Back in 2014, I wrote and article entitled Confessions of a CrossFit Gym Owner.
In May 2019, I sold my gym. What happened? Why did it happen? How did it happen? What follows are my new confessions:
My family and I had just returned from a spring break trip to Iceland where I’d spent the majority of my down time planning out my business targets for the second quarter. I had thought through a growth and retention strategy which would mean a net addition of between 40 to 65 members over the course of the 13 weeks in the quarter. We had hit the ground running in Q1, and I wanted to maintain that momentum leading into the summer.
My little gym had our fair share of fits and starts of growth and loss, progress and problems, happiness and heartache. And for the first time in over seven years, we had experienced an entire year of real – and predictable – growth and stability. I was functioning in the role of CEO and head of marketing, and I had a full and happy team of operators that kept things running smoothly. We were making a steady profit, and I actually had time to enjoy being with my family. Things were finally starting to work like they were supposed to, and I was realizing the vision I’d set out to see when we opened all those years ago.
So when we got back from the trip, I was fired up to get the team together and share where we’d be headed over the next three months. And that’s when my sales director asked me a very unexpected question. I’m going to compress the conversation for the sake of brevity.
Her: “So, would you ever consider selling the gym?”
Me: “Not really.”
Me (joking: “Well, I guess everybody’s got their price. Haha!”
Her: “Well, what’s yours?”
Me (playing my best Dr. Evil): “One million dollars!”
Her: “I’m serious.”
Ten days later, I had a very large pile of money, the freedom and invitation to remain involved at the gym that I love, and no job.
What my sales manager didn’t know was that less than two years before, we were in a position of such desperation that we thought our only option was to sell the gym. An exodus of members in Biblical proportions had resulted in a revenue drop of nearly 45 percent. I couldn’t afford to pay my staff, so we had to downsize. And the business couldn’t afford to pay me either, so my wife had to go pick up temp work while I worked 5-9’s with nothing to show for it.
After five depressing months of living on credit cards, and from a place of desperation, we began to explore the possibility of selling the gym.
We found three separate potential “buyers.” Side note: There is no shortage of people who think they want to own a CrossFit Gym. But, as we walked through the process with each of them, the best offers we were getting wouldn’t have even paid off a small portion of the debt we’d incurred over the previous five months.
Their responses: “It’s only worth the price we could get if we sold the 5 year old equipment.” Which wasn’t much… And “We’d be buying an overwhelming job that you’re making $0 at. May as well go work at McDonalds.”
The best offer we got was for $10,000 dollars, and I was seriously considering it.
So what changed?
When we decided we would keep the gym, I knew that I couldn’t do things the same way I had in the past, and I resolved to give everything I had for six more months. And if it didn’t work, then we’d close the doors and walk away. This could be a whole other article. But I made hard decisions. I invested significant cash into mentors. I made hiring moves. And hardest of all, I pulled myself off of the floor. I began acting like the owner of my business, instead of the leader of a fun fitness club. I learned marketing and sales. I learned leadership, and communication, and how to empower people.
People want to buy a business, not a job. In business valuation, there is a term called “goodwill.” It refers to the intangible difference in value between the sale price of the business, and the price of the business’s material assets – in my case, the equipment and inventory. Simply put, having established systems, and a full operations team essentially added a zero – and then some – to the value of my business because the buyer could take over and the customers would feel minimal impact. This is called a “turn-key” investment.
The truth is, if you don’t want it, it’s not likely that anyone else will either. But, when you’ve done all the hard work to plant, water, tend and grow your gym’s garden, it becomes very desirable both to you and to others. In other words, it’s tempting to sell a crappy business, but nobody wants it, and likewise, it’s tempting to keep a thriving business, but that’s when everyone else will want it.
Of all the lessons that I’ve learned over the years, there’s one that stands above them all: The difference between “success” and “failure” is never determined by someone else. You create your own standard, and then you try like hell to make it real.
Ask yourself what you want. And don’t just assume you know the answer to that question. What do you really want? Not, what do you think you should want, or what do you want to want, but what do you really want, in you core? Once you know that, decisions become simple.
Thanks for everything CrossFit. You’ll always be my first.