Joe Rouse (00:30)
you

Trev (00:31)
Hey guys, welcome back to another episode of brotherhood beyond business podcast. Today we're going to talk to Joe. I'm going to walk through Joe's rent increase. And really what we're going to discuss today is just like the stresses that come along with it, the decisions he has to think about when his, his rent, almost doubles. And so that happens honestly to all entrepreneurs. And it's really happening a lot since COVID. And I think over the last, you know, a couple of years, it's really happened to a lot of people. So we started to be a good discussion to let him.

talk through the things he's going through and I can kind of coach them up on that stuff, give advice as we go through it. So Joe, go ahead and just give the situation you're going through as a business.

Joe Rouse (01:05)
Yeah, man, I'm excited to talk about it, honestly, because it'll help me get my thoughts out, know, which is a big thing for me, just in terms of making decisions. But I think anytime you have a big change in business, it's easy to want to get wrapped up in self-pity or get wrapped up in all the thoughts about like, should I be doing this differently? Should I be doing something different? Should I stay the course? The way I tend to look at these things is more like an opportunity.

So, you know, just as opening my second location was an opportunity, closing my second location was an opportunity for more family time. It was an opportunity for more focus on the first location. It was an opportunity to spend more time working on the Brotherhood Beyond Business, all of this stuff. And now I've been presented with the, not gonna say another challenge, I'm gonna say the next challenge. Cause there's...

there's always another challenge. There's always something that happens, right? You go for so long kind of cruising like this or maybe busting your butt to grow like this and then something hits you and it tries to drag you down. And I think you and I have been in business long enough to know that this is just a part of the process, but it doesn't necessarily make it any easier. That's the hard part. That's kind of what I want to dive into today is even though I've been in business for over 12 years,

I've had multiple locations and gone through the stresses of having just all the stuff that comes along with that. When all of a sudden I get hit with, hey, essentially the building has a new owner and they need to raise the rent because the rent's been too low for too long and I knew that. So I've always kind of had an idea this was gonna happen. But the way, not the way, the amount in which they're raising it is a lot because they want to get it, it's not at market value right now and they want to get it a lot closer to market value.

which means a significant increase as soon as possible, like to the tune of anywhere from two to $5 a square foot plus increasing the TICAM fees. And then each year increasing by like probably, this is what they're proposing thus far, like two to $3 per square foot each year, which is not general practice, but they're trying to stair step it up much closer to the market value, which has gone way up in the area because things have been being built.

So just a big increase, right? Like it's a significant increase in business that has to happen when you go from a certain amount of rent to like doubling at the minimum and then it's gonna continue to go up significantly year after that. And once they get it closer to market value or where they think we should be at market value, then it goes to just 3 % per year, which is pretty standard.

Trev (03:34)
Yeah, it's kind of interesting because at our facility, our gym, they're talking about that as well. So we're coming at the end of our seven year lease at the end of next year, or it would be like May of next year. And the people we are building has been sold four times since we've been part of it. And we've been there 11 years has been sold four times. And the issue is, is it's, they're just not making enough money on it. And so now this newest company, we're in a seven year lease. couldn't change on us.

and now they want, they're going to make a big hike to us. And it's that side where it's like, but the issue is all around our area in our facilities in the Northwest suburbs of Chicago and Mundelein all around our area are just empty commercial buildings because people just can't afford commercial bill. Like these commercial buildings have gotten themselves so high priced that normal businesses can't afford to be in them. So they, you know, start to do.

Honestly, a lot of them are moving out of brick and mortar and they're moving into either at home if they can or finding different ways around it. As a gym, we can't do that. We've got to be brick and mortar. but it is an obstacle that like, Nate was telling me the other day that, there's a humongous, probably 30,000 square foot building in Mundelein that has like five cars out of it, outside of it every day. That's all that's at this giant building. because all the other, parts of them just are empty.

Joe Rouse (04:46)
Yeah.

Trev (04:50)
so it's just kind of interesting that, when you're going through it's like, know they want to get companies try to, you know, they're trying to get it to market value or whatever, but it's like, it's kind like house prices, house prices, so out of their bounds that people can't afford them. Well, you just can't keep raising it. Cause if you can't afford them, you're eventually going to run out of supply and demand because now there's so much supply, not enough demand. So things got to come back down. I don't know. I'm in your area. sounds like it's still growing, but in Munda line, our area is like, I wouldn't say it's not growing, but the commercial, the brick and mortar commercial side's not.

Joe Rouse (05:18)
Man, I live in a much, I would assume a much smaller area than where you live. It's very, like you can see this house behind me. That's not my house, but I'm definitely in the suburbs. There's not a lot of industrial spaces like that around here, unless they're kind of hidden, I'd have to go find them. Cause everything here is based on this one main highway that runs through the town. And everything's kind of built on that highway, not a lot off the highway.

So there's not a lot of industrial spaces as a result of that. There's more like strip malls and shopping centers. And what's happened over the last few years is over the last decade is that highway has widened and tons and tons of families moved to the area. Cause it's we have, we've had great schools and that's led to nicer shopping centers being built, more franchises coming in, larger corporate structure franchises.

