Andrew: 00:02 – Welcome to a special edition of Two-Brain Radio with guest Jason Khalipa. Jason won the 2008 CrossFit Games and is now owner of NCFIT. Over the next 50 minutes, he’ll tell you how he went from sleeping on a couch in his gym to running a business with over 20 gyms and 150 employees. Two-Brain Radio is brought to you by Two-Brain Business. We want you to succeed, so we’re giving our best resources away for free. We want you to add monthly revenue so you can afford to work with a mentor and achieve your Perfect Fay. If you have business questions, our guides have answers. We’ll tell you exactly how to take action that gets results. Download our free tools by clicking the link in the show notes. And now, gym owner and Two-Brain mentor Jay Williams with Jason Khalipa of NCFIT.
Jay: 00:45 – So Jason Khalipa here with us today. Jason is the owner of NCFIT, which started as a small gym with a couch he would sleep on an overnight and it grew to 20 gyms with over 150 employees. That’s right, 20 gyms?
Jason: 01:00 – That’s right.
Jay: 01:01 – Over 150 employees. He’s made every business mistake you can think of and he has learned through hard work and dedication what it takes to succeed. Today we will talk to him about how he scaled up his business and what you can do to scale up your business. So I’m just going to start with a general question. So the folks that don’t know you can get to know you a little bit. So how’d you get into the fitness business? Like where did you start?
Jason: 01:27 – I was introduced—so I started working at the front desk of a health club, a traditional health club, when I was really young. And then I got into sales at that same health club when I was in college. And then I was introduced to CrossFit when I was probably, I don’t know, 19 years old and maybe 20. And then I got really into it. And at that point I knew I wanted to own a gym. I knew I wanted to own a gym, but I wasn’t sure what type. And so when I was introduced this idea of having a coach and a community, et cetera, that’s where it all kind of took off from there. And so I was introduced to a traditional health club. That’s where I started in the fitness career and I started working the front desk when I was like 15, 16 years old. And then basically I’ve been in the fitness space ever since.
Jay: 02:08 – Did you just like, were you just like an avid gym goer, is that kind of what got you into it, or?
Jason: 02:15 – Yeah, I mean my parents used to go to this gym and so I used to attend it as well. And then so I was going to the gym when I was really young, just kinda like messing around. And that’s when I started—I wanted to get a job and so I started working there at the front desk, selling Gatorades or whatever it was. And then that’s where kind of this passion for fitness started to develop.
Jay: 02:34 – And so kind of take us through a little bit of your story of how you got to where you are now. I mean you, you opened your first gym when?
Jason: 02:41 – 2008. So I opened my first gym like a week after I won the CrossFit Games. So I had already signed the lease on our space, but I graduated from college. I signed a lease and then I won the CrossFit Games all within like a couple weeks’ span and we started off in a really conservative 1500 square-foot space that was very, you know, at the time was all I could afford, but all that anybody would actually rent me. Right? Cause I had no credit, no credibility, I had no money. And so it was really tough for people to want to lease me 5,000 square feet or whatever it was. So we started off with 1500 square feet and back then there was no Rogue Fitness really. So we started just building our own rigs, doing our own stuff and kind of grew from there.
Jason: 03:30 – And we went from one location, we then expanded from that location. Six months later we went to a bigger one. About a year later we went to a bigger one. And at that point, you know, CrossFit was very different than it is today. At that point, there was a lot of people that are, you know, I think I caught it at a good time when people were really interested in it and you were able to get away with a kind of a warehouse, more kind of old-school approach. Nowadays there’s so much competition that it’s not the same thing anymore. So I was able to build out for, you know, $5,000 a space whereas nowadays that’s not even possible.
Jay: 04:04 – So like, OK, so it was different back then. You started in a small space. How’d you get to the point where you were ready to move? Like what did you do? How did you get the clients?
Jason: 04:13 – Well, I mean my first lease, they would only give me a six-month lease. So what happened with this guy is I couldn’t get anybody to give me a lease because I was, you know, I was 21 years old, I had no money, I had nothing and no one wanted to give me space. And so I found a guy who happened to own a property and he went to the same college as me. And so he said he’d give me six months. And I said, OK. So he gave me a six-month lease and so I was forced to basically outgrow that space in six months. Because I had to show some basic financials for the next space. So from there we went to 2,000 square feet. From there we went to bigger and bigger and bigger.
Jason: 04:53 – OK. So this is where I really want to dig in because you have a tendency when we talk you’re like, yeah, we just did this and then we did this and then we did this. How the hell did you get to the point where like, OK, I got the six months that you’ve earned enough money so that you were able to go into the next space? What did you do?
Jason: 05:10 – I mean at that point in time, first off, everything aligned. Meaning I had a strong why, I knew why I wanted to be in business. I was credible; I had just won the CrossFit Games. I had been in the fitness space since I was 15 years old. And so a lot of things kind of added up to me feeling confident. And then aside from that, like I just had a girlfriend. I wasn’t married, I didn’t have any kids.
Jason: 05:34 – And so I basically slept at the gym and lived at the gym because I had to get, in the gym or out of the gym, getting people in the door. Right? I mean I would do anything possible. I’m talking door to door, I’m talking flyers, I’m talking Starbucks waiting in line talking about it because for me, literally the ability to pay my bills or not was specifically aligned with growth of that business. And so within six months we got to 110 members and we were able to—or maybe even more than that and we were able to outgrow that space and then move on to the next one.
Jay: 06:07 – Right, right. So it was just anything you could think of to get people in the door.
