There are countless reasons why business owners decide to sell up. Whatever your reason – perhaps you’re looking to retire or simply want a change of scenery – it pays to know your stuff.
Preparing for sale
If you’re thinking of selling, give yourself plenty of lead up time to get your gym in order. There’s a long checklist of things to tick off to give yourself the best chance of finding a buyer and maximising your sale price.
Some serial entrepreneurs even advise that you should always be ready to sell, even if you don’t intend to do so any time soon. Circumstances can change suddenly, so it pays to be ready in case illness strikes, you need to relocate, or other factors suddenly require a quick sale.
And anyway: keeping paperwork up to date and your premises in good condition are all good business practices.
Are your financial claims verifiable? Get your accounts in order so that potential buyers can perform financial due diligence easily. Make sure your licences, insurance and other paperwork are up to date too.
Keep the process moving briskly and impress buyers with your professionalism by digitising all relevant paperwork and consolidating it into a virtual data room.
It can be easy to overlook wear and tear, both on equipment and around the premises generally when the business is booming and you’re super busy. But first impressions count, so a deep clean and facilities audit – replacing any machinery that looks particularly shabby or outdated – is essential, even if you have to close the gym for a day to get it done.
Hone your business model
If you’re not expecting to sell for a year or more, you could even refine your business model to make your gym more appealing. You might, for instance, cement your appeal with a particular niche – whether that’s demographics like women or older people (a growing demographic) or through specialisation in personal trainers, swimming instruction or particular types of gym equipment.
Valuing your gym or fitness centre
You’ll probably lack the skills and certainly the impartiality to value the business accurately, so appoint an independent valuation expert.
Like other personal service businesses, income-based valuation methods are favoured: typically multiples of discretionary earnings for smaller, owner-operator managed gyms and the discounted cash flow method for larger enterprises.
Your expert may use several multiples, perhaps encompassing revenue, profitability and asset base, for a more nuanced, accurate valuation.
A gym’s revenues mostly comprise repeat business, of course, so the number of existing membership contracts will be key.
Exceptional brand recognition should be factored in too in the form of a goodwill valuation.
In your BusinessesForSale.com listing, you want to make your gym as appealing as possible without divulging confidential information (there are good reasons for this) or, of course, being dishonest. Fabrications or exaggerated claims will only scupper the deal during due diligence – wasting everyone’s time, your own included.
Ask yourself what sets your gym apart from its local competitors and you’ll soon have some ideas for your advert. For example, you might highlight:
- Superior facilities and services – the most cutting-edge running machines, perhaps, or the most numerous, qualified personal trainers around
- A wide or unique range of facilities and classes – whether that includes a steam room, swimming pool or zero-gravity yoga classes
A large and loyal membership. Successful gyms and fitness centres tend to have a client retention rate of 69% or above, according to
- Excelling in a niche. Perhaps your largest demographic is the 18-34 age range, or you might have great traction with women or older age groups (a strong growth demographic)
- Exceptional customer service as evidenced by online reviews
- A large, engaged social media following
- Great location – near transport hubs or at the heart of the CBD
- Convenient access and easy parking
Buyers will be put off if day-to-day operations are heavily reliant on your involvement. Are you the only one who knows how a certain system or piece of equipment works? Train up your team to take on your responsibilities as you gradually disengage from the business.
Anyone looking to a buy a business in the fitness industry will be greatly reassured if they can see that the business can effectively run itself during the transition to new ownership. You could even sweeten the deal by offering to stay on in an advisory capacity for a period post-sale.
Keen to buy another gym or fitness centre? Browse our health and fitness clubs for sale