Hi All - I am interested in buying a fully operational gym. It is about 15k sq ft and has a 5 lane lap pool. The revenue is $900k per year and the owner total take home is $ 195k a year.
The whole facility is leased - just signed a new lease this year with a slight monthly increase ( not enough where it makes that much difference ). Lease is 10 years with an optional renewal for another 10 years.
All the equipment in the gym is very very old but it works. I would estimate the book value of the equipment to be zero. I’m sure the next owner would need to make some new equipment purchases.
The owner is not involved in the day to day operations and drops by once per week to check on things.
What do you think would be a fair market selling price for this business??
( I would of course get an appraisal from a professional if I decided to move forward )
Absentee owner usually spends a lot more than average on labor and management to ensure customer-centric operation.
Owner operators usually run a tight ship and keep COG (i.e. 20% to 25% of sales) and labor (i.e. 35% of sales) in line. Labor excludes management salaries.
Absent the owner it not unusual for shrinkage, waste, and lack of following procedures to cause COG’s to slide up to 30 percent.
Likewise, it’s easy for absenteeism, scheduling conflicts, etc. to lead to overtime and all of sudden labor/revenue is more like 40 percent of more.
Quite frankly, I haven’t seen too many small businesses that run like a clock without the owner being involved in day-to-day.