The way in which you legally structure your CrossFit box (or boxes!) will have financial, tax, and liability ramifications, and each will impact your success.

As an Affiliate owner, the type of income you earn is considered by the IRS to be “ordinary income”.

In very basic terms this refers to such things as income from membership dues, salary, and tips. The IRS wants to tax that income by having you pay self-employment tax on any income you earn. That self-employment tax is actually several taxes rolled up in one (payroll tax, FICA, social security and Medicare tax), and, since 2010, has stood at a whopping 15.3 percent.

Oh, and you must pay income tax on top of that. Ouch.

photo credit: Lori Greig via photopin cc

(1) Partnership

By definition there needs to be at least two members in order for the entity to be a partnership. This is often setup as an LLC (limited liability company). For tax purposes, the active member of the LLC, (the one doing the day-to-day operations) owns 20% of the business and pays self-employment tax on his or her portion of the taxable income. The passive member, let’s say the spouse, owns 80% of the business, but does NOT pay self-employment tax on that taxable income.

(2) S Corporation

Some CrossFit Affiliates prefer to establish their businesses as S corporations (or S corps), in which they own 100 percent of the business. Taxable income from an S corporation is not subject to self-employment tax. However, the S corp does require that the company have an officer, and that the officer receive a “reasonable wage”. In most cases, you, the gym owner, will be the officer, and your S corp will pay you (the officer) a W-2 wage. The S corp will need to file quarterly payroll returns. You, the business owner, WILL pay self-employment tax on the W-2 wage amount. How much of a wage do you pay yourself? There is no right answer for that. The situation for each CrossFit Affiliate is unique. But in most cases, it is never 100% of the taxable income.

Both of these options have pros and cons, and you may find neither is best for YOU.

Unfortunately, there is no such thing as a one-size-fits-all tax strategy. As always, discuss all available options with your proactive CPA.

Guest post by: John D. Briggs, CPA.

John is a partner and tax specialist with Lunsford Peck, LLC, certified public accountants experienced in all matters of accounting and taxation, IRS problem resolution, estates and trusts, business formation, financial planning and investment, real estate and business sales. John also is responsible for all of 321GoProject’s accounting and taxes.

Femur length, posterior chain power, knee/hip angles…these can all be optimized to move more weight.

So, too, is our altruism.

Our collective knowledge, empathy, and desire to make people better is a powerful force. They can be optimized, just like the tilt of your pelvis.

The unofficial slogan of CrossFit is, “Make people better.” On the sickness-wellness-fitness continuum highlighted in CrossFit Journal, our goal is to pursue the right: to move people toward fitness, no matter where they start.

Some have to get to Wellness first. They need our help.

There are many great fundraising initiatives out there. Hope for Warriors and Barbells for Boobs have grown into powerful forces, and local events generate help for animal shelters, autism, homelessness…all very worthy causes. Most gyms don’t need to be convinced to host fundraisers, but they now need help deciding WHICH to support.

We choose to get behind Hope. Here’s why:

• Leverage. The collective power of the broader community means we can do more good in one place.
• Efficiency. The CrossFit Kids Foundation, through which donations travel, has no employees. It has no expenses; everything is covered by HQ. That’s a 100% flow-through rate. Other charities have unavoidable expenses: promotion, staffing, travel. HQ covers ALL of these. If it costs CrossFit, Inc. thirty cents to generate a dollar in fundraising, they pay the thirty cents.
• Knowledge. HQ isn’t afraid to send a team of experts around to different hospitals to find the best. They’re not afraid to build a massive website, full of motivational tools like a worldwide leaderboard, at their own expense, and pay people to make it run.
• Scalability. Members can donate and do a workout…or they can recruit their friends, who can sponsor them. This is how we’ll reach our goal of paying for the care of children.
• Worthiness. In each case, CrossFit HQ supports an organization that makes a DIFFERENCE. Visit St. Jude, and you’ll see a hospital where kids and their families can live for FREE during treatment; where drugs are custom-made onsite; where they grow their own vegetables. St. Jude has lead the charge on leukemia treatment in treatment worldwide, taking the cure rate from 4% to 94% over the last sixty years.

321Go is a supporter of Hope For Cures.

Working up to the Hope WOD on July 6, 2013, 321GoProject is doing our own fundraiser, Help for Hope. You make a donation of $50 and we give you an hour of our time, either for a website audit or a phone call with Chris Cooper, discussing how to “fix your biggest problem in your box”. 100% of the money collected will be donated to CrossFit for Hope. Fill out the form below if you are interested in participating with us.