Jason: 06:12 – Yeah, I mean cause you got to remember, you know, a lot of the guys in the CrossFit space right now, and some of the owners that are listening, you guys and myself are very passionate about programming and coaching and whatever and like that’s cool. It’s very, very important, right? Product on the floor is what we’re selling, but we also need to be selling. Meaning that when I got into the fitness space, I aligned this CrossFit mentality where, you know, it was all about the coaching and the community, but I also had a sales and marketing background by selling gym memberships in a conventional gym. So I tried to bridge those two together. Right? It’s all good and well to provide a phenomenal product on the floor. But if no one knows about it then it doesn’t do you any good. And so you could be the best coach in the entire world, but unless somehow you’re out of your gym telling people about it, then you’re just going to be servicing three people instead of being able to potentially impact thousands.
Jay: 07:03 – So the primary thing that you were doing was just knocking on doors or was there anything in particular, do you find like that thing worked better than the other stuff?
Jason: 07:10 – You know, honestly Jay, there’s nothing sexy about it. It’s just doing the fundamentals and doing them really well. Meaning right now before I got on the phone with you, I was doing my, I do like weekly business calls with gym owners just for 10 minutes just to say what’s up, check in, see what’s going on. I put these on social media. 50% of the ones I did this morning got on the phone, meaning I called 83 gyms two weeks ago and 33 of them answered their phones. It’s just the basics. If someone calls you, return the call or answer the phone call. If someone emails you, get back to them, because back then and even today it’s even worse, someone’s going to call your gym and then three minutes later they’re gonna call another gym and another gym and another gym. But if you pick it up, if you professionally engage them, if you track that lead, if you do all the fundamentals, that’s how you grow the business, one member at a time.
Jay: 08:04 – So it’s picking up the phone basically.
Jason: 08:05 – I mean, Jay, I mean, dude, guys, if you’re listening to this right now and your business is open from 8:00 AM till 5:00 PM or whatever—what business do you know of where if you call they’re not going to answer their phone? I mean that’s weird. Or that if you walk in they’re closed between the hours of one and three, like that’s weird too, right? I mean, you should be open when you say you’re going to be open. It’s just these basics I think done really well is what’s going to lead our industry to thrive.
Jay: 08:38 – OK, so kind of get us to where you are right now. So you’ve basically hustled, answered the phone, talked to everybody that you can, grew your gym, kind of expanded, expanded, and now you’re at a point where you have 20 gyms. So you know, there’s a lot of stuff that kind of happened along the way. What was the sort of, you know, give me an example of like a make or break point along the way where you just like if I hadn’t had done this or if I had done this—
Jason: 09:10 – Yes, there’s a few things I think are really important for your owners to pick up on here. First off, like I know that what I’m saying sounds very basic and it is, it’s just aligning a sales mentality with, you know, a coaching and a community mentality. It’s just both. You can’t have one without the other. Meaning you need to have a phenomenal product. You need to service people really, really well. That above all, right, you can get hundreds of people to come into the gym, but if you don’t service them well, then you have a problem, but also if you’re service is the best in the world, right? But you never tell anybody about it, then how do you ever grow? And so I think there’s gotta be this blend and I think that’s what we’ve been focused on for a really long time. For us, you know, we opened up in 2008 and we started to continue to grow. Then in 2011, at that point, I think we had three locations. We opened our first location was in Santa Clara. Then we had some key staff that needed an opportunity and I didn’t want them to go seek it with other people. I wanted to do it with them. So then we opened up a gym in Mountain View. Then after that we opened another gym in San Jose. And what it was was we opened new locations when we had coaches that needed opportunity and we wanted to provide it to them, and when we saw an opportune space, right? And one of the challenges I see is that more is not always better. When you go from one location to two to three, to four to five, it’s not always that easy. If you have one location that’s doing pretty well and you open a second, I would encourage you to take a step back for a second and before you open the second, especially nowadays, compared to back in the day, nowadays, your first one needs to be bursting at the seams.
Jason: 10:50 – It needs to be a completely optimized class schedule. And you need to have a coach where you feel like if you pull yourself out of the first location, that location will still be successful because you’re gonna need to go put energy over here and you don’t want to build a resentment against this other site and have your members get pissed off. And so what was really important for us is you become like more of a mayor at this location. And then you become a mayor at this location and you have key staff at each one that’s more of the operator. And you’re kind of around high-fiving and chest-bumping, but you’re not just the figurehead. If you’re the figurehead of your gym, then all of a sudden you move on to another one, people become resentful. And so you need to build people up over here before you try and open up a second one. So we opened up more locations, then we got into corporate wellness, which really expanded our business. We got into corporate wellness in 2011 and we started expanding particularly with a company called Western Digital. They were a big client of ours and that’s what really grew us internationally. And so then we started growing internationally and hiring staff globally and yeah.
Jay: 11:54 – Yeah. I mean what you’re talking about is, we call that the icon problem, where it’s basically like if everyone’s looking to you for the inspiration or the coaching, then you’re never going to be able to expand beyond the limits of your personal abilities. Right?
Jason: 12:09 – Yeah. You know, I just got the phone with someone who coaches seven hours a day, and that’s fine, but it’s hard for you to see the forest through the trees, and it’s also hard to scale a business if it’s predicated 100% on you. And so something that you want to do is you want to hire an assistant coach, have them just come and assist your classes. Then after that, let them lead the class and you assist. And then after that, let them lead the class without you assisting and you’re just walking around high-five and chest bumping, then eventually you can not even be there and it’s fine. That process takes about six months, you know, if you really want to do it right.
Jay: 12:43 – So one of the more common questions we got in the group was really about hiring. So tell me a little bit about when you started hiring your first employees.
