The gym, fitness, and health club industry are still quite competitive, but it also provides a lot of diversity. This sector includes anything from multi-location gyms with 30,000 square foot facilities to a beachside studio that provides paddle-board yoga. The range of alternatives attracts to purchasers, who are mostly entrepreneurs wanting to acquire a firm that enables them to have fun.
Profits are typically at 8.6%, and successful fitness facilities have membership prices that are 10x capacity. Because startup fees may be high, it’s simple to understand why purchasers might choose to acquire an existing fitness facility in this booming industry.
As a fitness facility owner, the greatest moment to sell is when your cash flow is increasing and the industry is growing. If you’re considering about selling your health club, the first step is to get a company appraisal to see how much it’s worth.
We’ve included some data below to give you a sense of what’s crucial in establishing the value of a fitness center, but keep in mind that only an experienced business broker can tell you the exact worth of your company.
You’ll want to make sure you obtain the greatest price possible when selling your gym now that you know what goes into valuing a fitness facility. We know what it takes to raise the value of a company so that when you are ready to sell, the sales price is exactly where you need it to be from selling dozens of fitness centers and health clubs.
These six actions may help you start planning now so that even if you aren’t ready to sell for another six months, the value of your gym will be much greater.
Offerings in Specific Markets
As more individuals continue to invest in their health, the more diverse market needs a broader range of exercise options. Adding more courses or training sessions to your gym’s schedule will assist improve attendance while also adding a new cash stream to your bottom line. First and foremost, think about giving individual sessions with a personal trainer.
The cost of private sessions might vary depending on the frequency of sessions, extra consultation, and customized training programs, all of which can be utilized to boost income and bring in new customers. Another strategy to enhance your income flow and enrolment is to provide lessons focused on specific markets. Women-only courses, kid’s classes, senior aerobics, and even highly specialized programs like anti-gravity yoga or pure barre are emerging niches.
Fitness facilities are subjected to a lot of wear and tear, which is frequently seen in the equipment. Because equipment is one of the most expensive assets in your gym, you should ensure that it is properly maintained and updated as needed.
The condition of your equipment also corresponds with your membership capacity, so even if you are not ready to sell right now, investing in your equipment can assist with cash flow and income in the meantime.
The size of your fitness facility does have an impact on the final valuation; for example, a tiny Pilates studio may get 3x EBITDA, but a multi-location gym may fetch 5x. Every owner should consider growth choices in terms of “acquire or be acquired.” If you do not want to sell your company and envision yourself continuing it for a few more years, building a second location can help you receive a higher price when the time comes.
On the other hand, you now know that other company owners are wanting to purchase smaller studios, which gives you an edge if you are considering selling. Remember that expanding your company does not necessarily imply owning a second location; it might also mean relocating into a bigger facility that can accommodate more equipment or acquiring a studio that specializes in an area that you do not.
Businesses are starting to care about their workers’ health and well-being and are implementing efforts to promote healthy lives. Many companies are instituting health-related competitions, team activities, and even fundraisers to encourage workers to take better care of their bodies.
By collaborating on these corporate wellness programs, fitness facilities have a unique potential to improve income and membership. Gyms often offer cheap memberships to companies in order to attract more customers while also establishing some recurring income via contractual conditions of the agreement. Even forming alliances with local small companies may help boost numbers and develop a reputation in the neighborhood.
Client retention is most likely the most important component in creating consistent income and boosting the worth of your company. On average, 30%-40% of customers do not renew their membership, causing a revenue gap and forcing gym owners to increase marketing expenditures.
The most effective strategy to boost customer retention is to persuade clients to sign on with a long-term contract by waiving the startup cost or giving lower monthly fees. Potential purchasers will consider your gym as a safe investment with built-in cash flow if you have created a consistent source of income over time. Clubs with a customer retention rate of 80% or greater get better value multiples.
Billing through electronic means
Set up ACH or electronic invoicing with your customers as another key technique to build recurring income. Electronic billing has a significant impact on the value of your firm, with monetary worth directly proportional to the amount of money you charge electronically each month. For example, if a club charges $10,000 in electronic billing every month, the value is $100,000.
Electronic billing also removes the need for invoicing, collections, and discussions; instead, you just charge the customer on the same day each month. Having an electronic billing system allows you to easily demonstrate to purchasers a consistent stream of money while also eliminating the administrative expenditures of accounts receivable.
If you’ve been considering succession planning and an exit strategy for your gym, we hope these six suggestions have given you some ideas on how to boost its value. The health and fitness business are thriving right now, and buyers are seeking for purchase possibilities throughout the Southeast.
If you are considering selling your fitness facility, the first step is to determine its value, which we can do with a free, no-obligation appraisal. Even if you are 6 to 12 months away from selling, implementing these actions now will help you improve the sales price when the time comes.
Learn more about why member retention is a key factor to look at when buying a fitness business or check out these 10 fitness-related businesses that an entrepreneur may want to consider.