Summary: In this article I explore why chasing more leads can worsen your life, and how fitness business owners can rethink success to build greater freedom, purpose and profit.
You will learn:
- Why chasing more clients could be keeping you trapped in the gym owner rat race.
- What a disastrous rat bounty reveals about a mistake you might be making in your business.
- How to tell whether your numbers are improving while your life gets worse.
- What rocket science can teach you about questioning the way you run your business.
- How to work backwards from the life you want to the business you actually need.
In 1902 , the third plague pandemic was devastating human lives. Transmitted to humans through the bites of fleas that fed on infected rats, between 30% and 60% of people who came in contact with the Black Death, died.
The French Government stepped in with a bold plan to eradicate the infected rodent plague to slow the spread of the bubonic plague.
They introduced a ‘rat bounty’, turning the human population into an army of rat catchers who were paid for every rat they caught, killed and handed over to authorities. To make collection easier, they only required people to hand in the rat’s tail to claim the bounty.
A huge number of tails were handed in, over 20,000 a day, and the French Government celebrated the spectacular success of the program. Until they started noticing ‘tailless rats’ running through the sewers.
Their enterprising army of rat catchers had realised that if they killed all the rats, there’d be no more government money and their income would dry up. So instead, they caught the rats, cut off their tails, and released them back into the streets to continue breeding.
Many even went as far as setting up breeding farms, and importing rats from neighbouring areas.
This is what happens you reward the wrong thing. It’s called a perverse incentive. It results in not only the failure to solve a problem, but the problem actually getting worse.
And it’s the same mistake I see fitness business owners making as they work to build successful businesses. We want fewer rats, but we reward more rat tails. These are very different things.
The rat tails are what we call a ‘proxy’. What the French Government really wanted was to reduce the loss of human life. So they jumped to a chain of conclusions. If we want to save lives, we need to reduce bites from infected fleas. To do that, we need to stop fleas being infected rats. To do that we need to reduce the number of infected rats. To do that, we need to reduce rat populations. To do that, we need to reward the killing of rats. And to measure that, we need to collect rat tails.
The tails are a proxy. It was too hard to measure infected fleas, so we measured rat tails instead.
The bacterium that caused the Black Death still exists. But now, instead of cutting the tails off rats, we treat the infection with antibiotics, solving the problem at its source.
In business, there are hundreds of these ‘proxies’ – times where we measure one thing because we don’t know how to measure the thing that actually matters to us.
It is my strong belief that your business should exist to improve your life, to improve the lives of the people you love, and to improve the lives of your clients.
Improving your life is comparable to reducing deaths from the plague. That’s the whole point. There is no next step we’re trying to optimise for. So let’s work our way back from this.
We want to improve our lives. So we decide we need to earn more money. So we decide our business needs greater revenue. So we decide we need more clients. So we decide we need more new clients starting with us. So we decide we need more leads. So we decide we need more people clicking on our adverts. So we decide we need to have more ads and spend more money on them. So we decide we need to work longer, stress-filled hours to earn the money to pay for the ads to get the clicks to get the leads, to get the clients, to earn the money to improve our lives.
But by working more and stressing more, we’re failing to achieve the one thing it is we actually want. A better life. Our business becomes so all-consuming, and the roller-coaster of business ownership becomes such a baked-in habit, that we forget why we started in the first place. We call this ‘the rat race’ – coincidentally, a term that fits in perfectly with our 1902 pandemic. We’ve all become rat farmers.
We’re rewarding ourselves for doing the things that makes the problem worse.
We’ve lost sight of the thing that matters – whether your business is making a positive impact in the world. And we’ve done that, in part, because that’s really hard to measure. ’30 leads in 30 days’ is easy to measure. So is the number of rat tails.
Number of rat tails is a proxy. Number of leads is a proxy. A clumsy secondary metric we construct to try to measure our ability to solve a problem.
So how do we make the change?
Well, to answer that, I need to tell you another story. The answer comes not from the sewers of the early 1900s, but from the stars – from rocket science.
The answer lies not in proxies, but in arguing from first principles. But what does that mean?
Love him or hate him, Elon Musk is a genius.
Exactly 100 years after the war against rats, Musk travelled to Russia to negotiate the purchase of decommissioned USSR intercontinental ballistic missiles that he could covert into rockets for his company, SpaceX.
US-based companies like Boeing and Lockheed were simply too expensive. Turns out, Russian missiles were too expensive too. So on a flight back from Russia, he broke down a list of materials that went into building a rocket. The absolute basics.
According to Musk, this included, ‘Aerospace-grade aluminum alloys, plus some titanium, copper, and carbon fiber.’ He went on to say, ‘It turned out that the materials cost of a rocket was around 2 percent of the typical price.’
This is called arguing from first principles. Breaking down your assumptions until you’re left only with the exact thing you’re looking to achieve – not a proxy.
We don’t need rat tails, we need to stop people dying of the plague.
So how can we actually use this in business.
First, boil your objective down to first order principles. Maybe that’s ‘I want my business to provide a full and good life for myself and the people I care about’. If you’ve got a growth mindset, and you believe that you have the power and agency to shape your own life (which you do), spending your time on designing and implementing the life you want to live is where you should be spending your time. Now of course, this ‘ideal life’ probably requires time and money. So we can now step down the ladder to second order principles. This may be something like ‘I need to profit $2000 a week from 20 hours of work.’ Then we can step down to third order principles, determining how many people you need to be paying you how much money to make that realistic.
But whatever you do, don’t make the mistake most people make – getting all caught up in the 10th order principles and building your life around petty vanity metrics like more leads and more social media likes. These are nothing but proxies for the things that actually matter.
Fixating on the things that aren’t truly important is as useless as chopping the tails off rats to cure a global pandemic.
Don’t be a rat farmer.
Your action steps:
- Define the life you want: Write down what a good week looks like, including work, family, rest and activities you enjoy.
- Set your money and time targets: Choose the weekly profit your business needs to provide and the maximum hours you want to work.
- Work backwards to your business model: Calculate the client numbers, prices and costs needed to meet those targets within your available hours.
- Question the numbers you chase: Review each business target and ask whether achieving it would actually improve your life.
- Change one thing this week: Choose one task to stop or change because it improves your numbers without improving your life.
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