And all that stuff just takes the rent up. And I think that's a good sign for the town. It should be a good sign. It's been a good sign for the business because, we can technically charge higher prices as long as we provide more value. But it with some of these nicer shopping centers being built, I think that's partially what's driven that rent so high, like to levels like even some of the older strip malls and shopping centers around here commanding rent levels like thirty dollars per square foot, which I don't know what. I mean, most people I know don't pay that with a small business.

even in larger places like outside of like major metropolitan areas. And it's wild to think that somebody would charge that much here, but I get it. I get it. You want to charge what if other people are paying it, like you definitely want to charge it at your, at your, place. We don't, we don't have the issue of, would say, I would say ours is probably the opposite right now. It's more of there really isn't very many empty spaces. There's more, I guess there's some, there's more being built.

But I have to look at it from the point of, right, this is what my current rent is, here's what my other expenses are, payroll, all that good stuff, taxes, and consider the margins I have. margins are fairly thin because I run a fairly beefy staff so that I can be at home sitting by this fire right now while I do this podcast. And then also I'm working on Google ads, and then I'm reaching out to former leads, I'm gonna be calling new leads, all that good stuff, because we gotta grow.

You have to consider all of that and then it's like, okay, now we look at this as an opportunity or you're forced to consider other options and your brain, can go all, my brain can go all over the place and say, man, should I, with this big of an increase and them wanting a five to 10 year lease somewhere in there, should I just sell? Should I close it? Should I look at other,

possible places to move, because I've been in a great situation and it's not going to be a terrible situation moving forward. It's just going to make it where it's much more similar to like a regular, any other situation would be. So you start thinking those thoughts that I haven't had at all. also if I do move, if I was to move, how does leasing somewhere else with the same essential setup for the same price or more expensive,

how does that put me in a better position unless I'm in a better location and maybe the actual physical building itself is set up better or more effective to be able to drive revenue and provide a great experience. And then there's also looking at, well, should I go back into considering buying property? Because if I'm gonna spend more money on this monthly cost, I'd rather have the opportunity to maybe rent part of that space out.

sell that off at some point, know, have an investment for generational wealth for my kids. Like something that's always spent on my mind for the last several years as I've gotten to 40 and approach 40, but there's not a lot available. So then it's like, all right, well, if we're going to keep considering all options, like I was speaking to Jim Herrick this morning, he was in this exact same situation right before COVID like 2018, 2019. And that's what led to him moving in the building he's in now. And he said he found his building simply because he went to like get his haircut one day.

And I think he knocked on the door of this building that was next door and he found out about it. He didn't know anything about it. So he just, he was talking about, just, consider all options. Don't get wrapped up just in one or two. And it might be that I've got a head hunt for buildings and go see what I can find within a five mile radius of breakaway and see if there's an opportunity where somebody maybe would sell more of an industrial type space. Cause I'm in a strip mall, I have three spots in a strip mall right now for everybody who doesn't know.

Trev (09:35)
Yeah. One thing I would say to that is it's also gives you a little peace of mind. Cause if you do go around and research all these other commercial buildings, you just find out like, Hey, Brent's the same everywhere. So why would I even spend the time trying to move? So it gives you a little, did that in it would've been 2019, right before COVID we were looking for a new, property, a new place to put our facility. and we just found out like places in where we are in Munderland places didn't want to take on gyms because gyms take up so much parking. And so we just couldn't find commercial parks.

Joe Rouse (10:00)
Yeah.

Trev (10:02)
places either that wanted to take us. So we just stayed where we were, but it gave us peace of mind. Like no matter we wanted to switch because we actually wanted better space, you know, just a better layout and we just couldn't find anywhere that really would take us. So, but it also, that was a piece of mind. Like, okay, cool. Like we don't even have to think about moving, you know, how to get the equipment, all that kind of stuff. Like we just, we're going to stay here, but it gives you that peace of mind where it's like in the back of your head, you might be thinking, Hey, I need to move because of these things. And you look at, Hey, the grass technically isn't greener over here.

Joe Rouse (10:28)
That's mainly where my head goes. Like I'm trying not to be, I guess, close-minded. And again, you know me, I'm very opportunistic. So I do, I look at a lot of this stuff as an opportunity, but I don't want it. There's anything I've learned through having multiple locations. It's, know, sometimes these opportunities, you got to be willing to deal with all the extra stress that comes along with it, the financial burden and all that stuff. And there's times in life when it's a good time to do that. There's times in life when it's not, you really don't know. But.

I mean, really, no time is great. You just have to stick it out. You got to work through it. But that's where my head initially goes is just, OK, let's be rational. Let's be analytical. Let's control what we can control. If we want to grow, we know what we have to do to grow. We have to do it more. We have to do it harder. We have to do it longer to be able to afford this new rent that's going to be going up over the next few years.

It's just very frustrating for me to think about all the work that goes into the growth that we will use or that we will push for just to pay more rent and not to increase my staff's pay. Not, you know what I mean, not to invest back into the business so much. It's just to cover a new expense that popped up. It's part of business.

