What you’ll learn from this episode
Highlights from the interview
[10:17] – How much he paid for his gym and how he got to that price
[13:18] – How he is able to offer so many services and he still gets to train clients with minimal headaches…some would call this the Subtenant Rent Model
[21:14] – How he uses a $0-cost Instagram marketing strategy that brings in hot leads every week!
[28:24] – As a past SEO expert, his recommendations that got his gym to the top of Google for his area
About our Guest
How he successfully turned around an established gym that wasn’t making any money
I’m so excited today because I’m talking to Jake Foutz, owner of Fitness Xperts, a full service gym in Orlando, Florida.
Fitness Xperts offers a gym membership that includes classes, the gym floor, small group training, personal training, massage, and even has a separate pilates room.
Jake used to work the normal corporate job in marketing for 16 years, and then in 2017 he bought Fitness Xperts, a move he had been dreaming about for most of his life.
What I think is interesting is how he is able to successfully manage a gym with so many moving parts, including four partners, two sets which are couples, and how he was even able to turn this complex business around, which was struggling at the time that he bought it.
This might be a dream for a lot of you, so I’m really excited that Jake will share with us his story and what worked for him to turn and manage this business and gym successfully.
Edited transcription of Fitness Business Secrets Podcast, Episode 23
Kristy: Hey, Jake. How are you doing? Thanks for being on the show.
Jake: Thank you for having me. I’m doing really good. I have a little sore back today. I was exercising this morning and after my morning shower, I tweaked something, but I’m glad it’s that rather than being sick.
Kristy: I also have a sore back. It almost comes with aging, unfortunately.
How much he paid for his gym and how he got to that price
[10:17] Kristy: I think a lot of us listeners are just wondering, how did you come across this gym?
Jake: I’m a weight room guy. I love lifting weights. Later on in life, I started running marathons, but I was very into being in the gym. It was a way of life for me, and still is, by the way. I was on Craigslist one day, looking for gym opportunities to buy or buy into a gym. Lo and behold, I came across Fitness Xperts.
It was an established gym. It’s been a gym for over 10 years now. You know what they say, “Just jump into the opportunity to make your dreams come true.” That’s how I wound up here back in 2017. I’ve always wanted to have a gym and I got that opportunity.
It was operating at a bare minimum. It really didn’t have a membership base. It was a personal training studio primarily, and still is to a point. That’s how we got such a great deal on the gym and on an established brand.
Kristy: Just to give some of the listeners a sense of risk that you’re taking on, because I think there’s a lot more opportunities of achieving our dream goal of owning a gym when they’re in that space. I think a lot of us won’t pull the trigger because that’s a scary place to be.
Jake: If you’re planning to start a gym from scratch, you’re going to be spending way over $150,000 with the new equipment, the marketing, and the advertising.
This was a great opportunity to get in for next to nothing. In the state that it was in, I paid under $60,000.
This was a great opportunity to get in for next to nothing. In the state that it was in, I paid under $60,000.
Kristy: What range would you say would you have been willing to pay for this gym?
Jake: Pretty much the cost of the equipment, the reputation, and it had a few trainers already. Starting by scratch, I had a little little head start though. It wasn’t making money.
Kristy: So, it was pretty much the cost of the equipment. Is that kind of how you came to that number? Also, how much was the rent at the time? Did that include utilities?
Jake: About $500 a month. It included water, but power is always up to us.
Kristy: I see.
Jake: We turned it from being just a personal training gym to accepting members. I started promoting the gym as a private neighborhood gym. We sold products through here like supplements as another revenue stream. We really began to fill out the gym with more people.
The Subtenant Gym Business Model
[13:18] Jake: It helps that all the trainers, the pilates instructor, and the massage therapist pay a rent because they’re all independent contractors. That rent goes towards helping a lot with the lease. It gives us a little bit of profitability.
Kristy: I noticed you have nutrition, pilates, and massage. Are those larger aspects of your revenue or are they just kind of add-on service like a small percentage of revenue?
Jake: Their rent is considerate of the amount of clients and business they do. If we have a trainer that only does about 25 sessions a month compared to a trainer.
It is a lot more attractive, especially around here where most of the gyms charge a percentage, and that percentage is typically taken more away from the trainer.
Kristy: Oh, I see.
