Many fitness businesses offer specials or discounts to entice members to commit or sign up for packages. When it comes time to sell, does this affect your business valuation?
It depends. To get you thinking, here are a handful of scenarios that we’ve seen at fitness businesses.
- If your business offers specials from time to time to cover slow times or provide extra revenue boosts, that’s great. It likely has no impact on your business valuation.
- If your business discounts or aggressively offers specials for new clients, that’s is great. However, if those new clients leave rather than convert to full paying clients, that might impact your valuation or how a buyer views your business. If a potential buyer thinks there is a disconnect between your new client numbers and regular attendance, that might be hard to explain.
- If you have published prices but most of your members are paying a lower price, that would likely negatively affect your business’s valuation because a potential buyer might think that customers do not see your price as justified.
- If you do regular marketing promotions that are automated, that can be good for valuation because a buyer knows what to expect. Along those lines, if you do no automated marketing promotions, a potential buyer might see opportunity, which is upside for them and justifies your valuation.
As you can see, there are many types of ways where discounts or promotions can impact your value. The best advice is to be very clear with your customers about promotions. If you’re considering a sale, be thoughtful in the promotions you offer and keep close records.
When you are ready to consider selling your California fitness business, including Pilates, yoga, barre, hiit, come talk to us! We can help you prepare sales materials, offer strategic support or help with valuation.
