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Is buying an existing gym or fitness center right for you?

What are the advantages and disadvantages of buying an existing health club or wellness center?

Thinking about buying a health club or wellness center? It can be a great idea, but you absolutely must do your homework. This is a complex decision that requires a careful analysis of physical properties and financial statements.  It also depends on the relationships between the existing business owner(s), his/her employees, customers, the community, and competitors. It can be overwhelming to try and do this analysis alone.  It’s best to get professional help to evaluate and price the business, particularly if you don’t have at least three years of experience in owning and operating a similar enterprise.  Some advantages and disadvantages of purchasing an existing business include the following:

Advantages

  • The business has an existing established relationship with both customers and suppliers.
  • Financing will be easier to obtain providing the business has a good profit history.
  • Operations can begin right away; current inventory can be sold to produce immediate cash flow.

Disadvantages

  • The cost may be higher than starting from scratch as often you are buying “goodwill.”
  • Existing problems can be hidden until after the sale.
  • Inventories may be obsolete due to their age; equipment may be faulty.