E491 | Should You Buy Your Gym?

If the opportunity presents itself, should you buy the gym that you are treating out of? Today, I am discussing a recent conversation I had that revolved around this idea. Enjoy.

• Profitability of the gym
• Visibility of the gym
• Terms of the lease

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Podcast Transcript

So one of the best ways to improve your customer experience, which we know will dramatically improve your business, is to have clear lines of communication with your clients. And that's something that can be really hard with these multiple channels between email and text. And what you really need is to centralize that in one place.

And that's something that we've been able to do as we switched over to PT everywhere within our client's accounts. We can actually message right back and forth with them. They can manage their home exercise plan within there, and it allows us to really compartmentalize the communi. That we have with those clients, instead of losing an email in the inbox or missing a text and then you're, it's very hard to dig yourself outta that hole because they feel like you're not very responsive, with them.

And for us, it's made a really big difference. It helps make our staff more efficient. It helps us not miss things as much with the volume of people that we're working with. And it's a really smart way of really compartmentalizing your communication with your clients so it doesn't interfere with the rest of the channels.

You have communication with family and friends and things like that. So I think it'd. Huge for your practice to centralize it the way we have. Head over to pt everywhere.com. Check out what our friends are doing over there. I think it's really cool and I think you really. So here's the question. How do physical therapists like us who don't wanna see 30 patients a day, who don't wanna work home health and have real student loans create a career and life for ourselves that we've always dreamed about?

This is the question, and this podcast is the answer. My name's Danny Mate, and welcome to the PT Entrepreneur Podcast.

What's going on guys? Doc Danny here with the PT Entrepreneur Podcast, and today we're talking about acquisitions, acquiring other businesses in particular. And this stems from a clinical rainmaker conversation that that I had this week that was an super interesting scenario and I don't wanna dive too much into the details of it.

I don't wanna bring up like where this person is or their name or anything like that, but I'll give a general idea of this scenario and then I'll talk through the way I look at it as well as, maybe how you would look at it. First of all, this comes from somebody, like I said, that we're working with our Rainmaker program.

So they are somewhat just getting started sub $10,000 a. But pretty close to doing that on a monthly basis. Which it is actually a really big milestone for people that's a five figure month is a big milestone. Means they have to be doing a lot of things right for that to happen.

And the path from 10,000 a month to 20,000 a month is really not that hard after you've gotten to 10. I think the first 10,000 a month in revenue is the hardest that you will ever earn. Now for this person, The context of it is they are in a gym, it's a pretty nice gym. But the owners are going out of business.

They basically were doing this part-time. It was taking up way too much of their time. It wasn't profitable. So they're just shutting it down and, he's looking for other space that he can go to. When we're on the call, we're talking about, okay, pros and cons of another sublease space versus standalone space.

And then one of our other mastermind members said why don't you, why don't you look at buying the gym? And he said they approached me about it and He didn't think it was a good idea. But as we walked through it a little bit, it was interesting to hear what they wanted for it, as well as the potential risk on his part that there might be turns out and obviously needs more information, but the gym is like, basically, break even.

It was not really making money, but it's definitely covering the cost of rent with the members that they have. Not necessarily a great business by any means, but there's equipment, right? And the equipment's already there. The build out's already there. The space is already there. The rent would be a decent amount in comparison to what this person is making per month, but it's less than.

And what he's making, not including any of the revenue that may come from the actual gym. So you. As we talked about it a little bit, it start, it was interesting to hear where he was trying to go if it was the right fit. And talk through these different scenarios because this is actually something that we've seen happen multiple times.

The people in our mastermind that we work with, they're in a gym. The gym isn't doing well. Their little cash-based practice is pretty damn profitable if they run it the right way and all of a sudden they acquire the gym that they're in. How funny is that, right? You're subleasing office from them and the next thing you know, you acquire the whole space because you.

Cash flow and the profitability to do then they can tweak the model and they can actually make it more profitable by doing things differently or by changing the marketing angle or the fulfillment side of things. But they have the space. So they have space to grow into. They have equipment, whether it's just gonna be, more providers that they have or not.

But it gives them an opportunity to have a recurring revenue stream from membership base revenue for members of a facility, of a gym. And they have their cash-based practice revenue, which is a nice compliment between the two. What was interesting about it was that these are basically the owners are moving.

And they are just shutting everything down. That means they're gonna have to fire sale the equipment. They're gonna have to figure out what to do with all their members. They're gonna have to shut everything down. They may have to, if people prepaid, have to pay some of these people back. So these people are in a bad spot.

And this is an opportunity that's not the best opportunity by any means. You don't wanna necessarily wish that people are in a bad position, but it happens sometimes and people are just like not very good at running a business and they think it's gonna be fun, or in this case, maybe it was a hobby they really liked.

And turning your hobby into your business is like a great way to ruin your hobby. So they probably. Going to the gym now, whereas they probably loved it before. And I see this a lot in micro gyms that are either CrossFit, weightlifting, boutique style, kettlebell kind of stuff, whatever.

It's like people love it and they love being there. They like the vibe of the environment and all that stuff. But then they're like, oh yeah we'll buy it, we'll run it. And it's it sucks because they don't know. They don't know first thing about running a business. They just like going to the gym.

And this actually happens a lot. I know multiple CrossFit gyms, multiple micro gyms in the, this, the Atlanta area that have sold. At very low valuations. Basically less than the cost of the equipment to to buy it. And so you can get a fully built out facility with minimal to no equipment that you need to buy, and potentially have that person Self-finance the gym and or maybe get it for free and just be willing to take over the monthly payments on the the lease.

