❗️Setting Financial Goals isn’t what you think it is.
We think of financial goals as “how much money do I want to make!”, or “How much do I need to buy a luxury lifestyle!”
Yet that’s NOT how business leaders think.
The first two modules of our Fitness Business Mentorship lay out the starting financial structure needed to grow your facility.
Here is a glimpse into some of the first priorities when it comes to understanding your finances:
1️⃣ How do you intend to be paid by the business?
It could be a personal income / salary amount, and / or a profit dividend released to you.
But you first need to know how much money you need as a MINIMUM to live securely, and also how much you’d need to pay for someone to replace you in the jobs you do.
To pay your bills, to feed your family and to cover your basic personal living costs. Plus you need to be honest about how many jobs you’re actually doing.
For example, If you’re the gym manager, the head trainer, the head marketer and sales person… you’d likely have to pay close to £6,000 a month to get ALL those jobs outsourced to someone else.
So even though you could LIVE on only £3000/month… you MUST get the company to a level where it can AFFORD to pay the £6k/m realistic rate to get those jobs eventually outsourced.
Otherwise, if the businesses can’t afford that money?
Then YOU are stuck doing that job forever
(Unless you find someone as good as you at all those things, who’ll work for peanuts!)
Most of you will start getting paid with a salary… but will move more to getting paid with profit dividends as your business grows beyond £250k per year (assuming you have healthy margins)
2️⃣ Once you’ve defined your required salary, you can then estimate what TOTAL revenue the company actually needs to make.
Here are some rough guidelines (but you MUST get some help to find your individual requirements. Our mentees get 1-1 consulting on this aspect of their business every month to dial it in for their specific business & goals).
To earn an owner’s salary of £3,000 – £6,000 per month, the company will generally need to make at least 3X that amount – or roughly £12,000 – £18,000 total revenue.
This amount would likely cover VAT, your other payroll, operating expenses and personal income tax payments, and leave 5-10% for clean company profit. Leaving £3-6k for the owner (you).
Most fitpros never pay themselves a great income because they UNDERSHOOT their goals.
They underestimate how much cashflow is actually required to cover all costs, feed profit to he business AND take enough for yourself each month.
3️⃣ Your Break Even Goal
As taught in Modules 2/3 of FBB, the first financial target you set isn’t about how much you WANT… it’s about how much your company NEEDS.
So you need to calculate or estimate how much it costs to run your business now – AND at the level of scale you want it to be to meet the goals we set in step 2️⃣
You also want to keep your operating expenses (OPEX) to no more than 30% of total revenue.
So if you figured out you need around £18k/m total revenue, as the example above, then operating / fixed costs should be higher than £5400 for a lean healthy, fat free business.[30% of £18,000 = £5400]
This would cover your rent/lease, ads budget, operating costs and subscriptions
(But NOT including payroll or taxes)
Once you work out your target OPEX, plus add some tax, and payroll on top, you’ll know what’s the minimum break even point you have to make.
This is your first real target – earn enough monthly revenue that all costs (including paying yourself) are met… even if the company isn’t profitable yet
4️⃣ Move into profitability
Now that you’ve earned enough money to cover all costs and pay yourselves decent salary… then we move onto company profitability
It’s important to pay YOURSELF a salary before the company gets profit, because you do need to live.
And the more financial security you feel , by having personal cash in the bank, the better decisions you’ll make and a more optimistic leader you’ll be.
Your businesses is designed to serve YOU and your lifestyle first.
If you can’t afford to pay yourself what the role requires, because you’re paying other people… then the truth is EITHER:
a) you’re paying for staff you don’t need Or paying them TOO MUCH, and you should get your hands dirty again and do the work til you CAN afford it
b) your Operating expenses are TOO HIGH and they need to be reduced to free up instant pay increase for you
The truth for MOST of you is that both your OPEX and payroll is too high… meaning you get neither a personal income NOR company profit.
You simply started paying out for stuff and people before the company was ready to afford it
(Or you underestimated how quickly you could make ROI on an investment such as ad spend, a new hire or a facility size increase)
If you’ve made any of these mistakes don’t worry. We’re all human.
But now you know what to do so it’s time to take ownership and responsibility for it and make the required changes to keep your business alive.
Let’s have an open, honest discussion about finances.
What are your questions? Or realizations?
And if you feel its time to get professional mentoring & support on growing your business, then lets talk.
PS. if you’re ready for business mentorship, heres how we can help…
1. Enroll in our Fitness Business Mentorship & Mastermind program
If you want to grow your monthly recurring revenue by at least £5000/m , this is for you.
You’ll work with me & my team over 12 months to fully systemize your marketing, your team recruitment & develop your leadership & management skills.
You’ll also work with me live in person at 8 events across the year. This program gives you more in-person coaching & accountability support than any other in the world – guaranteed.
If you’re interested, visit www.justindevonshire.com/ebb-Mastermind for more info
2. Take the 4-Week lead generation challenge…
If you want to get 5-10 qualified leads a DAY from Facebook ads, but without spending thousands each month on expensive agencies or ads managers… this is your solution.
In this 30 day program I share the EXACT Facebook ads system we’re using to generate leads & sales every single day. I’ve used this system on repeat to grow multiple fitness locations over the last 6 years successfully.
The best part is I mentor you through the entire process from A-Z – so you’ll have the sore by step answers to all of it.
I’ll show you our SIMPLE funnel set up (and how to do it in 30 minutes – even if you’re a tech dunce like me!)
You also get our templates, swipes and scripts for every step of the system – from creating your offer, to launching the ads, to closing the prospects into buyers over the phone.
You get the COMPLETE lead generation sales system – and my personal (one on one) mentoring & accountability to implement it over the next 30 days.
This program is extremely limited in spots and the investment will be rising soon. To see how we can work together 1-on-1 to get your FB ads working, go HERE : https://JustinDevonshire.com/4WLG-1on1
3. Join our next Free Tour Event (UK only)
Throughout the year we host a 3-hour business, management & marketing seminar for fitpros – at absolutely zero cost.
This is pure content and NO sales pitches. Giving you the best advice for free on how to grow a profitable and fulfilling fitness business.
To see upcoming dates & reserve your seat tap HERE : https://JustinDevonshire.com/freetour
P.P.S. Here’s that infographic of the 6 steps I promised…