Trev (11:44)
Yeah, it's like,

but for you, know, especially over your, your journey last few years, it's like you have this six expense you already know about. know how much rent costs, right? So now you can figure out how much I need to grow the business to create more employee wealth, right? You're trying to get them paid. Well, an obstacle is this one fixed expense just went up quite, it was, you know, it wasn't the 3 % increase. It was a quite, it was a decent enough jump to be okay. Now I, how far does that push my employee increase in wages back?

Joe Rouse (11:52)
Mm-hmm.

Trev (12:11)
because now we've got to figure out how to make up this, you know, $2,000 a month or whatever it is. We have to make up this gap first before we can now increase their salaries more. So it's tough in an economic situation where you as a business are taking on a bigger economic cost. And then the employees also have the economic cost of naturally all of our expenses in the United States going up. it's like, it's, it's, it's a tug of war there. So

Joe Rouse (12:32)
Yeah, and then it turns into the only way that you communicate to your employees that, know, because we're a small business and we can tell them this, like, look, we've got a significant increase in expenses and you want to convey strength and calmness and assertiveness to your employees, but you also want to be authentic. So, I mean, and that's not that hard to do. My, we have a great staff. They're all very bought in. They're all good, high character people.

I have to, just communicating with them, I want to make sure I communicate it the right way. I don't want any of them feeling shaken or unsure about their job or anything like that. And it turns into, we gotta look at business, we gotta look at growing, like you're talking about. You can grow employees' salary through specific services and also grow the revenue in the business. It's just not, the employee gets a percentage of that revenue.

That's just part of how we pay our employees. So it can be done at the same time, but I think the wise thing to do really what you're alluding to is we don't focus on growing employee salaries right now. We focus on growing overall revenue for the business, ideally recurring revenue, because rent is a recurring expense. And that's what I'm going to do. I've got it. I know what I'm supposed to do. I've got a hierarchy of who to go after to try to increase business, starting with current clients and then going to

then probably going, then going to referrals or former clients and then looking at referrals and bring a friend, things like that. then ads are running, so continuing to do what we do with ads, getting Google ads launched. And then I've got a call with my other mentor today too, so we'll be able to hash out a plan as well. So everything's in place, I think maybe because I've got a little bit of time, the thing that I'm probably worst at that I've had to learn to be is patient.

And like there's this balance between like, all right, do I, I need to go after, I have to, I have no choice. But like, don't, you know, I don't, we just, this call didn't happen until this time where we can discuss this. We called my men, my other mentor, doesn't happen until later today. So it's just, I gotta be patient to get that plan together. But I also have to balance that with, hey, don't spend too much time putting the plan together. Like let's take action. We gotta take at least one step every single day to grow.

Like I can't just keep, you know, I spent like 15 minutes starting this fire earlier. That wasn't the best decision, but it's, I'm to sit out here all day long, like, and I'm going to get work done by the fire. And then I'm going to continue into the night for a little while too, just cause the fire is going, it's going to be like 30 degrees here tonight.

Trev (14:59)
Yeah. One thing that I would recommend that I think most entrepreneurs don't do a great job of is as expenses increase in one category, dig through your other expenses and see if there's something that might have been escaping you. That's more than it should cost. Right? So go auditing your former expenses. Say, Hey, we're paying, you know, we could get away paying this before and we don't really use that. call software. don't really use that software that much. So maybe I can.

Joe Rouse (15:23)
Mm-hmm.

Trev (15:24)
And decrease that south that that software and it's not going to make up the increase, but you know, any, you know, especially when it's recurring stuff, can we get rid of three to $500 in a month of stuff? Um, it's just a good way, good chance to audit your current expenses.

Joe Rouse (15:38)
Yeah, I spent a lot of time on that with my annual planning before I even was thinking about this rent increase. And I can almost name every single expense for you that I have. And I can name what expenses I could, if I have like easy to cut. And then I have like, if I had to, could cut. And I could probably find, like there's some that are like, I've got like, when I do a make a big equipment purchase, I'll do some sort of interest free payment process so I don't hurt cashflow.

and I also don't get charged interest. So I've got like three different payments for different equipment purchases. They're all going to be gone by March and that's going to free up a little bit of cashflow. That's one of those things I always watch. I space all that stuff out so I can plan for it. So like we need new rubber flooring. I'll have to delay that until all this is settled out. But I know that I wasn't going to purchase new rubber flooring until this other interest free thing is paid off so that cashflow is balanced out and expenses are managed. Yeah, I've got some things that I

I could cut if I had to, but I would really rather not. I don't have a lot of like, well, that's easy, that's easy right now. But sometimes it does help just to get an outside perspective from that too.

Trev (16:34)
Yeah.

