Understanding Your Studio's Value

Understanding your studio's value

One day, I received a text from an unknown number.  They asked if I wanted to meet for coffee and talk about selling my studio.  

Now at this point, I had already purchased another studio, merged it with mine, sold a gym and sold my shares in a Pilates-inspired retail store.  So I wasn't clueless.  

We met a local coffee shop and after small talk, she dove in and asked if I wanted to sell.  She had her own smaller studio in a neighboring community and wanted to expand her footprint.  

I answered as any business woman would -- that of course I would be open to discussing that.  She smiled and said that she would offer $65,000 for the full business.  That was clearly the budget she had been working with because the number was based on nothing -- no due diligence, no financials.  Just what she had to spend.  

I smiled graciously and said that my studio's value was $475,000.  She went white and said quickly "but it only cost my $60,000 to open my studio.  How could you ask for $475,000".  

And right here is what many people don't get.  The value of your business assets.  This woman was calculating the estimated cost of my equipment only.  But my business value was based on so much more....

• I had pre-negotiated a lease that still had 5 years left on it.  Asset
• I had built out the reception area, entrance and mat room.  Asset
• I had in-force Teacher contracts. Asset
• I had a trained Studio Manager who knew our sales process, clients and SOPs.  Asset
• I had clients on 12 month contracts.  Asset
• I had a website with a brand name, profitable class schedule, and profitable private/semi-private schedule.  Asset
• I had 1000 people in my studio per month.  Asset
• I had printed marketing materials, and email database and merchandise. Asset
• I had set and enforced policies and procedures and therefore had a well trained and vetted client population. Asset

All of the time and effort I had put in to build my business to what it was -- that was factored into my price -- not just a depreciated value on the apparatus. 

If you do not have these contracts, standards or policies, then you don't have these assets - let this be another sign that its time to put your clients on contracts and convert your contractors to employees.  

PS. She didn't buy my studio

Book a call if you want help or guidance in increasing your business value