One question many fitness business owners are asking is, “what’s the future of gyms post-COVID?”. As we discuss below, many elements play into this, all of which will significantly impact new and existing business owners. The fitness industry is undergoing an enormous transformation, especially in regards to on-demand and live-streamed classes. Not everyone is ready to move in that direction, so we’re here to help you decide if now is the right time to sell a gym.
The fitness industry has suffered greatly through the pandemic. A recent study found that of 2,200 respondents, 67% feel uncomfortable going to a gym or exercise class during COVID-19. Despite evidence supporting that it’s safe to work out in a fitness center right now, the challenge of convincing the general public remains – and unfortunately, it’s not an easy weight to lift.
Gym owners have had to adapt tremendously to account for this setback. We’ve seen a lot of innovation within the industry, including hosting online and outdoor classes or personal training sessions. In addition, the pandemic has forced people to take a more holistic look at their health and focus equally on mental well-being. Fitness clubs that offer yoga and meditation classes and other forms of exercise are better situated for long-term success.
It’s hard to give a business owner a definitive answer to whether it’s the right time to sell their gym. Of course, everyone’s situation is unique, so if you’re interested in selling, you want to take a close look at your gym business and market trends to better inform your decision.
The opportunity to move in a new direction exists for prospective business owners, but not everyone is ready to take that leap. Ask yourself the following questions if you think it’s time for you to make your exit.
Get started by determining the value of your business so that you can set a fair sale price. Cash flow generated by gym memberships is important, but many other variables go into this equation. You should also create a summation of all tangible and intangible assets, including equipment, fixtures, and goodwill. Also, you must remain objective when determining this value. Small business owners often make the mistake of pricing their business too high, which ultimately lowers their chance of selling. For this reason, we recommend partnering with a business broker or another third-party service for an accurate and unbiased valuation. They’ll also point you towards what improvements can be made, which is especially helpful if you do not need to make an immediate sale.
One of the first things a prospective new owner will do is evaluate a business’s financial status. Ensure all of these documents, including profit and loss statements, are prepared to show all serious candidates. You should have clear data to substantiate your current and projected earnings. It reflects poorly on a seller who has made mistakes in their reporting, and it could be a deal-breaker for some buyers. If you aren’t sure which data to include or would like someone to help prepare your financial statements, a business broker is a great person to contact for support.
Nowadays, it’s common for business buyers to begin their search online. So, you could list your business on an online listing service such as BuyBizSell.com or businessbroker.net. You may also have someone in mind for your fitness center already, like a friend or family member, a business partner, or a long-time employee.
You may wish to take a more targeted approach, especially if your business is more niche, e.g., a fitness franchise or a specific type of health club. Try talking to a broker to see if they have any contacts interested in acquiring your gym business for strategic or synergistic purposes. They also could have retained relationships with aspiring entrepreneurs waiting for the right opportunity – which your business could be!
In any case, it’s important to find someone passionate about wellness and coaching. You should ask any interested individual to sign an NDA before taking any preliminary steps to guarantee your sale remains confidential.
If now is the right time to exit your fitness center, we are ready to assist. Get in touch with your local Sunbelt Business Brokers office for more information about selling a gym near you.