You know whenever I hang with Sam, we talk more shit than anything else. Most of it is rated R and can’t be shared on this blog, or Sam’s career as the top fitness guru in Chino Hills would be over. The dudes got tons of stories, from the times he’s hung with Mike Tyson and Money Mayweather, from his “natural” Bodybuilding days (lol), and the reasons why he’s afraid to go to Amsterdam. Believe it or not, I value chopping it up with him about life and other stuff more than anything having to do with the fitness business.
But every once in a while we talk about things having to do with business. When it comes to the fitness business, I defer to his wisdom for the most part. A few of the tips he’s given me have been absolutely vital to getting where I am.
But the last time I really got to hang with him, at the I LOVE MARKETING event, there was one issue me and him disagreed on.
It was whether a light industrial or retail space was better for running an indoor bootcamp business.
Sam is on the side of going with light industrial. He’s killing it with these types of locations with his bootcamps across the country (and of course doing millions out of his gym and bootcamp in Chino, which are located in a light industrial sector).
In my neck of the woods, I’m doing really well with retail. My current space is pumping at a 400K yearly pace (if you pro-rate the gross contract figures for the past three months over a year). And my new spot is twice as big, so I won’t be happy with anything short of twice the numbers. I’m a BIG believe with going with retail space – I can’t imagine running my business any other way.
This is a very important subject with big dollar figures at stake, and me and Sam fall on opposite sides of the spectrum. That’s why I wanted to do the topic justice and explore it in a blog post here.
The conversation me and Sam had on this is still very fresh on my mind so I’m going to go into each of the points we talked about. If you’re looking to open your own place (or go a different route on your second location), this will help you out.
I’ve broken this post down into two parts. Half are the pro-light industrial points Sam made, and the other half are my feelings on retail. Consider this an online virtual debate, and Sam, you’re of course free to voice your rebuttal in the comments section.
BENEFITS OF LIGHT INDUSTRIAL
Internet Marketing – The way Sam says it, is that no one drives down a busy street, sees a bootcamp, and decides they want to lose fat that day. Usually the decision is made privately, and they then take the web to find the best solution to the problem. In that case, being in a retail setting isn’t important. What’s more important is that you’re ranking high in the search engines and that you have the right content there once they find you (ie get your internet marketing and online persuasion game down pat).
Space – When it comes to the square footage of a bootcamp, I’ll admit that it’s MUCH more convenient and fun when you have a lot of space to run a bootcamp. One of my locations is 1300 square feet; the other is 2500. Although we get serious work done out of the smaller space and have more than 200 raving fan members, the bigger place delivers a better experience, hands down. When you go with light industrial you have the benefit of being able to get a lot of space on a shoestring budget, usually with high ceilings too. You and your clients will be able to feel the fun and benefits of this with every workout.
Rent – If you decide to go retail, rent can be double, triple, or more than it is in light industrial. Besides payroll, rent is the most hated check I right each month. Why don’t my employees and landlord see I am delivering a valuable service to the public, and let me ride for free?
Felix Dennis says that in business, you have to multiply any raw cost times THREE to understand how much it’s costing you in gross sales to make up for it. So if the same amount of space you’re paying $2,000 for in light industrial is costing you $6,000 in retail, it sure as hell must be bringing you $12,000 in additional business (not $4,000) to justify it.
Net Profit – In peeking into Sam and Boss Lady’s Bootcamp on my most recent visit to Cali last month, I could tell they run the place very lean and very mean. Sam noted that they put a few grand into equipment up front, and haven’t had to do much since. It’s apparent to me that the entire positioning of your business can be low-key when you’re located in light industrial. With my locations, I compete with the McDonald’s, Starbucks, and the other long-established private retail businesses of the world. It takes a lot of swagger and cash to play at this level.
Start-Up Cost – Most people will not have the money to open a retail space when they start out. They will then have to do weird and risky shit like take on loans or business partners, all of which I’ll tell you can become HIGHLY problematic. I’ve had the skills to get out of and handle these types of situations while leaving all parties satisfied, in order to get established and fully independent. I’m not sure if everyone does.
BENEFITS OF RETAIL
Rent – When it comes to rent, or any cost in business, I’m going to paraphrase the late Gary Halbert, who I consider the most influential person on my business career (even though he’s been dead for over five years and I never met him while he was alive). Gary says that it doesn’t matter one f’in bit what something costs. All that matters is ROI.
So is the additional money I pay for retail bringing me the ROI to justify it? Let’s see. My typical sale is about $900 in the first year, on average. One of these sales will result in at least two referrals, which again is about $900 per person, on average. In case you haven’t noticed, these are big customer value numbers.
So back to the question, is the retail space bringing me enough business to justify the additional money (which remember, we have to multiply times three), to pay for it?
In my opinion it is. My location ALONE is the biggest source of leads for both of my locations. Again, this takes some level of style, swagger, and direct marketing and persuasion skills to pull off. But I’ve carefully analyzed the the ROI on this, and it’s a definite no-brainer.
I look at retail space like having a billboard on a busy street. I use my store fronts to make a direct response message. I make a promise and have a response vehicle. I agree with Sam that no one decides they want to lose weight because they saw a bootcamp. But if they do decide, I’m the first place that comes to mind.
Credibility – There’s something to be said for the credibility of having a business in a busy district. Again, going back to my mentor Gary Halbert, a sale is much easier when you have the credibility of a centrally located retail space backing you up. Gary used to advise online and mail order marketers to get an office on main street in order to increase the response of their ads. What do you think that means to an ACTUAL brick-and-mortar business? I think it means an even more powerful increase in credibility and response. To borrow a phrase from Jay Abraham, I look at it as a “force-multiplier”. It makes my ads more effective, and enhances the live experience. Although there’s no direct way to split test this, I can feel it.
Marketing – Related to what Sam said about being prominent on the web when your prospects are searching for a trainer, I have a confession to make: my web game sucks. I am not on facebook in any way, the gohardfitness.com site you see in the right column of this blog is almost seven years old, and my other two sites for each of the individual studios is far from complete (plus I’ve been paying Sam’s guy Neil for the past four months without doing a damn thing with him). My retail locations have allowed me to grow my business despite being so weak on the web. I have instead worked on optimizing my real world presence, not my online presence.
That being said, online marketing is a passion of mine and am finding more and more time to devote to it. Once I get it dialed in, watch out!
Convenience – When you’re in the retail district, it’s real easy to find you. People are frequently already shopping where you are. And when they need you, they know exactly where to go.
Top of Mind Awareness – Somewhere in Sam’s 99 part series on the laws of marketing (or something like that), he talked about the importance of having mind-share in the mind of the consumer. Once you have that, it becomes hard for competitors to steal your spot, even if they’re better. I feel the retail space does that for me. It puts me in everyone’s face every day, and keeps my competitors out of their heads.
Barrier to Entry – MJ DeMarco, author of the underground business classic THE MILLIONAIRE FAST LANE, talks about how appearing big and highly established often scares away potential competitors. I agree. I’m sure being on front street makes potential competitors think twice about directly moving into my territory. This saves me untold costs in battling them in print and online, and in customer attrition.
Ego-Gratification – I have a big ego. Having prominent retail locations gratifies it. Nuff said.
So there you have it. I tried to make that as thorough as possible, so I hope everyone benefited. I don’t see many bootcamps located in retail settings, and the ones I have seen in my opinion suck. To each their own.
When in doubt go by whatever 7-Figure Sam tells you. But in my case, I’ve found I formula that works, and I’m working hard to keep it that way. Time will tell if I’m on the right track.
Kaiser “Super” Serajuddin
Original Super Trainer