Managing
growth via a focus on core competencies.
Guest essay by Michael Cooper
When we first opened our Box, we were
a one man army. At any given moment we wore at least a dozen different hats:
business owner, trainer, coach, accountant, maintenance man, to name just a
few. Money was tight, revenue was nearly non-existent, and that was the way of
it. We worked hard, built our clientele, and in no time at all, we weren’t
sitting around staring at the walls, but instead desperately searching for a
way to somehow squeeze another thirty minutes out of our day. It was exciting.
Our little Box suddenly wasn’t so little. We had grown.
Now we found ourselves on dangerous
ground. How could we go about managing our way through this growth in such a
way that the quality of service didn’t suffer? What’s more, how could we do it
without burning ourselves to a crisp, or losing our minds along the way?
Managing growth is a very common
challenge that faces thousands of companies and organizations every year, yet a
surprisingly significant portion of these companies fail to successfully navigate
this challenge. The consequences associated with this failure can be severe. I
cannot count on my fingers the number of times I have witnessed a solid,
promising upstart company reach a critical growth transition point only to be
crushed and brought to financial ruin as a result of their inability to
effectively manage the challenges that a growth opportunity presented.
One of the
major keys to successfully managing growth - and, for that matter, a multitude of
other business challenges - is clearly identifying and understanding your core
competencies. These are the things that make or break your business; the thing(s)
that sets you apart. In a Crossfit context this equates to making yourself a
better coach, and providing your clients with the best coaching/training
possible.
Once you
have identified this core, look to identify current activities that you engage
in that are not tied to this core. This list might include such things as accounting,
facility maintenance, etc. Can these items be performed by someone else without
negatively impacting the quality of your clients experience? Yes they can.
These are areas that should be explored first. Perhaps there is a client (who
wouldn’t come close to being an adequate trainer ) who happens to be a CPA, who
would happily take on some light bookkeeping in exchange for membership costs.
Or similarly a client who is a carpenter who could help with renovations in the
same bartering context. If as many of these peripheral responsibilities have
been dialed back to the fullest extent possible and there is still a time
shortage, only then should additional staffing be considered.
When you do hire
additional staff, how do you compensate them? Compensation structures need to
be developed in such a way that individuals are motivated to perform, while at
the same time not presented with conflict of interest. We want our staff to
maximize performance, not undermine the integrity of our organization in pursuit
of another buck.
I have
worked up a tiered compensation system, but have yet to put it to the test. It
looks something like this: Client interest indicates that a new class time
needs to be added. The new coach (following adequate training) gets assigned to
the new time slot with an agreed-upon base pay. As part of the agreement it’s
laid out that he has a certain amount of time to establish a stable minimum
average number of attending clients for the class to continue. If he performs
above this minimum required level he has the opportunity to increase his
compensation.
Let’s say
that he is given 3 months to achieve an average attendance of 3 clients. If he
gets 3, then the class stays open and he keeps his job and gets $20/per class.
Your coaching cost per client is now just under $7 (20/3 = $6.67). However for
clients 4 through 7 that begin attending the class he gets an incremental bump,
say $2/per additional head, and for clients 8 through 10 he gets yet another
incremental bump of $3/ per additional head. You cap a class at 10 given your
facility size (you’re still small).
Fast forward
six months; Now the average class attendance is 8 clients instead of 3. The
table below gives a brief summary.
Then
|
Now
|
Average Attendance = 3
|
Average Attendance = 8
|
Coaching compensation per class = 20
|
Coaching compensation per class = 20 +
8 + 3 = 31
|
Coaching cost per client = 20 / 3 = $
6.67
|
Coaching cost per client = 31/ 8 =
3.87
|
As you can
see, with every additional client attending his class, your coaching cost per client
is going down, and his compensation per class is going up. Everybody wins. Of
course this requires a box where attendance is tracked etc. but I think it
would work really well. If his class reaches a point where it is consistently
near max levels, perhaps it is time to set him up in yet another time slot and
the process begins anew.