Ep 16 – How COVID Space Restrictions Led Raphael Freedman and Lachlan Rowston to a More Profitable Business Model, with Great Revenues, Happier Clients and Staff

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Raphael Freedman and Lachlan Rowston are known for their 300+-episode strong podcast, The Mind Muscle Project. They’re also known for their Sydney, Australia-based gym Creature Fitness, which since they joined NPE, grew from one to three locations and increased revenues to more than $1 million a year.

There was a problem: Their business model was based on group training, and that was suffering from increasing commoditization. Competitors such as F45, CrossFit, and Orange Theory were flooding the market with group training offers, and putting pressure downward on prices.

Raph and Lach were looking for a way out of the race to the bottom. They wanted to be able to charge premium prices, but they weren’t sure of the business model that made the most sense.

Then COVID-19 hit and they were forced to shut down from March to June. It turned out to be a blessing in disguise. With their NPE coach, they set to work strategizing.

When they reopened under new space restrictions, they had a new model in place: Semi-Private Training for high-end clients willing to pay higher prices for greater value. They delivered customized programming to create specific results aligned to the goals of each client.

Within a couple of months, their revenues are back to where they were before they were shut down. But they are more profitable, have happier staff, and serve their clients better.

In this episode, you’ll learn…

  1. The obstacles that Raph and Lach faced with the group training model and the shift they made after COVID-19
  2. The upgrades they made to their programming to serve clients who each had different goals
  3. How they ‘niche-downed’ their ideal clients (those who believe in coaching) and how they converted their vision into their programs
  4. The struggles they had through the process of going from a group to semi-private business model
  5. How to adjust quickly and make progress in a constant changing environment
  6. How seeing the positive side of changes instead of focusing on the negative helped Raph and Lach keep going to grow their business
  7. And much more…

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Podcast Transcript

Ric Isaac:

Well, hi, folks, and welcome back to NPE Secrets of Their Fitness Business Success Podcast. I’m joined today by Raph and Lachy from our Mind Muscle Project and Creature Your Fitness. It’s great to have you both on the call today, gentlemen.

 

Lachlan Rowston:

Pleasure to be on.

 

Raphael Freedman:

Pumped to be here.

 

Ric Isaac:

Fantastic. Well, for those who don’t know of you, why don’t you give us an overview of the location of your facilities, your business model, and then the types of clients that you love serving?

 

Raphael Freedman:

Yeah, so Lachy and I are the two owners. We’ve known each other for six years now. We’ve been in business together for six years now, and we’ve been NPE clients for I’m going say three years with NPE. You guys came on our radar right before we even opened our first gym, but we were like, “No, we can definitely … We know all this ourselves.” Three years later, we realized we weren’t right about that one. So we ended up hiring you guys as coaches. Now we’ve been happy clients for three years.

 

Raphael Freedman:

So we started a podcast, which was the Mind Muscle Project, which you mentioned at the beginning, and that has been I think also about a five-year journey now. We’re over 300 weeks of doing the show consecutively. Then while doing the podcast, we grew from one gym to three gyms, and they were primarily group fitness. They were more CrossFit-style group at the start and then moving more into just functional group training. We did that. We scaled it to over a million dollars a year, and we were happy doing that. We went from five business partners down to two, and that was what we were running up until COVID this year.

 

Ric Isaac:

Gotcha. Well, I really wanted to dive into that with you, because clearly COVID is throwing the whole industry in a tailspin, and there’s lots of people who are really struggling now. Some of the models that they were using in terms of their business models are now not serving them. They’re finding it’s particularly challenging to be able to grow their business in the way that they want to. It’s also given people some time to reflect as well, right? Whether it’s realizing, actually, this has just morphed into this [inaudible 00:01:56], which I’m actually not passionate or in love with anymore. So tell us a little bit more about why you made that shift from that bigger group model to that more semi-private.

