Why Revenue is Vanity and Margin is King

"Revenues, vanity. Incomes, bling. Margin's king."

In his session at the Mastermind Gym Solutions Fall Summit, Nathan Jesperson, a 20-year veteran of the fitness industry, dropped this truth bomb on a room full of gym owners. It’s a simple phrase that cuts through the noise of the fitness industry and gets to the heart of what it means to run a truly successful business.

For too long, gym owners have been obsessed with the top line. We chase revenue, we celebrate hitting new sales records, and we wear our gross income like a badge of honor. But as Nathan points out, revenue doesn’t equal income, and income doesn’t equal freedom.

"While margin doesn’t always equate to bigger profits," he says, "margin does equate to how well, and like your prowess in managing your business."

The Three-Legged Stool of Financial Health

Nathan breaks down the financial health of your gym into three key components:

• Revenue: This fills the tank. It’s the fuel that makes everything else possible. But on its own, it’s just a number.

• Income: This shows how far you’ve gone. It’s the bottom-line profit that you can actually take home.

• Margin: This proves how efficiently your engine runs. It’s the percentage of revenue that you keep as profit, and it’s the truest measure of your skill as a business owner.

"The magic is in growing revenue while holding or expanding your margin," Nathan explains. It’s not about making more money; it’s about keeping more of the money you make.

The P&L as a Tool, Not a Chore

For many gym owners, the P&L is a dreaded document that gets sent to the accountant once a year. But Nathan argues that it should be the most important tool in your toolbox. He advocates for running your business off of an NOI (Net Operating Income) P&L, which strips out taxes, depreciation, and interest to give you a clear picture of what’s actually happening in your business.

"I’m gonna be showing you NOIP and LS today because those are the ones that actually show what’s happening in your business," he says.

By analyzing real-world P&Ls from low, mid, and high-revenue gyms, Nathan demonstrates how two gyms with the same revenue can have wildly different outcomes. A $460,000 business can be losing money with a 37% payroll and high rent, while another $460,000 business can be turning a healthy profit with a 26% payroll and reasonable rent.

"There’s always something you can do," he says. "There’s always a size business that you can find yourself in to find and make money."

The Freedom of Control

The beauty of the margin mindset is that it puts you back in control. Instead of being at the mercy of the market, you can start making strategic decisions to improve your bottom line.

"This is where you guys have control," Nathan says. "You go in and just, you start playing with this on a monthly basis and go, ‘You know what, I wanna make 25 grand this month. How do I do it?’"

Maybe it’s adding a little bit in revenue. Maybe it’s cutting an expense. Maybe it’s renegotiating your rent. The point is, you have the power to change your financial destiny.

"You can earn so much money by not changing anything about your business on the exterior," he says. "You can just start making money by planning. Internally. Right. Take the time to do it. You’re gonna get your reward on it."

In our next post, we’ll dive deeper into the practical tools and strategies Nathan uses to plan for profit, manage cash flow, and structure his business for maximum financial freedom.