Jason: 12:52 – Well, I mean, hiring our first coaches was maybe I think six months into the business, if I’m not mistaken. I recognized that I needed to allocate more time to focusing on the business. And not just being like, not only cooking the food, but also, you know, leaving the food to someone else to cook and allow me to focus more on the growth trajectory and the vision of the business. So we started hiring a coach. We started paying them an hourly wage. If I could do it over again, you know, we used to do 1099 because I didn’t want to pay the taxes or whatever the reason was. If I could do it over again, I would’ve W2’d them from the beginning. I would have had employment contracts. I would have had all that set up from day one, and there would never be any trade outs.
Jason: 13:36 – It would be all, you pay me, I pay you. If I could do it all over again, that’s where I would’ve started. And then as our business grew, we started then needing to specialize. And so one of the areas where some of your owners might be at, and I learned the hard way, was about five, six years ago. At this point, our business was relatively large. I mean, we were doing significant amount of revenue and I was still trying to keep up with things I had no skill set in. And so I should have delegated and hired an expert in a particular field earlier and it would have helped—.
Jay: 14:09 – What were you trying to keep up with?
Jason: 14:11 – I mean, particularly in this case, this conversation was about finance and operations. Yeah. It was just way over my head. I mean, at that point we were doing, you know, like I said, a decent amount of revenue and I only knew if we were making money because the bank account was going in a vertical direction. I knew nowhere where the money was going. I didn’t know anything. And here’s the biggest problem. As the owner, you only have a set amount of time, let’s just say it’s, you know, 12 hours in a day or 20, whatever, even if it’s 20 hours in a day, if you’re allocating, you know, hours to something that someone else might be able to do in 30 minutes, right, now all the sudden—whoops. Yeah. You’re not driving the biggest return for the company. And so something I’ve had to reflect on a lot is this idea of like if the company was a separate entity, right? Completely separate entity. I didn’t own it. It was just a C Corp separate entity. How do I as an employee of the business drive the biggest return for it, and whatever that is, I need to allocate my time there and anything that takes me away from that, if I can, I need to delegate to other people because it’s my responsibility as the founder and the CEO to allocate our team’s resources to what’s going to drive the biggest impact.
Jason: 15:25 – If you are the best at, let’s just say marketing, sales, business development, well you need to be focused on that. If you’re the best at coaching, OK, cool, but then who’s going to go focus on these other things, right? And so it’s important for each of us to say, hey, let’s look at it from a third-party view. If you’re sitting there doing QuickBooks for six hours a week, is that really the biggest return? And I’d also say the same thing obviously about programming, right? For me, if I’m spending 10 hours a week or five hours a week programming for our gym, is there a better way for me to utilize my time to follow up with cancellations, track new leads, stuff like that.
Jay: 15:59 – Yeah. This was actually my next question cause it’s one of my favorite stories that you told me. I mean, how many gyms did you have at the point where you realized you needed to hire someone for finance?
Jason: 16:11 – Probably, I mean, like I told you we were doing, you know, we’re doing seven figures in revenue and I knew no idea what we were doing, right?
Jay: 16:22 – Extra T-shirts sitting in a warehouse?
Jason: 16:22 – Oh, the T-shirts was the worst man. Oh yeah. We had t-shirts stuck in inventory. I mean, it’s just the challenge is is that I was trying to be a Jack of all trades instead of just honing in my skills on where I could drive the biggest impact. And at first it can be super scary for owners. It is, because to hire these people that are uniquely good at other things that you’re not uniquely good at, it’s going to be expensive. And it’s really scary. It is. You know, it’s scary when you hire someone at a salary level that makes you nervous. It’s not that scary to hire a coach. It’s a little bit scary because you’re giving up some of that, you know, ownership, like you’re giving up some of the classes, but when you hire someone on a salaried basis is very scary, but that’s the only way you’re going to move to the next level. If you hire the right people, they’ll pay back their salary in 90 days.
Jay: 17:18 – So one thing that I’m sure comes up often when people ask you about business is you were a Games athlete for many years, and obviously that contributed to some early success, but how much does it contribute nowadays?
Jason: 17:29 – I mean, it doesn’t really contribute. I mean, even in the early days, maybe you could get some people to come in and check out the gym because they’re excited to, you know, let’s just say in 2008, seven, nine, 2000, 10, 11, whatever. But if they meet me or they meet our staff and we don’t embody that positive culture, the coaching mindset, whatever, then they’re not going to retain, our retention is gonna be terrible. And so I think this concept of thinking that competitors are going to grow your business is false and because the people that are coming in seeking that are few and far between. And if you as the owner, for me in particular, I think yes, it’s helped our business a little bit, it surely hasn’t hurt. But what’s really helped our business is having really good qualified people coach classes and having different people in different lanes to focus on growing the business. And I could be the best athlete in the world, but if someone comes in and I treat them like shit, they’re not going to sign up.
Jay: 18:29 – Yeah. There’s tons of Games athletes with failing gyms out there. So you talk to tons of gym owners—
Jason: 18:35 – And on that note, just real quick, you know, you talk about gym owners who are failing because they—but it’s also where your attention grows goes things grow, right? So if I’m a Games athlete and I’m spending four or five hours a day training, well then what am I giving up for our business? I’ll give you a great example. Last year I competed at the Rogue Invitational. It was important for me. I felt like it was something I was looking forward to. This year I’ve decided not to compete because we have a lot of things going on as a business and I can’t look at our employees in the eye and say that I’m doing the best for our business if I’m training four hours a day to try and win the Rogue Invitational. That becomes selfish, right? All of a sudden that’s time away from my family, time away from the business. And as a CEO, it’s my responsibility to put people in place to be most successful; well me working out four hours a day is not doing that. So if you’re a gym owner out there and you’re spending more than an hour a day training, you gotta take some evaluation on where time is best suited and you need to take your personal agenda and separate it from the business’ agenda. I think that’s really important.
