The SampP 500 includes 23 companies rocking a debtfree balance sheet with ample cash laying around to do anything but average things Photo by Thinkstock

The S&P 500 includes 23 companies rocking a debt-free balance sheet with ample cash laying around to do anything but average things. Photo by Thinkstock.

What If Your Fitness Facility Was Debt Free?

What if tomorrow when you walk into your facility, everything is paid off? Not everyone has to carry debt. You can operate a club debt free. 

What if tomorrow when you walk into your facility, everything is paid off?

No weight equipment payments.

No cardio machine payments.

No rubber floor payments.

No state-of-the-art sound system payments.

No bank financing payments.

No contractor payments.

No bills coming in the mail requesting their piece of your pie plus interest?

Sounds like a fairy tale, right?

I hear the push back: "Everyone carries debt. Debt is so cheap right now. Debt is the only way we can grow. It's part of being in business." This is true for average facility owners looking to run their business in an average way.

The S&P 500 includes 23 companies rocking a debt-free balance sheet with ample cash laying around to do anything but average things. One company in particular stands out: Visa. A company whose sole purpose is to allow others the freedom to buy things they don't have the money for right now, actually operates by a different standard.

Others on the debt-free list include Facebook, Michael Kors, Chipotle, Whole Foods, Bed Bath & Beyond, PetSmart and Urban Outfitters. If it is good enough for these multi-million dollar companies, what could your business do with all the additional revenue you would have if you operated debt free?

I have operated my facility debt-free for seven years after starting out $220,000 in the hole, so I have seen both sides of the equation. When I first started, every decision I made was based on the potential money pulled in. I was overburdened by debt and found myself trapped on the debt treadmill. I could only dream what it would be like not to be obligated to pour any extra earnings into my debt payments.

I also had anxiety about owing money. Knowing I was expected to pay a certain amount on a tight start-up business budget kept me up at night. It affected my relationships with my wife, family, team and clients even though I pretended it didn't bother me.

How did we take the first step to running our facility without any debt? My mentor, Dave Ramsey, has a simple formula that we became laser focused on and relentlessly pursued until we paid off the $220,000 debt in 22 months. We listed our debts in order of least to greatest and tackled paying off the smallest debt first while paying the minimum on the rest. As we paid off each debt, we simply took that payment and applied it to the next smallest debt.

In essence, we created our own momentum. As each debt was retired, we celebrated a small victory and discovered new-found confidence that we could actually become debt-free.

What we have been able to accomplish as a private 4,500-square-foot training facility has been anything but average. The most important aspect is that for more than seven years now, our sole focus has been on two things:

1. Loving on our team of trainers

2. Loving on our community of clients

Although borrowing money enables business owners to take actions or grow at a pace that would not be sustainable otherwise, it also causes them to be less flexible and incur higher risk. It's a sobering reality that many facilities have failed due to the lack of cash and cash flow more than anything else.

It is true that club owners who follow a debt-free model grow their businesses slower. However, for us, our goal is to grow inch by inch, never spending beyond our means. The payoff has been anything but average.

Have you grown your business without debt? Share how you did it in the comments below. If you have debt, share whether you think you can pay off your debt and continue to grow without incurring additional debt.

BIO

Brent Gallagher is co-owner of the 4,500-square-foot personal training studio West U Fitness in Houston with his wife, Cassie. The facility offers 30-minute training programs and a teaching kitchen for nutrition health. Gallagher has been featured on the Dave Ramsey Show and NBC Nightly News. He can be reached at Brent@westufit.com.

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