If your box needs help organizing a fundraiser, check out some ideas below. We will continue to add to them as you share your ideas with us.

• Of course, make the Hope WOD on July 6 a big event in your box
• A loose change jar
• A talent show

For your website to drive and maintain your CrossFit business, it needs consistent graphics, simple, intuitive navigation, and…something of value for your visitors to read and share.

If you are busy building your business, it’s likely you aren’t spending time crafting what to say on your site. But think about this: your website is likely to be the very first place people will visit to get a sense of you and your box. You have one chance to hook them. Having crisp copy that tells your story in a compelling way can be the game changer.

Are you telling your story in the very best way possible?

A core part of CrossFit is humility. There is a big difference, however, between being humble about your max overhead squat, and helping potential (and existing!) clients understand why your box is best.

Responding to requests from our CrossFit community, 321GoProject is pleased to now offer Affiliate owners a variety of professional copywriting options to meet your content needs.

We offer several packages, as well as à la carte services, such as:

• Benchmark – website copywriting customized for you and your box
• Fuel for Thought – up to four articles a month on a wide range of CrossFit-related topics for you to use as your own. Once a month, starting next week, we will also be giving away a blog post article that you can use on your website and label your own. We tell you that you need to blog consistently and now we will help you do it.
• PR your PR – step by step instructions on how to use public relations to maximize your conversion rates
• Member Surveys – confidential third-party surveys of your membership for you to gain insight and honest feedback
• Rewrites – revisions to your existing web copy to ensure it is current, compelling and correct

Need assistance brainstorming for a special event, help with media relations, or looking for content ideas? 321GoProject can help you.

You can find more info about our new services here

All of our content services are overseen by Brooks Addicott, a writer with over 25 years of experience in the communications industry. She has held senior public relations positions at CBS, Inc., Turner Broadcasting, and Robert Redford’s Sundance Institute and the renowned Sundance Film Festival. At first intimidated by the idea of CrossFit, Brooks finally gave it a try nearly three years ago, and hasn’t looked back. Today her writing focuses almost exclusively on fitness, nutrition and CrossFit issues. She can be reached at brooks@321goproject.com

However, I really like sales. I like putting meat, vegetables, nuts and seeds, little starch and no sugar on the table. I like paying my bills. I like positive cash flow.

photo credit: iSlime via photopin cc

What is it about ‘selling’ that conjures up the image of the slick-headed bottom-feeder?

Perhaps it’s the approach: drip marketing, unsolicited calls, spam, advertising pollution…none of these things make us feel good, right? None of those things helps us pursue excellence, and none of them create value for our clients.

Which leaves us with a quandary: if we build excellent businesses, people will love them. But if they don’t KNOW about our businesses, we can’t help them.

The answer: help people you don’t know.

One of my favorite mentoring clients is Darren from CrossFit Knights. Together, we chose three ‘mavens’ from among his members and asked ourselves, ‘How can we help the people they care about?’

One way, we realized, is to provide a nutrition challenge to their coworkers or friends. Here’s how it works:

The Approach:

“Hey, Chris. We really like having you around CrossFit Knights, and we want to help your friends get healthier, too. We’ve got this neat little nutrition challenge that we can run for them; it’s simple, they’ll feel better, and there’s no pressure for them to become members of our gym. What do you think?”

The Plan:

* Host a free seminar on Paleo (or Zone) eating. Keep it simple: focus on eating gluten-free and lactose-free, for example, rather than trying to teach about sleep, supplementation, nightshades, and the rest.
* Derive a simple points system: 5 points for a day of perfect pale; 3 points if the participant missed a meal; 1 point just for being nice (never give a zero.)
* Put up a whiteboard with your logo in their workplace. Let them log daily scores, and ask questions of your gym member with whom they work.
* Give the ‘winner’ a free month or OnRamp package.

The Benefits:

* Non-members are participating as members of your gym. This helps make the mental transition from ‘outsider’ to ‘insider.’ Cults use this same tactic, and it’s powerful. We’re using this superpower for good, however.
* New people can interact with your brand every day without being faced with a purchase decision.
* Your existing client can become an ADVOCATE without becoming a SALESPERSON.
* After a month, you’ve pre-qualified the non-member most likely to become engaged in your program.
* It’s easy to make a transitional offer to participants. “Want to feel even better? We’d be happy to host you folks for a free workout on Saturday.”
* You’re demonstrating that you can make complex things simple.
* You’re helping people.

Question: what’s a ‘good’ drip? The one you don’t get.

You don’t want a drip from your roof. You don’t want a drip from your organs. You don’t want drip marketing from salespeople, and neither do your clients want a daily “sign up now…you know you want to!” from you.