So the thing is, sometimes these leases, you are pot committed to this for years, right? I talked to a gym owner that wanted us to actually buy him out. And he, he was in a bad spot. He'd been gone, he'd gone through divorce. A lot of this stuff happened during Covid. And he reached out to me.

He, and he was like, interested in us maybe acquiring his space. I took a look at it cuz I actually thought maybe this would work. But when I looked at it, I looked at the terms that he had. It was bad. Like his Jim had no value at all. I wouldn't have been willing to pay anything for it. He had three years left on his lease.

Pretty high cost because he got all of his tenant improvement. Basically the buildout rolled into it and he was paying a really high premium on rent for a facility in a space that really wasn't even that in that creative of a spot. It wasn't even visible to the main road. And it just was not a great place for us to to jump into this facility cuz I just.

Even if he gave it to me for free, I wouldn't wanna take over the lease. It's three years at bad terms. But with this guy, maybe the terms aren't great, but he's willing to take them over and he may even be able to get a facility for free. If or at a minimum they're willing to sell finances.

If you are, I guess what I'm getting at, I'm not just trying to break this scenario down. If you, in your area, if you know of any gyms that are not doing so great, that are struggling, or if you hear gym owners talk about trouble they're having or. Especially if it's part-time for them, like they, this is what happened with a gym that I know here in Atlanta.

The guy was full-time GS employee, so he worked for the government and he just was like spending so much time up there that he eventually just sold it for barely anything to somebody else that was actually Another business owner, he bought it as a second business and he's turned that thing around and done a really good job with it.

So I think if you know anybody that's struggling or they're part-time and it's this isn't fun anymore, what a great opportunity to acquire an existing business that you can then plug real business systems into a professional. Someone's doing the ship full-time versus somebody that, just, I don't know.

They're a government employee and they just like to work. Big difference between somebody that this is your livelihood, this is what you're learning, this is what you're developing. You're learning the skills of sales and marketing and systems and operations and hiring and all these other things that the average person doesn't have to do.

And you get to plug that into a preexisting business that is not in a great spot, but you could turn around and. Really add a lot of value to that. So something to think about if you're looking to expand. There might be opportunities out there in the gym space, especially with a lot of people coming out of the last couple years and just being tired, just beat up by the economic environment of gyms, which was tough, I think is one of the hardest places to own a business was in the, fitness sub niche or restaurants were up there too.

But you can't do to go workouts. So they got hammered and it's one of those things that is unfortunate, but if you can find the right fit where it's a part-time person or somebody that's may be looking to go back to whatever they were doing before and you can get the facility for less than the cost of the equipment and build out to furnish.

And even better get them to self-finance it, even if you're paying for it, meaning the owner's carrying that note. So let's say it's like you agree on a term of $36,000. You may agree. Okay, we'll pay. A thousand dollars a month for three years, or whatever the difference is for two years.

And then you just bake it into your overhead. So you're not even having to go try to get a loan from this, SBA or private money or anything like that. They're gonna, they're gonna self-finance it, which is the easiest way to go because they're actually they want it to be successful. Otherwise they wouldn't self-finance it.

So some gonna think about different things that you can look at in terms of how to maybe find one of these facilities. What it looks like if you do, and then, financing definitely the self-finance route of the owner might be an option, which is a pretty good place to to start.

Cuz it's gonna be much easier for you, way less fees associated with it. And typically you'll get some pretty good terms. So anyway, something to think about. If you're looking to expand, maybe you look to expand into a preexisting, business facility that you don't have to build out, that you can get, pennies on the dollar for what it would cost to build it out, as well as get the equipment in there and you can turn that bad boy around and be in a really nice sort of hybrid compliment space with a gym and a clinic.

So something to think about. Not the right fit for everybody, but if it's right fit for you, start looking around.

What's up, PT Entrepreneurs? We have a new exciting challenge for you guys. It's our five day PT biz part-time to full-time challenge where we help you get crystal clear on how to actually go from a side hustle. To a full-time clinic, even if you haven't started yet. This is a great way to get yourself organized in preparation for eventually going full-time into your business.

So we actually help you get crystal clear on how much money you're actually gonna need to replace with your business to be able to make a lateral transfer. How many people you're actually gonna need to see based on what you should be charging. We're gonna tell you three different strategies you can take to go from part-time to full-time, and you get to pick the one that seems like the best fit for you for your current situation.

We can show you all the sales and marketing systems that we teach within our Mastermind for people that are scaling to multiple clinicians, past themself that you need to have in your business to be able to go full-time. And the last thing is we help you create a one page business plan. This is a plan that's gonna help you get very clear on exactly what you need to do and drive action.

That's what this is all about. We want you to win. We want you to take action, and in order to do you have to get really clear on what you need to do next. So go to physical therapy biz.com/challenge. Get signed up for the challenge today. It's totally free. We think this is gonna be a game changer for you and are excited to go through.

Hey, real quick before you go, I just wanna say thank you so much for listening to this podcast, and I would love it if you got involved in the conversation. So this is a one-way channel. I'd love to hear back from you. I'd love to get you into the group that we have formed on Facebook. Our PT Entrepreneurs Facebook group has about.

4,000 clinicians in there that are literally changing the face of our profession. I'd love for you to join the conversation, get connected with other clinicians all over the country.

I do live trainings in there with Yves Gege every single week, and we share resources that we don't share anywhere else outside of that group.So if you're serious about being a PT entrepreneur, a clinical rainmaker, head to that group. Get signed up. Go to facebook.com/groups/ptentrepreneur, or go to Facebook and just search for PT Entrepreneur. And we're gonna be the only group that pops up under that.