A new client walks into your gym and thinks they can squat. 

Five minutes later, you have pointed out three wrong things with their squat—their heels come off the floor, they've got some serious knee valgus going on, and they can’t make it below parallel without collapsing through the spine.

If you have been coaching for a while, you probably feel pretty confident in your ability to assess anyone’s squat. You know the most important things to look for, like the back of your hand.

In other words, you know the key performance indicators (KPIs) of a squat. And you probably have a pretty good idea of how to fix the common problems as they arise.

When it comes to your business, do you take a similar approach? 

Are you conscious of the key performance indicators to look for?

The truth is, most gym owners and coaches don’t know what they’re looking for. So they have no chance to fix their business. This is equivalent to coaching a squat when you don’t know what a good quality squat looks like.

Teaching gym owners what to look for—the 6 KPIs—and how to fix their business problems is exactly what we do.

And here’s a hint: It doesn’t come down to how many members you have. That’s sort of comparable to someone coming in and telling you they’re a marathon runner: This information doesn’t actually tell you anything about their health….

6 Key Performance Indicators (KPIs)

1. ACV: Average Client Value
It’s this simple: How much are your clients paying you?  

2. Churn / Retention
Churn simply means client retention: What percentage of clients are you keeping year after year?

The Madlab standard is for 80-90% percent retention per year. If you live in a transient city, it might be tough to have 90 percent, as people are often moving away from your city, but anywhere above 80 percent is well above the industry average of 30% and is a great number to strive for. 

Madlab Pro Tip for KPIs 1 and 2:
Your client’s first day and their initial fundamental sessions should be done in a one-on-one environment with one coach and one client, as opposed to in a group. Simply making this change helps gym owners significantly increase their ACV and client retention pretty much immediately.

3. Total coach pay
Are your coaches able to make a professional wage and have a full-time career as a coach? 

To pursue a full-time professional coach career, coaches need to be earning $70,000 to $100,000 a year. If coaches cannot do this in your gym, chances are they won’t last long working for you, and they definitely won’t be an asset for your business’ growth long-term.

4. Dollars per coach floor hour
Are you paying your coaches $20 an hour? $25 an hour? What would it take for them to earn a professional wage-earning this kind of money? Probably close to 50 or 60 on-floor hours.

If you have coached long, you know working 40 on-floor hours a week isn’t sustainable and isn’t what will let coaches become professional career coaches.

25–30 on-floor hours are sustainable. To do this and earn a professional wage, coaches need to be averaging at least $50 an hour. ($50 an hour x 30 on-floor hours x 48 weeks (assuming they take four weeks of vacation) = $72,000

Madlab Pro Tip for KPI 3 and 4:
Compensate your coaches based on a percentage of revenue compensation model, and coach cooperative on group classes, where they get paid a percentage on their own book of clients for all services (Including group classes) instead of by-the-hour or via salary. 

Transitioning to this model is challenging, so we have mentors who will help you make the change seamlessly. 

5. EBITA (Earnings before, interest taxes and amortization)
EBITA is essentially the most effective way to express real profit. 

To have a sustainable business in the long-term, you need to be earning 20 percent EBITA as a minimum.

6. Sellable asset
Do you have a sellable asset? A business you can sell one day for a profit and retire?

This one takes care of itself if the other 5 KPIs are in order. If your clients and coaches are being retained for years, your coaches earn a professional wage, and your business is earning 20 percent EBITA year after year, you will have a sellable asset at 5 X EBITA when it’s time for you to move on and retire. 

Madlab Pro Tip for KPI 5 and 6:
Find a mentor to help you navigate business best practices the way you have devoted time to educate yourself about the technical side of coaching. 

Because if you can fix a squat, but you can’t fix your business, you’re kind of like a mechanic with too many cars to fix, no help to fix them, no profit for your efforts and no end game to sell. 


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