 

Lachlan Rowston:

Yeah, so it was not a small change for us. We were doing classes that involved all kinds of CrossFit movements, like Olympic weightlifting and gymnastics, which are, obviously, great training tools. We were getting 15 to 20 people per class, and it was running for an hour. We had a personal training onboarding system. But we had many issues with the model we found, obviously. Firstly, it wasn’t as profitable as we’d like it to be, which is obviously a really important factor. The second thing is we felt like it was just becoming a commodity. It was sort of everyone offered this in some form or fashion. It was just a different coat of paint or a different set of movements or different names for the classes. So we really started to feel like it was becoming a race to the bottom, and we were being compared to a lot of gyms that are very different to us.

 

Lachlan Rowston:

Then probably one of the key things as well was really even before COVID hit is Raph and I wanted to go after our high-end clientele. So what that just meant is the price point we were at, we couldn’t just charge more with the same offering.

 

Ric Isaac:

Right.

 

Lachlan Rowston:

If we wanted to move into a higher price point, we actually needed a completely different service offering, something that was a bit more like PT. But we ran the numbers with PT, and PT was never a profitable model for us or how we thought we could run it. So that’s when we chose, coming out of the first lockdown … So we locked down in March 2020, and we came out in June 2020. We completely revamped the model, changed heaps of things that we didn’t like about it in terms of staff pay and, honestly, our skillsets and the type that we wanted and then as well the main thing I mentioned, the clients as well, the different clients we wanted to go after. We launched a semi-private model, which we’re really stoked with at the moment, which means we’ve got six people per session or a maximum of six people per session. One of the immediate benefits is, obviously, it’s COVID-safe.

 

Ric Isaac:

Right.

 

Lachlan Rowston:

People can use their own equipment. They can social distance correctly. The gyms are the perfect size for it. Also, people get their own program. So now, rather than doing one template program, and I always say everyone would come to us with a different life experience, different injuries, different goals. But we prescribed them one program, which is stupid, right? It’s like a patient sitting in a doctor’s office with all these different problems, and he prescribes them one medicine. Sometimes it hits it out of the park. Other times, it’s completely wrong. It makes the situation worse.

 

Lachlan Rowston:

That’s what we started to notice, is, “Hey, is there a way to actually help people when they come in and say, ‘I want to welcome my arms and my abs’ and guarantee them that they would work on that, not, ‘Oh, okay, well you have to come on Tuesdays in the evenings and Thursdays in the mornings’ and they go, ‘Well, that’s not going to work. I’m training on Mondays and Wednesdays’?

 

Lachlan Rowston:

So we wanted to solve that problem, which meant in the semi-private model, everyone does their own program. But we wanted to keep what we liked about group, which was sweating and doing your workout together and building that camaraderie. So the six people, they’ll do 30 minutes of their own strength training with a coach, and then they’ll do 30 minutes with a workout conditioning session together. It’s been 11 weeks of running that now. We’re charging about double, if not more for some clients than what we did before, and it’s done exceptionally well. We’re almost back up to 100% revenue pre-COVID, and even better is we’re doing it with less clients. We’re doing it with better clients. The staff are more happy, and there’s more profits in the business, which I didn’t think I would say all those words, but somehow we pulled it off, which is great.

 

Ric Isaac:

Well, well done to you both, because it’s a significant shift, isn’t it? As you said, it’s not a simple decision, and it can be a bit scary, because it’s changing from a model which has proven to be successful. You talked about a few things there in terms of wanting to not be perceived as the same as the others. Now that you’ve got the semi-private, and it’s pretty incredible, because people will be listening to this and thinking, “How are you back, what, in 11 weeks back to the revenue you were prior to COVID?” I mean, that’s pretty staggering.

 

Ric Isaac:

There’ll be lots of people think, “Well, I wanted to do that, but no one’s going to pay that” or “My market, my current clients wouldn’t pay that amount.” You’ve obviously made the shift. How many of those existing clients continued with you, and how many of those did you have to bring on as new clients? What was the sort of breakdown there?

