This post was copied from a website I used to maintain called How I Built My Business. It’s now here for posterity.
Company: Body Shop Assisted Fitness
Years Active: 1996–1998 (sold)
Location: Burley, Idaho
Business Builders: Cameron and Jennifer May
HIBMB: What made you want to build a fitness center?
Cameron: We loved fitness and fitness was the growing thing in Utah. I did some personal training around Provo, UT and was a personal trainer for athletes at BYU. I was also studying business at BYU. All that combined made us want to build a fitness center.
HIBMB: Did you need to get certified?
Cameron: Yes, we were both certified personal trainers. We had to study some materials provided by the The American Council on Exercise. They provided the materials and we had to go to a testing center to take a test. It was just a written test. There was another test that was more expensive, intensive, and hands-on but what most people cared about at the time was just the ACE certification.
HIBMB: Beyond the certification, how else did you prepare for the business?
Jennifer: While Cameron was studying business he had to come up with a business plan for one of his classes. It had to be hardbound and very official. We had to outline positive projections, negative projections, and average projections. We had to study demographics, provide pro-forma financial statements, and do all kinds of research. That’s how we ended up getting the business loan. Banks really liked to see our prepared plan. We also needed to get a business license, find a location, meet with suppliers, among other things.
HIBMB: Where did you end up building the business and what drew you to the location?
Cameron: We built it in Burley, Idaho on Overland Avenue. We were both from that area and at the time there was nothing like what we were wanting to build. We chose Overland Avenue because it was the highest traffic road in the county.
HIBMB: How did you finance your equipment and property?
Jennifer: We got a loan from a bank for around $55,000.
HIBMB: How did you market the business and acquire new customers?
Cameron: Our grand opening was actually our first marketing mistake. We did have a grand opening but we only had it for one day. We took the banner down after the first day. The local newspaper published an article about the opening. That was about it.
We had no way at our grand opening to sign up customers. In our minds we were just showing visitors our new place. The night before the opening we threw together a form that people could fill out with their contact information if they were interested. In our minds we thought we were going to have this great event where we invite the media, have treats, take people on tours and then on Monday we’ll open and they’ll come in and sign up. That’s not how it works. We did not understand sales. What we should have done is have several people there signing up customers that day. That was a big mistake.
Another mistake we made is we assumed we would offer exceptional service and people would stay longer and be committed. We went with a no-contract model and thought customers would be more likely to get started because there was no pressure of signing a contract. Once they got started we figured we could keep them coming by providing limited personal training and a wide variety of classes. That worked to an extent but the truth is that people get busy or distracted and don’t keep coming and paying. If you’re not locked into a membership you end up paying sporadically. That’s just how people are.
On average, customers would end up quitting in three months. To break even we needed to maintain 210 customers. We essentially had to find 210 new people every three months in a town of 10,000 people.
Our gym was typically quite full, but with gyms it costs so much per square foot that you really need to sell the long-term contracts. It’s important to have people not coming in but still paying. If the only people who are paying are those coming in, the place can get crowded but still not be profitable as a business. The burden of cost needs to be spread across more people and that has to include people not coming in regularly.
We also had no auto-draft for payments. Auto-draft was not common at the time in that community and each month we relied on customers coming in and giving us money or sending it to us. Auto-draft was considered by customers as cumbersome and a huge commitment.
Anyway, our other marketing efforts included meeting with athletic administrators at local high schools, bringing in the strength coach from BYU who taught some classes, and other similar things.
HIBMB: Did you stick with the no-contract business model then?
Jennifer: No, eventually we decided to change the business model. We brought in a company that didn’t charge us anything up front but took a commission on each contract. They helped us set up contracts, did a big marketing blitz to the whole area (tens of thousands of mailers), and all sorts of stuff around town.
They helped us get the business back to where it was making money and that was around the time we decided to sell. In order to sell the business we needed it to be profitable or have some promise of profit potential.
HIBMB: If it started to become profitable, why did you sell the business?
Jennifer: For one, fitness went from being a passion to work. We loved fitness, health, and the energy of the fitness scene, but when you’re living there all day and that’s your stress and your burden you just want to go home or go to someone else’s gym.