Jake: It’s their own business. That’s one of the great advantages to being a trainer here. You can charge however much you want per hour or per session .
Kristy: Maybe there’s a reason why it’s more attractive to trainers.
Jake: For small groups, each person in that group would count as another session for the trainers.
We contract out for classes. My partners have a business called LunaFit, and it is a group exercise challenge. They host kickboxing classes, high-intensity training classes, and boxing classes.
Kristy: I like it. It’s so complicated. In this way, it sounds like you fully never have to worry about the whole employee or independent contractor getting a bill from the worker’s comp or something.
This really different way that sounds like it’s really working for fitness experts, for Jake in Orlando, where it’s a hundred percent independent contractor.
You have a specific way where they’re paying you based on a tier. How do you do class instructors?
Jake: Well, my partners have a bootcamp business called LunaFit, and they host kickboxing classes. It’s more of a bootcamp style program. They pay rent to host their boot camps and core classes here.
Kristy: I saw that, on your website, you have a basic membership that I think includes gym floor and classes. How do they get paid?
Jake: It’s really pretty simple. Whenever somebody pays full access to the gym, the weight room, and the boot camp style classes, we just split up the monthly payment. Part goes to Fitness Xperts, and part goes to LunaFit.
Kristy: One more thing. Massage. Is that the same tier as you mentioned for PTs or is it a different setup?
They rent out a room at my gym, and the pilates instructor runs out a separate area as well. They host their business in those spots, I should say.
Jake: Maybe I need to be a little more clear about the massage and the pilates. The massage therapist pays a pretty standard monthly rent. It doesn’t change. They rent out a room at my gym, and the pilates instructor runs out a separate area as well.
They host their business in those spots, I should say.
Kristy: All right. So, they pay a flat monthly rent. Since they’re paying a flat amount, does that basically set it up where they can use it anytime the gym’s open? Do you only have one massage therapist or do you break it up into two shifts?
Jake: We had two massage therapists. One left to do mobile massage therapy, while the other one is still here. We actually just sign on an aesthetician as well for eyebrows, makeup, and all that good stuff.
Kristy: That’s really cool. It sounds like you have a few different massage or bodywork rests, and aesthetician services.
How do you break up who can use the room at that time? Do you do a rent per the number of hours they have access to?
Jake: They each have their separate rooms.
Kristy: Oh, I see.
Jake: Well, it’s a long-term rent. The massage therapist has been there for over a year and a half now, and she’s had her one room that she pays rent for. It’s just a separate room that she has all to herself. She can do anything she wants to that room.
Kristy: For long-term rent, does that mean you actually make it a 12 month lease or a six month lease?
Jake: Well, we say it’s month to month. If she decides to leave us, she has to give us a certain time frame of notice. It’s 90 days. She has to give us 90 days notice that she’s leaving.
Kristy: That makes sense. What about things that are hard to quantify? I know I saw nutrition. How do you know if the person has nutrition sessions, but they’re doing it either in the gym or not in the gym?
One of our personal trainers also has a nutrition and meal prep business that we refer clients to or to members who want to focus more on their nutrition.
Jake: I guess we could charge more for that, but we really don’t. That trainer still pays us a monthly rent, considering how hard training is going.
Kristy: So, that’s really just a referral and I’m not sure if you get money for the referral, but that’s not actually part.
All the services are really physically there. It happens there. I know it will depend on the area, but a lot of people know Orlando. I’m assuming the room is a standard small size. How much rent can you get for a massage room or a beauty room?
Jake: This one massage room that we do is $550 a month.
Kristy: What would you say is your biggest revenue source? Is it the memberships or is everything kind of equal?
Jake: A trainer’s rent would be our biggest revenue source.
Kristy: How about membership? How has that as a revenue source?
Jake: It’s all right. We could always do better.
Our membership to a personal training business is 30/70. So, 30% of the business is membership, whereas the personal trainer area of business is 70%.
Kristy: For the membership split, since that’s such an interesting model, and I like it because that’s also a very gray area for most, whether it’s a pilates studio or a big box gym of how to classify them.
How do you break up the split for that? Because you also have your gym floor that you’re providing in the service. How do you do the split for the membership with a bootcamp company?
Jake: I’ll give you an example of what we charge for a membership that includes access to the weight room, the facilities, and the bootcamp. That membership would be $150 a month. $50 goes to the gym, and $100 would go to the bootcamp, and that’s for unlimited classes.
