In this episode, we’re back again with Mike Littrel, the CEO and founder of X3 Sports, who built up a 5 MILLION dollar gym business.With five locations expanding across the Atlanta area, Mike has become successful in team building, sales and expansion.
[WATCH: Mike’s first time on The GSD Show!]
How It Started
Mike talks about his experience building a business from scratch, including the challenges he faced and the hard work it took to achieve success. He shares a story about how he had to sell the vision to his clients, even though he didn’t have all the equipment they needed.He couldn’t afford a new ring (similar to the one they’re sitting in) but sold the members on the idea of it.
Mike notes that people didn’t realize there was no ring, or missing out on anything because they were focused on the experience he provided.
When to Expand
For those who have one location and want to expand, Mike recommends thinking about the current structure of the business. He says for those that want to expand to multiple locations, they need to make sure their current business is generating a good profit and can run without their direct involvement, as they will need to focus on the new location.
He cautions that growth does not always lead to increased profits and that expanding can lead to more expenses and responsibilities.He says to consider the infrastructure required for the new location, such as whether they will need to hire a district manager or build a mini corporate structure.
[READ MORE: HOW THIS FITNESS REGIONAL MANAGER DOUBLED CLUB PILATES REVENUE IN JUST ONE YEAR]
He stresses the importance of understanding when they will need to add additional resources and personnel as the business grows. If you plan to replace yourself with someone else at the new location, that person will need to be paid, and you may not be able to pay yourself.
He says focusing on creating a unique experience for clients, rather than just replicating the first location, to ensure the new location’s success.
Successful Expansion
Mike discusses the different levels of running a company, pointing out that it takes a different structure to run a million-dollar company compared to a five million dollar company. He notes that the transition from zero to one million is harder than one to ten million, and it is important to have good people to operate without much accountability as the company grows.
To prepare for the growth, Mike suggests making more profit by finding ways to make more money, which could allow for the hiring of good people who can operate without too much oversight. Mike also points out the importance of strong processes and systems that need to be even tighter and more specific as the company grows.
When opening a second studio, Mike advises not to replicate the exact staff and structure of the first studio, but to hire the necessary people before opening, train them, and have them hit the ground running. He suggests creative ways of doing this, such as hiring salespeople or managers and converting them into shadowing and working the same process in a successful club. Another conversion could be a street team for marketing.
Mike emphasizes the importance of having a recognizable brand and name, being flexible within the framework of sales, and not splitting time and focusing on the new studio. Instead, it would be best to dedicate full-time effort to the new studio and hire the necessary staff before opening, preparing for the opening of the second studio, and not forgetting the first.
A Sales Team of Tigers
Mike talks about the sales process and what success looks like to his team. To start, he needs to get in front of as many people as possible or generate leads. Paid traffic is useful, but personal outreach can also create leads. When gyms were starting out, the only options were big box gyms, but boutique gyms are now becoming more popular. Consumers are getting more educated and are willing to pay more for higher quality services and products. The goal is to help solve the problems that the big box gyms don’t address, such as how to use the gym equipment properly.
Each salesperson needs to be conscious of generating 100 leads per month, personally. There are many ways to generate leads, and it’s crucial to learn and get better at each one of them. Referrals are also essential, as every member signed up will refer two people. The question is whether the referrals are directed towards the salesperson or not. The VIP process is designed to help generate referrals, where the team presents 10 VIP passes at the point of sign-up. The goal is for each person to think of the first three to five people they know that would need the gym services.
One common mistake that people make when generating referrals is checking it off their list instead of genuinely selling the importance of the referral. It is essential to know who the referral is and how they know them to make it easier to follow up. A weak checklist style is not sufficient when generating referrals; it is essential to sell the reason why the person is on the list and the importance of it.
Raising Prices
Mike talks about his experience raising prices. He was initially resistant to raising prices because of his belief that he did not want to price anyone out, but he eventually realized that raising prices did not deter anyone from joining. Instead, it showed that if people weren’t building value, it didn’t matter if he charged $88 or $160 per month. He also realized that paying his people more was important because things cost more.
Mike learned that there comes a point where you can’t just sell more to make up for the increased costs. Even a great company has attrition, and it’s impossible to outsell it. Even a small percentage of a big number is still a big number, so managing attrition is really important. By increasing prices, Mike was able to have the same impact with 300 members that it would take him 650 members to do.
Mike also highlights the importance of being open to learning from anyone, regardless of their position or success. By acknowledging that there is always something to be learned, individuals can take ownership and come up with innovative ideas that can benefit their company or organization.
