Cool Telephone Solution: Ring Central

Posted on October 20, 2010 by admin | 8 Comments

We’ve been using Ring Central as our telephone solution at NorCal SC for over a year now.  In the past our business phone number was Robb’s cell phone number.  But as our business continued to grow and we started spending more time on the road presenting seminars we realized we needed a different option.  Having a fixed landline with an answering machine didn’t seem dynamic enough.  We wanted to still be able to answer the phone, but we also wanted our director of training and operations manager to be able to answer the phone in our absence.  We needed to be able to easily forward voicemails as well.  Ring Central has proven to be a solid solution for our needs.

Here is the rundown on what it does for us and why I dig it:

First, you can choose a toll free number or a local number.  We chose a local number because we are a local business.  Our market is local and we aren’t trying to create the impression that we are a national company.  (If you have a product or service with a national audience and you want to appear more established and larger than you are you might choose a toll free number).

Second, you can set it such that when someone calls your number it rings multiple mobile phones at once (you, your partner, your manager, whoever you want answering your business phone). If someone answers it stops ringing the other folks.  If no one answers it goes to voicemail and emails all of you the voicemail.  You can easily see the number that called, what time they called in, as well as allow you to listen to the voicemail.

If you answer the call there is a prompt that let’s you know it’s someone calling for your business.  At this point you can choose to accept or decline the call.  If you accept then you know to answer appropriately: “Thank you for calling NorCal Strength and Conditioning, this is Nicki.”  Or if you are not in a position to take a business call, (you are in a restaurant, in the car, etc) you can decline it and let it get picked up by another member of your staff who is listed on the mobile list or allow it to go to voicemail.

The fact that the voicemails are emailed to you is a super cool feature in my opinion.  It makes forwarding voicemails easy.  Let’s say someone calls to leave a message for one of your trainers…all you need to do is forward that email to that person and they’ve got the message!

All in all a solid option if you want a dynamic telephone solution for your microgym!

RingCentral Mobile – $10 Off First 3 Months any plan

Posted in Business, CrossFit Affiliates, fitness business
8 Comments

Starting a business and don’t know where to start?

Posted on September 28, 2010 by admin | 9 Comments

Welcome to part 1 of a series of video tutorials that I’m putting together!  The goal is to help you learn to model and project and therefore take the guesswork out of the decision making involved in running a business.  Similarly this tool can help provide you with a more complete picture of the path that lays before you if you haven’t yet taken the plunge, but are contemplating opening a business of any kind.

Businesses are usually opened by folks who are passionate about what the business provides, and in the case of a fitness business that means fitness.  As an owner you quickly find out there is much more required to keeping a ship afloat and building a thriving enterprise than knowing the ins and outs of providing a given service (although without a quality product/service we’ve got equal problems).  Things like accounting, payables, receivables, etc can make a person’s head spin if they aren’t your strong points.  Now I’m a big fan of outsourcing that which you can afford to outsource (accounting/payroll, etc) But as an owner you always need to be aware of the full picture of your business.  Where are you?  Where are you headed?  Are you on target?  All of these things can be monitored by the profit and loss projecting tool I’m going to share with you via video.

I’ve mentioned modeling and projections in other blog posts and now that I’ve finally learned some rudimentary skills in this screenflow software I’m going to do my best to get some of this information to you all via video.

Here is part 1 of my video tutorial series.  Hopefully you find it helpful.  Let me know what you think!

Posted in Business, CrossFit Affiliates, MindBody Online
9 Comments

You Sure You Want a Partner?

Posted on September 11, 2010 by admin | 3 Comments

I can’t tell you how many folks I’ve met who relay nightmarish stories regarding the partnerships they entered into when going into business.  Partnerships usually start with blissful ideas of taking on the world with your new business idea (gym, studio, etc) with your best friend, cousin or your favorite workout partner…and unfortunately the typical ending involves hard feelings and a severed relationship, and in some cases even a lawsuit.

