When I first opened my parkour gym, Freedom in Motion, I thought paying coaches would be a straightforward task. set some arbitrary pay per hour that sounded good, then just write a check, right?
As I soon learned the hard way, balancing fair pay with a sustainable business model hides a ton of nuance and requires careful management. If a gym pays too little, it loses talented coaches. If a gym pays too much, it risks survival.
So, how do parkour gym owners find that sweet spot? Let me share the journey and insights that have shaped how we handle coach compensation at our gym, and how you can craft a strategy that works for yours.
The 4/9th Model: How to pay coaches
Discovering the Model
Let’s rewind to a time when my parkour gym was on shaky ground. We were passionate about what we did, but passion doesn’t pay the bills. Every month, our payroll ate up to over 60% of our revenue, leaving us gasping for financial air. That’s when I stumbled upon Chris Cooper, founder of Twobrain Business, and his 4/9th model.
What Is the 4/9th Model?
The 4/9th model, popularized by Cooper and supported by financial experts like John Briggs, author of Profit First for Micro Gyms, suggests allocating 44% or less of your monthly revenue to payroll. Imagine your gym makes $10,000 in a month. According to the 4/9th model, $4,400 should go towards paying your team.
This model isn’t just a random number; it’s backed by data and has proven effective across various boutique fitness businesses, including parkour gyms like ours.
Implementing the Model
We asked our bookkeeper to begin adding percentage markers to our profit and loss statements. Seeing those numbers in black and white was a wake-up call. Our payroll expenses were bleeding us dry. We could adjust and align our spending with the 4/9th model by tracking these percentages. This simple change helped us bring our payroll down to a manageable 45%.
For every $1 we paid to the team, the company ought to generate $2.25 in return.
Balancing Pay and Quality
Keeping Payroll in Check
It’s crucial not to let payroll expenses drop too low. Underpaying your coaches can lead to high turnover and low morale, which ultimately affects your gym’s performance. We aim to keep our payroll at about 45% of revenue, allowing us to attract and retain top talent while staying financially healthy. Let's say our payroll percentage drops far below 45%; say it becomes 29%. This, too, may be a red flag, as it shows us we're not reinvesting properly in developing our team by acquiring new talented leaders. Or perhaps we're not rewarding our team by directing an appropriate amount of company profits back into increasing hourly pay rates. The 45% target percentage helps on both fronts.
Rewarding Intrapreneurship
To help our coaches thrive, we encourage them to take on entrepreneurial projects within our gym. We foster this intrapreneurial spirit by allowing them to run private lessons, workshops, and events. They benefit from our established client base, equipment, and brand reputation while sharing the profits through the 4/9th model. It’s a win-win situation: coaches earn more, and the gym diversifies its revenue streams.
Possible opportunities could include:
Private lessons
Private group workshops
Hosting unique special events
Being rewarded for learning extra skills like equipment repair
Working with 3rd parties to set up off-site marketing demonstrations
Developing unique programs to fill morning times / unused hours at the gym
Creating a Student Leadership Program
Note: Gym owners enrolled in the Business Accelerator program have access to intrapreneurial opportunities with descriptions and training already flushed out! Ask your mentor for more on this topic.
Example: A Coach’s Workshop
Let’s say a coach organizes a private workshop on mastering kong precisions. They invite 12 students, each paying $49. The total revenue from this 90-minute workshop is $588. According to the 4/9th model, the coach earns $259, added as a bonus in the next pay cycle. This system not only incentivizes coaches but also boosts our gym’s profitability.
Workshop Details | Amount |
Number of Students | 12 |
Fee per Student | $49 |
Total Revenue | $588 |
Coach’s Share (44%) | $259 |
Gym’s Share (56%) | $329 |
Crafting a Pay Raise Roadmap
The Need for Clarity
Without a clear path for salary progression, your coaches might feel undervalued and demotivated. This is where a pay raise roadmap comes in—a document that links performance to pay increases. It’s like a treasure map, guiding coaches towards higher earnings and greater responsibilities.
The various stages of increased pay are also linked to an increased revenue-earning potential. This gives coaches the needed context of "Where does the money come from?" while simultaneously answering the same question for the gym owner, easing tension on both sides.
Setting Performance Metrics
For each pay level, we define specific performance metrics. For instance, a coach might start at $16 per hour but can move up to $20 by achieving milestones such as:
Completing advanced training.
Securing regular private lessons.
Converting a high percentage of trial students into members.
Pay Roadmap Template
Gym owners enrolled in the Business Accelerator program have access to pay raise roadmaps for various positions within a gym, such as coaches or sales personnel. The one we use at Freedom in Motion Gym for our coaches is over 30 pages long, making it hard to share a visual here in this article. Ask your mentor for more on this topic.
Actionable Steps for Gym Owners
Adopt the 4/9th Model: Start by analyzing your current payroll expenses and adjust them to align with the 4/9th model. Use percentage markers to keep track of where your money is going.
Promote Intrapreneurship: Encourage your coaches to develop and run their own revenue-generating activities within the gym. Share profits through a clear and fair system like the 4/9th model.
Develop a Pay Raise Roadmap: Create a document that outlines the path for pay increases. Define clear performance metrics and link them to each pay level to motivate your coaches.
Communicate Transparently: Ensure that your coaches understand how and why pay decisions are made. Transparency fosters trust and aligns everyone towards common financial goals.
Regularly Review and Adjust: Periodically review your payroll percentages and financial health. Adjust your strategies as needed to keep your business and your team thriving.
By following these steps and leveraging the 4/9th model, you can create a sustainable financial structure that supports both your business and your team.
For more detailed guidance and resources, check out our programs at Motion Mentors. Let’s build a profitable and inspiring parkour community together!
If you need any tweaks or additional sections, feel free to ask!
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