Originally Posted By: 04SE
A local Snap Fitness center is for sale. Anyone know the nitty-gritty details of a fitness center?
The basics:
# of members: 700 +/-
Average monthly revenue is $25,000 +/-
The current rent is $4,900
Price $30,000 + transfer fee (assuming this is franchise fee)
They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first. I can't imagine it is a high profit endeavor if the initial costs are so low. Could you even expect to clear $1,000 per month? You can add tanning beds for additional monthly $$$, if you are fitness savvy you can offer training or partner with personal trainers. Snap fitness facilities are mostly self service, there are not attendants. I am assuming that you are leasing the equipment from Snap Fitness or a supplier. There have been a few of these for sale in my semi-local area lately.
Since you're asking questions that anyone who has any sort of business background should already know the answers to, I'll assume that you've never owned a business before. You need to do a small business evaluation and appraisal.
You'll need to open the books for at least the last three years. You'll want to see all of the expenses and revenue, and get an understanding of the free cash flow. If it's rising, find out why and understand what you need to do in order to continue that trend. If it's falling you need to find out why, and understand what you need to do to reverse the decline.
You have to understand all of the expenses associated with the business. You're in for quite an awakening when you begin to understand the amount of money required to simply keep the doors open. Keep in mind, simply keeping the doors open isn't enough-you'll need to constantly make improvements, otherwise you'll lose your clients to the gym down the street that is making improvements.
You will also need to do some market research. Is it saturated with businesses that offer the same services? What do other similar businesses sell for in the local market. Is there enough potential new business in the market to keep new customers coming in the door?
Looking at your numbers above, the sale price doesn't make sense. A business that is selling for slightly more than a single month's revenue? A sale price that is only 10% of the annual revenue? There are some serious questions with those fire sale numbers.
I'm not going to tell you to run from this business, but you need to do your due diligence. Check your emotions at the door as you do your research, and make sure you understand what the numbers mean. With just $300,000 in annual revenue, you may be buying a minimum wage job.
A local Snap Fitness center is for sale. Anyone know the nitty-gritty details of a fitness center?
The basics:
# of members: 700 +/-
Average monthly revenue is $25,000 +/-
The current rent is $4,900
Price $30,000 + transfer fee (assuming this is franchise fee)
They were hesitant to speak to actual net income, fees/costs, and some nitty gritty details. I think they wanted to see proof of financials first. I can't imagine it is a high profit endeavor if the initial costs are so low. Could you even expect to clear $1,000 per month? You can add tanning beds for additional monthly $$$, if you are fitness savvy you can offer training or partner with personal trainers. Snap fitness facilities are mostly self service, there are not attendants. I am assuming that you are leasing the equipment from Snap Fitness or a supplier. There have been a few of these for sale in my semi-local area lately.
Since you're asking questions that anyone who has any sort of business background should already know the answers to, I'll assume that you've never owned a business before. You need to do a small business evaluation and appraisal.
You'll need to open the books for at least the last three years. You'll want to see all of the expenses and revenue, and get an understanding of the free cash flow. If it's rising, find out why and understand what you need to do in order to continue that trend. If it's falling you need to find out why, and understand what you need to do to reverse the decline.
You have to understand all of the expenses associated with the business. You're in for quite an awakening when you begin to understand the amount of money required to simply keep the doors open. Keep in mind, simply keeping the doors open isn't enough-you'll need to constantly make improvements, otherwise you'll lose your clients to the gym down the street that is making improvements.
You will also need to do some market research. Is it saturated with businesses that offer the same services? What do other similar businesses sell for in the local market. Is there enough potential new business in the market to keep new customers coming in the door?
Looking at your numbers above, the sale price doesn't make sense. A business that is selling for slightly more than a single month's revenue? A sale price that is only 10% of the annual revenue? There are some serious questions with those fire sale numbers.
I'm not going to tell you to run from this business, but you need to do your due diligence. Check your emotions at the door as you do your research, and make sure you understand what the numbers mean. With just $300,000 in annual revenue, you may be buying a minimum wage job.
