Overcome Your Fear of Buying a Health club, Fitness Center
or Gym in 3 Easy Steps with Jim Thomas’ Fitness Management & Consulting
If you want to own your own health club, it is easier to buy an fitness business than it is to start you own gym business from scratch. An established health club allows you to skip past the startup phase entirely, which is where the majority of all new gyms fail. If you buy a health club then you can concentrate your efforts on making your health club larger and more profitable.
Buying a health club does not have to be a challenge. You want to avoid overpaying for the business or buying a lemon. The easiest way to avoid this is to follow these three steps in buying your own business.
STEP 1: Due Diligence
The first step is due diligence where you determine whether or not this gym or fitness center is one you want to buy and at what price you are willing to pay for it. Find out why the seller is selling the health club. This may involve talking to the employees, suppliers, and customers. Once you are satisfied that the reason is not to flee from something negative that you will be inheriting, you can do further due diligence.
Your examination of the health club will start with analyzing the last three years of financial data. You should uncover any pending lawsuits, relationship with supplier and customers, intellectual property rights such as copyrights or patents, and any potential liabilities.
STEP 2: Make Offer
There are formulas that are commonly used to value a health club or gym and this should be the starting point to determine how much to offer. The value needs to be adjusted to account for any information uncovered during the due diligence period. Having an accurate picture of the value of the gym will help you to decide whether or not to proceed and the maximum price you are willing to pay. Once you have arrived at a price you present the seller with a letter of intent. This letter of intent will detail the price and terms in which you will purchase the fitness business. Once both parties agree, a purchase and sale agreement is drawn up for both parties to sign. The purchase and sale agreement can be quite lengthy because it itemizes every aspect of the sale. This step usually involves hiring an accountant and a lawyer to assist you in the process.
STEP 3: Arrange Financing
The last step in buying a health club is financing. There are many sources available that you can tap to put together the financing. These sources include family, friends or banks. Whatever the source of funds, lenders will have requirements that you will need to meet in order to be approved for the funds. They will require you to have enough money available for the down payment as well as have enough adequate working capital to maintain the health club. You can either pay for the closing costs out of pocket or arrange to have them included in the amount that you are financing.
Owning your own health club is something that many people dream of accomplishing. Buying a health club is one way to make this dream come true. If you follow these three steps you will be on your way to owning your own gym.
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