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A Cautionary Tale

Yesterday on my facebook profile I wrote a comment about the amount of “Elite” training centres opening. Within about an hour I regretted posting it. It’s the sort of passive-aggressive bullshit that I try to stay away from generally, never mind on the internet. Sure enough it prompted responses ranging from the equally passive-aggressive to the comedic. I had just seen an ad and I reacted to it by writing something sarky. It was silly and I actually felt guilty, a strange and extreme reaction I know, but after all I had owned a similar facility that failed only 6 months ago. So there was some irony in me looking down my nose at others trying to do the same. I was disgusted with myself when I noticed it, and I’m sure others noticed it too. People aren’t naturally entitled to respect just for trying something, but at the very least they’re entitled not to be sniggered at.

So in the spirit of being positive, I’m going to write something positive and give my experiences of owning and operating a facility. It will be condensed to fit the format, and I’m going to try to not include anything overly personal which is difficult since owning a business doing something that you love is inherently personal. This is not advice, I’m nowhere near qualified to offer advice, just an experience and perhaps if you are one of the people looking to own their own gym, you might take something from it. If you’re not one of those people, then you’ll at least be able to look down your nose at me in the same way as I was looking down my nose at others.

So you have this idea right…

Chances are you do this already, you have a gym or you run classes or you are a coach, trainer or maybe you’re just a guy who has done a bit and sees the gap in the market. You look to the USA and see all of these amazing facilities with weights, mats, cages, boxing rings and whatever else and the crowds of people training there and you think to yourself that Dublin/Cork/Belfast/Scunthorpe/Marseille is ready for this too. Maybe someone in your city is doing it already and doing well. After all, your classes are full in the place you have now right? Well the first thing you need to do is think about the content people put on the web. They’re hardly likely to say check us out; we have classes that are full 2 nights per week and the rest of the time it’s pretty empty. No they put their best foot forward in public and rightly so, they want to appear successful as there’s no better advertisement than a vibrant business. Secondly, have a think about the market that you think you see a gap in. How big is it really? Are you walking into a vacuum or are you driving a very thin wedge into an already crowded market? Maybe it’s worse, as it was with my experience, maybe you have to create your own market. That’s even harder. The most difficult thing we had to do in Informed Performance was to attempt to convince people that they had to hand over additional money for something they felt they didn’t need or could get cheaper elsewhere.

Now if you have a business already, a class or a smaller gym, then you have a going concern. Look at your income for the year, that’s approximately how much your going concern is worth. You are earning money, and hopefully you’re making a decent living, as I was 3 years ago. I’m saying this because if you are planning to go into partnership, form a new company or enter into any new agreement, you need to value that going concern. If you’re doing okay, then you’re probably earning the average industrial wage (for argument’s sake, I doubt many are doing this well) of €35,000. Your custom, your client base, your reputation, your goodwill, these are all worth money and although they might not be tangible they have value. Don’t undervalue yourself, I certainly did. Your expertise is not all you’re worth. You’ve also spent the previous years building a reputation, probably a locally based one, and this stuff can’t be bought, it has to be earned. If you are like me then you’ve worn the soles of a few pairs of shoes delivering leaflets, going to schools to give talks and so on. Don’t sell that stuff cheaply. You’re worth it as the shampoo ad would say. You’ve earned your reputation. Increasing your price to match the rent in a new building and so on can tarnish that reputation if you don’t manage it correctly.

How many people do you train right now? How many people do you expect you will gain when you move to a bigger place? It might not be much. What you could be doing is moving, adding overheads and larger bills and then gaining 5 extra members. Worse again you could have more than just you coaching and you could either be letting them go without payment or just splitting whatever profits you were making before 2 ways. One of my larger regrets is having a friend teaching for free for a long time without the capacity to pay him. It still rankles with me that we couldn’t do that. Times were tough and there were bills to pay of course so there really was no choice, but still. Either way, you could actually just be taking on another, bigger building with no significant increase in income. You might just have maximised your market right where you are right now!

