Your Profit Isn't Yours

How often do you look at your gym’s profit and think, “This is finally mine to keep!”? If you’re like most gym owners, that moment is short-lived when you realize: Your profit isn’t actually yours to spend. While it feels like a reward for your hard work, your profit has bigger responsibilities. Taxes, debt, reserves, and growth are all waiting for their piece of the pie.

Taxes

One of the most overlooked destinations for your profit is taxes. When you work for a big company, taxes come off the top, and you get paid the rest, known as your net. But when you own a business, you’re responsible for pulling out the tax liability. This includes federal, state (if applicable), and any other taxes that apply to your situation.

It’s a tough concept for many to grasp, but when you earn profit, a portion of it has to be set aside for Uncle Sam. A good starting point is to set aside 25% of every dollar of profit. If you want to be extra cautious, aim for 30%. Open a separate savings account specifically for taxes if you haven’t already—I’ll wait.

Debt Destruction

If you have debt in your business and you only take the profit for yourself, that debt will never get paid down, and it will keep you financially shackled. A portion of all your profit needs to go toward paying down that debt. The wealthiest individuals stay out of high-interest debt, and as long as you owe someone money, you’ll never be financially free.

This was always a balancing act for me. My wife and I had aggressive personal debt payoff goals. I wanted to pay off the debt as fast as possible, but I didn’t want to stunt the potential for business growth. If I’m honest, I leaned more towards the side of taking more for debt payoff. Could the business have grown faster? Possibly, but that’s a decision we all have to make. Every gym owner will face a similar crossroads: how much to take for personal goals versus how much to reinvest into the business for growth.

Reserves

There’s a cliche in business that “cash is king.” It’s cliche because it’s true. If all your profit is being pulled out of your business, you’ll never build cash reserves, and that’s a dangerous situation. Cash reserves give you the ability to weather storms. Without them, when trouble comes, you could be in big doo doo.

Growth

If you want to grow your business, there are three things you need: technology, people, and money. If all of your profit is eaten up by personal spending or debt, you won’t be able to reinvest in these areas. Personally, As mentioned, I pulled a lot of profit out of my business to pay down debt. 

With that said, I sacrificed other things in order to grow. On the personal side, we drove used cars, even sharing one at one point. Business wise, we never had the fanciest equipment. Our clients didn’t seem to mind and this allowed us to put our profit toward growth opportunities like new hires, marketing, etc. 

At the end of the day, as a gym owner, you’ve earned the privilege of seeing your hard work pay off. But remember, profit isn’t just about what’s in your pocket today. It’s about making smart decisions that set you up for long-term success. Your profit isn’t for impulse buys or “easy wins” today. It’s a tool for securing your future, paying down debt, and keeping your business growing healthfully.

If you're ready to make your profit work for you (instead of the other way around), take a step back, reassess, and make sure your money is doing what it’s meant to. It’s not just about getting by; it’s about making a lasting impact.

Ready to take control of your finances and grow your business? Let’s chat! Book a quick call with me here, and we’ll find the best solution for you. We can also work through the best strategies for you to be prepared for taxes.