Now don’t get me wrong, good partnerships can and do exist.  But they are not the norm. The reality is that partnerships often end very very badly.  In fact there is good reason to seriously evaluate your relationship with the person you are considering partnering with, because odds are it won’t be the same at the end of your journey together as when you start out.

Let’s consider the top 2 reasons why most folks go into business with a partner (or heaven forbid multiple partners) and some measures to take to protect you both from a potential falling out.  We’ll also look at what you might choose to do as an alternative to taking on a partner.

1)   Financial considerations

Starting a business with a partner often allows the business to start with more capital.  If both partners are putting in a sum of money it means there’s more money to work with than if just one person starts alone.  This can mean the ability to purchase more equipment, inventory, be able to show sufficient assets to secure a lease, etc. and therefore the difference between starting the business or not.

Here’s the deal.  If your only reasoning for going into business with another person is financial you are likely far better off trying to secure a loan…maybe even from this same person.  They earn a return on their money and you are free to build and run your business as you see fit.  And as long as you make your loan payments your relationship will likely remain unchanged.

2)   Shared work load

Often there is the idea that the workload of the business will be shared equally by both partners.  This is something to be very careful with.  It may be assumed this will be the case, but often one of the primary reasons partnerships go sour is due to differing expectations on what constitutes “equal workload”.  It is important to delineate roles and responsibilities up front.  Is one individual going to be doing all of the coaching while the other takes care of backend items like the website and blog, maintaining the books, paying bills, etc?  You can save a lot of headache in the beginning by outlining each partner’s responsibilities and job description and putting them in writing.

It is also important for both parties to discuss expectations with the performance of the business.  Many folks new to business begin with the notion that their “winning idea” is going to take off right out of the gate and the money will begin pouring in right from the outset. Reality check: 80% of new businesses fail in the first year and 90% of those that make it through the first year fail by year 5. Of course each situation is different, but in most cases new entrepreneurs have loftier ideas about how quickly their business will take off than is actually the case.

Put it all in writing:

1)   What are each person’s responsibilities/job description?  Who is measuring the performance of each partner and what if one partner is underperforming?

2)   What is each person contributing financially?

3)   What steps will be taken if one individual wants out of the partnership/business?  Will there be any provisions for compensating an early departing partner for their initial financial contribution?

4)   At what intervals will you sit down and evaluate the performance of the business to determine if you are on the path you intended?

5)   Who are the partners?  What role will the spouses of the partners be playing? (this is a tricky one, because often a partner’s spouse will wiggle in and try to be another voice…for good or ill)

6)   How will you raise capital if you don’t have enough between you?  What is each person’s comfort level with taking on debt?

An alternative to the shared workload partner scenario is to simply outsource all of the business tasks that aren’t your strengths.  This will allow you to do what you are good at (coaching, teaching, etc) and not overburden you with administrative tasks. This may require more upfront capital, but in the end you are the one driving the boat and your business will thrive (or not) based on your efforts alone.

I have seen many microgyms with multiple partner scenarios where each and every partner is frustrated.  It made sense in the beginning for a group of 4 or 6 folks to each put $15K in the business (shared financial burden), but then a year or two down the road you find it’s nearly impossible to come to any consensus about any aspect of the business and 1 or 2 folks feel like they are doing all of the work. Making decisions by committee can take forever and may result in decisions you don’t like or agree with and the more partners involved the more complicated and potentially frustrating.  It may seem the easy road in the beginning to share the financial burden of starting a business with multiple people, but in the end many find it to become the bumpier, rockier road.

Depending on individual circumstances there will be many more items to delineate in writing.  Be sure to bring up every possible contingency and lay everything out on the table before you open your business together.  (A good lawyer can help with this and potentially save your relationships!) You may find early on that you prospective partner(s) has completely different ideas about what their role in the business will be.  Hash all this out early on and you both will be happier. Who knows, you may decide to just go it alone.

Oh one more thing…modeling your business ahead of time can help give you and your partners a clear, realistic path for your business to take!