How he uses a $0-cost Instagram marketing strategy that brings in hot leads every week!
[21:14] Kristy: Okay. So, it’s very much an independent contractor set up. It sounds like your job, a lot of it is marketing, and I know that you have a marketing background. How do you do your marketing so that you can keep your cost-efficient and low?
Jake: When we first started, we got bumped by all these companies like Yelp and Google. Before when I worked in corporate America, they didn’t really yield much results for me.
So, I figured instead of going that route and pretty much just paying for clicks and exposure, we would base our marketing on more of a referral basis and a word of mouth.
Social media has been really good for us as well, particularly LinkedIn and Instagram.
Kristy: That’s really interesting. I think all of us feel like the referral is the holy grail, but I don’t think we all know how to do it. Well, we get them, but from your experience, how did you push referrals?
Jake: We’ve gone on to Instagram and LinkedIn, and personally we messaged people that are into the health and fitness lifestyle. We also message personal trainers. You can see who are personal trainers on Instagram and LinkedIn.
We just send them a friendly message to let them know about us being Orlando’s only private neighborhood gym, to get them in here, to give them a tour, to talk more about what they do, and how we could work together.
We also offer referral fees or compensation to trainers and members if they bring in people.
Kristy: For the direct messaging on Instagram and LinkedIn, how do you make sure you message people without possibly getting spammed? I’ve tried that technique before and I don’t think I mastered it. I think it is working, but I always wonder. I don’t think I’m doing it the best.
How do you do it to make sure you don’t get marked as spam?
Jake: I don’t think I’ve had trouble with that. They have multiple message boxes on Instagram for people, and some of my messages have gone to the request folder.
I know it sounds corny, but I just speak from the heart or type from the heart rather, and I haven’t had any problems.
Kristy: Cool. So, you’ll actually go on Instagram. How do you find the people? Just through a hashtag?
There’s a search function on Instagram. You can either search by hashtags or by location. It’s a really good search.
Jake: Yeah. There’s a search function on Instagram. You can either search by hashtags or by location. It’s a really good search.
Kristy: Nice. I don’t know if you actually send messages to people daily or it’s just a few weeks. If as a daily, how many people do you usually message a day?
Jake: About 10 to 15 people.
Kristy: How many respond?
Jake: About three.
Kristy: That’s pretty good. Then of those three, how many actually engage with you and come in?
Jake: Almost a hundred percent. That’s a good rate because you’re being personable to them. We’re not a large company. We’re just an average Joe.
Kristy: I like that you’re saying that you’re just an average Joe. I think a lot of people like the lifestyle business you’ve built.
This is something that they understand. I think a lot of us fitness pros look at, “Oh, now I need to learn Facebook ads manager.” Suddenly, it feels like a whole huge part-time job or a new skill set to learn. I think that really sounds good to people.
What about LinkedIn? I could be wrong, but I thought you could only message a certain number of people on LinkedIn. How does that work?
Jake: I believe you can because I got a flag for that once. It said something like, “You reached your quota or maximum.” I would sign up for their free trial then, and I go off that. I just do as much as possible.
Kristy: How has your response been on LinkedIn? I think people assume that LinkedIn is corporate. People are professional and since you’re in the consumer area, how has that response gone or is that mainly for personal trainers?
Jake: LinkedIn has done well, better than Instagram.
Kristy: Really? I would actually love to hear it. Are you just using it for personal trainers?
Kristy: Okay. Not for, “Hey, come to the gym people.”
Jake: That’s right. It’s more for the personal trainers and we’ve signed on a few personal trainers from LinkedIn too.
Kristy: Smart. How many people do you usually message on LinkedIn a day, or is it more per week?
Jake: That’s much less, just because I really love Instagram. Though LinkedIn has been very good for us, I just don’t get on there much.
Kristy: What are the other ways you do to attract trainers to work at your gym?
Jake: That’s pretty much it, through online media. These days, it doesn’t seem like many people want to be approached in public.
Kristy: That makes sense. Do you post any job ads on Indeed or even LinkedIn or other job boards?
Jake: We have on Indeed. Most trainers are looking to be hired as employees on Indeed, not as independent contractors.