 

Raphael Freedman:

In the end, about 30% of the clients before we got into COVID stayed with us into the new model.

 

Ric Isaac:

Right.

 

Raphael Freedman:

I’ll also break it down, because there is a bit of compounding factors, because it wasn’t just a shift from group to semi-private. It was also a COVID-19 and lockdown for 12 weeks and all the stuff that came with that.

 

Ric Isaac:

Right.

 

Raphael Freedman:

So yeah, if you took, say, 100% of the clients, probably 35% of the clients just got lost in the eruption of COVID. People moved to different cities.

 

Ric Isaac:

Right.

 

Raphael Freedman:

People lost their jobs. A whole bunch of stuff happened. There’s probably a small percentage in there, maybe 10, 15% that honestly still don’t feel comfortable coming back to gyms. We still have some good clients that maybe have often someone’s sick at home or are looking after someone or want to visit someone elderly and not training back with us. Then everybody else was, yeah, just not in the price point anymore or it just wasn’t the right offering for them, because they really liked the big group stuff. That tended to be, yeah, a lot of our younger clients, definitely, and then number two, probably some of the clients that just felt like they could do it on their own and weren’t that invested in coaching.

 

Ric Isaac:

Right.

 

Raphael Freedman:

That was amazing for us, because we realized that, “Hey, we actually only want people that value coaching and want to get help from our coaches.” People that just use it as a social club, we’re probably not the best fit for you.

 

Ric Isaac:

Well, you mentioned a couple things there, and something that you mentioned earlier, like you said, you’ve got a better quality of client now. I know you’re not talking personally about those people and their personality, so to speak, but tell us what you mean by that. Why is it a better quality of client now?

 

Lachlan Rowston:

Yeah, I think just the direction, like Raph said, we were heading is very coach-centered. So to have the value to pay the money you’re going to pay, you need to value coaching. Yeah, if you get to the point … which is not a bad thing, which we got a lot of our long-term clients, too, which was they didn’t need us. They felt like, “Well, if all this value comes with the individualized programming and your expertise with injuries and coaching movements and stuff,” a lot of people, whether right or wrong, felt like they got to that point where they didn’t need that. So paying 70, 80 bucks a week is like, yeah, it’s a fee for what you pay to join a group gym, but that’s not what coaching is.

 

Ric Isaac:

Right.

 

Lachlan Rowston:

Coaching doesn’t cost that much. So the clients that we have now, they actually really value coaching and programming. So they do it. They do the coaching. They do the programming. They feel like the dollars they’re paying is really worth it. I think that that just goes a long way for the coaches as well. The coaches are getting more engaged that are rocking up and telling the coaches, “Hey, we love this. We love this service you guys are offering. You guys are doing an amazing job. We appreciate every aspect of what’s happening at the gym.” So I think it goes a long way for client and coach happiness, just people that are more engaged.

 

Ric Isaac:

[crosstalk 00:09:13].

 

Raphael Freedman:

Yeah, well, I was going to say yeah, in terms of like the better clienting, I think also from us, it’s like, “Yes, they want to value the coaching.” That’s amazing. That’s rewarding. They do what the coaches say as well. Then I think there’s a type of client that it’s just more fun sometimes to work with. They’re not the type of client that goes missing one week, comes back the next or doesn’t turn off for five days and then wants a refund on the previous five days. You’re getting clients that are committed. They understand it’s an investment, but they want to invest in themselves, and they also have a career that is really important to them outside of the gym as well.

 

Raphael Freedman:

That was important to us, because we want people that we can help go out and excel in their career and make a difference in the world. We’ve always went after the client anymore that was just obsessed with the gym, and the gym was the biggest thing for them.

 

Ric Isaac:

Right.

 

Raphael Freedman:

So we really enjoy helping that type of client. For us, a better client is someone that fits your ideal client a little bit closer.

