Deciding to open up your own CrossFit box is a monumental leap of faith and it requires a commitment on a number of levels. It will require an incredible amount of emotional, time and sweat investments – as well as the ever critical financial investment.
If you’re like most Affiliate owners, you’re not setting up your Box with a huge pool of cash that you have sitting under the mattress. While having a ready supply of cash can be a great way to accelerate the rate of growth in your box (providing your service is great), unfortunately the majority of new affiliates are in the situation where they have to borrow or set up with very little working capital and this means that budgets have to be very strictly managed and expenses minimised.
Stages of development
So if you’re cashed up, don’t bother reading on, but if you’re not, it is important to understand that you do not have to have everything perfect from the out-set. The tendency for a lot of new Affiliates is to want large spaces, with extensive equipment without even a member on the books. They may feel the pressure to compete with bigger, more established boxes, but coming in with the buy it now, pay for it later mentality is very dangerous and a sure fire way to put yourself under a financial pressure to which you and the business will not cope.
Rather, you need to enter in to the business with a focus on service and continual over-delivery. Members will not join with you because you have in excess of 30m of chin up bar or over 3 tonne of bumper weights. Keep in mind that what you are offering now will be different a year or even months from now. The number of classes, the equipment range, even possibly where you are offering it may all be different – you just have to understand the different stages of business growth.
Stage 1: The Apprentice Box
The primary income source for Affiliates here is not from the Box. They may well have a full time or a part time job elsewhere that keeps the roof over their head and pays the bills. They Affiliate owner is the head coach, the Manager, the administration assistant and the cleaner. The primary focus of the business here is to get break-even or possibly even pull a small margin.
Stage 2: The Craftsmen Box
This Box is starting to stand and walk on its own. It’s meeting expenses comfortably, with a bit left over each month that is going towards a partial income to the Affiliate owner and it is at this stage the Affiliate owner will recruit some additional staff (in which typically the first position they recruit for is another coach – which is a mistake, but this is a blog posting in its own right)
Stage 3: The Expert Box
The expert box now covers a full-time income for the affiliate owner. They also have a number of other part-time staff that all have their operating areas of focus.
Stage 4: The Elite Box
Elite Box owners have a turn-key box. Aside from their own income, they have a couple of full-time and additional part time staff that manage the day to day operations of the Box for which the Affiliate owner is leveraged out of daily duties.
Okay, so we know what the stages look like and I’m hoping it’s clear that the place you don’t want to spend too much time in is the apprentice or even the craftsmen stages. Your objective will be to accelerate to the expert stage as soon as you can. But in doing so, you need to manage a number critical elements in each stage.
The first cost management factor is your premise. Firstly, know that location is not critical – go industrial as the cost per square metre is much lower. Just make sure that you’re within 10-15 min drive time from home for people first thing in the morning or later in the evening.
In looking in to locations, focus on starting small with the intention that you out-grow your space. A lot of Affiliates get nervous about moving, but a Box is not like a retail business where walk-in traffic is critical. The beauty about the community within your Box is that it is very easy to relocate and keep people notified. In fact relocation’s are tremendous opportunities to run promotions that generate more numbers in to your Box.
Keeping in mind that the intention is to out-grow your space, make sure that you do not commit yourself to any long term leases. Keep this up your sleeve for when you’re hitting the craftsmen/expert stages.
Do your research on the locations. Find out how long they’ve been vacant. Get a feel for what the lease market is doing. And when armed with this information, always attempt to negotiate a ramp up period. For shorter term leases, the landlords movement will be minimal, but every bit counts.
For longer term leases, don’t be afraid to ask for a reduced rental for the first 12 months or even a 3-month lease waiver. The landlord’s primary interest will be to keep you there long-term and giving a ramp up period will be a good way to help ensure that the place doesn’t become vacant again in 12 months because your expenses were too great for your income.
Every CrossFitter loves the tools of the trade and I know it is great to be able to do all of the main-site WOD’s without having to modify due to equipment restrictions. But in making your initial purchases, you’re going to have to factor in what you need versus what you want.
The easiest way to do this is to develop 3 months of programming (or just pull it off of HQ if you’re following main site). Then you need to make three lists for the required gear that is used in the WOD’s based on;
1. the gear that you’re using on a daily – weekly basis
2. the gear that you’re using on a monthly basis
3. the gear that you’re only using once every couple of months.
List one is the stuff that you need to have (this is for the Apprentice Box). How much you need will be determined by your intended class sizes. As a rough guide, you will need as a minimum, one item between two people (based on your max class size), but set your sights on getting this to one item per person as the class numbers grow.
List two is the stuff that you will get once you can afford an item per person. This is for the Crafstmen Box and the purchase of this should be made using your discretion of the amount of usage versus the cost.
List three is the wishlist. Don’t even bother looking at this list until you’re operating as an Expert Box.
The other big consideration to make when setting up the box is where you source your equipment. And for this there are some great equipment providers in Australia including Iron Edge, Gym Direct, Gym and Fitness, Rogue Australia, Again Faster Australia, Primal Equipment.
Don’t get lazy with this one, make sure you shop around with all of these guys and see what they can do (don’t forget to factor in freight to your door) and where possible, see what can be done with packaging. Be sure to compare apples with apples. When starting out, go with affordability first and enforce proper equipment courtesies in your Box. You’ll find the vast majority of the entry level equipment will serve you incredibly well with the due care.
Where possible also look to make your own equipment. There are some great resources on the CrossFit Journal for how you can make your own gear. Alternatively, you can have some equipment engineered for you. The best examples I can give here is chin up frames. You’ll find that taking some specs down to your local welder will be far, far cheaper than getting it through a retailer and at the end of the day, it will be designed specifically for your Box.
A great initiative that a Box owner can take when first setting up is to run a pre-launch campaign. When done correctly, a pre-launch campaign will sell foundation memberships to people prior to the doors actually opening. And this is a great way to ensure that you are hitting break even status as soon as possible. A well run pre-launch campaign in some instances can even generate an operating profit if the first month of operations (as you are getting sign ups without yet having the operating expenses.
The final factor to consider in setting up your Box on a shoe-string budget is to timetable like a dentist. Do not schedule in too much, too soon. Scarcity is one of the strongest calling cards to take action. Limiting the number of classes also helps create a sense of community sooner (it means you’re not WODding it up with only a couple of people in each class) and it is also a great way to ensure that you are not over-committing yourself if you’re also having another job. Much like the size of your Box, add extra sessions as the membership base grows.
One of the great elements in growing the Box through these stages is that your members really appreciate the amount that you’re giving back in to community. To have everything sitting there from the out-set, it becomes quite easy to have this taken for granted by your members. Incrementally growing the box is always acknowledged and appreciated by the community, while also being a means by which you can reduce the financial, emotional and time investments.
For all those current affiliates out there, what tips do you have for saving money when you start your Box?