I absolutely hate where I work... And in the back of my head for a while I have been wanting to open my own gym...
Problem is I am clueless on the financing end of it! Been doing some googling and such, but really... Numbers make my head spin. That is where hips comes in!
Anyone here have any experience with getting financing to start up their own enterprise?
I got a loan to start a landscaping business down in Florida about 8 years ago. Had to provide the bank with a business model and numbers that showed potential profits, monthly expenses, marketing plans, and an aggressive plan for paying back the loan. Also showing that you are willing to put down a substantial amount of your own savings to bridge the gap between the loan and the expected overhead shows a committed potential business owner who is confident that the business model will succeed. Basically, you are professionally and tactfully begging for money. It's not posssible to do too much preparation, planning, and preparing your pitch to the bank. Don't be discouraged if a bank turns you down. Just drive on to the next one.
I work in commercial real estate, but not in your state. The way it works in Cali is there are several loan programs you can go with to purchase a place to run your business out of. However, this is only if you are buying the real estate (which I highly recommend if you can). You can have your payment lower than a lease and only put 10% down using the sba program.
For financing strictly for capital to start business operations, then you'll have to go sit down with someone to get a better idea. Go to any reputable lender with your business plan and economic plan. They are going to want to see that you have some capital to get the business started as no one is doing highly leveraged deals these days. The amount of money they will loan you is based on how strong they think your business model is. So the better you can show them how you will make money and provide examples of other similar businesses, the better the chance will be that you can get a nice loan.
Most people's mistake when it comes to starting their own business is that they think they will only need 25%-50% of the actual amount of money they will need. I've seen it before where some guy has $20,000 and wants to open an auto repair shop. Well, when we went through all the financials he was flabbergasted to find out that unless he was bringing an existing customer base and doing all of the work himself, he'd have no money after just a few months and wouldn't be able to survive....even after a loan.
If you can swing it (even if it's later on down the road and not now) I'd try to get a group of investors together (friends or colleagues) and buy a retail center in which you want to run your business. This would preferably be a smaller spot with 3-5 spaces and a good parking lot. The money you can generate from the rental rates of the remaining units will likely pay your mortgage for the entire property. Out where you are, I wouldn't be surprised if you could find a deal with an 8-10% capitalization rate, not even including your own rent that you'd be paying (which is a business write off in most states). Just hire a management company to keep the property clean and lease them out when they become vacant. Most full service operations will collect rent checks and take care of inspections and preparing leases for only about 3-5% of your monthly gross receipts. Again, this is not including your own rent. So, if you've got a monthly income of $10,000, then you only pay the property manager $300-$500 per month.
You gotta dream big if you wanna live big! PM me if you need any assistance bro and I'll try to help you out
Thanks guys... I was also considering the venture capital route... I to have access to guys like that, but the only thing is I want do own the gym... Not build it up and sell it off.
I'll be starting to develop the business plan this weekend. My father actually starts up companies, builds them into monsters and then sells it all off... Pretty good at it too. Retired at 49 and now just works on projects for fun. I am trying to avoid going to him with it though. I suppose I should suck up the pride thing and have him maybe help with the business plan.
Be careful when doing business with family, it can get awkward quickly. I would recommend pitching the idea to your dad as a one time investment with xx% return on the original investment, but not an ongoing stake in the company.
I think it is a fantastic idea POB, and gyms can clearly make substantial sums of money. You just have to understand that the most lucrative gym is more than likely not going to be the one that you or I would like to powerlift in. It's going to be the commercial friendly, daycare providing, treadmill and machine heavy, faggy music playing gym. Not to say that you couldn't have your own room in the back that is strictly for powerlifters, after all, you are the mother ****ing BOSS!
Best of luck brother, and you know that when it opens, I'll plan a trip to come and help break it in.
I went the SBA route and about a gym. It was a great gym but the loan process sucked and the $180k loan costs me in SBA closing fees $16k + the 20% down payment on the business itself. It was 3 months of pure hell trying to get the loan to close.
Now the good thing is the SBA will back the loan so banks are only into the loan at 50% so they are more ready to loan BUT business that are based on memberships like gmys most don't like because the income changes so much.
Now Banco Popular is a bank that will or did offer fair rates Prime + 2.75% which right now is great... thing might be different from the last time I talked to them.
Keep in mind if you go the SBA route they own you, they can ask to look at your books any time they want, they will be up your ass about your tax returns before the IRS even says you have to file. Every quarter they can and probably will ask for proof of where you are on your business, this will happen for a couple years.
The good side is SBA loans are easier than normal loans since they are backed by the the gov't the bad news is they are backed by the gov't LOL.
Find a way to get the money yourself but DON'T go in with family you will be sorry. Been there done that.. not good at all.
My 2 cents
I also don't plan on asking my father for a nickel... Just help with the business plan development and financial modeling.