Jay: 19:43 – Right. Yeah, that’s a, that’s really important. So you talk to gym owners on a regular basis. When you’re talking about the collective, what kind of trends are you seeing out there and what are some of the biggest problems facing gym owners right now?
Jason: 19:55 – I mean, the biggest problem is we are in an industry that has a very low barrier to entry, but we’re in a very high learning curve. Meaning dude, you could get a gym started for 50 Gs or whatever it is, maybe even less. You know, I started our first one with 10,000. That was 12 years ago so it’s a lot different, but you could open up gyms with a low barrier to entry and I just talked to a gentleman on the phone 20 minutes ago who—people become super passionate about what we do. But just because you’re passionate doesn’t mean that you should open up a business. And so that’s the biggest trend I’m seeing is that a lot of the guys who’ve gotten into it a couple of years ago who were passionate, they’re now recognizing that it’s not living up to their financial expectations and it’s becoming tough. Or they have partnership agreements with five partners and they’re recognizing that maybe this wasn’t the best thing to get involved in. My recommendation for owners would be to treat it like a business, and just like any other business, you have sales, you have marketing, you have finance and you have to create appropriate expectations for the entire team.
Jason: 20:58 – For a lot of years we would run this business like, hey, work hard, get paid more, or hey, go out there and go coach a great class. But we never explained to them what does that mean to provide a great class? Where am I—you know, what does the trajectory look like for our team? And if you don’t have these systems in place, it’s tough because you’re going to lose a lot of coaches because they’re going to be with you at the age of 22. When they become 32, they have different goals and aspirations, and unless they can see that growth with your company, they’re going to leave and you can’t get mad at them.
Jay: 21:29 – Right, right. OK so a few more questions then I’ll get to some of the submitted questions. If you were to start all over again from scratch, nobody knows who you were, right? Very little resources. What are the first few things that you would do?
Jason: 21:45 – Would I be starting today or I started 12 years ago?
Jay: 21:47 – Starting today.
Jason: 21:50 – I would ask myself, OK, is it good timing? Why am I doing this? What am I uniquely good at? Right. Those are the three things I’d ask to start off with. I’d also ask what is the model? What’s the model? Meaning the CrossFit model, there is no model, meaning there’s no set equipment list. There’s no set square foot list. There’s no set, you know, price per square foot you should be paying on rent to generate the revenue you need. What is the return on sales we’re shooting for? How does it look like from a structure perspective? What I would do if I could do it all over again, is I would have asked myself these questions, right? I would say, hey, how many square feet do I need? Do I need 10,000? Well, why do I need 10,000? How am I going to optimize 10,000? Do I need 5,000? Right?
Jason: 22:33 – What is the business model? You look at any other fitness franchise or license or whatever, and each one of them has a set of rules or set of guidelines because they’ve found that that’s what’s best optimized, right? You look at a typical Starbucks, it’s gonna be similar size, typical Peet’s, similar size, Orangetheory, same. F45, same. All of a sudden with CrossFits you have these major extremes, right? You have small ones, you have big ones. What is the model we want to go out with? What is the programming methodology we want to align with and how are we going to create financial stability? That’s what I would be asking myself.
Jay: 23:07 – OK. So you ask those questions, right? And you get to a point where you’re ready to open a gym. How big is it? How do you get people in the door? Like what are you doing?
Jason: 23:20 – I think there’s two models and this is just, again, this is just my perspective. I think you’re either at 2500 square feet total space with about 1800 or 2000 usable. Right? And the rest is like front desk and and changing rooms and bathrooms. Or you’re at, you know, four or 5,000 square feet with two-room model where you split it up and you have a wall in the middle. And the reason why I say that is because if you are a coach to class ratio, you’re looking at maybe one coach to every 15, at the most 20 athletes. So if you agree with that and you think that’s a good ratio, well then why would you want to space that’s 10,000 square feet? If you have 10,000 square feet, unless you have multiple classes running, which is tough without any walls, then what we say is you could accommodate one person per every hundred square feet with a barbell in hand.
Jason: 24:09 – Now if you get rid of the barbell, you could accomplish one person per 50 square feet, but then all of a sudden your quality might diminish because you’re coaching to class ratio. So where I’m going with this, if you have a 2,000-square-foot usable space, you could accommodate 20 people. Let’s just say. I think that’s a good coach-class ratio. So now you’re being efficient with your payroll labor. I also think that if you look at how many members you could have in 2000 usable square feet, we’re saying anywhere between maybe 250 members would be a good target goal. That’s a good size community to keep it close-knit but also generate enough revenue, and then you can go open up a second location, do the same thing. Third location, do the same thing. When your locations get really big and your communities get six, seven, 800 members deep, it becomes a little bit more challenging to create that close-knit group. So I think smaller locations, 15 to 20 minutes apart from each other is a better model than these bigger sites.
Jay: 25:07 – So you would have basically 2,000, 2,500 square-foot-location. Would hire a couple of coaches right away, or would you be coaching everything? Like what would you be doing?
Jason: 25:22 – If I didn’t have the resources to hire coaches and understand W2 employees, et cetera, I’d be pretty nervous. I would start off with, I would be there from 5:00 AM till 9:00 PM every fucking day. Right. And I would be outside the gym and shaking hands and kissing babies as much as I could, but I would have other people that would actually be coaching some classes. Right? I would coach some of course. But if I’m coaching a class, I can’t be answering phones and answering emails. If I’m just present there, whatever, I could also be doing both.
