Renting a Gymnastics Business

[Deleted member D3987]

I was wondering if anyone has had any experience renting a gymnastics business. I have the opportunity to rent my former gym. Gym ownership is my ultimate professional goal. I have a Masters degree in Physical Education and Coaching. The business itself has been active for over 20 years. The owner of the business also owns the building it's in. She has offered to rent me the entire business (I'd be responsible for paying the utilities too). Before I talk numbers with her, what should I be looking for in those numbers? Any rule of thumb to help me determine whether or not I can afford this and whether or not it will be worth it. It's a small business with the total coaching hours about equal to what I am currently working somewhere else. I have been a successful program director in the past and feel I am not being used to my potential in my current position. I also see room for growth in this business opportunity (i.e. bringing back their team program). I feel like at this point, renting is really the only option I have as I don't have the credit or money to start from the ground up. Any and all advice would be greatly appreciated. Thanks in advance.

stop right here. you need an accountant and an attorney. unless you know what "numbers" means in a gym business, p&l's, expenses, hiddens, etc; DO NOT even start a conversation with this person.

 

[gymdilettante]

I asked the same question on my Facebook page and the feedback there said to establish myself as an LLC. Does anyone have any experience with that? I don't think I've really come across any gyms that are LLCs (as I understand the LLC part needs to be in the name of the business).

I talked to the owner (who I've known for over 20 years) about just working for her, but, as COz said, she can't afford to hire me as a manager (or coach or what not). When I spoke with her last, she had an enrollment of 75 students and said it was the lowest enrollment she's had in 17 years. She has been doing all the coaching herself (with the assistance of one of her former gymnasts who's in college) and I would be doing the same. If she hired me as a manager, she would still be responsible for utilities and taxes on the property, plus paying me. If she rented it all out to me, she wouldn't have to pay me, and she'd still get some income from the rental to cover the taxes. I understand her husband works and is the real moneymaker of the family so making a lot of profit from the gym isn't a big priority for her.

*This isn't intended as legal advice. I am just laying out some factors to consider before jumping into a business venture. If you actually proceed, you should definitely consult a lawyer.*

First many gyms are LLCs - a quick look at mymeetscores will show you this. Honestly though corporate form is the least of your worries ....you should begin by analyzing whether this is a worthwhile investment. Ask for the gym's recent income statements, balance sheets and, if any, cash flow statements. This should give you some idea of how viable the business is. If the business is running at a loss, are you willing to put your money on the line? And what would be your viable market-researched plan for turning it around? The thing about renting is that you aren't getting any ownership in the equity that would give you a right to share in the profits (if there are any)...obviously your rental agreement would have to do that for this venture to make any sense but, for example, say the business went bankrupt, if you were an owner you'd still have a right to any assets left after creditors were repaid while if you were a renter, you'd have no right (unless the contract gave you such rights).

Have you done any diligence as to your plans of starting a team - is there interest among the families? Do they understand the sacrifice and can they afford team? Are there many other teams in the area? You also need to honestly assess your own situation and whether it lends itself to this endeavor. ..starting a business is a lot of work and things like young children, dependent aging parents, little/no savings all conflict with starting/"renting" a business.

All that is the preliminary analysis. If you have really ticked all those boxes and have a detailed market researched business plan, then consult an attorney. By the way, you should see if there are any small business promoting incubators/non profits in your area. ..they can help with things like business plans, market research, etc and might provide the legal help pro bono if you qualify.

The bottom line is don't just jump into this without a lot of careful planning and professional help! From what you've said, it sounds it might be your friend taking advantage of your desire to run a gym as a way to get out from under a poor business decision on her part...but regardless this is a decision that requires a lot of forethought and consideration.

 

[Deleted member D3987]

like i said^^^stop right there.