Posted in Business, CrossFit Affiliates
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3 Comments

Robb talks about the book!

Posted on August 25, 2010 by admin | 1 Comment

Check out this great little video of Robb speaking about his book The Paleo Solution!

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1 Comment

Employees vs. Contractors in your Microgym

Posted on August 13, 2010 by admin | 3 Comments

I’ve been getting this question fairly frequently of late:  Nicki, I know you recommend having employees, but isn’t it expensive?  Shouldn’t I just keep my trainers as contractors?

If you have trainers that train at multiple locations (other gyms besides yours) and who come to you as accomplished professionals (you are not providing ANY training nor are you telling them in any way HOW to do their job, and they bring their own equipment/tools to do their job, then maybe you legitimately have independent contractors.  However, this is not the case in most microgyms.

Here’s the deal: the government is on a tear trying to find places to pick up lost revenue.  One of the places they are targeting is the small business that has contractors who in fact should be classified as employees.  If they find your contractors are indeed employees you are liable for back payroll taxes on all the earnings this person has made under your roof.  We’re talking big dollars here.  Big enough dollars that could put you out of business.  It doesn’t matter if they pay “rent” or even if they’ve signed an “independent contractor agreement”.  None of that matters if you are audited and are found to have misclassified your folks as contractors.  Apparently top targets of this type of audit are fitness studios and hair salons.

In the end you really need to make some basic decisions about what you want out of your business.  Do you want a microgym that just makes ends meet (covers all operating expenses) and allows you a place to train? Cool.  Do you have a few friends that are trainers and you all want to run your own independent operations out of the facility, co-op style? Ok, fine.  It’s totally up to you.  In this case I would recommend each person have an equal stake in the overhead and liability (everyone’s name is on the line so that one person is not stuck holding the bag at some point)…although having partners of any kind is usually a horrible idea, so you’d be better off doing the whole operation solo….but that’s the topic of an altogether different post.

If however, you want to build a business that has VALUE and is considered an ASSET (ie not only provides you a place to do what you love, but also generates income, provides a return on your investment (monetary and sweat equity), and is saleable) then you will need to have systems and you will need to have employees to carry out those systems. You will want some uniformity within the client experience.  Obviously all trainers and coaches have different personalities and coaching styles, which is great!  But you will want some integration of basic principles, some continuity in curriculum for the brand new client (prerequisite mobility and movement mastery prior to entering group classes), etc. You will want your folks classified as employees.

Here are some of the most common objections to hiring employees:

I don’t want to bring all my folks on as employees, I don’t trust all of them.

Red flag. Why do you even have them as IC’s if you don’t trust them?  If you don’t trust someone they should not be operating in a professional capacity (representing your business) in the first place. Period.  Bring on the folks that are your top performers and who you view to be valuable to your business.

Hire promising folks on a probationary status and set performance parameters that must be met within a certain time frame.  If they don’t meet them they don’t progress past probationary status. End of line. (Bonus points for you if you know the sci fi reference I just made J)

How much does it cost?

Yes it costs money to have employees.  You must pay payroll taxes and workers compensation.  This is why you must be careful when structuring your pay schedule.  If you have your best paid folks bringing in 70% of their private training you are covering costs (typically around 2.5-3% in workers comp, 17% in payroll taxes) and not really making much money from these sessions.  Especially when you also consider the 2-3% in merchant processing fees if clients are paying via CC. Depending on your group class margins you can afford to have your best folks making top dollar.  Especially if they are pro-active and hustle to bring folks in the door.

How can I pay them such that they make good money and they are employees? I can’t afford to pay benefits.

Most microgyms and small fitness studios do not have the margins to pay employee benefits.  But it also depends on what you are paying your folks. The facility I know of that does offer benefits only pays out 40% of private training earnings (thus there is ample margin to pay benefits)…if you pay your folks a larger % of their training then there may not be any margin for benefits. There are big tradeoffs however as your staff likely gets to create their own schedule and has a relatively fun/relaxed/flexible work environment.