Starting your gym can be a daunting task.

We receive emails and phone calls all the time asking what’s the best process and best practices for opening a box.

One of our goals here at 321GoProject is providing value to Affiliates whether they decide to use our services or not. Just like CrossFit has given so much to us and changed our lives, we want to give back as well.

This checklist is a result of years of vendor relationship building, talking to coaches, and other affiliates owners who have been there.

As you go through the checklist and contact vendors, don’t hesitate to mention you were recommended by 321Go. You might even get a discount.

You can also find other free business templates here.

If you do have specific questions about the checklist, feel free to contact us.

That means the gym owner is already holding their check.

photo credit: Matt. via photopin cc

First, CrossFit Prototype opened with 54 members pre-sold; then CrossFit Belleville took the title with 63. Lowry CrossFit holds our current record with 70 members enrolled by the end of their Grand Opening day (and CrossFit 1834 has a shot at breaking that mark when they officially open next week.)

How are they doing it?

By offering extra value to create a sense of immediacy for potential members. By offering pride for early adopters. And it doesn’t cost them anything.

Three years ago, the most common question that affiliates tried to answer was, “What’s CrossFit?” Today, it’s “Why CrossFit?” and the next question on the horizon is, “When (should I do) CrossFit?”

Our strategy, in a nutshell:

First, lay the groundwork.

1. Create context. Tell your story on your website and facebook. What brought YOU to CrossFit? What made you stay? Why did you want to coach? Why do you want to open your own gym? When people feel that they know you a little, it’s easier for them to trust you quickly.
2. Establish expertise. Write knowledge-based content. Brian Terpak is doing a fantastic job at his Movement Program blog at Steelworks CrossFit. 321GoProject can also help. We are just launching a new content writing service for affiliates. View here
3. Get your site up, and establish your social media presence as soon as you can. Give people a place to go where their questions will be asked.

Next, attract attention.

4. Take your kettlebells to the park, for example. Set up a sandwich board. Run around your parking lot. Wear your box’s t-shirt. Take gift certificates to trusted service providers around town. Invite ‘talkers’ to a ‘free preview’ workout. This list is long, and we work through it in the Mentoring Program, but these ideas are all effective.

Offer increased value for a limited time.

5. This sounds sales-y, but it’s not. Ask yourself, “How else can I help people get started with CrossFit?” What services will help people learn more about Paleo or Zone eating, stick with the program, become proficient with lifting, or achieve an early Bright Spot?
Offer these for free with pre-registration. For example, members of a Founders’ Club might receive one or more of:

• Two free skill sessions (value $90)
• Two free months of Open Gym time (value $100)
• Free admittance to all seminars in the next 12 months (value $280)
• Free admittance to all in-box events for the next 6 months (value $200)
• Free nutritional profile meeting (value $135)
•  ”Founders’ Club” T-shirt…

It’s important to illustrate the price in the above to demonstrate value, because consumers in North America frequently confuse value with price. You and I know the true value of a personalized nutritional plan (about a million bucks!) but for now, you’ll have to give your potential clients some context in a language they’ll understand (i.e. $135 value!)

Play to their pride.

6. “I was there when this place was a shed in a parking lot…” Founding-member cred is powerful. We have members who still proudly wear their faded yellow ‘Catalyst Fitness’ t-shirts with a poorly-done logo from 2005. Green on yellow, thick cotton, ugly. But they’re worn with pride.

Painting your Founders’ Club member names on your wall takes guts, but hey – they’ve committed to YOU. Put their pictures up on your wall. Tell their stories on your site.

Celebrate their commitment.

7. My favorite ‘Founders’ Club’ prize so far is a t-shirt that CrossFit Prototype gave its first members. The front has their logo; the back has the member’s last name and their member number. For instance, if I’m the eleventh member to officially register, my shirt says “Cooper” with a big ’11′ beneath. When a member wears that shirt, they feel pride…and take ownership of the Box’s success, because they’re part of the cornerstone.

It seems unbelievable to open a new business with positive cash flow on the first day, but it’s happening. The CrossFit business model makes it possible; several boxes are using these very ideas to make it a reality.

Some owners appeal to us because (admittedly or not) they have become too dependent on membership fees as their sole source of revenue. Others want to understand the best way to improve services, to provide more value to members. Often the Affiliate owner has been receiving some pricing “advice” from a friend or family member, and simply wants a reality check: “Are my rates competitive, or should I be charging more relative to the services I provide?”

Here is that reality check: rarely, let’s say 10 percent of the time, is a gym underpriced.

