By Rachel Cosgrove
Personal trainers are some of the most passionate people I know. We love what we do, we want to help everyone we meet and we have the energy to move mountains.
You’d think this would be a perfect formula for a successful business owner…quite the opposite. Because personal trainers are so emotionally involved with our careers, our clients progress and what we do can sometimes be very to translate into a strategic business owner. One of my favorite truths – When emotions are high, intelligence is low. Learning to compartmentalize and put your business owner hat on is step one.
There are a few golden rules in business that can be tough pills to swallow for someone so passionate about what they do – starting with the importance of knowing your numbers.
So many times I meet personal trainers who are training people for free, giving away their services or not charging enough. They are working 8-10 hour days giving their energy, time and knowledge all day long and barely making enough to get by.
If you are a personal trainer ready to transition to becoming a successful business owner it’s time to get real with some numbers, and I’m not talking about how much weight is on the bar or the percentage of body fat your clients dropped this month.
One of the most important numbers to start to familiarize yourself with is your Lifetime Client Value (LCV) – What is one client worth to your business?
Once you know that you can calculate your future income, expenses, marketing budget, education etc.
Here’s how it works.
Let’s say you charge $50 per session and a client trains with you 5 times per month. That’s $250 per month (or you could charge a monthly membership of $250 as opposed to sessions).
How long does the average client stay with you?
In this example, let’s say that the average client stays with you one year. 12 x $250 = $3000
Let’s say that this client buys a protein shake at $6 every visit. 5 visits per month is $30 x 12 = $360
Let’s also say that over the course of the year, this client does a challenge, another event you are having or buys a t-shirt/water bottle/other supplement for another $100 per year.
That means the LCV of that client is $3000+$360+100 = $3460.
Here’s how we use this.
Without inflation being taken into account, the stock market returns around 6% annually.
Which means for every $100 invested, it will take 12 years to double your money (Rule of 72).
So, let’s say you invest in a $30 book on building your business.
Based on something you learn in that book, if you pick up just ONE client in the next TEN years ($3640 value), you’ll have made 121x your initial investment.
That out performs investing in the stock market.
You run a marketing campaign with a $3000 annual budget. One client in that year yields you a 20% return.
You attend a business course that has an investment of $3640 to attend.
You’d only need to pick up a mere TWO clients in the next 12 months to double your investment. That’s amazing.
Let’s say you hire a consultant for $30K. Yeah that’s a huge investment. But with the information learned from their coaching, you’d only need to get ten new members within a year to get a 20% return on your investment.
Here’s the thing – in this business you’re investing in “Speed,” you’re investing in ideas. Ideas are money in our world. And the cool part is the ideas don’t go away.
Picking up one client per month (at the above example of $3640) adds $43K to your bottom line annually. Two clients per month? $86K.
What if the advice from the consultant or course increased your retention by just one extra month? What if you learned a strong referral system that meant every new client really became TWO new clients.
How much are you prepared to invest if I guaranteed you one new client per week?
That’s 52 new annual memberships at $3640 each. $189,000.00!!!
Until you start to take the time to understand LCV you will have a tough time transitioning to become a successful business owner.
Figure out your LCV and print it out or write it down somewhere so you can see it every day.
About the Author:
Rachel Cosgrove, 2012 IDEA Personal Trainer of the Year, co-owns and operates Results Fitness, located in Southern California open since 2000. She has authored two best-selling books, The Female Body Breakthrough and Drop Two Sizes published with Rodale and created the Drop Two Sizes DVD set. She lectures nationally and internationally on topics such as strength training, fat loss, business and nutrition. A consultant for Nike, she is also on the advisory board and is a columnist for Women’s Health Magazine and has been featured in almost every fitness magazine on the market. She oversees a team of 22 who help her run the gym while she works full time coaching up-and-coming fitness professionals through ResultsFitnessUniversity.com, a resource for trainers to join in to the mission of changing the way fitness is done. Rachel is also a content contributor for the Association of Fitness Studios (AFS).