Yeah. It's just something that I think most entrepreneurs don't always look at. You got to kind of dig through and see like, you know, when cash flows higher, you can get away with little expenses that don't seem like they're a lot. And then all of sudden you're like, man, I haven't used that in like six months, but I'm still paying for it. But it's because you don't, have the cashflow, but when all of a sudden that tightens up, like, Hey, let's get rid of some of that. And that's like business and personal budget, right? We do that on our personal budget all the time where it's like, man, I just, we have that recurring subscription going, even though we really don't use that recurring subscription.

Joe Rouse (16:45)
Mm-hmm.

Yeah, yeah, I would say that's probably one of the first things that I did or that you have to do. You got to monitor your expenses every month. I actually monitor mine weekly now. I go in and put in my expenses every single. Whatever's been charged thus far this month, I already have on a spreadsheet at the end of each week.

Trev (17:28)
I Joe to wrap this conversation up, give me an action plan. Uh, so that anybody that's watching this can kind of say, Hey, here's like your, your step one, step two, maybe step three of how you're going to think through this process to give you like where to, how to keep moving this forward. Like you said,

Joe Rouse (17:43)
Well, let me divide that up. So, you know, I'm always wordy. I like to talk. So first it's like, how am going to think through it? And then it's action steps. I know I'm going to go ahead and take even while I'm seeking advice and thinking through it. So thinking through it is having this conversation with you. Thinking through this is making sure I talk to the mentor, another mentor that I pay. Thinking through this is also using a chat GPT on speech mode specifically. Like I like typing back and forth to get ideas. But when I speak, just like,

when I'm speaking to you right now, it really helps me with ideas or it helps me remember something I was taught and to take the right steps. So that's how I think through things. It really helps me to talk to other people that I trust that I know have experience in the area or I seek out somebody I know that's been through it. That's what I do. The biggest thing I do is lean on the brotherhood, which we call our group, the Jedis and...

you'll be getting lots of text messages from me when we're not talking. But that's part of the reason we, right, we rescheduled this podcast. Like we had this earlier, we didn't, we had to reschedule it for whatever reason. And then we were like, now let's make this happen. Let's talk about this. Cause this can benefit other people, but it's also gonna benefit me. Us just talking about this on here. So that's how I think through things. And of course, a lot of things I love to discuss with my wife in the right way. And then thinking through things on my own. The fire behind me is a big one for me.

This thing, like it just helps calm me and relax me. And I do a lot of thinking by fire and I haven't done it in a few months, so it's helpful. But I'm also going to take action while I'm thinking through that. So I have enough experience in the fitness industry to know exactly what to do. And most of these are general business principles. So there's a general hierarchy. If you need to grow fast, you need to utilize what you already have access to because those people, they know you, they probably like you and they probably trust you.

So my first thing is to increase how many appointments I have scheduled with current clients to see if there's any other ways we can help them that we're not helping them. The second thing is to schedule some sort of referral incentive or event with current clients. So we call that a bring a friend. We'll do it for a full week and we have it coming up already scheduled in February. That's where some of that patience comes in. And then the next...

step of the hierarchy is to go towards former clients. So I'm gonna reach out to some past clients that maybe aren't clients anymore that I think that we missed that were great fits and that maybe now is a good time to come back and give them an opportunity, an easy low barrier way to come back. And then after that, I'll go into leads, like past leads that I have and start reaching out to them individually. And after that, it's then focusing more on newer leads and maybe juicing up our ads a little bit more.

but that's generally the hierarchy that I follow. It's current clients, former clients, former leads and clients, and then ads like surface level stuff. That's what I'll be doing to take action. Like I'm finishing up our Google ads here in just a little while too.

Trev (20:34)
That's awesome. Like that. So for anybody watching this, that's really what we talked about in the brotherhood is like, Joe just needed somebody to bounce this off of. Cause as a, as an entrepreneur, you just don't really have a lot of people that understand that conversation. So instead of me and Joe would have talked about this regardless. So it's like, Hey, let's just do it on video. So everybody else can see the process of just walking through. I don't have to give a crazy amount of advice for Joe to be able to talk through the things that he needs. The idea is just like when he, when, when I hear those things, I can give a little bit of advice as we're talking, but also

After this conversation now in my head, as I know, Joe has a problem that needs to be solved. And so as a brotherhood, then when I see the opportunity pop up, I'm like, okay, I need to send this off to Joe. Right? So it's like giving your, in a sense, your board of directors a chance to know what's going on that you're struggling with, or that's the current obstacle in your way so that they may not be able to solve it in the moment, but they can solve it over time as these situations pop up or one-on-one conversations usually happen after that. It's like, Hey, like

Joe Rouse (21:14)
Yeah.

Trev (21:32)
I have dealt with this before. me talk, let's talk about this separately. Right. And so this is what we're talking about is like, these are the real conversations. This is really how it happens. It's not like, you know, crazy where it's like, man, I got this intense idea. It's like, no, this is what I'm going through right now. And this is a conversation we're having. And that's how the brotherhood is really built is conversationally. And then we'll just help each other as we go along. All right. Thanks for sharing your, your, your situation you're dealing with right now. guys, thanks for listening to this episode of the podcast. We'll talk to you later.

Joe Rouse (21:51)
Yeah, that's.

