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Running a CrossFit Facility Tips and guidance on how to open and operate a CrossFit gym.

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Old 06-16-2011, 08:12 AM   #1
Masen Mills
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Who was successful in obtaining a small business loan?

Reading through the archives on this board gave me a bad taste in my mouth about applying for a loan... Most of the posts were people saying they couldn't get a loan; then again, most of these posts were from around 2008. Times are different and so is the economy. How has this affected new affilaites?

Is there anyone out there who was successful in obtaining a loan?

Also, I know most people generally say:"Don't get a loan; work out of your garage until you make some money and build up a small list of clients." Fact of the matter is, if I run morning and evening classes out of my house while I work throughout the day, I'm barely going to make any extra money, and I'll drive myself and my family crazy for three years. At this point, I'm ready to open up a facility and run it full time.
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Old 06-16-2011, 08:16 AM   #2
Chris Walls
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Re: Who was successful in obtaining a small business loan?

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At this point, I'm ready to open up a facility and run it full time.
If you don't have the money to do it I would say you aren't ready. I did get some loans as part of a youth entrepreneur organization, got an operating line of credit for small business, got a space and gear and took 2 years to be breaking even. (not out of the hole... just breaking even every month.)

If you think running classes at home around a regular job would be hard on the family...

I have since closed that affiliate and moved and am starting over. This time in my garage, working around a day job, growing it slowly with no loans. I learned my hard lessons the first time (and am still paying for them...)
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Old 06-16-2011, 09:59 AM   #3
Chris Cooper
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Re: Who was successful in obtaining a small business loan?

Hey Masen - I had to start with a loan. I quit a job as a PT elsewhere and opened Catalyst with no other income, no guaranteed clients, a mortgage and a two-month-old. I took a shareholder duo for their access to credit, and it took me two years to get rid of them.
In Canada at least, you can't really get access to credit as a BUSINESS until you have a few years' worth of credit history. However, a personal loan for under 20k will get you a great CrossFit Box, and 20k in the course of your lifetime for the CHANCE to do this is worth it. If you lose every single cent, you'll get another job, pay off the loan, and apply what you've learned when you try it again. Looks like Chris Walls had a negative experience this way; mine's been positive, 6 years in, and that's colouring my perspective. I did a little post about this very thing at http://catalystfitness.typepad.com/d...er-thirty.html, and it's been one of the most popular so far.
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Old 06-16-2011, 12:16 PM   #4
Masen Mills
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Re: Who was successful in obtaining a small business loan?

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Hey Masen - I had to start with a loan. I quit a job as a PT elsewhere and opened Catalyst with no other income, no guaranteed clients, a mortgage and a two-month-old. I took a shareholder duo for their access to credit, and it took me two years to get rid of them.
In Canada at least, you can't really get access to credit as a BUSINESS until you have a few years' worth of credit history. However, a personal loan for under 20k will get you a great CrossFit Box, and 20k in the course of your lifetime for the CHANCE to do this is worth it. If you lose every single cent, you'll get another job, pay off the loan, and apply what you've learned when you try it again. Looks like Chris Walls had a negative experience this way; mine's been positive, 6 years in, and that's colouring my perspective. I did a little post about this very thing at http://catalystfitness.typepad.com/d...er-thirty.html, and it's been one of the most popular so far.

For only $20,000??? Really? A buddy of mine at the box I go to now is also a financial advisor... he's telling me that I would want AT LEAST enough money to pay all my bills for the whole first year (since most small businesses that fail, do so in their first year).

Here's how we're breaking it down; I saw "we" because I'm planning on doing this with another guy I know, whom I used to serve with in my old platoon. He's a level-1 training and an expert at programming, I'm good with numbers, business, and coaching (not level-1 yet, but going in a month!).

We figured we'd need $100,000 loan; that would cover all equipment ($30,000), all lease payments, utility payments, insurance, affiliation fees and website hosting for the entire first year, as well as give us enough money to make the monthly payments for the loan itself ($2,022/mo) for the first year. It also leaves us with roughly $10,000 to $15,000 to spend on zoning fees/fines, property build-out, etc.