 

Ric Isaac:

I mean, again, but this is just such a great conversation, because the quality of client, you said they’re more committed, and it also means there’s more skin in the game. Isn’t there? If they’re paying more money, they’re going to turn up for those sessions. They’re going to take the advice outside of the gym to change other areas of their life which is not serving them as well, which is significant. I guess the other thing, too, and certainly correct me if I’m wrong, I mean, these people, because of the price point now, they’ve got to have a fairly high disposable income and certainly household income.

 

Ric Isaac:

So because of that, changes in our economy and the interest rates go up or down, that’s not going to affect them. They’re at a price point or an income level which that stuff is not even an issue for them. So you tend to have less of those wanting a refund or having to drop out because they just can’t quite make it that week or that month. Would that be right?

 

Raphael Freedman:

Yeah, exactly. I guess before, we would just get everyone, and that was great, because we enjoyed working with those clients as well, but yeah, when COVID hit, we found out pretty quickly people that we’d invest a lot of time on, their jobs disappeared really fast, because maybe they were casual workers and stuff like that. Their work is probably the first to go when there’s a big change in the economy, and that’s tough on them. I definitely feel sorry for them, but for my staff, who also have to make a living, we need reliability for them to be able to build a career. They want to work with clients that, despite what’s happening outside in the world, can continue working with them for 12, 18 months and really see some progress. That’s going to be rewarding for them as a staff and us as a company.

 

Raphael Freedman:

So we’d like to work with those clients that, yeah, exactly, that’s more resilient, probably more settled in their life as well, because they’re a little bit older and they’re not traveling and changing cities and getting new girlfriends and changing boyfriends or whatever it is. So they’re a bit more settled, they’re a bit more resilient, and they can invest more in the long term in improving their health and fitness.

 

Ric Isaac:

Gotcha. So it’s made it a more financially stable model for you guys as well. Then something that you mentioned as well, you’ve got half as many people to deal with, right? So administratively, there’s so much less work and followup and client communication. Has that been a big impact?

 

Raphael Freedman:

Yeah. A good example was this week, we had no failed payments, no unprocessed payments. Back when we ran the group, I could have 20 plus every week.

 

Ric Isaac:

Right. [crosstalk 00:12:31].

 

Raphael Freedman:

It’s just because, A, there’s half as many people, so less clients, and then just, yeah, more reliable clients that are just … Yeah, it wasn’t like the last few dollars in their account so their payment bounces every month.

 

Ric Isaac:

Ultimately, as you’ve both said, it’s all about results, right? Getting better results for the clients, providing your coaches with people where they can get that intrinsic reward of really changing their lives, rather than someone just sort of going through the motions or, as you said, doing it more for the social aspect rather than the health benefits.

 

Lachlan Rowston:

Yeah, yeah, [inaudible 00:13:05].

 

Ric Isaac:

Gotcha. Okay. So you’ve made that shift. I mean, obviously, it was a leap of faith, and you guys certainly practiced having your own courage there. That’s for sure, and working through it. I mean, you guys have been working with that bigger group model for a long time. How hard was it to let go of that?

 

Raphael Freedman:

Yeah, it was really hard. It was hard. So we sold one of our locations in the process as well.

 

Ric Isaac:

Right.

 

Raphael Freedman:

That one was probably easier. It was still tough, but I guess it was just gone, out of sight, and we knew the staff was … So we knew the members were going to get well looked after, because the new owner was going to do something similar and keep their training going. So that was easier. It was probably tougher for the existing clients that we still love and we still wanted to help, but we probably just couldn’t help anymore. So it was like, I guess, there was a bit of a breakup that was there. But I guess what helped us get through it was just, yeah, we kept believing in the new model. The staff kept believing in the new model. So we just knew that for the people it was right for, we’d still be there.

 

Raphael Freedman:

In truth, I mean, you can’t serve everyone forever. So every relationship is going to come to an end at a certain point, whether on their end or on our end. It just turned out this time, it was on our end. Normally, in the relationship, it’s on their end.

 

Ric Isaac:

Right.