Are you going in with somebody? How much do you trust them to uphold their end of whatever it is they’re doing? Are they renting from you or are they sharing? There are a lot of pitfalls when someone other than you is involved. This is particularly true if you’re used to being on your own. If you’re splitting the rent 50-50 with another instructor or another coach, then how do you know they’ll meet their target every month? What will you do if they don’t? If they’re renting from you and they decide to up and leave then you’ll be left with a big hole to fill and a gap in your rent payment each month. If you’re in partnership or in a company, then how do you know their side of the business will be successful at all? Also, do you trust them to make their payments on time, be professional, turn up to work on time, put in their share of work delivering leaflets, making sales calls, paying bills and so on? You have to think about this stuff even though you don’t want to and it will inevitably mean having a difficult conversation with the people you will be working with. As a cautionary tale, the martial arts side of my former business remained steady, but the gym side grew by only tiny amounts per year on year due to a variety of factors including the ever present economic difficulties. Essentially this was my previous years’ wage being spent on rent, electricity and the other major pitfall of the industry- City Council Rates. Watch out for those, they’re a doozy. Take care. You might think your mate is the best guy in the world but if one day he decides he doesn’t like teaching Karate anymore, you might be left picking up the bill. Let’s take the average wage again- €35,000. If you fail to pay yourself that amount 2 years running because you’re keeping the business afloat with your wages, then you will be down €70,000. If I asked you to invest that amount, up front, in your new gym right now, would you do it? I doubt it, yet this is what I did and several others I know have done. You just don’t pay it up front, you pay it on the drip, month by month. Adding the figures up after the event can be a sobering experience.

Serious question time now… How long will you be doing this? Really? Because for most of us, this is a labour of love, not a method of making the mega bucks. I do this because I love coaching and training, and when I stop loving it then I will also stop running a gym. There are other things that I could do that would mean I would have a steady wage, be able to put my boys to bed at night, not spend Saturday nights away from my wife, not have to worry about meeting rent payments every month as well as my mortgage and so on. If you’re a lifer like me, then you will take this as the rough that goes with the smooth. If you’re not in this for the long haul, then stop right now. If I wasn’t coaching in my gym right now then I would be training in someone else’s. I love what I do and I am delighted to have been given an opportunity to do it for a living, but it’s not easy, and you must accept that if you want to do what you love for a living, then you will inevitably have to give up a bit of the love to make a living. It’s tough out there. People aren’t spending money and convincing them they’ll love doing what you do is tough. I was considering stopping after IP closed, just quitting, then moving away from where I had been based for near a decade to another area, then I got 2 specific text messages of support encouraging me to keep everyone together who had trained with me for the guts of 10 years. So ask yourself if this is something you’ll want to keep doing when the going gets tough. The hint there is that the going will be tough almost immediately.

I’m saying this not because I am an expert on these matters, but because I have made pretty much every mistake there is, and I would like to think that I’ve learned from them. Hopefully I have but only time will tell! However there are experts out there who offer free advice occasionally. These guys know their shit. You might think martial arts are a class apart when it comes to business but unfortunately, the rest of the world doesn’t think so. The electricity company, the rates guy, your new landlord, they all don’t think your gym is a Buddhist Temple or a hardcore elite training centre, they think its somewhere that has to give them money when they invoice it. Asking people like your local Enterprise Board or your accountant what they think is a good idea. They can quite often have good advice or bad news. Take it on board. You don’t have to agree with it or act on it but at the very least you can’t say “well I didn’t know that” when something pops up to bite you in the arse. It’s also good to sit down and chat to someone who won’t be talking to you about how cool the new cage or boxing ring will look.

That’s all I’ve got. I’m currently doing it all again, so I know these things from very recent experience. I’m lucky enough to have a good crew of people around me for support and hopefully you do too. I don’t need to tell you that that’s the most important thing; being able to ask people for help or advice or even just to bounce ideas off is important. It’s a tricky environment in which to do any sort of business except repossessions so I hope all of these places that are opening are going in with their eyes wide open, and that they will succeed of course.

See you on the mat!



One thought on “A Cautionary Tale

  1. I think I’ve lived through most of that. Thanks for posting it. Best of luck with your new venture.

    Posted by catherinecostigan | October 26, 2011, 8:28 pm

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