Pros and cons of buying recently closed gymnastics center

[Shellyk]

Hi! First off, let me start out by saying I was NOT a gymnast. I always wanted to be so when my daughters showed an interest, I found a way to make it happen. Time was the main issue.We didn't currently belong to a gym that offered gymnastics so we joined a smaller, newer gym that I had heard good things about. It took me a few months to feel comfortable there but I think it was my own insecurity about not knowing anything at all about gymnastics.My 5 yr old joined, level 1. She was moved up to 2 mid competition season. We decided to do a few AAU meets and she absolutely loved it.My 4 yr old started when she was still 3 in the preschool tumbling program. She is 4 now and in level 1.Our girls team ended up traveling from WI to FL for the AAU nationals and my daughter did ok, but had fun and we did a mini vacay so it was all good. We spent the rest of the summer on and off training and were waiting for competition season.Well the second week of August, we all received a mass email saying the gym was closed effective immediately and no refunds were available as they were broke and getting divorced.They looked for buyers and when we caught wind of this, we decided to investigate the option. My husband has started and sold successful businesses in the past, but I don't have much as far as business background. In fact, before I was a mom I was a police officer. Not really similar.So, the gym wants to sell the gym, the year lease in the building and everything in it for 35k. They would be paying off all outstanding debts and the balance would be at zero. We think they would take 25k if offered.I have had a few friends there who are way more familiar with gym offer to help us get it running again. Also, all the coaches said they would go back if it was us that bought it. So that's positive. Now, my comNcern os how many parents will come back? The thing is, the closest gym with a competition team is 30 miles away un.ess they joined the YMCA. I know I could get almost all if not all competition girls back, but thats only 10-12 girls so all in all not my main focus.Here is the kicker...the gym was being rented for a flat rate to include electric and heat/air. However, was only being used from 4-8pm, Mon-Fri. All those other hours it was being paid for but not used. Think of the potential!So anyway, my husband and I really are at a crossroads here. We either offer and hopefully save gym in time to get into competition season, or let it go under and try to search out plan B for the girls in the meantime. The ideas I have in my head to make this gym a real profit are many. We started discussing opening a gym a few months ago, when we found out current owners opened this one with no previous gymnastics experience. Oh, the current head coach will stay and she is invaluable in that department.So, now that the gym name is damaged, we have a lot to think about in order to save it, rehab it and make it a million times awesomer.Thoughts? Would you consider? There are more details but I'm typing on the ipad and my fingers hurt Thanks for your thoughts!Shelly

 

[Bobby]

I know nothing about owning/operating a gym - or any other business for that matter. But I imagine finding team girls would be the hardest part for most new gyms? - whereas lack of competition means you shouldn't really have that problem. Or finding a suitable HC but you already have that too.

Surely it can't be too hard to build up some pre-school type programs? In local gyms that's where the real money is, and lots of people send tots because of the all-round fitness benefits. Between tot classes and little sisters of team girls, I would have thought that you could build a respectable business without too much trouble??

And you'd be a local hero to team girls' families too no doubt. I even know of a local gym whose families all paid a levy to keep it running during a rough patch.

But at the end of the day I guess the question is whether it's the right financial strategy to look after your own family. Best of luck thinking things through!!

 

[gymcoach26]

It sounds like a good oportunity. Keep in mind that 90% of kids will never make it to team gymnastics. With that in mind, you need to start some preschool and recreational type classes. If your sole focus is on team as a brand new gym starting out, you will probably not have much success (Even though team costs plenty of money, after factoring in all the hours they practice, you really make very little off a team program. They will pay way less per hour then you are paying the team coaches.) Build from the base up and eventually you will have a strong program that keeps on growing and is profitable. Goodluck with your decision!

 

[JMD]

Sounds like a bargain to me.

We're in the process of opening our gym and we have a budget of $160,000.

There are so many startup costs that you will be avoiding. I can list all of our expenses if you really want to hear about it.

You should really get out of the team focus your first year. We're not doing a team at all first year. We'll have a pre team program for the team girls our coach used to coach but that is about it. Rec kids going one hour a week pay $17 an hour. Team kids pay much less than that. Gymnastics is a ratio driven business. Your coaching expenses will always be the same no matter how large your enrollment. The key is all your fixed expenses get spread out over more students.

Starting a business is risky and involves a lot of reward. We're building two one week vacations into our schedule but other than that there won't be any weekend getaways for many years. We will be at our gym every morning at 9am and probably not leave until 8pm. Saturdays will be even earlier but we will leave earlier. It's such a commitment... unless you are in an area that can really only handle classes 4-8pm.

Good luck whatever you do!

