, everything's back to normal. We can go right back here to 5,500 a month salary few .

Well that's interesting, but you know what, if we did something different, you know, what if, what if we got , uh, a little bit more personal training revenue, you know, so we're doing 6,000 a month right now, but what if that went up to 10,000? Well, a few things would happen . Number one, this coach other just went up enormously. Okay? It's at 50,000 or $5,000 a month now it was at 3,500.

So now you're paying a coach another 1500 bucks a month. And if that happened every month, their salary would go from 41,000 take home to 60. Hey, that might be enough to make that coach full time . It also means that your income went up pretty significantly. Okay? So, you know, we, we brought this up to 10,000. If we undo that, you know, your annual income should actually be going up here with profit leftover .

Alright ? So you can play around with that. Oh boy, what if we , uh, what if we raised our rates? Oh boy, okay, what if we went from one 50 to one 60 for our average membership price? Well, that brings our a RM up. Our revenue jumps up quite a bit, okay? It was at 30,000. No , now it's at 32,000 6 0 7. That's very interesting. Also, notice that your expenses don't change when your price goes up.

You know, you didn't increase your class rate yet, but you, you can if you want to because everything else is just gonna fall straight to the bottom line. So you've still got this 99,000, but now you've got an extra 25,000 in profit at the end of the year. So you're actually making $123,000 instead of 99,000. And all you did was raise your price by 10 bucks.

The reason all that fell to the bottom line is because you didn't add any expenses. Like it doesn't cost you more to raise your rates when you add more members, though, sometimes it does cost you more because you have to do more classes. So, for example, let's say that you went to 170 members. Well, everything looks great with revenue, but you gotta put those people someplace.

So we might have to add another class three times a week, right? So now we're up to 53 classes. The coaches are getting paid a little bit more here, okay? And what you're gonna see is like, oh , you actually did make a little bit more profit even though your expenses also went up. So, you know, that is quite a big jump from one 50 to one 70.

You do have more expenses, but again, you know, your , your profit went up too . Look, here's the point of all this, by using a p and l, you take control. You can play around with it. Just as I've been playing around with it in front of you. You can, Hey, what if I get to 1 52? Oh boy, hey, oh , my coach is quitting tonight. There's 20 people gonna go with her. What's gonna happen?

Well, first, you know, you dig this thing out, you change this to one 30 , okay? Oh boy, it looks like I'm, I'm gonna be taking a pay cut here. I might have to go down to 3000 a month. Oh, even less, okay? 2,700. Okay? No, that's, that's still too high . Oh boy. Okay, okay. If I go down to 2200, boy, that's, that's a huge pay cut. If my coach leaves and takes 20 members, well , what can I do? What can I do?

What can I do? Well, I can , um, you know, take the social media back myself. Okay? I can save that money right there. Alright , well, you know, that brings me back up to 4,500 a month maybe. Okay? Okay, good. I , that's, that's some of it. Um, what else can I do? I can take a few more of the classes myself. So she's leaving.

But, you know , um, she was, she was taking a lot of classes or maybe she had a salary, right? You know, maybe that general manager had a salary. You know, I can bring this back to zero. And the point is not like everything's gonna be okay. The point is that you go from this feeling of my coach is leaving. Oh my God, what am I gonna do? I , I don't know what's gonna happen to me.

You're gonna lose sleep to my coach is leaving, but I'm in control. There are things that I can do and you know, if, if something bad happened to me, I lost six clients, you know, in a week or whatever, I would open up my p and l, I'd remove those six clients and say, what can I do? Let me give you an example. The month or the week before us Thanksgiving, I had six group clients leave my gym.

That's our biggest exodus since like right after Covid. That was massive for us. And my staff was kind of freaking out like six people in a week. That's insane. What the hell's going on? Like, should we change the programming? Should we change the schedule? Is it Christmas? Is it the market they can't afford their groceries anymore? Like , who do we blame?

And I said, hang on, I've been here before I pulled up the p and l . Let's look at the six people who left. They're all group members, which means they're not like among the highest paying clients at Catalyst. Those are the personal training and semi-private client . So you subtract six group memberships, okay? How many new ones did we get this month? Oh, three. How many clients did we bring back this month? Two more.

Okay, so we're minus one, but we're actually up in revenue because two of the people who joined, joined semi-private. So they're paying more than twice as much as the others. So our head count went down by one, but our revenue is actually up. How many more NSIs do we have booked by the end of the month? Three more NSIs. Great.

So we're actually coming out ahead this month, and I go from the risk of I'm , this is outta control. I don't know what's happening in my business. I can't take this stress. I'm not sleeping, I'm not eating to, I've got this like , it's okay. It's not good that six people left the gym, but it's good that we're still ahead. We still had a good month.

And even if we're not ahead, okay, I can use a p and l to make a plan to fix the problem. Of course, I'm gonna look at retention, of course, I'm gonna try and figure out why these people quit. But having a plan lets you and your staff have confidence in your business. It lets you feel like you're in control. Like you can sleep at night, you can train without distraction.

You don't have to panic, you don't have to undermine your values and go take a job selling software or something like that. Uh , sorry, software. Guys, this is just a little joke. Take a job selling real estate. Like you don't have to panic. On the other hand, hey, if things are bad, it's obvious that they're bad. It's right there in front of your face. You can't hide from it anymore.

And now you know it is time to make a change, right? Sometimes seeing how bad your business is is the forcing function that you need to make, the changes that you have to make. If you don't change your business, your business isn't gonna change. It's gonna always be the same. Change is hard though. We avoid it. We, one of the ways that we avoid it is we don't look at our financials, we don't check our metrics.

We're scared of them because in knowing our metrics, we tell, we acknowledge that we have to change. And change is the hard part. I wanna help you through that. That's what mentorship is all about. It's showing you the path forward. It's helping you get really clear.

It's helping you take control of your business and then guiding you through those changes, helping you through the changes, making the changes as easy as possible. Holding your hand, walking step by step , saying, I've been there too. That's what mentorship is. I really want you to get a mentor. Let's start by getting you a p and l. Go into gym owners united.com . Shoot me a DM on Facebook.

Hey Coop , I could really use that p and l after watching it. Watch this video 50 times. If you want to. Nobody's keeping track. Play with the p and l. Break it 50 times. Nobody's keeping track. You don't have to open up an accounting textbook or sign up for a night school. Just play with it until you figure it out. You'll get it. It's not too complicated. The spreadsheet's already made for you.

You don't even have to do the math. And if you break it, you close it, you start over. Nobody will ever know. I hope this helps you take control of your gym because when you're controlling your gym, you're controlling your destiny. And when you control your destiny, your destiny helps you serve more people for longer and change more lives in our community, in our world . Thank you for your service.

Thank you for changing lives and thanks for taking control.