If you’re still unsure about whether this is the sector for you, on how this $2bn revenue industry is booming off the back of rising health concerns and what it takes to thrive as a gym owner.
If you’re sure you want to buy a gym – read on:
Comparing gyms for sale
What do you want from your gym or fitness business? Familiarise yourself with the types of
When browsing gyms for sale consider factors like:
- Location
- Size – how many members can it accommodate at once and is there room for adding extra equipment or facilities?
- Standard, range and amount of equipment
-
Composition of current membership - Pricing structure – and scope for growing revenues by tweaking it
What about buying a franchise?
You have to follow a formula, but franchises are a typically less risky proposition. Buying into a gym franchise means you are buying into a
Know your regulations
It’s a good idea to be familiar with relevant regulations before you buy. Think about:
- Qualifications and credentials
- How you will adhere to
industry code of practices - Your professional registration
- The safety of your customers while in your care
The governing body, Fitness Australia, goes into further detail to help you get your head around these and other regulatory and licensing issues.
Due diligence
Jim Thomas,
“The owner can produce financial statements that show a gym is thriving,” he wrote in a LinkedIn post. “You need to do due diligence to make sure the information presented to you is valid and shows an accurate picture of the condition of the gym.”
He advises that you establish clearly “what items the gym actually owns, what is leased, what is owed to the gym and what the gym owes to others.” Thoroughness in “due diligence will help you avoid buying the wrong gym or paying too much.”
Budgeting
Fitness
During “times when the revenue is less than the expenses then you need cash reserves to cover the shortfall,” says Jim Thomas. “If you spend all your money
Your projections should be conservative enough to account for teething problems during
Paying a fair price and deal structure
He also warns against paying for ‘potential’. “Do not make the mistake of overpaying for a gym and rewarding the seller for your hard work. The value of the gym should be based on the condition at the time that you purchase it” – not on what it could become under your hardworking, savvy stewardship.
He also says that choosing the wrong entity structure is the worst mistake you can make.
“First-time gym owners will buy a gym and sign every contract in their name. This is a major mistake because it makes you personally liable for any loss that the gym incurs.
“If there is loss your creditors will go after your home, your car and your savings.”
Instead, he recommends that you opt for a corporation or LLC in order to reduce your personal exposure to risk.
If you’re ready to break into the fitness industry, check out our fitness
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