The Game with Alex Hormozi - How to Have Your "In-Gym" Cake & Eat it Too | Ep 144

Episode Date: August 21, 2019

"You don't need to change your pitch. You just say at the end of this, ‘Would you prefer to do X or prefer to do Y?’” Today, Alex (@AlexHormozi) discusses his recently written "hybrid manifesto," which distills the decision-making process for gyms looking to transition to a hybrid model into one central question: "Do I want to have an in-gym training community?" From there, he outlines two paths depending on the answer to that question.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(1:20) - Want in-gym community?(3:51) - Add hybrid level, increase profit.(5:41) - Have gym? Start side business.(7:00) - Existing gym more profitable by adding hybrid.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Good morning, everyone. Happy Sunday. Hope you guys are rocking and rolling on your restful end of weekend, beginning of prep for the week. I came off a really great week. Got a lot of stuff done. And I, among those, was writing something that I'm calling the Hybrid Manifesto. I'm playing around the title, but more or less, kind of a very in-depth look at, you know, industry trends, where we're looking, what's going on now, that kind of thing. And in writing the hybrid manifesto, it became clear when I got to the last section, which is kind of like, what do you do now? Right? What is the path ahead?

What are the choices that you need to make? Given different scenarios, et cetera. And so when I was looking at that, it became clear that there was really only one choice that needs to happen. And then there's just two paths that split off of that. And so it was good for me because I, you know, when we first launched hybrid, I was like there's five kind of different scenarios. And then developing it more. I was like, well, these two are kind of similar. This is just applied differently, so there's really four.

And then going from four, now it really comes down to like one central choice and then two paths. And so if you'll allow me, I'll share with you what those are. And so the single question that has to be answered at the beginning before you go down the path of whether you want to convert into a hybrid facility or not is simply, do I want to have an in-jim training community? That's it. If you want to have an in-jim training community, you want to keep, you know, keep the in-jim experience, et cetera, you love that, and that's amazing, that's awesome, then there's one really clear path that you need to go down, right? On the flip side, if you say, you know what, I don't need that necessarily, I just like getting clients results and I don't have an in-person requirement to actually watch them work out at my facility, then there's a second path. And so I'll go down both. So if you want to keep your facility and the community and the training that you have intact at your facility,

then the only thing that you're going to do is simply added as an additional level of service, which is what we call Bolton. So instead of, or in lieu of having a semi-private training, which you might have, and that's what I espoused for a really long time, instead of needing to spend the money on the equipment, spend, use the extra square footage, deal with schedule, and logistics around trainers for some are privates, you can have the same revenue per customer except,

and the same profit per customer because HCPs also 20% goes to the coach. And so both of them are actually the same in terms of profit. It's simply that with hybrid, you don't have all of the constraints that are associated with it. And so you would take your existing customer base, you'd add an additional level of service, which is Bolton. And then from an acquisition standpoint, when someone comes in, all you're simply doing is offering them a choice, right? And this is the long-term sustainable way of doing this because you say, you get to the end of the sale and you'd say, listen, you can do this at predefined times in a group at our facility. Or would you prefer to do this one-on with me at your own convenience? Right.

And that's simply the question. So everything up to that point is the same. So it's the same external promotion. You don't need to change anything there. You don't need to change your landing pages. When they come in, you don't need to change your pitch. you literally just say at the end of this, would you prefer to do X or prefer to do Y, right? A.B.

Right. And the nice thing is that it's an A.B. It's an assumed sale. And it's relatively prescriptive. And so you simply just say, do you want to do this as workouts in a group here at pre-defendants, like pre-definite times in the gym? Or would you rather work out with me individually one-on-one at your own ex, outside of the gym, at your own convenience? Right. And then from there, a person will pick the thing that.

matches their their suits their needs right and so that is the sustainable way forward for gyms who want to keep their gym keep their community keep the training workouts all of that kind of stuff that means that all you're doing is you add the additional level to your existing members which means you're ascending them so you add your profit per member which will massively increase and I've made other videos about just adding that level of service to your existing membership base makes you more money but then from an acquisition standpoint so that your gym does not die out because you're feeding only one thing when they come in, you give them the option A or B, which one would you prefer?

And then you go on your merry way. Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast that you do the exact same thing. So if it was a review, if it was a post, if you do that, it would mean the world.

to meet and you'll throw some good karma out there for another entrepreneur. And with those situations, you can actually sell both too. You can sell them in the in-person workouts and then also tack on Bolt-owner hybrid on top of that. So you can actually get your EFT to around $400 a month for that client with really no additional costs. So that is kind of like after writing through this entire manifest, there's about 100 pages. Like that was kind of the distillation of like if you want to keep your gym, this is the best way to do it. Now, the second scenario is you say, I don't need to keep my gym in person.