I don’t know how to do all the payroll paperwork!

Outsource it!  It is highly likely you are not an expert at running payroll and calculating and paying all the necessary payroll taxes.  Hire a professional to do this.  You do not need another responsibility or another task on your plate.  There are great payroll companies that make it easy for you to do what you’re best at without the headache.  Your payroll rep will call you every two weeks, you report the gross earnings of each of your staff members and they are paid via direct deposit.  You don’t have to physically be there to sign checks. You can be on vacation and your team will still get paid! Paychex and ADP are two examples of payroll companies that do this. If you are using a business management software like MindBody Online you can run a staff payroll report in a snap and have the numbers ready for your payroll representative.  Easy.

Something else to consider:

A facility I’ve been working with is currently making the move from contractors to employees.  One of the contracted trainers was a fairly flakey individual who disappeared off the scene amidst this transition. Well, one of this individual’s clients showed up wanting his money back for the $800 training package he purchased.  The client gave the money to the trainer.  The trainer split the scene.  The business is still liable to refund the client’s money.  The clients of a business have no idea how you are structured.  And they will always come to the storefront with any complaints, etc.  If you own the storefront any contractor liabilities are your liabilities. Ultimately you are responsible and it’s your job to make the customer happy (if you care to build a good reputation that is).

As you can see, how you structure your business is vitally important, including who you bring on in a professional capacity and the manner in which you build your team.

Posted in Business, CrossFit Affiliates, Trainers
3 Comments

Sales Alone Do Not a Healthy Business Make

Posted on July 25, 2010 by admin | 10 Comments

I recently did some consulting for a Southern California CrossFit affiliate with some serious financial problems.  Among other reasons the problems stemmed from a failure to look at the business’ finances in its entirety.  Sales were reasonably healthy…however the operating expenses and labor costs were such that the business could not sustain itself.

As an example:

Let’s say you use MBO and you run your sales by category report and you see the following:

Group classes $9,000

Private training $16,000

T-shirts $450

Total Sales: $25,450

Looks like a reasonably good month.  So why isn’t there any money in the bank?

A couple of reason’s in this particular instance:

#1 –  MBO is great at tracking revenue in your business.  However it does not track expenses.  You MUST be tracking your expenses in some way. It doesn’t matter how much money is coming in the front end….if your expenses out strip what you are earning you are in trouble. (No different than living beyond your means with your personal finances.)

#2 – What are you paying out in labor to have those sessions/classes serviced?  $16,000 looks like a large sum of money for your business’ bottom line.  But if you are paying out 83% to your coaches, that leaves you hardly anything to cover operating expenses.  How many classes per month in labor does that $9000 need to cover?  What is the margin there? What is the margin on those t-shirts you are selling?

All of the facets of a business can and should be modeled prior to implementation and as a way to track and project growth. Thinking about pricing changes? – model it first.  Want to bring in an office manager? – model it first.  Want to buy an Eleiko bar? – does it coincide with your equipment budget in your model?

Want to learn how to do this type of modeling in your business?  I’m working on a 1-day seminar…stay tuned.

Posted in Business, CrossFit Affiliates
10 Comments

Slated 1099 changes

Posted on July 19, 2010 by admin | 9 Comments

A couple of days ago I was in a meeting where a CPA stood up to explain some new changes regarding businesses and 1099’s.  Somehow this is all a part of the health care reform bill.

So here it is for all of us small business owners:

As of January 2012 we will be required to send a 1099 to ALL vendors who we pay more than $600 in a given year.  Yep, ALL VENDORS.  This includes your landlord, your utility company, any equipment purchases over $600 from the same company, cleaning service you may use, towel service, Costco supplies, etc.  It was estimated that small businesses will be issuing between two to three hundred 1099’s per year.  The exception to this is if you make vendor purchases with credit cards.  Apparently banks will now be reporting all of our cc purchase info to the IRS…

Absolutely crazy!  I suspect that one of the unintended consequences of something like this going into effect include vendors going out of business (small businesses will likely try to consolidate vendors to avoid extra 1099 paperwork and expense) and therefore increased unemployment.  And/or increased revenue for credit card companies as more businesses use credit for these expenses to avoid having to 1099.

