5 Steps to Selling Your Fitness Business or Franchise
Are you looking to sell your fitness business? Are you curious about how you go about selling a gym or yoga studio? If so, you’re in luck.
First and foremost, we should probably congratulate you on building a successful business and someone else wants to buy. There’s nothing more rewarding than seeing your hard work come to fruition when someone offers to buy your business for MUCH MORE than you paid to start it.
Below are 5 simple steps you should take during the process of selling your fitness business. As a disclaimer, this article is for informational purposes only and should not be taken as legal advice.
Read this article, close the deal with your buyer, get the cash, and start your next endeavor!
Create a Detailed Profit & Loss Spreadsheet
First and foremost, your potential buyer is going to want to know exactly what your finances look like. There’s a rule of thumb that you can sell a small business for 2 to 6 times its earning before interest and taxes. I don’t know if I personally believe that you can see it for 6 times your current earnings, but you can do some research on your own. If a business is earning $100,000 per year, I think it’s entirely feasible to sell it for $250K to $300K.
Regardless, you’re going to need to put together some business documents that can prove your earning as well as future earning potential. Take a look at our business documents section. You can find various profit and loss forms as well as business plans that the new owner can fill out. Either way, make sure you have a solid number with data to prove your worth. Any buyer doing their due diligence is going to dig into your data and look for errors. Find them before the buyer does to keep the trust.
Consult a Small Business Attorney for Paperwork
Meeting with a small business attorney is one of the smartest things you can possibly do when selling your fitness business. Let’s face it, unless you’re an attorney, there’s probably a lot you don’t know about the legalities of selling your gym. Sit down with an attorney and go over the entire situation. They’ll help you go about the sales process as smooth as possible.
Since you’re the seller, you should ask that the buyer pay for any legal expenses that are incurred during the sales process. Some buyers might agree, whereas others might not. Either way, it’s worth asking.
Dissolve Corporation and Have New Owners Reincorporate
Once you’ve finished the legal aspects of selling your business, it’s time for you to remove yourself from the system. Go to your secretary to state and dissolve your corporation or any partnerships that you are involved in. If the new business still has you on their legal records, you could be held liable for future incidents. It’s best to thoroughly remove yourself. The buyer will have to go about incorporating their business and jumping through all those government hoops; but hey, at least it’s not you this time!
Switch Over all Website & Social Media Accounts
This step might not be necessary if the new owner of your gym is going to change the name, branding and marketing materials for your gym.
However, if the buyer of your gym is going to keep the name and branding, you’ll need to go about doing a social media and email switch. This can take a while since you’ll have to add the buyer as a new administrator on every single social media account and then the buyer will have to remove you from the administrators list. It can be time consuming, but if your gym has several thousand Facebook fans, any smart buyer will want to take advantage of that social media following.
Offer On-Going Consulting if So Desired
If your new buyer isn’t from a gym owner background, you might be able to set up an ongoing consulting relationship. As a personal anecdote, a good family friend recently sold their successful steakhouse to a group of investors that wanted to get into the restaurant business. The investors had no clue how to run a restaurant at the start. On top of the sale price of the restaurant(about a million), my family friend was able to set up an ongoing consulting agreement with the investors where she would teach them how to run a restaurant and train their new staff. It kept her busy for awhile and added some money to their bank account.
Do the same with your new buyer. If she or he doesn’t have any idea how to run a gym, offer your services for a monthly fee. You’ll have a nice lump of cash in your bank account from the sale, and you’ll also be getting a consulting paycheck on top of it.
The materials in this blog post are for informational purposes only and not for the purpose of providing legal advice.