 

Lachlan Rowston:

Yeah, and one thing that made it I think especially tough was definitely the first lot of phone calls, the transition across, and I didn’t do any, actually. But I would see the effects on Raph and the rest of the team that had to take these clients, which are all dealing with different stresses towards the end of the lockdown, whether they’ve lost jobs or they’ve had pay cuts or it’s just been a stressful time, being locked indoors with your family, and having to call them with the great news that, “Hey, we’re doubling our prices now to come back to the gym. We changed the model that you knew and loved.”

 

Lachlan Rowston:

So we lost some pretty loyal clients, not in a way that wasn’t amicable, but I guess just disheartening that they weren’t going to support us in the next phase. They felt like they didn’t need us.

 

Ric Isaac:

Right.

 

Lachlan Rowston:

So there were definitely some moments earlier on where you think to yourself, “Oh, have we made the wrong decision here?” There definitely was a good week or so where we were looking at each other, going, “Maybe we’ve made the wrong choice here,” but like all things in business, you do find new clients, and if you stick to it, I guess now we’re so different to everyone else that it helps. It helps as a point of differentiation, which so many other gyms lack.

 

Ric Isaac:

Well, you mentioned something earlier, Raph, about really darling in that ideal client, recognizing that they’re a little bit older than probably your general average age, and they’re more settled in their life, as you mentioned. How much of that was important in really getting dialed into who it was, and what was that process like for you going through that to come up with that new ideal client?

 

Raphael Freedman:

Yeah. I think that before we did it, we were already pretty clear on who we wanted to serve. I mean, we realized that we want to keep stepping up the type of person we serve in terms of how much they can invest in their fitness so we can do more for them over our years, and we plan on keeping to do that in the future. So we already knew that, really going in. I guess what we hadn’t done was go back to the drawing board and develop the product for them. So that was the process this time. It was, “Okay, we’ve got this person now. We’ve been trying to speak to them for a while on the marketing. But when they come in, it’s probably not really the thing for them if it wasn’t created for them.” It’s just that over time, we decided we wanted that client, and we were stuck with the thing we already was selling. So we went back to the drawing board and the product for the person.

 

Raphael Freedman:

So we were still targeting really the same person we were targeting pre-COVID, except that now when they got there, we could be like, “Hey, this thing is built for you, and here’s why,” and they can say, “Oh, I can say that it is built for me.” Then so far, everyone that’s come in has been like, “Wow, this thing really is built for me. This is why it’s better than the thing before, because, A, the thing before wasn’t personalized to me. This thing’s personalized to me” or “B, my personal trainer before was super inflexible. This is really flexible and works with my lifestyle.” So I guess that was the difference, was we already knew the person, but now we just went back and created all the operations around that person.

 

Ric Isaac:

Yeah. I love it, and the fact as well that these birds of a feather flock together, as they say. So these people are swimming in the same circles, and when you’re in a group environment, in that small group, you can still build a ton of that community and that camaraderie, like you said, that people love, right? But it’s at a level where I’m talking with other CEOs and working out together. It’s not me with a 25-year-old kitchen hand doing the same thing, and not that there’s anything wrong with that, but there’s a lot to be gained by being in a common environment and having lots of things in common.

 

Lachlan Rowston:

Yeah, I think the one thing that we really … Well, it took me a while to come to in the marketing was what is the real benefit that I can speak to with these clients that everyone else isn’t saying? So it wasn’t going to be weight loss. It wasn’t going to be best shape of your life. It wasn’t going to be build muscle. It wasn’t going to be get strong. It wasn’t going to be any of that stuff. What I ended up coming up with, and I think it really has worked well, because the clients have really mentioned it and we’ve attracted the right clients, is that we say we get you into incredible shape, but it’s so that you can excel further in your career.

