Ever wonder what your gym is worth? Maybe you have an interested party and are looking for a jumping-off point to start the negotiation.
Well, here ya go! This is a calculator we built for you do get a ball park evaluation of your gym. This is not financial advice, it is simply just for educational purposes and do not take in to account things like unique market conditions or unique use cases. This is built with 90% of gyms in 90% of markets in mind.
The way we built our evaluation calculator is to include how turnkey the systems of the gym are. Since business that is a turnkey revenue generator ultimately gets far more on the open market in evaluation. While some calculators may use over-complicated year-over-year cash flow projections and data most gym owners don’t have or need, we’ve found we can pretty accurately estimate evaluation based on revenue, profit, and a couple of ranking factors that determine the businesses viability.
We’ve compared this against almost every other business evaluation tool out there, alongside actual comparable gym sales in the market, as well as agreed-upon standards in the community of gym owners, and found it to be pretty accurate when averaging out the data without having to spend all-day entering complicated numbers in to a spreadsheet.
In our research, we found that no matter how you calculated the evaluation of a completely turnkey gym that is:
- Built to sell
- Fully staffed
- Employs an operator that is not the owner
- Client acquisition is consistent and adequate
- The recurring client base is stable and a strong base of receiveables
… it came out roughly equal to 1 years total revenue plus the value of all assets minus debts
From there, it was evident to us that the value deducted was often equivalent to how much of the actual business was missing in regards to systems for marketing, sales, operations, and fulfillment. This makes sense since a business lacking systems is not a business, but actually a self-employed job for the new owner, and that new owner is essentially earning that discount by way of sweat equity.
It’s REALLY hard to accurately reflect that value in generic business evaluation calculators since it’s industry-specific and subjective. Most of them assume you have everything delegated and systemized, which is often not the case with most independent mom-and-pop businesses. It is exactly these factors that anyone auditing a business’s value is going to pull back the lid on.
So that’s how we built our calculator and we feel like it’s pretty spot on.
The 4 Gym Pillars We Are Using In The Calculator
The Marketing Pillar
Marketing is the act of lead generation to be converted through the sales pillar. This is the business’s ability to fill its sales pipeline with adequate leads and nurture them closer to the point of sale in a consistent and predictable way.
A 5 means marketing systems are fully automated and delegated, lead generation is consistent and without changing anything the new ownership would expect lead generation to remain consistent.
Follow-up is automated and someone on the team is doing outreach and appointment setting beyond the automation to keep a steady stream of new prospects warm, booked, and showing up. A gym owner rating their gym a 5 knows all of their lead conversion numbers and they are within
The Sales Pillar
A 5 means you have a consistent and dependable sales process led by someone else who is not the owner. Not just front-end sales, but also resell and upsell that includes ascending members into value-added services and programs that increase average member values. A gym that is a 5 has these ascensions model built in and it’s built in to a customer’s lifetime journey.
On the front end, close rates are stable and consistent, and the membership offerings are built and presented to build an evaluation-boosting base of receivables for the business.
The Operations Pillar
A 5 means there is an organizational structure in place that includes a manager or operator who is not the owner and the owner does not need to be present for the business to continue to sell, fulfill, and operate profitably. An operator who is not the owner handles admin tasks, and scheduling, and manages staff and coaches.
All processes and SOPs are documented from mopping the gym floor, to running routine admin tasks, to hiring and interning a new coach. A business that is a 5 would mean someone could walk in and run your business without confusion off of your published and readily available SOPs.
The Fulfillment Pillar
A 5 means all scheduled coaching hours and programs are run and covered by professional staff who are properly on payroll meeting local guidelines with employment agreements in place. There are fail safes in place to ensure coverage is handled should a coach call in sick or not show up. In other words, there is no way an owner is going to have to cover on short notice unless they chose to.
Accurately Rating A Gym’s Pillars for Evaluation
The calculator below will ask you to honestly rate 4 different key pillars of a gym business. Based on your rating our algorithm will adjust the evaluation. Below are the classifications for each rating.
5 – The pillar is completely turnkey – The pillar runs and continues to run at its current rate without the business owner’s involvement for months at a time and even improves itself with involvement from the team and system feedback. The owner is completely silent in this pillar and there is leadership in the pillar. Level 5 means the system and process are so good it can easily be replicated with similar results and even franchised. This is less than the top 2% of gyms.
4 – The pillar is almost turnkey – The pillar requires oversight from the business owner, it can run on its own for periods of time (a week or even a month) but will not continue or improve itself without some input or oversight from the business owner. 90%+ delegated and automated, there is a trusted operator in the role running and optimizing it with feedback from the owner. There is an operator but the ownership is still in the leadership role for the pillar. This is less than the top 10% of gyms
3 – The Pillar half turnkey – The pillar is shared between the owner and team, but there is not an operator, the owner is the operator. There might be some full-time help but mostly part-time help with the pillar. It can run on its own for a couple of days at a time but still requires oversight and there is not a trusted team or operator to optimize or run the pillar without the owner beyond that. The owner still owns the pillar but has some help so it’s more part-time in that pillar. This is less than the top 35% of gyms.
2 – The Pillar Is Established But Run by Owner – Partial systems implementation and/or some hired help but the business will not run without engagement from the business owner for more than 1-2 days. This means the pillar has some help but is very far from turnkey and new ownership would be assuming the roles and jobs of the pillar or else it would result in a downturn in the business.
1 – Pillar Is Not Even Establish – No delegation or automation whatsoever, and the owner simply does it as a means to an end. This means the business will not run for more than 1-2 days if they are not personally involved in the role and performing or implementing the tasks associated with this pillar and the roles within. There is no technological or personnel assistance to ensure the job gets done if the business owner can’t do it.
Presenting The Group Gym Evaluation Calculator
This calculator will use an algorithm based on revenues and how turn key the business is to estimate proper evaluation for a group fitness brick and mortar gym with assets and potentially debt. This is an estimate based on unanimously agreed upon factors often considered in evaluating this type of business. There are a lot of variables that going in to fine-tuning an evaluation and that’s where we recommend hiring an expert or broker to fully assess your specific evaluation. This is only for guidance or a jumping-off point to provide a ballpark based on common factors. Factors like unique market conditions, brand value (which is only a factor if your gym has reached mainstream critical mass in your market), and other one-off variables are factor in. This is not financial advice, it is only for educational purposes.