Jay: 25:53 – Right, right. OK. And you would get to a certain point, like some sort of number and then look to open a second location?
Jason: 26:01 – Yeah, I mean for me, you know, it would be 250 members and you’d have a key staff that needed an opportunity.
Jay: 26:09 – What is one business habit that you do differently or more consistently than anyone else?
Jason: 26:17 – In our industry, I look at this like a business. I look at this like we need to continually raise the bar, look for opportunities because my children going to college is dependent on it. And the children of the guys I’m looking at right now in the office is dependent on it. And it’s not a hobby. It’s not a game. And I take it really seriously and it doesn’t mean we’re not providing a premium product. Doesn’t mean that we’re not having a good sense of culture and community. That’s not what it means. Just because you talk about money, financials, doesn’t mean you’re anti culture and community. It means you’re all about creating trajectory for your team. Right? And now how many more people can we impact if we go from one employee to five to 10 to 20 to 30 whatever, right? These are very important things, and I think that a long time ago in our industry, for some reason money and talking about growth became like a bad thing. It’s not a bad thing. That’s what helps us stay sustainable.
Jay: 27:15 – Yeah. One thing I’ve noticed in the industry is like it’s either one or the other. Either you’re a scumbag that’s always talking about money and trying to sell stuff. Or you are a martyr who is not talking about money.
Jason: 27:27 – Yeah, and you could be both, right? I am all about going downstairs, talking to people. Let’s have you know, social hours, let’s go do that. But wait, let’s make sure the company can actually afford these things and can actually afford to pay people. The only way we’re going to get there is if we go drive sales.
Jay: 27:50 – All right. So what is one skill every business owner must learn to level up?
Jason: 27:57 – How to have tough conversations.
Jay: 28:00 – I was expecting you to say sales. Why tough conversations?
Jason: 28:03 – Because I was talking to a gym owner this morning and she has one of her coaches that’s undermining her coaching. So meaning she would be coaching, another coach would come in and they would say something else. And before it festers into something bigger, she needs to take that person out to coffee and say, hey, this is how I’m feeling and let’s squash this, let’s find a way to move forward. Right? But if you don’t ever have those conversations, they fester into something bigger and bigger and bigger and they become cancerous for the organization because people feel the vibe. And so if you want to keep the vibe positive, you’ve got to have tough conversations.
Jay: 28:38 – Awesome. All right. Before we get to the rest of the questions, you started a program called the NC Collective, which is focused on delivering programs to improve the client experience for gyms. Tell us what it is and where this idea came from.
Jason: 28:50 – Yeah, I mean, so as you said, we have 20 locations with 150 coaches, and I started asking myself, how are we going to keep consistency not only from the 6:00 AM class to seven to 10 or whatever, but also how we’re going to keep it across multiple sites? It was really important for me. So we created our own app, and we created our own app for our coaches. We didn’t do this as a business. We did this for us,where every day you see the warm-up, the in-depth session plans, all this stuff, right? I mean, I’m talking scaling, you name it, plus daily videos. And these daily videos go out to our athletes and they also go out to our coaches and they’re our way of—we say to ourselves is man, our coaches get their Level 1, Level 2, whatever. But then how do we continuously give them stuff to learn on a daily basis?
Jason: 29:36 – And so that’s what we’re looking at is it’s not just programming. Anybody could give you a 21-15-9. What we try and give our coaches is coaching development tools. So when they look at where they’re at today compared to where they’re at a year from now, we want to see progress in that and we’re trying to scale that through our digital products. And so we were doing it for ourselves and we staffed up, we had like eight full-time people on it and we’re like, man, we should probably start selling this to other gyms because we had the scale to do it at a very high level. Right. We put out, I don’t know, 30 videos a week. We put out, there’s three unique workouts every day, actually five. We have such a scale, why don’t we just help other gym owners and provide this to them to free up their time to go grow their business.
Jay: 30:23 – Yeah. I visited and checked out one of your video shooting sessions. It’s pretty cool the way you set it up. It’s just you explaining the workout and doing it for different levels for coaches and for athletes. It’s pretty detailed.
Jason: 30:36 – Thank you. I appreciate that.
Jay: 30:41 – All right, so I’m going to get to some of the questions that people have posted. And if you’re on this Zoom call, you can also post some questions. So I’ll start with one from—so Sean McQueen says, “Running as many gyms and things as you’ve got your hands in, what measures do you put in place to keep quality and the best service possible?”
Jason: 31:00 – Well, I mean, I think we do—so we look at KPIs. So we do monthly performance reviews. So NPRs. How are we performing, how many cancellations, how many new leads, what do the financials look like? And we start looking at trends and seeing how we can improve per location. So that’s one thing we do is NPRs. If you’re not doing that with your team, it’s low-hanging fruit, super easy. You just, you create a package every month and in that package you hit these certain metrics. But on top of that, it’s our collective, it’s our app. I mean, every single day we’re putting out more content than anybody else in the industry for our coaches to keep a consistency. So those are the two things we’re doing that other people aren’t, which is—well, three things. We’re onboarding our coaches with our in-depth apprentice and intern guide. We’re doing NPRs every single month. We’re sitting down with our team and looking at, you know, who canceled, why did they cancel? What’s our follow-up process, what does everything else look like? And then it’s the daily app. Right?
Jay: 32:00 – How do you prioritize your day with having so many different things going on? How do you determine what’s urgent versus important? So you personally.
