USAIGC Club Owners Business Briefs

The Sharing of information, thoughts, ideas and suggestions concerning the world of business and finance. I am not a degreed financial or legal professional. I was a Gymnastic Club Owner and still own businesses that have the highest business mortality rate in the most challenging of cities. I learned more from a business that failed then those that are extremely successful. Being a Gymnastic Club Owner was the most difficult business to run because it was close to my heart. The person who taught everything was my accountant.

Small Business Administration-
Eastablished in 1953. The SBA provides financial, technical, and management assistance to people who want to start, grow and run a business. MarketingProfs -  One of the best marketing sites on the Internet. It is an aggreagator of everyone else's marketing stuff, it generates new content from its network of marketing professors and professionals. Find: marketing articles, blogs, case studies, events and online seminars. Most of the info is accessible with no fee. Premium Membership $49.00 per year.
WSJ Enterpreneur - Provides comprehensive set of online resources for businsses. Great articles and business-plan tools. Center for Business Planning - 
Provides free business planning guidelines, which include articles and templates on things such as: cash-flow statement, mission statement and financial ratios. You can find checklists, segmenting your market, pricing and strategic marketing. Kaufman Foundation  eVenturing - 
Devoted to growing a business. Finance & Accounting, HR, Sales & Marketing, Products, Ervices, Operations, and the enterpreneur. Sponsors a monthly newsletter. 
Mind Tools - 100 essential life, career and management skills - free. It also offers self-development courses and e-classes taught by experts (not free)
SCORE - Service Corps of Retired Executives - Counselors to America's to America's Small Business
Answer Questions, give advice and share their wisdom and experience. Has a 24/7 counseling service and has offices nation-wide. 

USAIGC/IAIGC Business Brief  Personal Finance: Retirement Using Your Business
You must prepare for Retirement. Savings in some type of Retirement Fund is paramount. It's a concept business owners have a difficult time planning for. Many believe that they will sell their business and live off the proceeds. This as I stated in a previous Business Brief (below) can be a huge assumption. Many businesses simply cannot be sold and others end up being sold for far less than expected because of unrealistic expectations of business worth.
INVEST IN THE FUTURE Business Owners take a lot of risk in their professional lives because much of their net worth is tied up in one asset (65-85%), their business. Therefore you as business owners must use your saved money to work for you. 
Invest conservatively and diversify, assets that are liquid, have low volatility and generate income and are generally an entrepreneur's best bet. Corporate bonds that can be sold quickly or are held to maturity and mutual funds that are invested in equities and pay dividends are "safe bets". Avoid bonds because when interest rates rise the bonds lose value.
BUY THE BUILDING: Owners who own their building should hold the real estate in a separate company from the business for rent-related purposes and to limit liability. Owning your building gives you the added bonus of No landlord and the possibility of a dream tenant, YOU! Owning your building gives you options when you are are close to retirement:
(1) sell the business & building
(2) sell the business and keep the building allowing you to collect rent/income from a new occupant.
KNOW YOUR BUSINESS WORTH. If selling your business is part of your retirement plan, it is essential that you start tracking its value long before you plan to sell. Hire professionals to calculate the current value of your company, then determine how much money you will need to live the lifestyle you want. More importantly think about whether you will be able to increase the value of your business enough to match your retirement numbers. Pay attention to what the industry doing? What direction is it going in?
Do you know what your business is worth? I have a saying, your business is only worth what the buyer is willing to pay and if you do not own the building you are behind the eight-ball because it is the landlord who controls the space your business is in and your future. Owning your building gives you options: (1) sell the building for market value, remember not everyone wants to open a Gymnastic Club, (2) sell the business and not the building and collect rent as the landlord, (3) sell the business and the building as a package. Your decision will be based on your own personal finances and your plans for the future. How do you determine what your business is worth? By getting a valuation of your Business by Professionals. There are three basic approaches:

  1. Asset Approach: typically used in distressed situations for sale of defunct businesses. Your company's value is calculated by adding up its tangible and intangible assets. This is not the position you want to be in.
  2. Income Method: is a buyer relying on the present value of the businesses expected cash flow. This method is normally used for high-growth sectors like technology not the gymnastic club business.
  3. Market Approach: the most common way to value a healthy business is an valuation based on a multiple of the company's past earnings, usually the last 12 months of (EBITDA) earnings before interest, taxes, depreciation and amortization. IF this amount equaled $1 million dollars and you choose a multiple of 5, you have a valuation of $5 million.
    Picking a Multiple: multiples can vary widely. Experts' tend to compare "comps", or the multiple of earnings at which comparable businesses have been selling to choose a multiple that is realistic for your business.

