Financial Gym Update with Shannon McLay
On this episode of Financially Naked: Stories from The Financial Gym, our host is Shannon McLay, Founder and CEO of The Financial Gym. Shannon will talk about the plan for The Financial Gym moving forward, due to COVID-19.
Podcast Notes
As an entrepreneur, you need to be a problem solver, and this is another problem to be solved. Shannon has been building The Financial Gym for seven years, and this is something she did not see coming.
The end goal is to keep The Gym: “How do we keep the lights on? How do we keep this business going, even though it will look different?”
The Gym now works with over 3,000 clients on a regular basis, has over 20 investors, and has a team of 66 people.
COVID-19 has presented problems for The Financial Gym. All Gym locations were closed as of March 13, 2020, and it is unclear when they will reopen, but it’s also unclear how much the community will grow when they do reopen.
The Gym was finally at a place where growth was very formulaic and they could rely on new client numbers every month. Now, Shannon is running the business in the fog. Not only is growth unclear, but The Gym is waiving more and more membership fees for clients who have lost their income due to COVID-19.
At this point, venture capital investors are on hold with new investments and when they do invest again, they’ll be looking for different financial results than they were just a month ago.
The Financial Gym is a startup and ultimately relies on investors to continue to help fuel growth.
Previous to this global pandemic, venture capital investors were very comfortable funding companies that were losing money, in fact, many of them have gone public (i.e. Uber, Slack, Peloton, etc.) and they’re still losing money.
Losing money for a startup was not only normal, it was expected. Now, startups will need to show a clearer path to profitability, rather than just large revenue growth, to receive funding in the post-COVID-19 world.
The leadership team at The Financial Gym has put together a path to profitability with the four Gyms they planned to operate in 2020 (HQ, DC, Brooklyn, and LA). This plan involves expense cuts and very conservative growth, since the future is so unpredictable.
The largest expense for The Gym is payroll. The first step they took was to ask the highest paid employees if they would take a voluntary pay reduction for a period of time. Shannon was making a salary of $100,000 and, as of April 1, her salary was reduced to $60,000. Every single person on the team volunteered for a pay reduction, including teammates that weren’t asked.
The next step is determining the team The Gym can support full time, the team that will switch to part time, and the rest of the team that will be permanently let go. The process of evaluating the team is extensive and has been gut-wrenching for the leadership team.
Many clients will lose their B.F.F. (Best. Financial. Friend.), but team members at The Gym will be losing their “Gym Family” members.
On Monday, April 20, every team member of The Financial Gym will meet with a member of the leadership team to determine their future at The Gym. The team that stays on will have more work with fewer resources.
Shannon’s first priority is to The Gym’s clients. It is important to keep this business running to ensure that financial health is available for all. Team members are here to change clients’ lives and future clients’ lives for the better.
The next priority is to the team and making sure they have jobs and they can support their families and fund their hopes and dreams.
Finally, Shannon has a responsibility to investors to make sure the faith and financial resources they put into the team and the mission was not misplaced.
With this plan, The Gym will fulfill their responsibilities to as many people as possible. This is not the plan they had for 2020, but most of us are not living the plan we had for 2020.
Great challenges bring great opportunities and Shannon is looking forward to the positive ways these challenges will mold us all.
If any client wants to speak with Shannon directly about these decisions, please let your trainer know or email Emily@Fingyms.com to schedule a time, and Shannon will make time for every single one of you.
Thank you for your trust in the team at The Financial Gym. Thank you for supporting The Gym, and thank you for your patience as they work through the greatest challenge this business has seen to date.