Jason: 32:08 – You know, I’m really fortunate that our business has gotten to a scale where I’m not as much in a day-to-day operations necessarily. I’m more like big, you know, big business. Where are we going in the future? What are we trying to do? And so my day really gets segmented. I look at it like the AMRAPs, right? So I’m AMRAPing with you guys right now. You don’t see me on my phone doing anything else. I’m just AMRAPing, fully focused with you. Then I go work out, then I go home with the family, then I’m at work, whatever. I segment my day and compartmentalize it and I try to get the most out of it when I’m there.
Jay: 32:43 – OK. So Anne Oxley asked a few different questions. So this is a simple one. How have you structured your NCFIT in terms of CrossFit affiliation? Like one owner per affiliate; how did you do that?
Jason: 32:51 – So we have five locations that are open to the public and we have 15 that are corporate owned, like corporate sites that are closed to the public. The five that are open to the public, each have a different licensee, each one. And that’s how we’ve done that. So it’s like my wife, my mom, my dad, a friend, whatever. And you could have a separate operating agreement with that individual that you could have it. But yeah, so for us, we don’t affiliate all of our sites. On our website and whatnot, we don’t utilize the CrossFit mark. But we do affiliate for other reasons, but we do not utilize the CrossFit mark on any of our anything.
Jay: 33:37 – OK. So taking your gym from one to multiple, did you take any investment and how much ownership of NCFIT is still yours?
Jason: 33:46 – 100% and no, we have not taken on any outside funding. Let me answer that though. Like I think that there is a myth, especially in the Bay Area, that you need to take on funding and whatnot. Nowadays, maybe it’s different, but if you really bootstrap, you know, when we first started, you bootstrap everything. Then I worked for CrossFit HQ. I used the seminar money that I earned on the weekends to to help support us. Then we got corporate contracts. There is a way you could do it and you could self-fund it. It just will take you longer. The time to take outside funding is when you think you have such unique opportunity that you have to do it today, not tomorrow, not next week, but now. Then maybe you could go seek outside funding. But taking money from other people starts to skew things because people don’t just give you money out of the kindness of their heart. They give you money with expectations aligned with it. And so if you have a vision for your business, you need to make sure that whoever you take money from also aligns with that vision. Otherwise there’s major problems at hand.
Jay: 34:49 – Yeah, absolutely. Where do you see NCFIT in the next 10 years? Are you in it for the next 10 years or do you have an exit strategy?
Jason: 34:56 – You’re going to see some things coming up in the pipeline that I think are gonna be really phenomenal for the space and for what we’re doing and I’m in it. I mean, what else am I going to do? Look, I got into the fitness space when I was 15 years old. This is what I love, this what I love to do. And you know, if you—I mean, this is what I love to do and this is what I’m also uniquely good at. Right? And so I’m uniquely good at it and I love doing it. So why wouldn’t I just keep doing it?
Jay: 35:29 – If you were the owner of another gym, what would be the number one idea you would steal from NCFIT? You can’t answer Collective.
Jason: 35:36 – It would be our mindset, right? It would be our mindset that we’re treating it like a business and not a hobby. I mean that in itself is just such an important thing, is going at it with a business mentality where it’s not some mom and pop lemonade shop that’s popped up on the side of the road. Like that’s for fun and that’s fine. And we do a lot of philanthropic things through this business for sure. But our business is not a philanthropic effort. Our business is to generate revenue to then eventually do these other philanthropic things. I think for anybody getting into the business right now, it’s not a nonprofit. If you want to do nonprofit, that’s fine. Just set that up separately. This is a for-profit business designed to provide jobs for people and to impact members’ lives. And that’s a mindset shift that I think people need.
Jay: 36:26 – I love that. So a few questions about the Collective. So this was asked multiple times. People really wish it integrated with SugarWOD. Is it going to integrate with SugarWOD?
Jason: 36:36 – Yeah, we will eventually integrate with SugarWOD. You know, right now we’re with Wodify, we have a few other partners we’re discussing with and we have our own app. I really love our app. I think our app is super user friendly and I would highly recommend it. I mean, look, if you’re a gym owner out there and you’ve been listening to this whole talk and you’ve seen some value from the things that I’m sharing, I could assure you with 100% confidence that our Collective will level up your business. It will, because it’s going to free you up just like it’s freed me up. Like you don’t see me as the founder/owner programming for 10 hours a week. We have a team that does that and if you have a team that does it and you could provide in-depth plans for your team or for your members, go for it. Keep doing what you’re doing. But if you’re a single owner/operator and you’re spending valuable time doing something you could pay a fraction of the time for and you could actually go out there and follow-up with cancellations, I think you’ll see a huge ROI very quickly.
Jay: 37:33 – Do you plan to create a movement library for reference?
Jason: 37:39 – We already created it. It should be up on the website by December 1st.
Jay: 37:44 – So this is Nicole. “I love the 30 and 45-minute class ideas. How have you implemented those into the gym and schedule?”
Jason: 37:52 – Yeah, a good way to think about it is that we have three like core offerings. And then two additional offerings. Our 30-minute class is less complexity, 45 incorporates a barbell, and then 60 is more traditional, complex gymnastics, complex weightlifting. And so with the increased duration of the class, it allows our coach to develop more skills or for the athlete to warm up more. And so therefore they could kind of progress in this complexity ladder. And so for us, we’ve implemented it, like for example, right now at our gym, there’s a 30-minute class that just finished and then a 45-minute just starts. And so if you have two rooms, you can run concurrent classes, but if you have one room you could just try and offer a 30-minute class at times that you think are valuable, and leading into the new year is a great time to do this because you can give people gift certificates to get their friends in the door and it’s a low barrier to entry.