Here’s a CNN Money article that explains more on the reform.

Fun stuff!

Posted in Business
9 Comments

To Sublease or Not to Sublease

Posted on July 5, 2010 by admin | 9 Comments

Andrew posted a comment a few weeks back asking for my thoughts regarding subleasing space in his soon to open affiliate to some guys who are interested in paying a portion of the rent in exchange for using the space to train power lifting and strongman workouts.

Here is that question, followed by my thoughts:

I need your help. This is sort of off the topic, however it is regards to business. I am planning on opening up a new affiliate in the next month and have had a number of people who are excited about becoming members of CrossFit Fort Wayne.

One particular gentleman e-mailed me the other day and is very much into power lifting and strongman workouts. He mentioned that he has about 15 other guys who get together every now and then but have no place to workout in the area.

He would like to know if we would allow him to use part of our space with a power rack, platform, and bench. He’s willing to pay a portion of the rent however I’d like your opinion.

I like the idea of getting some extra money and spreading the word, however I do have some reservations. They are as followed:

1. I don’t know anything about subleasing.

2. Insurance. I am sure that our premium would go up.

3. I’m afraid it will change the environment of our box.

4. We are just starting and new to all this!

5. I’m afraid of loosing potential future clients.

6. Contracts. I’m assuming I’d have to write up a new contract.

These are all really spot-on reservations.  First, if I’ve learned anything at all in the last 7 years it is to listen to your gut on all decisions.  Yes, you need to look at numbers, etc. But if there is even the tiniest of red flags waving in the back of your mind you need to bring it forward and take a long hard look at it.  That said, here are my thoughts regarding your situation:

First, I would suspect you would need to thoroughly review your current lease agreement.  Many lease agreements have stipulations regarding whether or not the property can be subleased and you will want to check this first so you don’t jeopardize your relationship with your landlord.

If you decide to bring these guys in you absolutely need a contract or agreement of sorts.  Things like:

  • Amount of rent to be paid by what date.
  • What hours are they allowed to train (you need to consider that even though you may not have 100 clients out of the gate you may get there sooner than you think and you may have a conflict with these guys be taking up prime space at prime time).
  • Conduct and cleaning.  What are their responsibilities regarding equipment maintenance and cleaning up after themselves.  This should be clearly defined (ie. All chalk will be cleaned up, weights returned to proper location, ie.)  Will they have any other responsibilities?  Bathroom maintenance, etc?
  • A provision for ending the agreement.  Let’s say at some point, for any reason at all, you decide you don’t want to sublease to them anymore. Or they may decide they don’t want to sublease from you.  There needs to be a provision that either party can terminate the agreement at any time…or with a 30 days written notice (just throwing that out as an example).

Your concern about changing the environment of your box and losing potential new clients is also a valid consideration.  What is the demographic you are going after?  Is it young male power lifters and strong man competitors?  (Not a typically bread and butter client for most affiliates.) Or is your demo primarily 30-55 year old women who want to lose weight and have a nice fanny?  It would be easy to imagine a scenario in which you have a few middle aged women walk in to check out your gym and see a few shirtless guys chalking up in the corner and think that your gym is not for them.  Not that you need to have a flowery, pastel environment…but first impressions really do matter.

One final thing.  I know it is tempting to offset your rent when you first open your doors by subleasing to other folks, but you should be opening your doors based on what YOU can generate and produce out of your box.  And hopefully you have planned adequately and have some capital to get you started and get you through the beginning months when you don’t have a huge client base.

Target demo?

