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Sometimes Profit First Is NOT The Focus

By April 4, 2021April 11th, 2021Blog, Microgyms, Profit First, Uncategorized

I am going to be a little transparent here and share an experience I had with my GM and how that motivated today’s conversation. Sometimes, Profit First is not the answer.

“When are we going to do those things?

The other day, when I came into the gym, he mentioned that he was listening to our active life podcast and how he found it very interesting.

Then he asked, “When are we going to do those things?” In the podcast, we discussed Profit First and Cash flow management and my GM was wondering why we don’t do those things.

Our Scenario… Truthful Moment

So today I wanted to share with you the scenario of our gym, whether profit first works, and whether we are doing those things. Truthfully, our Gym has yet to figure out how to consistently bring in leads. We are doing all that we can, personally, I am not good at bringing in leads to a gym.

Mike Michalowicz has a book titled Fix this Next which I love because he compares Maslow’s Hierarchy of Needs and shares that businesses have a Hierarchy of Needs as well. The base foundation of a business is sales, above that is profit, and above that is where systems come into play. 

A lot of the time when we come across a problem we think that we just need to solve the problem as quickly as possible, but what Mike is trying to get us to realize is that you might have problems across the board, but if you have a problem in the base layer of sales that needs to be your top priority.

We Have A Sales Problem

In our gym’s case, we have a sales problem, we don’t have a profit problem. So I had to explain to our GM that we are doing the Profit First model to the highest extent that we possibly can.

For us, this translates into cutting back on expenses, we are super lean in rent and leadership expenses. I have gone through the exercise of expenses and have cut back on everything that is not essential. We still find ourselves in a profit because profit can only happen by retaining and maintaining a portion of their sales, and we just simply don’t have enough sales. We don’t have enough members to really fill our space and then with covid that has really put a damper on profits.

We have tried a large variety of marketing ideas and lead generators but we have just not seen the results we need. We have not figured out that thing that will work best for us. 

Have You Found Yourself In This Scenario? Here’s What To Do.

So if you have also found yourself in a position where you are struggling with cash flow, sales are the next thing we need to focus on before even looking into profit first.

Now, as we have addressed for our own business, going through the practice of looking at your expenses and cutting back on any things that you can is definitely a good place to start. You may find after doing that exercise that you are doing well and you are profitable. However, If you are finding yourself still struggling, that is the time to change your focus and look at sales, the base of your pyramid.

Profit First Have It’s Place But It Is Not Everything

Profit First has a place but that is not to say there are not other things that you need to fix. I wrote the book Profit First for Microgyms and I believe in the system, I know there are other components to running a business that is not just focused on cash flow management, and sometimes those are the priority. Systems are great, but that is two rungs up the pyramid, Sales has to be the top priority. Systems are great, but sales have to be the main focus.

All the systems in the world are great, but it is not going to matter if we don’t have enough revenue to cover the basic needs of the business.



Take a look at this video, to hear more about this from John

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