Ep 19 - Transcript.txt

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1

Joe Rouse (00:30)
you

Trev (00:31)
Hey guys, welcome back to another episode of brotherhood beyond business podcast. Today we're going to talk to Joe. I'm going to walk through Joe's rent increase. And really what we're going to discuss today is just like the stresses that come along with it, the decisions he has to think about when his, his rent, almost doubles. And so that happens honestly to all entrepreneurs. And it's really happening a lot since COVID. And I think over the last, you know, a couple of years, it's really happened to a lot of people. So we started to be a good discussion to let him.

talk through the things he's going through and I can kind of coach them up on that stuff, give advice as we go through it. So Joe, go ahead and just give the situation you're going through as a business.

Joe Rouse (01:05)
Yeah, man, I'm excited to talk about it, honestly, because it'll help me get my thoughts out, know, which is a big thing for me, just in terms of making decisions. But I think anytime you have a big change in business, it's easy to want to get wrapped up in self-pity or get wrapped up in all the thoughts about like, should I be doing this differently? Should I be doing something different? Should I stay the course? The way I tend to look at these things is more like an opportunity.

So, you know, just as opening my second location was an opportunity, closing my second location was an opportunity for more family time. It was an opportunity for more focus on the first location. It was an opportunity to spend more time working on the Brotherhood Beyond Business, all of this stuff. And now I've been presented with the, not gonna say another challenge, I'm gonna say the next challenge. Cause there's...

there's always another challenge. There's always something that happens, right? You go for so long kind of cruising like this or maybe busting your butt to grow like this and then something hits you and it tries to drag you down. And I think you and I have been in business long enough to know that this is just a part of the process, but it doesn't necessarily make it any easier. That's the hard part. That's kind of what I want to dive into today is even though I've been in business for over 12 years,

I've had multiple locations and gone through the stresses of having just all the stuff that comes along with that. When all of a sudden I get hit with, hey, essentially the building has a new owner and they need to raise the rent because the rent's been too low for too long and I knew that. So I've always kind of had an idea this was gonna happen. But the way, not the way, the amount in which they're raising it is a lot because they want to get it, it's not at market value right now and they want to get it a lot closer to market value.

which means a significant increase as soon as possible, like to the tune of anywhere from two to $5 a square foot plus increasing the TICAM fees. And then each year increasing by like probably, this is what they're proposing thus far, like two to $3 per square foot each year, which is not general practice, but they're trying to stair step it up much closer to the market value, which has gone way up in the area because things have been being built.

So just a big increase, right? Like it's a significant increase in business that has to happen when you go from a certain amount of rent to like doubling at the minimum and then it's gonna continue to go up significantly year after that. And once they get it closer to market value or where they think we should be at market value, then it goes to just 3 % per year, which is pretty standard.

Trev (03:34)
Yeah, it's kind of interesting because at our facility, our gym, they're talking about that as well. So we're coming at the end of our seven year lease at the end of next year, or it would be like May of next year. And the people we are building has been sold four times since we've been part of it. And we've been there 11 years has been sold four times. And the issue is, is it's, they're just not making enough money on it. And so now this newest company, we're in a seven year lease. couldn't change on us.

and now they want, they're going to make a big hike to us. And it's that side where it's like, but the issue is all around our area in our facilities in the Northwest suburbs of Chicago and Mundelein all around our area are just empty commercial buildings because people just can't afford commercial bill. Like these commercial buildings have gotten themselves so high priced that normal businesses can't afford to be in them. So they, you know, start to do.

Honestly, a lot of them are moving out of brick and mortar and they're moving into either at home if they can or finding different ways around it. As a gym, we can't do that. We've got to be brick and mortar. but it is an obstacle that like, Nate was telling me the other day that, there's a humongous, probably 30,000 square foot building in Mundelein that has like five cars out of it, outside of it every day. That's all that's at this giant building. because all the other, parts of them just are empty.

Joe Rouse (04:46)
Yeah.

Trev (04:50)
so it's just kind of interesting that, when you're going through it's like, know they want to get companies try to, you know, they're trying to get it to market value or whatever, but it's like, it's kind like house prices, house prices, so out of their bounds that people can't afford them. Well, you just can't keep raising it. Cause if you can't afford them, you're eventually going to run out of supply and demand because now there's so much supply, not enough demand. So things got to come back down. I don't know. I'm in your area. sounds like it's still growing, but in Munda line, our area is like, I wouldn't say it's not growing, but the commercial, the brick and mortar commercial side's not.

Joe Rouse (05:18)
Man, I live in a much, I would assume a much smaller area than where you live. It's very, like you can see this house behind me. That's not my house, but I'm definitely in the suburbs. There's not a lot of industrial spaces like that around here, unless they're kind of hidden, I'd have to go find them. Cause everything here is based on this one main highway that runs through the town. And everything's kind of built on that highway, not a lot off the highway.

So there's not a lot of industrial spaces as a result of that. There's more like strip malls and shopping centers. And what's happened over the last few years is over the last decade is that highway has widened and tons and tons of families moved to the area. Cause it's we have, we've had great schools and that's led to nicer shopping centers being built, more franchises coming in, larger corporate structure franchises.

