The Challenge

The owners of an established gym and fitness business in regional Victoria were considering a future sale.

The business had an established membership base and operated from a well-known council-owned facility. There was an opportunity to strengthen its financial performance and operating structure before taking it to market.

Several areas were identified where practical improvements could have a meaningful impact on profitability and business value. Staff rostering and class scheduling could be more efficient, membership pricing had scope for review, systems and processes required further documentation, and the business remained relatively dependent on its owners.

The owners had time available before a potential sale, giving AS Advisory approximately 12 months to focus on improving the business before it went to market.

What AS Advisory Did

AS Advisory worked with the owners on the areas most likely to influence profitability and the way a future purchaser would assess the business.

Staff efficiency was one of the key areas of focus. A computerised rostering system was introduced to manage staff hours more efficiently and feed time reporting directly into the accounting system. Specialist gym classes were reorganised to improve trainer utilisation and reduce unnecessary staffing costs.

Pricing was reviewed, resulting in an increase of approximately 6% across memberships. The business increased its marketing activity and established corporate membership arrangements with local businesses, helping grow member numbers and contributing to stronger revenue.

Further improvements were made across the operating structure of the business. The lease over the council-owned facility was renegotiated to provide greater certainty, systems and procedures were documented to reduce owner dependence, and membership and renewal processes were improved.

Together, these changes strengthened revenue, cost efficiency, recurring income and the overall operating structure of the business ahead of a future sale.

The Outcome

Over the 12-month period, annual profit increased from approximately $190,000 to around $220,000–$230,000, representing an improvement of more than 20%.

Stronger profitability became a significant driver of the improvement in business value. Increased membership and revenue, combined with better staffing and cost efficiencies, strengthened the underlying earnings of the business.

The operational improvements also created a more structured and transferable business. Systems were clearer, staff were being used more efficiently, owner dependence had reduced, corporate memberships broadened the recurring membership base, and the renegotiated lease provided greater certainty around the premises.

The business ultimately sold for approximately five times more than the offers received before AS Advisory became involved.

The 12-month improvement period gave the owners time to strengthen the financial performance and operating structure of the business before presenting it to prospective purchasers.

Why It Matters

Business value can change considerably in the period leading up to a sale.

In this case, practical changes to pricing, membership growth and staff efficiency contributed directly to stronger profitability. Improvements to systems, owner dependence and the lease created greater operational certainty for a prospective purchaser.

The experience highlights the value of preparing early. Understanding the factors influencing business value well before a planned sale gives owners time to identify where improvements can realistically be made and see those changes reflected in the performance of the business.

For owners considering an exit in the next few years, an earlier assessment can provide a clearer picture of the current position and the areas that may warrant attention before the business goes to market.

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