Why Your Market Shouldn't Matter If Your Model Is Designed Properly... How My Two Best Locations Were In Polar Opposite Markets. | Ep 71
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Why shouldn't your market matter if your business model is designed properly?
Everybody, happy Tuesday.
How can a flexible business model adapt to different income levels?
Man, I'm doing two in a row on a content tear. But I wanted to make a short video, so I don't think this one will be as long as the last one was.
What is a bifurcated model and how does it benefit diverse customer bases?
But this one's just a very tactical video, just kind of an understanding of the business model that you have within a local market.
What advantages do poor markets offer for business growth?
And so one of the questions that we get all the time is like, my market's different, or I don't know if this will work in my market. So there's probably... Two main points that I want to make and then kind of an example of how this applied with our gyms. So why your market shouldn't matter if your model is designed properly is the title of this and how my two best locations were in polar opposite markets. Why your market shouldn't matter if your model is designed properly is that the model should be able to adjust to a given market. And so what I mean by that is that my two best or, you know, the locations that made the most money were in polar opposite locations.
How do demographic differences impact service pricing and customer behavior?
So let me give you just numbers to back that. So my La Habra location was in my probably what you could argue my poorest market. And so the poorest market – and so this is Southern California. Median income was $31,000. And in Southern California, that is not a lot.
Why is it essential to have a good acquisition strategy regardless of market conditions?
A lot of gang activity in the area. Like, it was – I mean, it's considered a lower socioeconomic status area. On the flip side, the best location I had was – the second best location I had that was in – Lake Forest, California. And so you have these two polar opposite facilities, right?
What ultimately matters for business success beyond market conditions?
And the way and the reason that these work... And my Huntington Beach location was actually almost the same there too. And Huntington Beach probably sits closer to the Lake Forest in terms of demographics and income. That one median income was like 90. Body Forge Lake Forest was... 120, I think is the median income there. So you have 31,000, you got 120 on this side, and you got 90 in the middle, and then I think we had another one in, that was like 60, 60,000 median income. But the point is this, is that the reason that they were able to do so well is that we had a bifurcated model, which is a hybrid model. And so the reason that a flexible model can be flexible is that independent of the market that you are in, provided you are not super, super, super high ticket.
And for me, what I would define super, super, super high ticket as is, you know, if you're doing $2,000 a month, probably, yeah. I mean, if your minimum ticket is $1,000 a month, that's going to be very high ticket. And that would lend itself better to a truly very wealthy market, right? Now, that being said, The hybrid model that we espouse, which is what all the gyms that we have and go into Gym Legacy end up adopting, is the hybrid model, which means that their first level of service is gonna be large group, which is between $150 and $225 a month, and then their second level of service is gonna be semi-private, which is one on four, and then the ticket price there is gonna be $500 to $700 a month.
Now, why did this apply to the examples that I was giving earlier? My Le Havre location had way more in the large group and way less in the small group. And broker markets tend to have more people. It's just denser. There are more poor people than there are middle income and wealthy people. And so when you are in a poor market, the advantage that you have is that your ads will go further, you will get more leads, they will be cheaper. That being said, the lifetime value of those customers maybe slightly lower and so you're going to have a larger large group right you'll still have people who have who this is a high priority for i can't tell you the amount of times i had people who had the hud cap missing on their car and had like you know their doors a different color um paying 400 500 a month for semi-private training because it was a priority for them it mattered a lot to them and those guys are the types of people who would work the extra shift at their job would pick up uber on the weekend so that they could do it because it was a priority for them right and
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Chapters
7 chapters
1
Why shouldn't your market matter if your business model is designed properly?
0:00–0:01
2
How can a flexible business model adapt to different income levels?
0:01–0:11
3
What is a bifurcated model and how does it benefit diverse customer bases?
0:11–0:18
4
What advantages do poor markets offer for business growth?
0:18–0:58
5
How do demographic differences impact service pricing and customer behavior?
0:58–1:14
6
Why is it essential to have a good acquisition strategy regardless of market conditions?
1:14–1:35
7
What ultimately matters for business success beyond market conditions?
1:35–8:24