Jason

 

[Shellyk]

Great points definitely. How awesome that parents came together to keep the gym running in that community.
I should point out a few things that make this gym a little different than the other ones we know of, as far as team goes.
Even though there is a recreational AND competitive program, the competition team was small. There were about 10 girls total, for USAG and when we added in our level 2 and 3 girls we had about 14 or so.
When we went to Nationals in FL, the team total that did go was about 10.
I don't see it as a real profit building program, but more so, for the fact that as an athlete, those girls that DO want to compete at meets in WI, have a chance to do it. I was just telling my friend who has a level 5 girl that last year we got moved up to level 2 and they said we could do a meet for AAU. It was pretty disorganized as far as the gym explaining it all to me, so I didn't get that there even was a "team". I thought basically it was just any girl at the gym, that wanted to learn the routines for the AAU meets, could go. They never made us try out or had any requirements besides us attending a few extra practices. The whole competition program confuses me when I read about other gyms because they seem so much more organized.
So, since it technically has a team already, and has paid the USAG and AAU dues, I would imagine the head coach (the one who also took care of some of the meet info last year), would be willing to step up and take charge so the girls could compete this year still.
I do think the preschool programs in the AM's and maybe a few adult lunch time classes might be a good idea. It's in a downtown location, amidst many businesses so I think it would be convenient for them at least.
Not sure how else to run it. The Y is half the size and even more less organized That is the only other option in our town, the next closest is about 1/2 hour away and a small university program.

 

[dmytv]

Start an after school program. Buy a cheap bus and pick up at elememtary schools. This will give you a base of children to get classes from. Rec is the way to go. This will feed into your team. Also. offer other things besides gymnastics; like tumbling, cheer, karate, dance? This will tie into your gymnastics easier than you think. Good luck! sounds like you are in a good market.

 

[gymnut1]

How Exciting. Let us know how it goes.

 

[Sarah'sMom]

I hope you don't mind me chiming in, because I am just a parent. This comment is not meant to be negative but helpful, so please read all before you react.

My thought is that since neither you nor your husband appear to have experience coaching gymnastics and you are relying on the head coach to stay that you want to give some serious thought to what you would do if the head coach decided to leave. You might not think that is a great risk now, but all it might take is some disagreement on her part with how you are running the gym. You might also think that would not happen because you would rely on her advice. But anything could happen. And, if you do not have the experience yourselves to take over her duties, and you can not quickly replace her, you may find yourself in a serious hard spot. And, you might even be hard pressed to sell the gym at a good price because you will have lost some of the value of the gym, which is a going operation.

I don't think that risk is necessarily a bar to you owning the gym. I'm just saying you need a really good, as fail-safe as possible back up plan. What that might mean for you will be individual to you and your unique situation. For one thing, you might always make sure that you have an assistant coach or two who can take over and are qualified to do so, whether temporarily or permanent - although I would keep that plan to myself to prevent discord in the workplace. You might also consider whether you might give the head coach some ownership interest or some other financial incentive to stay. Ownership interest does create some disadvantages as well, including the fact that the head coach would now be a permanent fixture that you would have trouble displacing and replacing if you wanted to. There might be other ideas as well. But whatever you do, I would seek the assistance of a very good business attorney - one who knows the law as well as has some good business sense. Such a person should have some experience in the different ways in which a key person can be given incentives to stay and who can discuss the pros and cons of the different methods and help you choose one that is right for you. It could also be wise to have that attorney help you consider this deal to make sure there are no hidden legal/financial surprises for you if you do decide to buy the business. It will, of course, cost you some money, but it could help you reduce the risk of potential financial problems down the road.

Maybe some of the coaches/gym owners may have some helpful thoughts on this as well...

That being said - with the right homework and planning - how exciting!!!

 

[jago]

Just a Pround Parent here!

Sounds like a ton of fun!

But I had a thought while reading your post ...I imagine that the monthly flat rate that the current owners are paying takes into consideration the fact that the utilities are only used 4 hrs/day, 5 days/week (per original post). I daresay that if the building owner has an increase in utility costs s/he will pass that increase along to you. However, I do think it is very wise to make good use (profitable) of available time and space of the gym. Don't forget - birthday parties can be hosted when gym, dance, martial arts, etc isn't scheduled.

 

[Shellyk]

Thank you so much for your reply rcafamily (and others!). I definitely get your thought process. Like I said in the first post there is so much more to this opportunity than what I listed. Just a few explanations, then give me your feedback again, hope this helps. I need serious help thinking this all through so I genuinely appreciate your time.

* The head coach is a 22 year old college student that will graduate this next year. She is student teaching this year. Her main job at the gym was that as a "gym manager". Basically she knows the ins and outs of the meet schedule, the team, the rec programs, and did the scheduling. She was able to facilitate the "gym" business pretty flawlessly on a part time wage and time constraint. So, if she chooses to leave (which she could, absolutely but I know she's on board for at least the re-start up, or as long as she can stay) there are the other coaches that are there currently that they have been working with.