And all that stuff just takes the rent up. And I think that's a good sign for the town. It should be a good sign. It's been a good sign for the business because, we can technically charge higher prices as long as we provide more value. But it with some of these nicer shopping centers being built, I think that's partially what's driven that rent so high, like to levels like even some of the older strip malls and shopping centers around here commanding rent levels like thirty dollars per square foot, which I don't know what. I mean, most people I know don't pay that with a small business.

even in larger places like outside of like major metropolitan areas. And it's wild to think that somebody would charge that much here, but I get it. I get it. You want to charge what if other people are paying it, like you definitely want to charge it at your, at your, place. We don't, we don't have the issue of, would say, I would say ours is probably the opposite right now. It's more of there really isn't very many empty spaces. There's more, I guess there's some, there's more being built.

But I have to look at it from the point of, right, this is what my current rent is, here's what my other expenses are, payroll, all that good stuff, taxes, and consider the margins I have. margins are fairly thin because I run a fairly beefy staff so that I can be at home sitting by this fire right now while I do this podcast. And then also I'm working on Google ads, and then I'm reaching out to former leads, I'm gonna be calling new leads, all that good stuff, because we gotta grow.

You have to consider all of that and then it's like, okay, now we look at this as an opportunity or you're forced to consider other options and your brain, can go all, my brain can go all over the place and say, man, should I, with this big of an increase and them wanting a five to 10 year lease somewhere in there, should I just sell? Should I close it? Should I look at other,

possible places to move, because I've been in a great situation and it's not going to be a terrible situation moving forward. It's just going to make it where it's much more similar to like a regular, any other situation would be. So you start thinking those thoughts that I haven't had at all. also if I do move, if I was to move, how does leasing somewhere else with the same essential setup for the same price or more expensive,

how does that put me in a better position unless I'm in a better location and maybe the actual physical building itself is set up better or more effective to be able to drive revenue and provide a great experience. And then there's also looking at, well, should I go back into considering buying property? Because if I'm gonna spend more money on this monthly cost, I'd rather have the opportunity to maybe rent part of that space out.

sell that off at some point, know, have an investment for generational wealth for my kids. Like something that's always spent on my mind for the last several years as I've gotten to 40 and approach 40, but there's not a lot available. So then it's like, all right, well, if we're going to keep considering all options, like I was speaking to Jim Herrick this morning, he was in this exact same situation right before COVID like 2018, 2019. And that's what led to him moving in the building he's in now. And he said he found his building simply because he went to like get his haircut one day.

And I think he knocked on the door of this building that was next door and he found out about it. He didn't know anything about it. So he just, he was talking about, just, consider all options. Don't get wrapped up just in one or two. And it might be that I've got a head hunt for buildings and go see what I can find within a five mile radius of breakaway and see if there's an opportunity where somebody maybe would sell more of an industrial type space. Cause I'm in a strip mall, I have three spots in a strip mall right now for everybody who doesn't know.

Trev (09:35)
Yeah. One thing I would say to that is it's also gives you a little peace of mind. Cause if you do go around and research all these other commercial buildings, you just find out like, Hey, Brent's the same everywhere. So why would I even spend the time trying to move? So it gives you a little, did that in it would've been 2019, right before COVID we were looking for a new, property, a new place to put our facility. and we just found out like places in where we are in Munderland places didn't want to take on gyms because gyms take up so much parking. And so we just couldn't find commercial parks.

Joe Rouse (10:00)
Yeah.

Trev (10:02)
places either that wanted to take us. So we just stayed where we were, but it gave us peace of mind. Like no matter we wanted to switch because we actually wanted better space, you know, just a better layout and we just couldn't find anywhere that really would take us. So, but it also, that was a piece of mind. Like, okay, cool. Like we don't even have to think about moving, you know, how to get the equipment, all that kind of stuff. Like we just, we're going to stay here, but it gives you that peace of mind where it's like in the back of your head, you might be thinking, Hey, I need to move because of these things. And you look at, Hey, the grass technically isn't greener over here.

Joe Rouse (10:28)
That's mainly where my head goes. Like I'm trying not to be, I guess, close-minded. And again, you know me, I'm very opportunistic. So I do, I look at a lot of this stuff as an opportunity, but I don't want it. There's anything I've learned through having multiple locations. It's, know, sometimes these opportunities, you got to be willing to deal with all the extra stress that comes along with it, the financial burden and all that stuff. And there's times in life when it's a good time to do that. There's times in life when it's not, you really don't know. But.

I mean, really, no time is great. You just have to stick it out. You got to work through it. But that's where my head initially goes is just, OK, let's be rational. Let's be analytical. Let's control what we can control. If we want to grow, we know what we have to do to grow. We have to do it more. We have to do it harder. We have to do it longer to be able to afford this new rent that's going to be going up over the next few years.

It's just very frustrating for me to think about all the work that goes into the growth that we will use or that we will push for just to pay more rent and not to increase my staff's pay. Not, you know what I mean, not to invest back into the business so much. It's just to cover a new expense that popped up. It's part of business.