The difference in culture between that community and a bigger city was a factor as well. It was a farming community so we would have people come in with poo-smeared jeans and boots and work out in them. A lot of them didn’t approach fitness the same way that we were used to. We wanted to help people with more complex fitness, personally train them, and help them make big changes but a lot of the people just wanted to ride a bike while watching a TV show. It just wasn’t quite what we had in mind.
Six months before we sold the business, Cameron moved to Nevada to start work as a financial advisor at Edward Jones (he studied and took tests while running the Body Shop) and lived by himself on the floor of an apartment. I was working full-time at Simplot near the gym trying to pay the bills and get the business sold. Cameron’s parents moved away to a ranch during all this and took our son Bryson with them to take care of him. I was living in their old, empty house alone. We pulled it all off but it sucked. We ended up selling the Body Shop for less than we owed on it. We ended up with about $15,000 in debt.
HIBMB: Who did you sell it to?
Jennifer: A local couple looking for a business to build.
HIBMB: Were you only involved in managing the business or did you teach classes as well?
Jennifer: I taught aerobics classes and we had four or five other aerobics instructors.
HIBMB: Did you have other employees?
Cameron: No, but in order to keep the business open 24/7 we had a keypad on our door and would give memberships to the business next door. In return, they would take payments, issue the security code to paying members, and perform other custodial tasks.
HIBMB: How did you go about purchasing exercise equipment?
Cameron: We were already familiar with the type of equipment that was needed. We used a company called Bigger, Faster, Stronger in Orem, UT. They manufactured the weight equipment and were a retailer for cardio equipment. The cardio equipment was the biggest cost. The combined cost of all the weight equipment was as much as a treadmill. Probably 70% of our startup cost was for cardio equipment. One commercial-quality treadmill was about $8,000.
HIBMB: What other costs did you have?
Cameron: The aerobics room had to have special flooring. We had to have two good sound systems and the aerobics one was special in that you could increase or decrease the tempo.
Between the weight room and the cardio room we had about 3,200 square feet. When we bought the space it was essentially just a shell made of 2x4s. Our landlord had a builder who did some construction as part of the cost of our lease. We had to put in walls, two bathrooms, a custom front desk, sound systems, flooring, mirrors, and sound-proofing.
We were really surprised that we ended up within about $25 of what the business plan had outlined.
HIBMB: Anything else you learned from building the business?
Cameron: The business plan determined that there was enough population to sustain the business if competition remained the same. As I said, the Racquetball Club was really our only competition. They were more recreation-oriented. It was mainly racquetball and a swimming pool with a few rusted weights in an unheated, uncooled area where people could lift some weights if they wanted. I was going to let them have the recreational crowd and we were going to take the fitness crowd.
Two weeks after the grand opening we drove by the Racquetball Club and there was a huge structure going up that looked like the size of a hospital. I thought, “Uh-oh, I think I just lost.” Unfortunately, that took the wind out of my sails and I wasn’t very effective at running the business after that.
My advice to anyone wanting to build a business: start small. Stay within your means. Don’t do something that is an all-or-nothing outcome. Determine if the business is a make-me or break-me scenario and, if it is, pass. Start with a small model, prove it as a concept, and put your own money into it. If you don’t have money to put into it, you’re not ready for the venture yet. We went into this with no money and no proven model. We had an idea that should have worked and probably would have worked if our competition hadn’t geared up at the same time we did. They obviously already had plans at the time we started but we weren’t aware of them.
Also, even though it wasn’t much of an issue for us, don’t borrow money from family. It causes undue stress.
Jennifer: Have an exit plan. How much are you going to give to the business and what are you going to do if you end up hating it? We were young and didn’t have a lot of living expenses so we thought we were in it for the long haul and that we’d figure it out. When we decided we didn’t want to make it work long-term, then what?
Cameron didn’t think anyone would want to buy the business but I was confident we could get it sold. There are a lot of people who purchase businesses that aren’t profitable. They like what the business is about and see the potential. We didn’t have anything else to put into it; we didn’t have more money to put into it or more people to help out. If someone did have those things then who knows what they could do? We started looking at the possibilities of what they could do with it and came up with a sales plan. We worked on getting the business into shape so we could present a picture of where we were and the possibilities going forward. It eventually sold and we moved onto the next stage of our lives.