This approach allows us to survive for 1 year, even with zero clients. As long as we finish out first year with 120-150 members by the end, then we'll start the second year fully able to pay all of our overhead (roughly $4,500/mo) and pay ourselves a decent paycheck (we will be the only two coaches as well).

Am I crazy or am I on to something? We can all agree that I'm kinda lost....
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Old 06-16-2011, 06:27 PM   #5
Brian Strump
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Re: Who was successful in obtaining a small business loan?

You said that you're good at business? Have you ever owned your own business, literally your own....not one you ran for someone else. If so, great. If not, just prepare for more bumps in the road than you expect.

I think $100,000 is ALOT of money, especially if it's a loan. Do you have capital of your own to put into this? Both own your homes? Equity? Be prepared to be asked to sign as the guarantor of the loan....I would not sign one on a $100,000 unless I've had at least 2x that in the bank; especially if there's another guy on the loan. But that's just me, financially I play it safe.

The financial advisor gave you very sound advice with regards to your savings. It will be very hard in todays times to get a loan to that will provide you with that additional monies for 6-12 months. You have a much better chance of getting approved if you can show that you have 4-6 months of personal expenses covered, and that the loan is to run an actual business, not to run a business, AND support you and your partner.
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Old 06-16-2011, 06:54 PM   #6
Justin McGinley
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Re: Who was successful in obtaining a small business loan?

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Originally Posted by Masen Mills View Post
As long as we finish out first year with 120-150 members by the end, then we'll start the second year fully able to pay all of our overhead (roughly $4,500/mo) and pay ourselves a decent paycheck (we will be the only two coaches as well).
I know MANY affiliates that did not end their first year with 120-150 clients. I can think of more than a few with under 50 after a year.
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Old 06-17-2011, 05:05 AM   #7
Tamara Cohen
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Re: Who was successful in obtaining a small business loan?

$4500 a month overhead is HUGE. And, I also know many affiliates who aren't training 120-150 members, even after several years.

So, to answer your question, yes. I think taking a $100,000 loan is crazy.

I just opened without taking on any debt, I have a fraction of the overhead that you have, and I don't need to feed my family off of my gym's eventual profits. And, it's still stressful.
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Old 06-17-2011, 05:54 AM   #8
Jason M Struck
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Re: Who was successful in obtaining a small business loan?

I started with no overhead, with about maybe 3500 in equipment.

My first year I ended with about 15 members, my second year about 20.

Then I moved out of my garage, and now I add 3-5 members a month, such that after six months in a 'real space' I have added an additional 20 members or so while losing maybe 5. Hence, after almost 3 years I am now around 30 members.

However, due to my initial set up, I have a great cash flow, pay myself enough to live, and I am always growing.
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Old 06-17-2011, 07:48 AM   #9
Casey Connor
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Re: Who was successful in obtaining a small business loan?

I live in Austin who is continually listed as a top city in the nation to start a small business. That being said have you tried to take out a personal loan? Every bank around here wants collateral near the amount of the loan. Do you have $100k of collateral? Hell, do you have $10k of collateral? Judging by the few numbers you've posted it looks like you plan on opening one hell of a facility. Have you reviewed all of AF's "how to open an affiliate" videos? http://www.againfaster.com/the-micd-...-part-one.html wfs My buddy is trying to get a small business loan around $10k and is having a very difficult time.
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Old 06-17-2011, 07:49 AM   #10
Chris Walls
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Re: Who was successful in obtaining a small business loan?

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I know MANY affiliates that did not end their first year with 120-150 clients. I can think of more than a few with under 50 after a year.
Agreed. There are probably hundreds of affiliates who grow maybe 1-2 members/month for every affiliate that gets 50 in their first month, and have 150+ members their first year.

Don't get sucked into thinking every affiliate grows like the success stories that are shared...
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