* Other coaches, are college gymnasts or ones that no longer compete for whatever reason. The gym is a small, new gym, so their salary for coaches was higher than the others in the area but still not enough to recruit a professional coach. Ultimately that would be the goal, would be to either hire one on for a permanent full time position after college or find someone that can take over quickly in the event she has to leave. I'm hoping to be "trained in" enough by then and know the ins and outs of the gymnastics (not necessarily the actual performing of gymnastics, heaven knows I'm not that flexible) lol.... but as far as running the programs, implementing the new programs and learning the USAG, AAU and MAGA levels and competitions, laws etc I think I'd be able to play a much bigger part than the current owner was (She had a full time teaching job).

* Right now they have a karate program on Wed nights, they do open gyms, and birthday parties. They had a cheer program but it wasn't being run successfuly by the cheer coach (I found out the disorganization on her part was the main reason) so I think that program could be rehabilitated.

*The building it's held in is an old manufacturing building. There is office space, manufacturing space and storage space. There are 12 buildings total (I think) and they just pro-rate it because alot of the offfices are open. The rent will stay the same, based on the lease, regardless of electricity and heating costs. (YAY!) that is all in the lease. When they leased it they did a 3 year lease and the agreement was full usage of the property they were renting for that flat rate.

*Never thought about the bussing, I would think there would be huge liability insurance for that though??? But I could definitely see afterschool care as being a great option!!!!

Ok, I think I hope, I explained the situation clearer! Now what do you think??????

 

[BlairBob]

Link Removed Kind of the gymnastics business guru of the US. Even if you were not going to go to his bootcamp, he has a lot of articles in USA-Gymnastics archived magazine articles over the past 10 years.

You would definitely need to start up morning classes. These are the bottom of your pyramid and feed into your rec and developmental programs.

If the gym is big enough or has extra space, you could see about renting/subletting it some sort of fitness group. Yoga is pretty popular and there are quite often yoga teachers always wanting or looking for a space to teach. You have a floor or perhaps multiples ones so maybe Zumba. Get a dance program in if you can manage it somehow. Even if it doesn't have a wood floor and ballet bars. Many martial arts only need floor space (like cheer) though they may make too much noise.

Another would be CrossFit. A lot of them get started in gymnastics gyms. It sort of depends on other factors such as insurance and how much space you have.

Birthday parties on the weekend. These bring in a lot of non gymnastic children and families and they can make some cash on the side. I know some gyms even do free ones just for free publicity.

Bringing in an office manager may be necessary at some point.

 

[Shellyk]

OK here's a little twist in the game.
When we go to write the offer (they are patiently waiting for our decision) we want everything they have but my husband thinks it's a smart move to change the gym name because of the bad "blood" that is associated with the current situation. Remember, they basically shut down with no notice and no refunds for 1/2 month of lessons.
So it's currently just named after our city and then "Gymnastics Center". I am not a huge fan of the cutesy names and I think we could get by with changing it just enough where people knew it was different but not the same. That being said, gym names aren't really my big issue, it's what they current owner will say when we tell them we want to change it. Their goal was to keep their business and it's name running....but the longer we've kept it shut down, the more impatient parents are getting and when and if it re opens wether by us or someone else (there is a lady that wants the equipment and space, nothing else) I want to make sure people know it's NEW OWNERS.
So I'm wondering if we should tell the current owners our intent is to change the name and marketing plan or if I should just omit it from any of the contracts or just put in, 'Name and logo can be changed at discretion of new owners" or something like that. I want to get the best deal possible and I know that part of them offering that was to keep their name "alive"....thoughts?
Oh, yes, in my many hours of research I have come across his bootcamp program for new businesses. I read the profile and felt like it may be way over my head for the first few months though because most people are gymnastics coaches or owners that have experience. I'd look silly with my little to-no knowledge. Although I could bring a coach with me and then hide behind them

 

[dmytv]

Name it with both the new name and the old name in it. It needs to be a different name for business purposes anyway. This is the easiest way. Then if you want you can drop the old name in a year or two. This is the way my dds current gym did it.

 

[JBS]

BlairBob is right on...go to Boot Camp...

Link Removed

SLink Removedession 49 is coming up in Nov. If you do decide to buy the club...definitely go to Boot Camp. You would be extremely silly not to go to Boot Camp. You will be received well there.

How many rec. kids attend the club?

 

[Shellyk]

The summer enrollment was down, and I think it's usually around 200?-240. I have the exact numbers, I know august only had like 105, because people broke for summer. Thanks for tip on the boot camp! Not sure where we are right now...leaning more towards not the right timing for us, but are waiting through the weekend, before we make the final decision.

 

[JMD]

Definitely go to Boot Camp. My partner and I went last May and it was great. Even though we were a year and a half out at the time the information is invaluable and I promise it won't be over your head.

There were also two other people there that were thinking of opening a gym and eventually decided it wasn't for them. So who knows what you'll learn. We're actually hoping to go again in the next couple of years. I'm sure we'll take away many different ideas being gym owners rather than prospective gym owners.