Maybe this should be titled, “Do You WANT A Second Location?”
This is a common topic in the TwoBrain Family. Successful gyms are now often invited to “buy out” failing gyms in their area. As the polarization of “successful” and “unsuccessful” gyms continues, more owners are becoming either a buyer or seller.
I’ve been approached to purchase gyms many times. And many MORE times, I’ve been asked to consult on a sale agreement. But I don’t start with the valuation. I start with a question:
“Why do you want to own a second gym?”
If I hear: “I just want to help more people. My first gym doesn’t take any of my time” — then we proceed with the purchase.
But usually, I hear: “It’s a great opportunity. There are no other gyms in the area. My members could choose where to visit. It’s almost profitable. I KNOW I COULD FIX IT.”
That last one is in all caps because I hear it a LOT.
Here are the questions I ask next:
- Is there a chance you could get the gym’s members even if you didn’t buy the gym?
- Is there an easier way to increase your income in your current gym in less time than you’d require to fix the other gym?
- Are clients in the other gym accustomed to lower rates? Do they match your target demographic?
- Why is the other gym failing? Are you buying the problems that killed them?
- Does a higher membership count move you closer to your “perfect day”?
- What liabilities are you also buying? (For example, a lease)
After thinking it through, many owners decide NOT to buy out another owner. Here are some reasons I’ve heard recently:
“It would take me months to fix that gym. If I calculate the value of my time, it would be a lot easier to just increase my sales by $2000 per month at my current location.”
“I’m pretty close to my perfect day already. I can’t imagine dealing with all the discounts and student memberships that killed the other gym.”
“I know I could fix the culture over there, but it would cause me a lot of stress in the meantime.”
“They want a lot more than their valuation. No thanks.”
“I realized it was just my ego saying, ‘I want to be the guy who owns two gyms.'”
Many decide they don’t want to buy the other guy’s problems. But they DO still want to help. So sometimes they offer the other owner a job; or pay for their client list; or even buy their equipment. There are ways to help that don’t involve sacrificing YOUR perfect day (or your income!) to save someone else. But kudos for wanting to!
If you DO want to buy out another, we’ve been through it many times. The path is clear. Just make sure your OWN house is in tip-top shape, because you’ll have to focus your full attention on the second gym for a few months. Clients who have been through the Incubator are generally successful when they buy out another gym–unless they decide they’re doing just fine with one.
After all, no one needs a second gym when the first one pays them well.