 

Lachlan Rowston:

So we are really targeting career-focused, career-ambitious clientele, which wipes off a lot of the board for a lot of people. A lot of people in their twenties aren’t really that career-focused, and they’re not really in the career that they’re ready to go all in in. So a lot of them as well might still be studying or at uni, but yeah, we’re with the clients that want to make a massive life for themselves, that are super ambitious. I think really speaking to that value and that character trait has attracted a lot of the right clients, because we get a lot of them at the moment.

 

Ric Isaac:

Clearly from the feedback, as you mentioned, they’re loving the service, the personalization of it, but also the combination of still being in a smaller group model. [inaudible 00:19:04]. There’s still that peer support.

 

Lachlan Rowston:

Yeah. Yeah, [inaudible 00:19:08] doing great.

 

Ric Isaac:

Just coming back to your trainers for a second there, I know you mentioned that you had to really have a lot of courage to stay on the course, and you knew you had the backing of the coaches. It’s a big shift for them as well, right? They’re familiar with this certain model, and now we’re shifting into a new model. How was that process in terms of educating them on why you were changing? Because that was probably a question, “Why?”, and how much have they embraced that?

 

Raphael Freedman:

Yeah, that’s a good question. We did try to go through very thoroughly, “This is why we’re doing it,” and we took a lot of the time, I think, while we were in COVID. We were doing a lot during COVID. We were just doing a lot of Zoom classes, and it was definitely less time pressure. People aren’t waking up … People have a bit more time, and we used a lot of that to sell, “Hey, this is why it’s going to be better for you in terms of your job. This is why it’s going to be better in terms of the gym,” how all these aspects were going to be better.

 

Raphael Freedman:

That wasn’t for all the staff. So some of the staff really got around that. They really liked the idea of working with less clients and doing more for them. Some of the coaches were probably much more sold on, yeah, still doing really big group, high-energy classes with younger clients. So those coaches didn’t stay on. So yeah, I guess we told us why we believe it’s better for them and for the gym. The staff that it resonated with, they stayed on, and they went hard in helping us create it.

 

Lachlan Rowston:

I think it was good because with the old model, because you’ve got such a mix of different clients, you could keep a lot of coaches happy,be cause they could work with all different clients, and there would be all kinds of service offerings. You could do a bit more PT. You could do more of the group. The programming was a lot different. It was I guess a lot more reckless is probably not the right word, but it was a lot more variety than what we program now. It was good because we do, honestly, where we’re going need a very specific type of coach with a very specific clientele that they want to work with.

 

Lachlan Rowston:

So yeah, as you niche down the clients and the business model and the offering, you also niche down the type of staff member that you attract. So it was really good to get rid of some of the extra baggage, and at the time, it’s not fun, because they’re obviously still great people and they’re good friends of ours still, but they’re dragging the chain. They’re just not onboard anymore. So yeah, the boat’s going a lot faster without them.

 

Ric Isaac:

It’s interesting that you shared that in terms of you making that shift and then explaining to the staff and letting them self-weed out, if you like, to see whether or not they want to be a part of it. I mean, from a business model standpoint, clearly it’s enabled you guys to be able to serve on a much higher level and get more committed clients as we talked about there. There’s a lot of people, though, that the thought of making such a big shift, or they’re just not prepared to make those hard decisions in business, and I’m sure those conversations with those staff members wasn’t fun and a nice handball there for you, Lachy, not to have called any of the clients. You’ve just got Raph and that’s saying to do all of those, but those would have been hard conversations, I imagine. I mean, there’s some people who are just not prepared to make the hard decisions in their business, are they? So they just continue doing what they’re doing, and that’s not working, either, financially or intrinsically as well.

 

Ric Isaac:

So what would you say to those people who recognize that their model is not either working or it’s not what they want to do, but there’s a significant amount of fear of change?

 

Raphael Freedman:

Yeah. I think we’ve realized that change is guaranteed. It’s just that progress is not guaranteed. So whether you want to stick with it or not, it’s going to end up changing. Either the market’s appetite for your type of training is going to change. You are just going to grow older. You’re not going to be the same face of it when you’re at 40 as when you’re at 20. Things are going to change, but what’s not guaranteed is progress, and the progress has to be forced, has to be tough and thought-through and executed and all that type of stuff.