Posted in Clients, CrossFit Affiliates
9 Comments

Distinguishing between your money and your business’ money

Posted on June 16, 2010 by admin | 10 Comments

I had a meeting yesterday with a local business owner that I am doing some consulting work with and the topic of business checking accounts and owner compensation came up.  It is fairly common for new small businesses to have no idea how much money their business is actually making in a given month.  Of course knowing gross sales is easy enough…but how much cash has the business actually made?

If you pay attention solely to gross sales and the balance in your checking account and spend accordingly you could find yourself in a serious financial pickle. It may seem obvious to keep business expenses separate from personal expenses, but it’s a fairly common thing to let those lines get blurred…especially if you operate as a sole prop.

What have you earned?

It is important to differentiate between revenue that you have “earned” (service provided/sessions serviced/products sold) in a given month versus general sales revenue.  Of course you want to track both.  But for spending and budgeting purposes the amount of money you have already provided services for is what you have actually “earned.”

For example, a new client buys a package of 12 sessions for $600 on the 25th day of the month and comes in and completes 2 of those sessions before the month’s end.  In your reporting software it looks like you made $600 that month and likewise your business checking account has an additional $600 deposit.  However, you only actually earned $100 of that package value…you only provided service for 2 of those sessions. This is where looking at your checking account balance and spending accordingly can get a small business owner in big trouble.  It may look like you have a hefty balance and can afford to go out and buy a new GHD or other piece of equipment, but you need to account for the future demands on that revenue (paying staff, etc).

In the beginning I recommend paying yourself in the same way you would pay a staff member to do the same work.  Even if your business takes off right from the get go…pay yourself a reasonable but modest wage…and allow your business capital to grow.  It’s better to live a little lean in the beginning and allow the business to get its feet under it and thrive than to withdraw too much capital as owner compensation and leave the business lean.  The more cash assets your business has the more options you will have in the future.

Posted in Business
10 Comments

Resurfacing

Posted on June 13, 2010 by admin | 25 Comments

Apologies for my almost 3 month absence of posts.  Also apologies to the folks who’ve left comments during this time…they have just now been approved.  I had no intention of leaving you hanging…I just haven’t been able to bring myself to login as I’ve been in a conflicted place about this blog.

Right about the time of my last post it was brought to my attention that a woman in the “community” was not just using and modifying the On Ramp for use in her gym with her clients.  She started writing and publishing articles and speaking on “community” radio shows about the On Ramp as if it were her original work.  Her website even had the nerve to say: “All content is my original work.” “Content that is borrowed and revised will say so.”  Hmmm….doesn’t appear to be the case.

There are other former members of the “community” who’ve had similar experiences with “community” folks pinching their original content TO THE LETTER.  I guess as they say, “mimicry is the sincerest form of flattery”.  Perhaps that is true…but it’s also really annoying and frustrating. People put hours and hours into the work they create to HELP people…not to have them pinch it as their own work.

My only intention in publishing the On Ramp originally was to help other microgyms succeed faster.  And I guess over the last couple of months I’ve just not been feeling very much like helping.

I’m not sure if all organizations once they reach a certain size also acquire the sort of bravado and arrogance that the one I’m speaking of has acquired…but it seems some of the poison is leaking down the ranks.  Open source in the context of this “community” when it was in it’s nascent phase once meant “Hey, what do you think about this?” Or “let’s try this and see if it works better than that.”  Now that it’s grown to the testosterone injected teenager that it is it appears to mean “I’m a part of this thing you’re a part of so give it up to me.”  Or, “I just joined and I have no f*ing clue what I’m doing, but I’m a badass so I’m going to take your shit cuz you’ve been doing it longer.”

So I’ve just been doing my own thing…and have had a serious disinclination to write and share much the last few months. Instead I’ve been helping and consulting with people I consider friends as well as a local MMA gym…and you can thank both Robb and Megan from Level 10 in Oroville for kicking me in the fanny and bringing me back to the surface.

Fortunately there are always more ideas coming. And in fact I’ve got a few fun projects up my sleeve myself…one of which is re-working this blog.

Have a great Sunday!

Posted in Uncategorized
25 Comments