Before you resort to a price increase, please take time to explore all other options. Some are outlined in Two-Brain Business; more are outlined here on this site; some are discussed on the old DontBuyAds.com blog; and you’re always welcome to a first-time free consultation with Chris Cooper.

In the North American economy, consumers DO tend to associate price with value. Pricing your service is part of your branding effort: if you’re the lowest-priced affiliate in town, you’ll be perceived as the no-frills, economy, bargain-basement, less-educated, base-level training program. Sometimes, raising your basic membership rate is a strategic branding move. One local friend raises his membership fees every time a new Affiliate opens in his city, because he believes that their presence increases his value as the long-standing expert. As a very early Affiliate, at some point he has been the coach for most of the new guys.

CrossFit culture, as led by Coach, holds the tradition of grandfathering: your membership rate is yours for life. While most of us don’t guarantee that this will be the case, many members actually expect to hold their rates forever.

Here’s how to get past this hurdle:

1. Wait for an opportune time, or create one.

When rolling out new services or programs, or moving into a larger space, use discussion and excitement to frame the price change:

“We’re so excited to offer you more opportunities to love CrossFit. Our new membership structure means that you can come and play between classes – it’s like CrossFit recess! – or get tailored coaching to address YOUR little sticking points. Our membership rates, effective July 1, will be….”

2. Always define the opportunity that will follow the change, rather than the problem that prompted the change:

“On July 1, we’ll be launching a new way to improve at the sport you love. You’ll enjoy the best of all CrossFit has to offer: the fun groups, the feeling of ‘sport’ instead of exercise, individual attention, and free time to play around. We’ve considered each of those individually, and improved ALL of them. Our new services:

• CrossFit Group classes: $
• Individual Skill Sessions: $ Work on your specific weaknesses, one-on-one, with a trainer. Get homework, get better!
• Open Gym: $ Spend more time where you need it, do extra work, roll out, or just play around!”

3. Provide veteran clients with the option to keep their current rate for a while longer by purchasing X months in advance.

“Special offer for existing clients: you may keep your current rate for up to six more months by paying in advance!”

Note: this can also be used when introducing the concept of Open Gym: “Existing members: you’ll get to enjoy Open Gym for three months FREE – a $120 value!”

4. Plan to keep your new rate for five years.

Constant change is confusing! If this type of change IS necessary, make it all at once and move on.

As we said, rate increases aren’t necessary most of the time. Instead, a look at your business model (click here for help) will solve the problem. Should you decide that it really IS time to raise rates, be sure to make the process as painless as possible for your clients.

In terms of a tax write off, you can get the same tax deduction whether you own it personally or in the business name. The way the tax rule works is you can take either: 1) what you actually spend on the vehicle (this would be oil changes, tires, gas, interest on your car loan or your lease payment, other repairs, etc.) or, 2) your standard mileage deduction based on your business miles.

As the IRS rule states, “If you use your car in your business and you use it only for that purpose, you may deduct its entire cost of operation. However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.

You can generally figure the amount of your deductible car expense using one of two methods: the standard mileage rate method, or the actual expense method. The kicker is that regardless of which tax method you choose (actual versus mileage), you need to keep track of your business miles and your total miles. This means keeping a mileage log. Before choosing a method, you may want to figure your deduction both ways to see which gives you a larger deduction. For the current standard mileage rate, search standard mileage rates on IRS.gov.

Unless your box operates a fleet of vehicles, my recommendation is to keep the car in your personal name. If you put it under the business name, you have a higher interest rate, and you have to obtain a business insurance policy on it, which is also more expensive than the personal insurance.”

It’s just more expensive all around if it is a business asset.

As always, it helps to explore your options with a certified public accountant. You can also learn more here

Guest post by: John D. Briggs, CPA. John is a partner and tax specialist with Lunsford Peck, LLC, certified public accountants experienced in all matters of accounting and taxation, IRS problem resolution, estates and trusts, business formation, financial planning and investment, real estate and business sales. John also is responsible for all of 321GoProject’s accounting and taxes.

These ‘skill sessions’ are critical to helping your clients overcome their fears and frustrations, and to helping you put your mark on your programming. Time spent outside the group setting can be a pivotal game changer, provided you approach it the correct way.

For starters, you want your clients to understand that undergoing a one-on-one coaching session is a high value proposition. Yes, it’s going to be more intense in many ways than throwing down with buddies in the 8:30 AM class. (We won’t argue: It’s much more fun to do 30 muscle-ups for time next to friends, for example, than to power out 90 ring pull ups and 90 ring dips in front of one trainer.) But the session provides a chance to really work on those sticking points.