 

Raphael Freedman:

So it’s not really an option to keep it the same. That’s what we realized, is that the change is coming, and then the pandemic just brought that on in a violent and much quicker way that was like rapid change. It wasn’t staying the same regardless. Yeah, I mean, it’ll be interesting to see how it plays out. But my observations so far have been the gyms that tried to keep everything exactly the same as it was, they’re probably struggling more these days, whereas the gyms that have, not just like us, but in different ways, adapted to the situation, maybe changed their offering, just maybe have gone over and above with their COVID-safe stuff, maybe changed their clients, they to have taken advantage of the opportunities there around, even something as simple as like, “Hey, people have totally different work schedules. Should I keep the class schedule the same?” Obviously not.

 

Ric Isaac:

Right.

 

Raphael Freedman:

The more changes you can make to fit in with the changes happening around you, seems to me like the more you can take advantage of the opportunities. But what is tough, which is probably a mistake that you can fall into, which is you always see the downside really clearly of the new offering or the new thing you’re doing, but you don’t always see the upside immediately. So when we did the offering, I could count all the money we were going to lose next month.

 

Ric Isaac:

Yeah. Right.

 

Raphael Freedman:

I could count all the members we were going to lose, and that is hard. I couldn’t count all the new members we were going to get or how much longer the new members are going to come. I didn’t actually know. So you always see the downside really clearly. You often can’t see the upside. That maybe can hold people back from making the change.

 

Lachlan Rowston:

That was like what’s on the wall behind you, “Practice faith.” You’ve got to have faith that you have made the right decision. I think that’s part of being a business owner, is yeah, you kind of jump off and build a parachute on the way down, as they say. But yeah, like what I’ve said, it’s not really a choice. I think the choice to do nothing is the worst choice. So I would either say get it out or go all in, because you can’t just sit on your hands and just hope it’s going to return to normal. It might, but it’s going to be a while. You’re relying on a lot of factors out of your control for things to go back to normal. That’s for sure.

 

Ric Isaac:

Well, and from what you’ve talked about there, you’ve created a model now which is future-proof as well, because are we going to go through phase two, three, four? Sorry, I should say wave three, four, five, like we’ve seen in other countries that we support as well. That’s likely to happen. In that case, you guys have still got the model that will work. I mean, talking to someone yesterday, actually, been in business for a long, long time. But as he explained to me, he’s now recognized, “My group model is a dinosaur. It’s done,” and it’s probably been done for a couple of years, just because of the mass saturation in the market of so many people just doing the functional fitness classes, which really took off, obviously, around the formation of CrossFit and those sorts of thing and made it more formal, anyway, and a community you’d be involved around.

 

Ric Isaac:

I mean, what would you say to those who have a model where it’s bigger group that are now in pain because they either can’t open or they can’t open to be able to support those bigger groups? What would your advice be to them?

 

Lachlan Rowston:

Yeah. I mean, it’s tough, because every government and every local government and regulatory body is different. So for some people, it might work. They don’t have the caps. But I think the vast majority of people are hindered if they have big group fitness. Yeah. It’s hard to predict where it’s going. Obviously, the direction we’re going is working really well for us. But I know some people love big group fitness, and so it’s hard to take away from it.

 

Raphael Freedman:

One thing I would say is I think if you can get around other gym owners that are doing the something else successfully, sometimes that can open your mind a bit as well. We got pretty stuck just talking to other gym owners who are also doing the functional fitness group. But sometimes in NPE, we would talk to someone charging three times what we charge. I’m like, “Fuck, people actually pay?” “Yeah, people will actually pay.” “Wow. Okay. Maybe it is possible.”

