Business for Sale, Would I Buy It? | Boutique Fitness Center

Alright, so the next episode of “Would I Buy This” is a turkey fitness and wellness center. So, it’s an interesting kind of business that I generally wouldn’t buy because I think a lot of the fitness stuff that you see tends to be faddy. Like Orange Theory was big for a while then it kind of faded, and then F45 has been you know coming on strong for a while. Spin centers were all the rage, everybody wanted to get on a spin bike. And then they kinda got out of that. Yoga comes and goes. It never goes away but it’s you know comes and goes. Jazzercise was big 35 years ago and then you know Zumba and all that stuff. So I feel like the boutique sort of fitness stuff is faddy. So it might be good if you get in early and then you get out before it kind of goes away. You’re gonna have trouble running it maybe for the long term. And then there’s the other end of it like Planet Fitness and 24 Hour Fitness and stuff, where their model is it’s cheap and they wanna sign up as many people as they can, who never show up, right, that the equipment never gets used because a million people have memberships where they’re paying 15 or 20 or 30 bucks a month but they hardly ever go. So they “Oh I have a gym membership” but it only works if you actually go and do it. So just buying it doesn’t actually help you. But that’s their model is to make it cheap and mass appeal and sign people up for recurring payments and then hope that they never really come and use the equipment. So this looks like the sort of the more boutique model.

But let’s see what the numbers are. So they’re asking for 1.8 million gross revenue is 1,381,594 which is a nice specific number, I like that. And cash flows saying  37,007. So they’re using real numbers, they may be right or not but at least they’re reporting real numbers, which is nice. They don’t have anything for fixed assets, which these kinds of businesses generally involve a pretty significant investment in all the equipment. So that would be a nice number to know. But based on the cash flow, the prices may be a little high. I would say maybe 1.5 million would be a more reasonable number for this but let’s see if there’s anything in the description that tells us anything different. Nestled in the heart of Houston, thriving fitness and wellness center. Founded in 2016, so they made it through Covid which is good cause a lot of gyms had a really hard time in Covid. 8500 square feet. A solid base of 500 loyal customers. And here they say the equipment is valued at over $400,000. So 500 people and there are a million three, so those people are paying around 170 bucks a month or something like that. Quick math in my head which you know always check math in my head I could be off. So it’s definitely higher than your Planet Fitness or your 24-Hour Fitness type of thing. But it doesn’t seem like they have – it’s not like a CrossFit or a system, it’s just a small boutique gym. So I don’t know, it could be good. They also have merchandise sales and some group fitness classes. So I don’t know.

If you’re into gyms, if fitness is your thing and you wanna have a fitness-oriented business you know this could be good. It’s not tied to a specific type of workout so you’re not stuck with that fad problem. But you are trying to recruit people to a much more expensive than average general gym so that could be a challenge. But I mean it’s not a bad business. I’d say it’s priced a little too high. It’s worth investigating though if this fitness and gyms is something that you’d be interested in. And then if the model works there you might be able to expand it into other areas. Maybe open one in Austin, San Antonio, and Dallas, and build the brand out of three or four locations. You probably then be able to sell the business for five or six million bucks. So it definitely – if that’s – this is up your alley it could be a good fit. It’s something I’d check out if I was interested in gyms at all.

Here’s a little about this series. CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses for sale and see if Matt would be interested in buying them.