For years now you’ve poured everything you’ve got into building and managing the fitness business of your dreams. You turned your passion into profit and a career that has served you well. But now, for one reason or another, you’re considering selling your health and fitness facility. And let’s face it, the real end goal for any business owner is to create a success business and eventually sell it for a profit. So now that you’ve made the decision to sell, it’s time to get the return on your investment that you deserve.
Unfortunately, getting out of a fitness business may be tougher than the work you put in to start it in the first place. If you want to see the most profit from your business then a solid exit strategy will go a long way. Unlike many other industries, fitness businesses rely heavily on a trained staff and dedicated memberships to exist. And if you lose either in the process of your sale, the value of your business decreases dramatically.
So, in addition to the normal consideration of selling any other business, you’ll need to take special precautions to avoid scaring your customers and/ or employees and creating a cascading mutiny effect. To help you along the way I’ve put together a checklist of special considerations that I used to sell my three health and fitness facilities at a profit without losing a single member or employee in the process.
Deciding if you’re (actually) ready to sell
First and foremost, you have to commit to your decision to sell your business. I spent over 25 years cultivating a community of fitness minded individuals by creating an inviting atmosphere and providing clients with a highly trained staff. Over the years I absolutely fell in love with my company and everything that it touched. When it came time to sell my business I felt as if I was giving up a child. But I knew in the end I would be able to use my profit to invest in my next brainchild. So I made a clear and decisive decision to remove myself from the deal emotionally so I could stay clear headed throughout the process of the sale. If you want to make the sale of your business as smooth as possible, make sure that you commit to selling before you proceed any further.
Can your business be sold?
This may seem like a silly question to ask but it’s actually one of the most important questions to ask when selling your business. You see, people who buy businesses do so because they see an opportunity for profit and growth. And if the overall financial picture does not reflect this vision then you’ll have a difficult time finding a buyer. So take a moment and look at your business in detail. Does it profit every year? Is there room for expansion or upgrades? Is there anything you can do to improve the profitability of your business before you sell?
What’s your business worth
You have two options when you sell your fitness business, you can either sell your business as a package deal or you can sell the business and real estate separately. Whichever you choose to do, you should evaluate the value of both options and choose the most profitable option. To determine the value of your business by itself, the general rule of thumb is as follows:
Business value = (3 x Yearly Profit) + Value of Equipment
As for the real estate, you can evaluate the value by having a licensed real estate professional (like myself) complete a Comparative Marketing Analysis of your property. It’s important to be realistic during this stage of the process. You’ve put blood, sweat, and tears into creating your business but buyers are only going to pay for the value they see in the business.
Preparing your business for sale
Preparing your fitness facility for sale properly can change the market value of your business by thousands of dollars. As I mentioned earlier, you’ll want to be sure your financials are in order. Preferably you should be able to show increasing profitability of the business for at least 6-12 months. In addition, you’ll need to be sure your facility is clean and in good working order. If that means investing some money in cleaning, fixing, or replacing equipment it will likely be worth the investment. Do the same for locker rooms and other amenities within your fitness facility.
Marketing your business
So now that you’ve decided to sell and prepare your fitness business for sale, it’s time to start marketing your business. But, it’s not that simple. If you just throw up a sign on your building, or list your business for sale with a local realtor, your clients and employees will quickly realize your intentions and start to jump ship. And without clients or a trained staff the fitness business you’ve worked so hard on, is now worthless. So how do you pull off this seemingly impossible feat? As a former fitness facility owner and real estate professional, I can guide you through the process of finding the right channels to market your business confidentially and still find high paying, interested, and qualified buyers.
Qualifying prospective buyers
Throughout my life I’ve learned the a tough lesson. That is, things in life are not always as they appear. This could not be more true for finding buyers for your business. When you first list you fitness business for sale you will have a quick influx of buyer leads. It’s important that you take time to qualify each of these leads to determine who is actually serious and capable of completing a deal. You can easily waste hours of your time negotiating with buyers who will never be capable of pulling the trigger. Remember to qualify buyers first (both financially and emotionally) before taking the plunge into negotiations.
Negotiating with buyers
More often than not, buyers are going to offer less than your asking price. This is completely normal in any form of real estate transaction. But, if you’ve done your homework and prepare your business for sale then you should have a very realistic idea of the value of your business. So if a buyer offers less than your asking price, you will have plenty of negotiating leverage. If they refuse to match your asking price you will have solid financial proof of the value of your business and can request that they to prove why they see less value in your business. If they can’t make a good case for their low offer then they are probably not a qualified buyer and you should move on.
Accounting for the deal
At last you’ve made it to the end of your deal and are ready to close. During this stage you’ll need to complete the necessary paperwork for the real estate transaction and organize your tax documents. Working with an experienced real estate professional with make this process go smoothly.
Preparing to exit
Now that you’ve accepted an offer and closed on your deal you should create a checklist of responsibilities before you exit. This list should include things like preparing your staff for the transfer, giving professional “good-byes”, thanking those who have helped build your business, taking any open accounts out of your name, and so forth. Preparing a exit checklist will give you peace of mind that you left your business in a professional and dignified manner.
What to do the day after
Congratulations! You’ve made it through the sales process and it’s the first day you don’t have to go back to work. Now what? Well I can tell you for a fact, if you try to just live off of the money you just received from selling your business two things are going to happen. You will likely spend the money faster than you would like to, and you’re going to get bored pretty quickly. So use your first few days to relax and then start brainstorming about your next investment or project. To your success!