Kristy: That’s good to know. I used to use Indeed a lot, and we did hire them more as staff. So, I can see how that might be tricky. It sounds like for your cost of marketing, it’s pretty low.
You’re messaging people. Are there any other ways that you market that’s paid like a paid ad, paid print, or something?
Jake: We have a social media lady that runs some ads for us from time to time on Facebook and Instagram, but that’s pretty much it.
Kristy: Great. I was actually going to ask you about your Facebook page. I noticed it’s pretty active. How has Facebook worked in your marketing system?
Maybe she posts ads, but regarding what you’re doing or what you’re familiar with, how has Facebook been for you?
Jake: When I post an ad, I seem to get a lot of likes, but that’s about it. I post an ad every now and then. But, from the trainers that I’ve talked to from the gyms that I’ve done research at, Facebook ads, I just haven’t seen them work for many people.
Unless you’re a big gym franchise, the smaller guys kind of have a hard time with that.
As a past SEO expert, his recommendations that got his gym to the top of Google for his area
[28:24] Kristy: I know you have a strong background in SEO. How has SEO worked for you? For people finding your website.
Jake: Really good. I think one of the major things that we’ve improved on from when we got the gym back in 2017 was a website. Since I’ve had the gym and my partners, our website has been on the front page of Google search and it’s in the map area too. There’s a map that you can search as well.
We’re constantly ranked in the top three to five on the map. All because of keywords, and we don’t pay anybody. It’s keywords.
Kristy: That’s fantastic. That was a big thing for us. I think what we lacked was analytics and even knowing how well it was working. Since I know you worked in SEO before, could you give listeners some tips on how to show up better on maps and on Google search?
Jake: Yeah. I’ve just used keywords for the geographical area a lot. Orlando and Altamonte Springs because we’re located in the Altamonte Springs area of Orlando. Just the key help terms: gyms, personal training, health and fitness in Orlando. With the gym search, it’s all about the location.
You want that up there. You also want great reviews and a clean site with images that are not very big in size. Just nice small sized images.
Kristy: For the reviews, do you mean just get reviews on the plate like Yelp and Google or do you mean just make sure there’s reviews on your site?
I’m very proud of how we rank with reviews on Google. I believe we had 76 or 77 five star reviews.
Jake: On the search engines. Reviews on a site helps, but it’s really the reviews on a search engine. For example, I’m very proud of how we rank with reviews on Google. I believe we had 76 or 77 five star reviews.
We really have that in our area. We have a good stance on Yelp as well.
Kristy: Got it. That is really good. Regarding search terms, we can all guess what search terms will apply to us. Do you use a tool of any sort to determine your search terms?
Kristy: Got it. I was curious. Since you have independent contractors and a bunch of customers coming in, but at the same time between people coming in and signing up in booking, how do you do that?
Do you have a Mindbody type of thing? Do people just book with those separately through the same system or does everyone have their own system?
Jake: We’re very simple here and very old school. All the clients of the individual trainers, it’s their responsibility. It’s their own business they’re running.
We do have a sign-in sheet at the front of the gym where clients sign in, and they indicate which trainer they’re training with on that day. That’s how we can keep track of the number of sessions. It’s really a very loose system.
The softwares, Mindbody, and all the other ones, Mindbody being probably the most popular one, they’re expensive. If you’re not making a lot of money, it’s tough to do one of those programs.
Jake’s low-key Sales Process
Kristy: Got it. Let’s imagine somebody finds you on Google maps, comes in, sees your website, and says, “Hey. I’m interested, but I don’t even know where to start. I haven’t worked out for five years.”
Who would greet them? How do you facilitate that process, so that they sign up for the optimal package for them? Who talks to them and signs them up?
Jake: Either me or one of my other partners. They’ll come in and talk to us directly. We’ve got our cell phone listed on the front window.
All the trainers are instructed that if anybody comes in looking for training through the front door or not by means of any of their marketing, that prospect has to talk to one of us, the owners, to get a consultation and all that good stuff.
Kristy: That makes sense. So, they talk to you. What is your sales process? Since you have a bunch of services they could sign up for, what do you channel them towards?
Jake: We’re a very personable gym. We’re very honest and straightforward people here. So, I’ll get a prospect that comes in the front door and they’ll come see me.
