In November of 2017 I bought the beautiful eco-chi power yoga studio, The Green Yogi, in Manhattan Beach, CA. To say I was pumped would be an understatement. My background is in finance and after years of working in private equity specializing in the turnaround of distressed and under-performing assets, I sought a career change.
The number one thing I have learned in my business purchase is that you should always do your research on what you’re buying. You could end up paying more money than you originally anticipated if certain things aren’t included in your purchase like the name of the business, website ownership, social media pages, trademarks, etc. Without these assets, you could end up paying a lot out of pocket after closing.
To help you avoid making these mistakes listed above, I have outlined the most important information on buying a yoga studio:
Get an attorney.
Most APAs (asset purchase agreements) will be standard if you have an honest business broker representing the Sellers, but having an attorney to ensure the deal closes as expected is important. Fees for one will only be around 2-5% of the purchase price.
Do your homework.
If I could offer some advice here, I would suggest you always contact the founder of the business if they are not the direct sellers. Make sure to find out which trademarks, licenses and intellectual property are still owned and retained by the founder or other parties
Do you own the website and its content? Even if your APA states that you will be purchasing intellectual property, you really have to specify whether their existing content is included in the deal by contacting the founder directly.
People hate change.
Change is uncomfortable and can induce fear in those who have been somewhere for a long time. The employees whom have been there the longest will be your most valuable sources of intel, yet they can often prove to be the hardest to get onboard with your new vision for the business. In my case, I bought the studio as-is because the staff members were the biggest drivers and creators of the community. I felt they were magical. I count myself beyond lucky that only two staff members had to be asked to leave. Don't be afraid to let people go. You do not have to get along with everyone and you do not have to work with everyone. Be swift and courageous in your changes.
Get an accountant and learn to read your financial statements.
Upon hiring my accountant, she told me that over 90% of her clients do not read their financial statements. This came as quite a surprise to me because you can’t technically understand your company or its success unless you are able to digest your financial statements. I know they can be daunting to learn to read but because I studied these statements, I now have an idea of how my company works. I attribute the ability to use and interpret financial statements to the health of my business now. I cannot stress this enough — honing your financial statements skills is the number one way to ensure the longevity of your company.
Know your instructors.
If you inherit a great team of well-respected and dedicated instructors, then they can be your biggest assets. I bought my studio because the instructors are incredible and I believed in their purpose and their teaching style. It’s important to pay them well and expect more from them. I expect all my instructors to be in total control of their class. This means I expect them to:
- 1) Know how to use MINDBODY.
- 2) Open and close the studio.
- 3) Familiarize themselves with our current sales, specials and promotions.
- 4) Have their own websites.
- 5) Encourage clients to try out our studio.
- 6) Spread the word about our studio to our yoga community in and out of the studio.
My instructors really go above and beyond because I choose to treat them like they are their own small business. Not only do my instructors enjoy their independence, but it also helps free up enough time to focus on growing the business. Remember, the best thing you can do for you team and your business is to make sure you’re providing a beautiful space that is full of clients.
Be an instructor yourself.
Before investing in a yoga studio, it’s imperative that you are familiar with the type of studio you are buying. If you’re not already certified in teaching the style of yoga you want to offer at your studio, I would suggest becoming an instructor as soon as you can. Furthermore, sometimes just becoming an instructor isn’t enough to really bridge the gap of understanding. You really should have years of practice in the different modalities of your studio and have at least five years within the industry. If you don’t have either of those things, you can always hire someone with those qualifications to be a talent consultant.