Jason: 38:44 – So instead of having these complex gymnastic skills or whatever, you just give them a dumbbell, a kettlebell and a rowing workout, and you can get new people in the door. And if it’s a new class offering and you haven’t offered it before, you could offer it for free for a month or whatever it is. And your current members won’t get pissed off because if you’ve never had a 9:00 AM and you add a 9 AM, they can’t get mad if it’s free for the, you know, 30-day pilot program to see how successful it is.
Jay: 39:08 – Right. Yeah. A couple of people asked, how do you compress a class into 30 minutes and what has to go?
Jason: 39:13 – Well, you reduce the complexity. I mean, Jay, when’s the last time you did a workout over 30 minutes long?
Jay: 39:17 – Not often.
Jay: 39:21 – Not often. So if it’s not—so it’s not the workout duration that’s holding a 60-minute class. It’s the fact that you want to develop skills or warm up for heavy loads. So it’s not, you know, if you don’t have skill set, if you’re not doing rope climbs or snatches or whatever, and if you’re not lifting heavy loads, then a 30 minute could be an appropriate timeline for what you’re trying to do.
Jay: 39:44 – What are the numbers on people who prefer classes under 60 minutes to the standard hour?
Jason: 39:49 – Well, I mean for us it’s very skewed because our legacy is in traditional GPP 60-minute classes. That is still the predominant force here. But in Asia and our other sites, our Burn program, our 30-minute class, is far more popular, especially in corporate settings. And so I think time will tell. But right now our 60-minute classes are definitely the most popular. So I don’t want to get the wrong impression, but I think in the future we’ll see a shift. I think we’ll see a shift as functional training has become more you know, popular, right.
Jay: 40:24 – Can elite athletes who do their own thing in the corner coexist with a gym dedicated to serving the general population?
Jason: 40:32 – Probably not. I think they should have a space for, during open gym for sure. I think open gym is a no-brainer. But I think that these people can become very cancerous and they can start creating their own niche of people. I also think that, you know, if they’re in the corner snatching and you’re trying to coach, it’s very, very difficult. And I think those are conversations like the one I was talking about earlier where you just need to have a difficult conversation and just say it like it is. And that’s one of the reasons why we created NC Compete. So at our gym, we never had a competitors’ track. It wasn’t, you know, that big of a deal to us, but people started utilizing other programs like Invictus or whatever. And so for us, we created our own competitor track that was focused around our 60-minute class. So our competitors are focused on, they have a before class or after class, but they’re required to take our 60-minute class. So they’re still a part of our community.
Jay: 41:34 – So one last question and we’ll get to the ones we have in our chat here. What systems do you use to establish relationships with clients when the gym membership is so large?
Jason: 41:44 – We have some type of CRM system that we utilize. I don’t know what CRM we use, I could find out for you guys, but primarily what we do is the general manager that’s responsible for that. So each of our sites has a site manager. Some of our sites have—two sites have one manager across two sites. And what we do is that person during the monthly performance reviews is tracking everything. So they’re tracking how many leads you get, how many cancellations you get, and you’d be surprised, if you track these things on a weekly basis, you’d be amazed at the results. Anybody listening, if you’re not tracking your leads and cancellations on a weekly, monthly basis, you’re totally missing out. Because what happens if I have a meeting with Jay and on Friday I’m responsible for showing him how many leads we got this week and how many conversions we got, and I show Jay that I got none? Well now he’s going to hold me accountable to go out there and try and get some. And so I’m going to be more creative in that process.
Jay: 42:38 – Yeah, you’re going to do something over the weekend.
Jason: 42:41 – Yeah, that’s right. And so even if that’s your significant other, you know, set up a weekly reoccurring meeting where you pull out a bottle of vodka or something and you say, hey, this is how many leads we got, this is how many conversions we got, and you start looking at trends. Oh, I had 30 new leads, but I only converted one. Hmm. Maybe my on-ramping process isn’t as efficient as it could be.
Jay: 43:04 – OK. So Jesse asks, when you say key staff that needs an opportunity, can you explain how you put together an opportunity as far as business structure and partnership layout?
Jason: 43:13 – Yeah. So two things I’ve learned the hard way is if you’re really good at coaching, it doesn’t mean you’re a good manager of a site. So there’s different skillsets. You take a coach who’s really all about coaching, right? And you try and put financial expectations on them or growth or whatever and they just get turned off. And so it’s really important that whoever you do partner with, you could see something in them where they’re business minded. If they’re not business minded and they’re just an exceptional coach, that’s fine and that’s great, right? But that shouldn’t necessarily be the person that’s going to be running and operating a gym for you guys. That’s important. For us, we have not structured any revenue share or profit share or partnership agreements. We keep it super simple. We pay you a premium for what you’re doing and that’s what we do.
Jay: 43:59 – Who is responsible for driving sales?
Jason: 44:02 – The site manager. So not not the head coach, the site manager.
Jay: 44:11 – And the question was what software you use; we didn’t know what that was. And then what reasons do you affiliate?
Jason: 44:18 – We affiliate so that if we do want to use the CrossFit mark, which we don’t, but if we do at times, right, we have the ability to do it. A little bit of a tip of the hat to Greg for what he’s been able to create and providing a business that has provided for a lot of people here. Those are probably the two main reasons, I think, you know, and the cost is not, for our business model, is not a huge number. Now, if it was a huge number—I think that everybody just has to do and evaluation, say, hey, does it help, hurt or is it neutral in our business? And if it helps then keep doing it. If it hurts, then you should probably switch things up.
Jay: 45:02 – OK. So Kevin asks, “What is the most effective way to break into the corporate wellness space?”
Jason: 45:10 – The most effective way is to run a really successful gym. And then in there start creating conversations with your members who work nearby and have them do warm intros to you to HR, whoever it is.