I’m not particularly a trained salesperson. I just tell them how it is. I use great customer service and I asked them, “Number one thing is, what are your goals? Do you want to just use the gym equipment or are you looking for a personal trainer? Are you trying to lose weight? Are you more into the group exercise classes?”
It’s all about them. To tell you the truth, I’m not a great salesperson. I just talked to him like a friend or a family member, and that goes a long way.
They’ll go into one of those larger franchises like LA Fitness or Planet, and those gyms actually have cubicle setup. Trainers at those gyms are actually taught how to sell and not to train. It’s all about selling at those big gyms. Here, it’s about the community.
Kristy: That’s awesome. So, you just talk to them and find out what they want. Let’s say somebody decides that they might be interested in personal training, but they’ve never done it. What’s the next step for them? Do your trainers or some of them offer a comp session? How do you help them see if that’s the right fit?
We’ve got over 20 personal trainers here. There’s always going to be someone that can help them meet their goals.
Jake: Well, there’s pretty much always a comp session, but I’ll screen the prospect first by interviewing them about their goals.
We’ve got over 20 personal trainers here. There’s always going to be someone that can help them meet their goals, and it’s up to me to really match them with that trainer.
Most times, I will first look at trainers who need the business and are kind of struggling. If it’s a perfect match , it’s a done deal.
Kristy: Even though they’re independent contractors, you mentioned some trainers were struggling and some trainers are new, and they’re just getting their bearings. How much of a role do you play in coaching them or helping them with their follow up and conversion?
Jake: Well, I think that’s one of my jobs as an owner here to help the trainers build their business. If they’re happy and successful, ultimately, the gym will be successful. I do my best to coach them. If I am able to give them a client, I will.
Do independent trainers take your clients?
Kristy: I’ve been in a situation before where I work really hard to build up the trainer’s business. For some reason or another, they decide to leave and maybe even at times try to take clients. How does that work? Do you have something written where they can’t or that’s kind of okay?
Jake: It’s expressed that they cannot take the client from the gym. If we supply them with the client, it belongs to us. It’s understood. We’ll take a 30% cut of that client, while they will take a 70% cut of the money that the client brings in.
Kristy: Have you ever encountered that issue? Maybe a trainer starts feeling like, “Well, I’ve been training them for a year and I have the relationship.”
Jake: No. Amazingly, we’ve never had that issue. I tell you, we’ve got a great and very respectful crowd here. The further you are away from being a corporate entity of bossing these people around, the better it is and the more they respect you.
Kristy: I get how that connects back to your mantra that you guys are a community private gym. What made you decide that that was the right fit and the right messaging when you started out?
Jake: About being a private community gym?
Jake: Well, it really stemmed from my childhood. I used to go to the gym with my dad. I used to go to the YMCA back in the early eighties and nineties. I love that atmosphere.
The YMCA used to be very personable and it used to be a community- oriented gym. They were just like Gold’s gym and Bally’s fitness that they became a very big franchise.
When you’re working out at my gym, you’re working out amongst friends and neighbors. No strangers. It’s all a great community here.
I’m like, “I don’t want to be like that.”
I kind of want to go back in time to the old community driven gyms. We’re private in the sense that we don’t take any day passes. When you’re working out at my gym, you’re working out amongst friends and neighbors. No strangers.
It’s all a great community here. That’s what we wanted to bring back.
Kristy: It sounds like it, and it sounds like you’ve done a really good job, essentially, of creating a great culture among your staff and your members. That’s great.
How the owners stay sane with 5 co-owners!
Kristy: Last question. I was just curious for a lot of people. I think the idea of having partners is really interesting because there’s a lot to do when running a small business. If I have it correct, I saw on your website you have two couple partners, so that’s a total of four people.
Are they actually owners in the physical place or are they partners because you have working relationships with them?
Jake: We’re all owners, so we each have a percentage interest into the gym. I have two other partners and they’re a husband and wife couples.
Kristy: How did you decide how you want to split it? Is it like a full 33% split? I know that I sold my gym to two managers and I think they themselves had a talk of how we were going to do the split. Does one person have more percentage than the other? How are we going to make decisions?
How did you do that conversation? What did you decide about how it would be best to split the company?
Jake: Well, we’re all separate shares. It’s not equal. It was just a plan that we came up with in the beginning. Kitt and Karen Hildreth are the original owners. They sold it to Rich, Ariana, and me.
