So many gym owners are crazy busy putting out fires and running the day-to-day operations of their gym that they typically do not give much consideration to this question (until it’s too late). Before selling a gym, there are many factors that need to be addressed. However, if you do these things right and you can maximize the return on your gym.

In a perfect world, the best time to sell a gym is when the gym is performing well and not when it is trending downwards. However, there are certain things gym owners can do to make their business as attractive as possible to potential buyers.

To build value in the gym, take some time to review the following:

  • Standardize documents and company procedures
  • Eliminate any liabilities or liens and resolve any litigation (if you have any)
  • Investigate the transferability of leases, vendor contracts, etc.
  • Be sure all equipment is in good working order
  • Consider securing key employees with employee agreements
  • Eliminate non-performing employees from the payroll
  • Give you gym a face lift (paint, carpet, drive up appeal, etc.)
  • Be sure your books are clean and information can be verifies

Consider taking the following action to free up cash flow:

  • Reduce any unnecessary inventory
  • Collect on any outstanding receivables
  • Attempt to renegotiate any vendor agreements to more favorable terms
  • Review any owner discretionary spending
  • Be sure financial controls are in place

In addition to setting a future target date to sell the gym, gym owners should ask themselves what they want to get out of the sale of the business.

Do you they just want to finance their retirement?

Is it important that their son/daughter remain with the gym?

Can they gain any tax benefits by financing part of the sales price?

Do they want to ensure the new owners will treat their members with the same level of service?

Make a list of priorities and seek the advice of gym business professionals to ensure there are no surprises during the gym transfer process.

Confidentiality Matters

Once a decision has been made to sell, a gym owner should be conscious of the need for confidentiality and non disclosure. Any leaks about the sale of a gyms can cause fear for the employees, suppliers, landlords and banks. Great care must also be taken to assure that your competition and members do not learn of the planned sale.

You competition may (and will) sabotage a gym by leaking the information to employees and members. Key employees may start looking for other jobs. Members could be concerned about how the gym will perform under new management and may seek to join other facilities.

If any one of these were to happen, the value of a gym could be significantly decreased. The name of the gym and any detailed information should be disclosed only after it is determined that a potential buyer has the skills, experiences, financial capability and leadership required to run the business being considered. In addition, ALL potential buyers should be required to sign a non disclosure agreement stating they will maintain confidentiality on all information discussed.

Conclusion

The early planning on the sale of a gym will generate the most value and will likely expedite the gym ownership transfer. To summarize, focus on building market value and improving cash flow, prioritize the terms of the sale, seek the help of gym business professionals and maintain confidentiality.

Now, go sell your gym!

An Outsourced CEO and expert witness, Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully to overcome obscurity, improve sales, build teamwork and market fitness programs and products. In addition, his company will buy gym equipment from gyms liquidating or closing. Visit his Web site at:www.fmconsulting.netorwww.jimthomasondemand.com.

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