Do you want to increase the amount of money you make? Do you have an earnings goal but are unsure on how to achieve it? Business can be very straight forward if you know what you need to improve. This article will explain how.
Business – What to focus on
I’m by no means claiming to be a business mentor or guru. However one thing I do believe to be a strength is my organisation. A few years ago, I attended an excellent workshop by a man named Geoff Sober. He has featured on my podcast and taught me a great deal about money and your attitude to money. In this article, I will explain a different way of approaching your finances.
Rent – A business expense
Why is it that Apple is a household name and yet Nokia is gone by the way side? It is of course down to product quality, but whether a business survives or not is very much down to profit margins.
If it costs Apple $50 to make an iPhone and they sell them for $500, they make $450 per phone. This is simple maths. If they want to increase their profit margins they can either increase the price in which they sell the phone OR they can reduce their out-goings. A phone being sold for $510 or a phone being made for £40 is the same profit made.
Now let’s apply this to paying gym rent. If you pay £500 gym rent per month and deliver 80 sessions per week, each session is costing you £6.25. A simple way of decreasing outgoings would be to do more sessions. Although this seems like common sense it’s an massively overlooked aspect of business. Do not view your rent as a monthly outgoing, view it as an expense per session.
Take Home Point Number 1: It is more profitable to be busy. Get clients training frequently even if it means reducing your session prices slightly. It will pay off more financially.
Session Prices – Your business product
You do not charge your highest rate per hour. You charge your average rate per hour. To see what you actually charge for a session note all your clients hourly rates and find the average. This gives you a very important piece information; your session profit. How much you charge on average minus your rent per session gives you the actual amount you earn per session. This is critical for your business. For your business to grow, you want session profit to increase, ideally to around the 70-80% mark.
Putting it all together – Business made simple
Below you can download the same spreadsheet I used to calculate session profit. All you have to do is type in your clients name, how much the pay per session, how many sessions they do per week and how many clients you have. Then type in the rent you pay in the other tab and the spreadsheet will do everything for you.
If you head over to YouTube and type in Chris Knott Coaching, you’ll be able to access the full video on how to use the spreadsheet.