I'm not married to that. I prefer the one-on-one or closer relationships, et cetera. I'm happy to cut my overhead, et cetera. Then really, if there's, like, in that one, there's two sub-scenaries. And this is how you can see how I got multiple scenarios. But there's really just two sub- scenarios. If you are in favor of a long-term full hybrid model, then it's just, do you have a gym already, or do you not have a gym?

have a gym already, then what you have to do is essentially start it as a side business. What I mean by that is that you're going to continue to market and sell, but you're not going to be feeding the in-person business. You're simply going to be stacking up your hybrid or side business, right, a side hustle version. And then the nice thing is because the profit is so high on this one, this will essentially cover the decrease that will happen in your main business because you're no longer feeding it, right? And so as this one increases, eventually there will be a time or a moment where the revenue from this and the profit from this far exceeds the profit you're making from your main business and the fixed cost that you have associated with it and then at that

point you could make the transition from an in-person facility to a full hybrid facility and so that is where a lot of our gyms have gotten to that point already and they're making that transition etc so you want to build this up now if i want to give you like overarching numbers i think you should shoot for 50 to 75 um hybrid clients before making the full switch this is just having done this with a lot of gyms now and walked plenty of them through that process. 75 seems to pretty much cover you. I said at a minimum 50, but the more the merrier, because if you're doing 75 clients who are paying you $400 a month,

you're more than covered, and really the rest of that will now be pocket money because you're eliminating all the costs that were associated with the old business. So if we have our original choice, do you want to keep the gym and the in-person training? Do you want to not keep it? we already covered if you want to keep the in-person training, and then we entered into if you

don't want to keep it. And we just covered if you have a job. So what happens if you don't have a facility? So this would be people who have personal trainers or people who are starting hybrid facilities. So if this is you, it works the exact same way because if you don't have to deal with the other business at the same time. So in some senses, you have an advantage of not having to kind of deal with some of the mental attention split of having to keep this one kind of going while you're really focusing your attention on feeding this side business, right? So for you, it wouldn't be a side business. It would be the main business.

And someone posted in here earlier where they just started their gym as a full hybrid facility. And that's the beauty of it. There's not a lot of overhead. And so all of the sales that come in are just pure profit, which is fantastic. And so that's kind of the way that I see this crystallizing out is that the existing gym becomes more profitable by adding the send. No argument. And it becomes logistically easier because there's no equipment.

outlay from a cash standpoint, you don't have to put square footage and allocate that. So you don't have to decrease your class sizes. And you don't have to do with scheduling and coordinating with trainers, right? So which is all the downsides of semi private, right? Now, some of the private's great. It's just that those are, those are some of the costs associated with it. And so hybrid gets you all the benefits of an HTTP type setup or a high ticket program type setup for semis, except you don't have to deal with all the other stuff.

So pretty much any group training facility can add this as an additional level of service, make more money, really not change anything. fundamental about the gym, even the acquisition just becomes an AB close, which direction they want to go, and you feed both businesses simultaneously, which allows you to keep above average profits by a long shot compared to facilities that aren't executing that. And then the alternative is you want to go full hybrid. You like that model of just having a very small fixed cost with the rent, and then having 20% cost that's variable that goes up as you scale more clients and goes down if you have less. And then in that case, you either transition by building that up so that it can,

replace your existing revenue and then cutting that one off and then keeping this or if you don't have one just building it from the onset as a full hybrid facility with no in-person training. So, anyhow, I hope that clarifies it for anybody who was unclear. I know that I've had multiple scenarios that I think some of the case studies that we have have five scenarios. I think this kind of distills it down into really the one decision that needs to be made. Do I want to keep in-person training? Do I not want to keep in-person training? And then if you, and then once you've made that, decision the path is fairly straightforward right at an initial level of service a be closed on the front end and then or just feed 100% the new business let that one cover

the cost of the old business until eventually you can shut down the cost of the old business and then reap all the awards and profit of the new and that is all so i hope you guys have an amazing sunday how that answered some of the questions that you might have had surrounding hybrid um i love the question so thank you keep them coming um i get i get them all over the place so i try to do my best to kind of consolidate them into simple framework. So have an amazing day, keeping amazing. I'm going to say amazing more times. All right, talking soon.

Bye.