Trev (11:44)
Yeah, it's like,

but for you, know, especially over your, your journey last few years, it's like you have this six expense you already know about. know how much rent costs, right? So now you can figure out how much I need to grow the business to create more employee wealth, right? You're trying to get them paid. Well, an obstacle is this one fixed expense just went up quite, it was, you know, it wasn't the 3 % increase. It was a quite, it was a decent enough jump to be okay. Now I, how far does that push my employee increase in wages back?

Joe Rouse (11:52)
Mm-hmm.

Trev (12:11)
because now we've got to figure out how to make up this, you know, $2,000 a month or whatever it is. We have to make up this gap first before we can now increase their salaries more. So it's tough in an economic situation where you as a business are taking on a bigger economic cost. And then the employees also have the economic cost of naturally all of our expenses in the United States going up. it's like, it's, it's, it's a tug of war there. So

Joe Rouse (12:32)
Yeah, and then it turns into the only way that you communicate to your employees that, know, because we're a small business and we can tell them this, like, look, we've got a significant increase in expenses and you want to convey strength and calmness and assertiveness to your employees, but you also want to be authentic. So, I mean, and that's not that hard to do. My, we have a great staff. They're all very bought in. They're all good, high character people.

I have to, just communicating with them, I want to make sure I communicate it the right way. I don't want any of them feeling shaken or unsure about their job or anything like that. And it turns into, we gotta look at business, we gotta look at growing, like you're talking about. You can grow employees' salary through specific services and also grow the revenue in the business. It's just not, the employee gets a percentage of that revenue.

That's just part of how we pay our employees. So it can be done at the same time, but I think the wise thing to do really what you're alluding to is we don't focus on growing employee salaries right now. We focus on growing overall revenue for the business, ideally recurring revenue, because rent is a recurring expense. And that's what I'm going to do. I've got it. I know what I'm supposed to do. I've got a hierarchy of who to go after to try to increase business, starting with current clients and then going to

then probably going, then going to referrals or former clients and then looking at referrals and bring a friend, things like that. then ads are running, so continuing to do what we do with ads, getting Google ads launched. And then I've got a call with my other mentor today too, so we'll be able to hash out a plan as well. So everything's in place, I think maybe because I've got a little bit of time, the thing that I'm probably worst at that I've had to learn to be is patient.

And like there's this balance between like, all right, do I, I need to go after, I have to, I have no choice. But like, don't, you know, I don't, we just, this call didn't happen until this time where we can discuss this. We called my men, my other mentor, doesn't happen until later today. So it's just, I gotta be patient to get that plan together. But I also have to balance that with, hey, don't spend too much time putting the plan together. Like let's take action. We gotta take at least one step every single day to grow.

Like I can't just keep, you know, I spent like 15 minutes starting this fire earlier. That wasn't the best decision, but it's, I'm to sit out here all day long, like, and I'm going to get work done by the fire. And then I'm going to continue into the night for a little while too, just cause the fire is going, it's going to be like 30 degrees here tonight.

Trev (14:59)
Yeah. One thing that I would recommend that I think most entrepreneurs don't do a great job of is as expenses increase in one category, dig through your other expenses and see if there's something that might have been escaping you. That's more than it should cost. Right? So go auditing your former expenses. Say, Hey, we're paying, you know, we could get away paying this before and we don't really use that. call software. don't really use that software that much. So maybe I can.

Joe Rouse (15:23)
Mm-hmm.

Trev (15:24)
And decrease that south that that software and it's not going to make up the increase, but you know, any, you know, especially when it's recurring stuff, can we get rid of three to $500 in a month of stuff? Um, it's just a good way, good chance to audit your current expenses.

Joe Rouse (15:38)
Yeah, I spent a lot of time on that with my annual planning before I even was thinking about this rent increase. And I can almost name every single expense for you that I have. And I can name what expenses I could, if I have like easy to cut. And then I have like, if I had to, could cut. And I could probably find, like there's some that are like, I've got like, when I do a make a big equipment purchase, I'll do some sort of interest free payment process so I don't hurt cashflow.

and I also don't get charged interest. So I've got like three different payments for different equipment purchases. They're all going to be gone by March and that's going to free up a little bit of cashflow. That's one of those things I always watch. I space all that stuff out so I can plan for it. So like we need new rubber flooring. I'll have to delay that until all this is settled out. But I know that I wasn't going to purchase new rubber flooring until this other interest free thing is paid off so that cashflow is balanced out and expenses are managed. Yeah, I've got some things that I

I could cut if I had to, but I would really rather not. I don't have a lot of like, well, that's easy, that's easy right now. But sometimes it does help just to get an outside perspective from that too.

Trev (16:34)
Yeah.

