My wife is a CrossFit coach and has been approached by the owners of her box about the possibility of us buying the business from them. I would really appreciate any advice y'all may have on questions to ask them and ask ourselves about this opportunity.

My wife is a teacher and would have to quit for this to work, I am sure. She has no business acumen or experience but is passionate about training people and is an incredibly hard worker at whatever she is doing. I am passionate about fitness too (not necessarily CrossFit) but have a very demanding job that would limit my role.

I have recently felt a strong urge to have ownership in something beyond my job and we have talked in the past about going into business in the fitness industry in some way.

According to my wife the owners have personal reasons why they are selling that make sense. I plan to ask for financials and speak to a couple of friends and acquaintances that have experience, but I would truly appreciate any feedback y'all can give.

And I ask that this doesn't get in to the merits of CrossFit unless it pertains to the business decision.

(I also posted this on the Health and Fitness board)

What do the current financials look like?

Where are you located? Member #s? Rate? Are they paying coaches or are they giving them free memberships? I love CrossFit, but have doubts about HQ (Greg Glassmen). The US actually saw a decline in boxes last year because of over saturation.
Don't want to sound like a downer, because this would be a fun (and demanding) opportunity, but owning a box is usually a second job for people.

I own a gym, Where are you located? How many classes a day? Sizes of classes? Current Memberships?

Woody2006 said:

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What do the current financials look like?

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My wife is trying to get those today.

UpstateAg said:

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Where are you located? Member #s? Rate? Are they paying coaches or are they giving them free memberships? I love CrossFit, but have doubts about HQ (Greg Glassmen). The US actually saw a decline in boxes last year because of over saturation.
Don't want to sound like a downer, because this would be a fun (and demanding) opportunity, but owning a box is usually a second job for people.

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Over-saturation is one of my big concerns. Seems like we are 10 years behind the big growth phase. Coaches are given free membership and paid per class.

My wife says there are about 10 coaches (including current husband and wife owners).

We are in SA.

I know multiple people who owned crossfit boxes in Houston. None of them made any money.

The only exception is people who have a cheap building and a huge membership base like EADO.

The business model for a gym is to have a huge membership base with very few people showing up. The business model for a crossfit box is a small membership base that always shows up. Pretty self-evident which is the better business model.

If you buy this, buy it like a hobby for your wife and not a business.

You need to consider what the rest of your situation looks like. Do you make enough or have enough in savings in case things go south? Do you have kids? Can you both/all handle the additional stress? What other sacrifices might you have to make?

Don't need answers here but it's not just about the financial side of the actual business.

Their financials wont necessarily be your financials. Take into account how expenses will change. You need to be figuring how many memberships it would require to break even, and is that a realistic expectation to keep.

Also, do you have a good grasp of WHY the members come to the box? are the current owners a big draw? will them leaving cause members to leave? How can you guys continue the community aspect that has been created.

I think community is a big part of crossfit and will make or break a box.

The first thing to do is find out what the "personal reasons" the current owners are looking to leave consist of.

9 times out of 10 when a small business is for sale at a seemingly good price it's either A) It doesn't make that much money or B) There is something on the horizon that will impact it's profits.

I've heard every "personal reason" under the sun and upon closer inspection it's almost always a reason for getting out of an investment that is no longer worthwhile.

If it was profitable and they didn't have the time to do it, they'd hire someone to do it and still have the generated income.

If you and your wife had money to invest and staff a business that would be one thing... If you and your wife were retired and looking for a business to run that would be one thing.

But if your wife is going to quit work and you are going to be unavailable to help much due to your job then IMO it doesn't make a whole lot of sense unless this place will be generating more income than what your wife currently makes -- and if the current owners are willing to sell rather than hire someone to run it, chances are it doesn't.

The owners are putting together a non-disclosure agreement so we can meet and get into the details tomorrow. Should have more info then. Thanks again yall!

I am also skeptical that it is purely personal reasons that they want to get out.Good point about them hiring someone to run it if it was generating good revenue.

And no I will have very little time to devote to helping manage it and I think that's a big problem. I doubt we could replace her income with the revenues and that is the ultimate bottom line.

I want to meet with them to at least see the numbers and hear their side of things.


Thanks again!

That personal reason is "damn, I bought myself a job." Or "I personally cant afford the lifestyle I want by running this.

bam02 said:

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I am also skeptical that it is purely personal reasons that they want to get out.Good point about them hiring someone to run it if it was generating good revenue.

And no I will have very little time to devote to helping manage it and I think that's a big problem. I doubt we could replace her income with the revenues and that is the ultimate bottom line.

I want to meet with them to at least see the numbers and hear their side of things.


Thanks again!

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Yeah definitely no harm in seeing the numbers and hearing their side of things. Worst case is you learn something beneficial for your next opportunity.

Make sure you fully understand the current real estate situation. Currently under lease? How long? How much? Get historical lease info on the property so you can get a sense of future rent increases. Is it in an established area or up and coming area? Potential for landlord to sell the property?

Running a Crossfit gym is quite a bit of work coming into it with little business background but there are resources out there to help you. Our gym is one of the few in Houston that is doing well with a small client base and they utilize Affiliate Solutions to help with the business side of things.

https://www.affiliatesolution.co/

It's worth checking in to if you want to have a network of people to help your wife since she would be the one driving most of the day to day operations. Having 10 coaches is a great start to having some work life balance with owning a gym.

I put together a business model for the box that I go to now as I was considering being an initial business investor. Shoot me a PM or email and I can forward you what all we were looking at. We took a deep dive into financials and this was the second Crossfit box that we had looked at investing in.

My cousin is buying one soon. I'm hoping he doesn't crap the bed with it. I gave it the once over and the economics didn't sound very compelling.

Well, I wouldn't be totally pessimistic and think if they aren't making money you can't either. Management makes a huge difference, however, if you lack experience, you have no way to know what levers to pull to improve.

On the CNBC show "The Profit" the guy turns around failing businesses quite successfully but he has tons of experience and walks in knowing what knobs will up the cash flow before he buys.

I dont watch that show religiously but almost every one I have seen has a common issue...inventory management, with work in progress issues being a close second.

Outside of hiring too many trainers, I dont see how inventory is going to be an issue.

CrossFit is a lifestyle. I do not know a single person that casually does CrossFit. To me, that cuts the knees off the growth unless you were in early. I told my cousin to hold times specifically for newbs, lots of trainers around giving instruction, anything to reduce the hurdle.

I was addressing the "the profit taught me that just because this guy didnt make it profitable, doesn't mean you cant." Position.

I agree that I cant see the growth rate of these gyms and their perspective members being very good going forward.

Seems like you'd want to pair it with a standard gym type membership or some other service. CrossFit is an exercise fad, and just like every other exercise fad the number of people participating will slowly dwindle down. Id be curious to know how the CrossFit numbers have decreased with the increase in popularity of barre, orange theory, climbing and cycle bars.

I know a guy whose wife met another dude at crossfit! Boom went the dynamite!

I've been Crossfitting since 2012 and just recently switched to Peloton. Don't think I'll go back to lifting heavy anymore. My back and shoulders are thanking me!

I go to a CrossFit like gym in Austin with about 700 members. Coaches get $25 per class, a free membership and use of the facility for private training. I estimate the owners after rent are bringing home 150 to 250k per year based on the factors I know, mostly fees, rent, insurance and pay structure. They work a good deal but it seems more fun than other jobs of similar pay. The community is far more important than the workout and keeping good talent is hard.

However I agree many of us have asked for more cardio and less weight based classes because of the strain it puts on your body