 

Lachlan Rowston:

Yeah, yeah. Yeah, it’s one of those things. You don’t believe it can be done until it’s done, because you’re just married to your old ways. Yeah, I mean, it’s the change conversation. If you’re willing to make the change and take a leap of faith and go all in, you definitely should, or yeah, you can make the choice to just sit on your hands and wait around for things to happen. But yeah, I do echo that sentiment of that gym owner. I feel like group fitness will always have its place in the market, big group fitness, but it’s not profitable and it’s not working for you right now. It’s locking down over and over again. It’s not looking good. You need to change. Maybe it’s just not … It’s so out of the question.

 

Ric Isaac:

Yeah. Well said. It’s having courage and practicing faith, isn’t it? It’s about really embracing that change and seeing it, as you said, Raph, not looking just at the downside, which is obviously really obvious, but then looking at what can happen and how things have changed. As you guys have said, your coaches are happier. They’re working more closer. There’s a lot more relationship with the clients. The clients are loving it, getting great results. You don’t have that volatility in your business in terms of finances now. It’s really consistent and stable. I guess those people that you’re working with as well that are higher-level clientele, if we want to call it that, they’re not going to be affected so much about economic situations in the marketplace, as we talked about. They’re going to be there because they want to create that. They’ve got that ambition, and they want to have a better career. They recognize that health and fitness is going to help them to do that, no matter what their career is, which is awesome.

 

Ric Isaac:

It’s been fantastic watching you guys. I know there’s times, as you mentioned, where you start to think, “Well, hang on. Maybe we made a mistake here.” But it’s been really awesome seeing just how you have presented as leaders through this change and shift in your business, which is a big one, right? Because your team aren’t going to buy into it unless you do, which is really super, super powerful. So congratulations to both of you on creating such a fantastic model and really making a massive difference in the results that your clients are getting, as well as your coaches. We see it, and you guys living happier lives, too, because it’s more aligned with your goals.

 

Lachlan Rowston:

Yeah. Yeah, I think, well, firstly, just to speak to that last point, happier lives is … A dramatic increase in our happiness as owners, undoubtedly, and then second thing is yeah, we just want to thank NPA for all your support, your support, Ric, Sean’s support, Rachel’s support as well. Yyou have these ideas, and then, especially for the sole gym on out, it can be very lonely at times. Maybe the advice that you get from other people, you don’t really trust, or I don’t know. Maybe it’s not that valuable. It doesn’t come from a place of experience. But I think having the network of gym owners, having all your experiences with other gyms, having so many different markets as well, like US markets, European markets, different Asian markets, to be able to go, “Here’s our model. This is what we think. These are the numbers. What do you guys think?” It’s not just, “Oh, it seems pretty good.” It’s like, “All right. Have you thought about this? What about this? This is really good. That’s really good.”

 

Lachlan Rowston:

That gives us the courage. That gives us the faith that, “Okay. They think it works. They’ve seen thousands of gym models before. It should work. Okay. Let’s do it.” So if it wasn’t for you guys, we also wouldn’t have that same confidence when we pull the trigger on these sorts of things, because they are big changes.

 

Ric Isaac:

Well, well done on making the changes and making the pivots required in this … I hate this term, but the new world, because the industry will never be the same again. That’s for sure. It’s great to see you guys being leaders there amongst your community as well. So look, I really appreciate your time. I know you guys are super busy with all the things that you’ve got going on, and thanks so much for sharing your wisdom on this. It’s going to be a real inspiration for a lot of people who are really struggling right now and just don’t know which direction to go in.

 

Raphael Freedman:

Yeah. Yeah, well, if it helps anyone, it was a pleasure.

 

Ric Isaac:

Fantastic. Well, thanks very much, Raph and Lachy. We will speak to you very soon. For those listening, this is well worth listening to this one again to really pull out those gems that the boys have shared there, because it is about progressing and it is about developing the right model that fits and aligns with your core values and is going to enable you to help more people. So thanks again, Raph and Lach. We’ll speak to you very soon.

 

Raphael Freedman:

See you, Ric.

 

Lachlan Rowston:

Thanks, Ric.




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