Yeah. It's just something that I think most entrepreneurs don't always look at. You got to kind of dig through and see like, you know, when cash flows higher, you can get away with little expenses that don't seem like they're a lot. And then all of sudden you're like, man, I haven't used that in like six months, but I'm still paying for it. But it's because you don't, have the cashflow, but when all of a sudden that tightens up, like, Hey, let's get rid of some of that. And that's like business and personal budget, right? We do that on our personal budget all the time where it's like, man, I just, we have that recurring subscription going, even though we really don't use that recurring subscription.

Joe Rouse (16:45)
Mm-hmm.

Yeah, yeah, I would say that's probably one of the first things that I did or that you have to do. You got to monitor your expenses every month. I actually monitor mine weekly now. I go in and put in my expenses every single. Whatever's been charged thus far this month, I already have on a spreadsheet at the end of each week.

Trev (17:28)
I Joe to wrap this conversation up, give me an action plan. Uh, so that anybody that's watching this can kind of say, Hey, here's like your, your step one, step two, maybe step three of how you're going to think through this process to give you like where to, how to keep moving this forward. Like you said,

Joe Rouse (17:43)
Well, let me divide that up. So, you know, I'm always wordy. I like to talk. So first it's like, how am going to think through it? And then it's action steps. I know I'm going to go ahead and take even while I'm seeking advice and thinking through it. So thinking through it is having this conversation with you. Thinking through this is making sure I talk to the mentor, another mentor that I pay. Thinking through this is also using a chat GPT on speech mode specifically. Like I like typing back and forth to get ideas. But when I speak, just like,

when I'm speaking to you right now, it really helps me with ideas or it helps me remember something I was taught and to take the right steps. So that's how I think through things. It really helps me to talk to other people that I trust that I know have experience in the area or I seek out somebody I know that's been through it. That's what I do. The biggest thing I do is lean on the brotherhood, which we call our group, the Jedis and...

you'll be getting lots of text messages from me when we're not talking. But that's part of the reason we, right, we rescheduled this podcast. Like we had this earlier, we didn't, we had to reschedule it for whatever reason. And then we were like, now let's make this happen. Let's talk about this. Cause this can benefit other people, but it's also gonna benefit me. Us just talking about this on here. So that's how I think through things. And of course, a lot of things I love to discuss with my wife in the right way. And then thinking through things on my own. The fire behind me is a big one for me.

This thing, like it just helps calm me and relax me. And I do a lot of thinking by fire and I haven't done it in a few months, so it's helpful. But I'm also going to take action while I'm thinking through that. So I have enough experience in the fitness industry to know exactly what to do. And most of these are general business principles. So there's a general hierarchy. If you need to grow fast, you need to utilize what you already have access to because those people, they know you, they probably like you and they probably trust you.

So my first thing is to increase how many appointments I have scheduled with current clients to see if there's any other ways we can help them that we're not helping them. The second thing is to schedule some sort of referral incentive or event with current clients. So we call that a bring a friend. We'll do it for a full week and we have it coming up already scheduled in February. That's where some of that patience comes in. And then the next...

step of the hierarchy is to go towards former clients. So I'm gonna reach out to some past clients that maybe aren't clients anymore that I think that we missed that were great fits and that maybe now is a good time to come back and give them an opportunity, an easy low barrier way to come back. And then after that, I'll go into leads, like past leads that I have and start reaching out to them individually. And after that, it's then focusing more on newer leads and maybe juicing up our ads a little bit more.

but that's generally the hierarchy that I follow. It's current clients, former clients, former leads and clients, and then ads like surface level stuff. That's what I'll be doing to take action. Like I'm finishing up our Google ads here in just a little while too.

Trev (20:34)
That's awesome. Like that. So for anybody watching this, that's really what we talked about in the brotherhood is like, Joe just needed somebody to bounce this off of. Cause as a, as an entrepreneur, you just don't really have a lot of people that understand that conversation. So instead of me and Joe would have talked about this regardless. So it's like, Hey, let's just do it on video. So everybody else can see the process of just walking through. I don't have to give a crazy amount of advice for Joe to be able to talk through the things that he needs. The idea is just like when he, when, when I hear those things, I can give a little bit of advice as we're talking, but also

After this conversation now in my head, as I know, Joe has a problem that needs to be solved. And so as a brotherhood, then when I see the opportunity pop up, I'm like, okay, I need to send this off to Joe. Right? So it's like giving your, in a sense, your board of directors a chance to know what's going on that you're struggling with, or that's the current obstacle in your way so that they may not be able to solve it in the moment, but they can solve it over time as these situations pop up or one-on-one conversations usually happen after that. It's like, Hey, like

Joe Rouse (21:14)
Yeah.

Trev (21:32)
I have dealt with this before. me talk, let's talk about this separately. Right. And so this is what we're talking about is like, these are the real conversations. This is really how it happens. It's not like, you know, crazy where it's like, man, I got this intense idea. It's like, no, this is what I'm going through right now. And this is a conversation we're having. And that's how the brotherhood is really built is conversationally. And then we'll just help each other as we go along. All right. Thanks for sharing your, your, your situation you're dealing with right now. guys, thanks for listening to this episode of the podcast. We'll talk to you later.

Joe Rouse (21:51)
Yeah, that's.

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