If you are unsure as to how this might look, here are some likely steps:

1) The value proposition: “You haven’t had a snatch PR in awhile; I know some things that will help, but they’re beyond the scope of this group. Do you have a half-hour free to work on some really specialized stuff one-on-one with me?”

2) Action: Book a half-hour skill session for $40.

3) The delivery: “Let’s take a video of you doing snatches with a warm-up weight. Now, let’s take another as we get into the higher weights. Watch the two side-by-side; see how you don’t pull yourself under the bar when the weight increases?”

4) Action: Demonstrate exercises that will help, and assign homework (to be done during Open Gym time, for which you should also charge.)

5) Homework delivery: “I’ve shown you how to do overhead squats and we’ve practiced snatch balance. We’ve also tried a Sotts Press as part of our warmup. I’d like you to do five sets offive on overhead squats, and 10 singles of heavy snatch balance, once per week. I’ve also added a second ‘homework’ assignment that includes mobility exercises and some wider-grip bench pressing. You’ll do these on your own during Open Gym time for two weeks, and then we’ll meet up again and move to the next step. Let’s book that appointment time now; how’s this time work for you in two weeks?”

6) Action: Follow up with added value, or additional feedback, let’s say, in an email: “Great session today! By practicing your landing and improving your overhead position and OHS, we can get you under a PR soon. Here’s your homework, and a link to the YouTube video of our split-screen video analysis. Keep these for reference as you improve. See you next Thursday at 2pm!”

If you are shy about charging for your time, consider this:

If YOU could receive targeted coaching to address your weaknesses from an expert, targeted homework assignments, and video to review, would you pay $40?

Of course you would. We all would. It is tremendous value.

Programming homework, uploading split-screen video (included in the new Coach’s Eye 3.0 App) and emailing follow-ups will take a total of five extra minutes outside the half-hour Skill Session time. Some tracking software, like ZenPlanner, FrontDeskHQ, and MBO will allow you to record notes on a client’s profile; they can login and access their homework and video links anytime, and see notices about upcoming groups when they do.

One-on-one sessions are great for building a client’s gross monthly revenue, but more importantly, they can help people when general group programming cannot. They establish your expertise, and help new trainers be more entrepreneurial.

It’s a winning formula for everyone involved.

Where do you put a fifteen-year-old? Do they go through OnRamp? CrossFit Kids? Some other program? Philosophies about maturity and physical readiness differ; even if you filter by skill to keep them safe and keep them around longer, it can be hard to attract teens to CrossFit.

Solution: do what the other sports do. Give away the sport for free, and sell the training.

photo credit: Matthew Kenwrick via photopin cc

It doesn’t cost a teenager anything to play sandlot baseball. Yes, they need a mitt, but they can borrow one. What they DO need is someone to teach them how to swing; how to catch; how to throw. Baseball skills are so simple to acquire, at the basic level, that dad or Uncle Joe or one of their buddies can teach them the fundamental skills.

Not so with CrossFit. The ‘skill gap’ is where CrossFit gyms make their daily gluten-free bread.

To attract an active teen to CrossFit, one strategy is to host regular competitions. If they’re held often enough, each teen will have the opportunity to showcase their skillset (the running kids will dominate one WOD, and the football kids another, etc.) Each teen gets a chance to shine, in other words…and that’s very addictive. Anthropological research suggests that teens tend to stick with things they’re already good at. Letting them ‘win’ at CrossFit is our first hook.

If we issue a challenge involving a run, pull-ups, and pushups, but then warn that power cleans and deadlifts will be in next week’s challenge…teens will want to know how to be better at power cleans and deadlifts. We’ve thus created a knowledge gap, and as the skills involved in their weekly ‘competitions’ become more advanced, that gap begins to grow.

Where will they acquire this knowledge?

From their high school coaches, parents and peers – at first. Gradually, as they seek to maintain superiority (or just win their first event) they’ll seek coaching from the guy pulling the strings. Some high school coaches will even recognize the gaps in their OWN knowledge, and turn to the CrossFit coach for help.

In one Affiliate’s case, they began experimenting with this design in January. After two sessions, the Athletic Director from one school called to book a ‘field trip’ for a session on weightlifting for sixty kids. Not coincidentally, the next monthly event, the gym featured snatches, and his athletes knew in advance. School pride, even, can be leveraged to bring teens into your gym.

With corporate backing for teen competitions slowly rising (there will be a huge event on the East Coast in June, with 1000 kids participating) teens will begin to get the CrossFit message from the top-down. It’s up to us to provide bottom-up opportunities NOW in our communities, and we can address a glaring market gap in our businesses at the same time.