I think it was the right way to go because for Rich and I, this was our first venture into owning a gym. We liked it because we all had different ideas of how things go. There’s very unique input from each one of us. It’s like we got each other’s back.
Kristy: Did you know Rich before? How did you know that you guys could work well together?
Jake: We’ve met on a few occasions before actually doing a deal. I guess you just feel each other out. You meet, talk, go out to eat, do some functions together, and come together as one.
Kristy: Awesome. For responsibilities, since you mentioned each person has their own take on different things, but also to make sure everyone has clear roles or ways they’ll contribute, was there something specific where you knew Rich was going to do something specific and you were going to do a certain job role?
Jake: Yeah. In the process, we’re just all intermingled. We all have our specialties. That comes out whenever we’re in meetings and at the task of recruiting people or doing marketing. In the end, we’re all doing each other’s jobs.
Kristy: So, you guys closely work together. It’s not one person just doing marketing, and one person does bills and operations. It’s that way, but then you guys kind of just overlap.
Kristy: Cool. So, it’s been a little more than three year, I think since 2017 January. What do you look back on? Are you happy with the decision? What would you say, maybe one or two changes or decisions you’ve made along the way, would you have made differently?
Jake: We seem to find things out as we go along. It’s like a big puzzle. You’re blindfolded and you’re trying to fit all these pieces together. I’ve loved every bit of it. It’s always going to be a challenge. I guess I found out more about marketing on social media later in the game.
I’ve only been messaging people maybe for a year and a half, but I kind of wish I would have jumped on a ball a little sooner there. It’s a gym. It’s fun. It’s not like a big accounting firm. This is fun work and it’s challenging, but you enjoy it every day.
It’s a gym. It’s fun. It’s not like a big accounting firm. This is fun work and it’s challenging, but you enjoy it every day.
Kristy: It sounds like it. You’re definitely more rewarded. In general, I think people who might have the same dream as you, owning their own gym and feeling so fulfilled, but making that leap from the corporate world. Would you say that you’re making more than what you were making in the corporate world the same or less?
Jake: Less, just because we took the gym over whenever it needed some work. So, it’s kinda like we’re rebuilding and they say it takes about three to five years to realize the rewards, and it’s very true. It’s hard work. I’m not making really any money from the gym yet.
It’s pretty much the personal training that has been propelling me, but the gym business is really tough. You really got to stay in there and just put some elbow grease into it.
Kristy: Absolutely. I hear you. I spent five and a half years putting a lot of elbow grease. It can be tough. So, but really innovative ways to keep it simple.
Your time is important and you probably need to be doing a lot of things. So, that’s an interesting model. I think that would be attractive to a lot of future gym owners.
Thanks for sharing that. What do you see that your future holds for you in the next three to five years? Are you gonna keep growing your gym or do you think three more years and then you might try something else?
Jake: No. This is it for me. I’m 39 years old. I want to be in the gym my whole life. I want to open up a few other gyms though. That would be really good. Maybe a handful of other gyms in areas that I really love to go like Miami, Nashville, or Myrtle beach.
I have connections in all those places, and it would be great to just have private neighbor areas as well.
Kristy: Yeah, absolutely. Those are good places.
Jake: People tell me all the time that I work too much. I work seven days a week. But, I’m like, “I feel like I’m retired because this is fun.”
Being in the gym all day and training people as well. It’s like I’m playing every day, so I love it. I’m here to stay.
Kristy: That’s awesome. Well, I think that you’re living the dream, and this gives us some ideas if you’re looking to open your own gym. Maybe for fitness experts, this is something that could be really rewarding.
Thanks so much for your time. If someone wants to reach out to you, how could they do that?
Jake: On Instagram, I guess that’s what you really need a handle for. I’m @officialjakefoutz. I’m on LinkedIn, Jake Foutz.
I also have my official brand page, which is Jake Foutz. Of course, Fitness Xperts is on Facebook, Instagram, and LinkedIn as well. So, me and the gym, we’re all over the place.
Kristy: Yeah, sounds like it. Awesome. We’ll definitely reach out to Jake. He has a lot of interesting insights and thanks so much for your time.
It was really interesting hearing your story.
Connect with Jake!
Jake: Thank you for having me. I had a good time. Thanks.
Kristy: Awesome. Thanks.