Jay: 45:22 – Right. Let’s see. How do you do payroll? Schedule everyone into a program every two weeks, how do you keep payroll from growing too large?
Jason: 45:33 – You know that, you can tell. I think we use Paychex or ATP right now. One of the other, I don’t know exactly which one. See, this is a great example where I’m focused on the growth and the trajectory of where we’re going. I’m not focused on our payroll. We have another team that does that and we used to use Paychex when I was doing it. I think we still do. What’s nice about them is that they take out all the taxes and whatnot. How do you manage it from getting out of control? I think you’ve got to look at what somebody is making and just look at it objectively and just say to yourself that you aren’t the business. The business is a separate entity and that separate entity has an obligation to look at each person that’s part of it, including you and ask, is it getting return on its investment? So if we’re paying somebody $100,000 a year, is the business getting more than that? And if it isn’t, we have an obligation to change things. But if someone is so valuable, right, that they’re driving $1 million in value, well then you have an obligation to pay them effectively because the business should be doing that. Otherwise, you know, that’s the difference in a mindset. You know, my mindset, whether it’s with sponsors that I have or whatever is I want to provide so much damn value to these people that when you go to them and you ask for something, they have to say yes because they know they’re getting a huge return on it.
Jay: 46:59 – Right. OK. So last question and then we’ll wrap this up. Where do you see this industry going in the next five or 10 years?
Jason: 47:08 – I think you’re gonna see a lot of consolidation. I do. I think you saw a huge upswing in affiliates five years ago, three years ago, and I think you’re seeing that some of them are realizing that it wasn’t exactly what they thought was going to happen, right? They got into it because they loved it and they still love it. But it’s a business and it has its own risk and liabilities. I think you’re gonna see, you know, a few owners start to kind of take over multiple sites, start consolidating gyms. I think some of that will happen and I think that you’ll also see some, you know, functional training is alive and well, alive and well, we’re in the best damn business on the planet because if you’re at whatever membership you’re at, for example, the gym I’m sitting in right now, I just had a conversation, we need to increase sales here. The beautiful thing is we had four people come in this weekend. If all four of them convert, that’s $1,000 a month in reoccurring revenue that we can get. And it’s like that. You don’t need 400, you don’t need, you know, you don’t need 4,000 members like a traditional gym does. All you need is 400 to become successful. So we’re in the best damn thing to go out there and go get more people in the door.
Jay: 48:18 – Right, right. OK. So last thing, if I want to go check out the Collective—.
Jason: 48:24 – I’m gonna introduce you guys to MBV. If you want to check out the collective, the best people to talk to—
Jay: 48:31 – How would I do it?
Jason: 48:41 – MBV does, he’s our CFO, chief fitness officer here at NCFIT, and he’s got all kinds of docs and programming and whatnot. So he’s in charge of the actual programming. He has a team that he works with to get it shared. And then we also have Gabe who is in charge of, he’ll be your point of contact if you’re interested. If you’re interested in the collective, simply email collective@nc.fit. So there’s no .com. It’s just collective@nc.fit. And we’re giving Two-Brain business customers 50% off their first month. And what I ask of you is this, look, we will share—we have business docs that we’ll share. We will share our private Facebook group where we talk about different stuff. But most important, we’re gonna save people time. And just like I had to five, six years ago realize that me doing QuickBooks is not the most efficient way, you got to ask yourself, if you’re programming for five hours a week, are you putting out the best product out there for your coaches to follow? Maybe, maybe not. If you’re programming for 10 hours a week, is that the best use of your time? And we have a team of experts that have been doing this a very, very long time and we’d love to have you try us out.
Jay: 49:53 – Awesome. So they just email—what was the email address again?
Jason: 49:58 – Collective. So collective@nc.fit. If you want to put it on the screen or whatnot.
Jay: 50:03 – And just tell them that they are a Two-Brain customer and they’ll get 50% off their first month.
Jason: 50:08 – Yeah. And guys, for anybody again who’s listening, right, it’s really important for me to have you realize that we are in the trenches with you every single day, right. We are not some just like old-school gym or whatever. We are every single day in the brick and mortar doing exactly what you guys are doing. And so if our programming and session planning, everything we’re doing sucks, we have a major issue because we have 20 sites of our own that are using it. And I think that’s the biggest differentiator between us and other companies that might be doing it is yes, we have business toolkits. Yes, we have private Facebook groups, but most importantly, you know, we’re putting out plans and development through our videos and whatever that if it’s not good, this place behind me doesn’t survive, you know?
Jay: 50:56 – Yeah. Awesome. Jason, I really appreciate you taking the time this morning to chat with us and if people have other questions, they can email that same address, collective@nc.fit.
Jason: 51:06 – Yeah, email us. Let us know. I mean, look, if you don’t join the collective, you just want to shoot the shit and just talk, I’m totally cool with that. No problem. I’ve been dedicated for over a decade in rising the tides of our industry. When you do well, we do well. So if you have any questions, hit us up. And I would be honored to have you test out our programs and for 50% off, I mean, we’re talking like 50 bucks. It’s well worth it.
Jay: 51:33 – Awesome. Well, thank you so much and we’ll talk again soon.
Jason: 51:37 – All right guys, have a great day. And looking forward to getting an email from all of you soon.
Andrew: 51:41 – Thanks for listening to Two-Brain Radio. Be sure to subscribe for more great episodes. And if you’d like to learn how a mentor can help you build a successful business, book a free call at twobrainbusiness.com. Chris Cooper’s team will show you exactly how you can add $5,000 a month in revenue and move closer to your Perfect Day. Visit TwoBrainbusiness.com today.