    Your potential buyer will figure heavily in the size of the multiple. Is the buyer from the gymnastics world or someone from outside the gymnastic world? Is it a person who has vision and sees an upside in your location (not the business)? Example: a commercial building in SoHo was worth $50-75 million, two floors 2500 square feet each equaling 5000 square feet of space with no air rights'. A sneaker Company bought the building for 151 million dollars! They wanted a presence in SoHo. So, I go back to my opening remarks: "your business is worth what the buyer is willing to pay" but you need to think about the future no matter what your age i

Writing Business Policies and Procedures helps ensure “product quality” because regardless of the business the product is only as good as the process the service delivers to the customer.  In our Gymnastics World your service is the teaching of Gymnastics Skills and any other programs which have a benefit for a child/student/team member.
Writing business policies and procedures help to
-ensure product quality
-ensures consistency in practice
-helps to maintain product quality/gymnasts learning/progress and the benefits that go with learning gymnastics.
- A Club Owners Policies set the expectation for employee’s behaviors and the Business Procedures outlines the steps for it.

Reasons to Writing Business Policies and Procedures:
1.  Articulation of Required Steps
A procedure should lay out the required steps to perform job tasks or provide a service to a customer. For example, for a waiter who serves in a restaurant, the service should be delivered by introducing themselves, making eye contact with the customer, offering the most popular menu items, ensuring all drinks are topped off when half-filled and ensuring food quality meets the customer’s expectations.
Detailing the procedure for delivering great service to customers is what contributes to a great service/learning environment. 2.  Performance Measures Procedures should be used as a tool to measure an employee’s performance by determining if the process was followed appropriately. For example, a procedure for a receptionist answering the telephone should include a tracking of how often the receptionist answers the phone using a telephone scriptFor Gymnastics an example of Performance would be CLASS RETENTION & GROWTH. The Goal for every club owner is to provide excellent service which should increase your bottom line.
3.  Process Consistency When procedures are followed, there is consistency in practice for work processes. This helps to ensure that things are done the same way, every time and that all steps are followed. When steps get skipped it creates an inconsistent process that then creates variations in product or service quality.
4.  Serve as a Training Tool
Employee training is one of the most valuable investments any organization can make.  When employees receive thorough training and detailed job descriptions, they are prepared to complete job tasks.
5 Benefits of Employee Training
1. Recruitment: When prospective employees assess an organization to determine if it is a good fit, they look at the employee benefit package.
2. Business Advantage: Employee skills current in order to be competitive. Keeping up with changing software programs, technology changes, customer service skills or leadership trends are examples of competitive advantages organizations can have with a well trained work force. Gymnastics: a professional individual, dress appropriately, knowledge of teaching the skill level, good personality, good communication skills and an ability to teach multi-levels in the same class when necessary
3. Employee Morale: Most employees stay satisfied in a job for a period of time and then look for growth opportunities.  Employee who continually develop their professional skills or pursue higher education, are hopeful that there will be career advancement opportunities in their future.  This can also help employees remain positive and contribute to the vision of the organization.
4. Employee Contributions: Employees who are in school often bring back what they learn to the organization and apply learned concepts to the job. This offers value to the organization and provides for real life application for the student.  It is definitely a win-win for both.
5. Employee Retention: This kind of policy should be considered carefully. Training impact has on an organization’s recruitment, retention and employee morale.
It is one of the most valuable investments any organization can make.  When employees receive thorough training and detailed job descriptions, they are prepared to complete job tasks. Using policies and procedures as part of employee training helps to ensure that there is consistency in practice and reinforces global expectations.  For example, a review of policy and procedures should be included in a new employee orientation process
6.  Incorporates Worker Experience: Policies and procedures build off of those who have been performing the job tasks and documents work methods of experienced employees.  It also incorporates lessons learned and best practices to ensure quality products and services in addition to safety and legal compliance.
7.  Training Refresher Having a written policy and procedure manual can be used as a tool to help train employees and serves as a reminder of procedure steps and expectations.
8.  Foundation for Process Improvement: When policies and procedures are reviewed and employees, customers and quality data is considered in the review, it can serve as a great template for improving what is done and can help to improve current processes.

Other Things to Remember: Policies and procedures need to be reviewed and updated at least annually to make improvements and keep them current. Employees need initial training on procedures but should have continuous refreshers to inform them of changes in practice and to remind them of expectations for following procedures. Records should be kept in employee files to document training. Policies and procedures should be consistently reviewed for its effectiveness and to ensure that what is being done in practice is adding value. Most procedures should have checklists that simplify the process and serve as a reminder for employees.

As organizations grow it is important to put those things in writing that the organization values and deems important.  Doing so in a detailed policy and procedure manual, that is shared with employees, can help to ensure that products and services maintain the high quality that customers expect.


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Paul Spadaro - USAIGC President
450 North End Avenue - Suite 20F
New York, NY 10282
fax: 212.227.9793

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