Business Buyer Diaries: the Reality Before, During, and After

376. Management started a competitor 3.1 miles away, the old managers are back, results years later

• Nathan Platter

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Speaker 1:

Hello, hello, all right. Well, it's been about a week since the last update, so here's. Here's where things are at. It's been kind of fun or fun, interesting, probably more interesting than fun.

Speaker 1:

Um, but yesterday had the hearing for the meeting of the creditors. Basically, what happens is you meet with your trustee, so someone who oversees your, your bankruptcy case, and figuring out like what to do with it so like the judge, if you will, but it's not quite a judge, but they're the trustee. So we're in a zoom room with I don't know eight or nine other people, half of them probably attorneys, half of them probably folks, uh, pursuing bankruptcy, and then they say someone else's name. Then they say our name and then our gal says oh, we're missing a statement from this stock account that we have like three thousand dollars of stock worth. I need a statement for that. I need to see like the history of that. So we're gonna reconvene your case and from three weeks from now, and that's it next case, and then we're done like that's it. So nothing really happens, which is kind of surprising. We've provided like 30 statements to them about different accounts over several months and apparently one account. That it's kind of surprising. And then what else. So that was it on that side, on the gym front. So this is just kind of interesting. I'm more curious how this unfolds. So we closed the studio at the start of the month and it was a surprise to everyone corporate as well as the members and unfortunately that had to be that way, since we needed to have our personal bankruptcy filed before it even makes sense to close a business. So that's the order we did, and so corporate's been asking for some help, some support on accessing the studio and whatnot. So I've been working with them on that. Uh, my lender asked for you know the landlord contacts so that they could visit the property, start collecting and seizing assets, and then they'll probably like sell them or do something with liquidating them for for cash, and so get working with them on that.

Speaker 1:

But anyhow, back to the the the story of the gym and how this has unfolded so far. So go to the gym at the start of the month the first couple of days and then, from what it looks like, the recent management team about a week later found some space about 3.1 miles away from the gym and started running out space and equipment and saying hey, some members, you know, come, keep coming here for some of your workouts and we'll we'll keep things going. So that's something that they're promoting on their personal pages. It's not something that they're using like business space for. So I didn't know about it and that's fine. And so, looking at just like snooping around and looking at their personal Facebook pages, uh, it looks like about 30 or so, maybe more, members have transitioned away from the gym into this scrappy startup that the management team did, and that's great. I it's honestly pretty cool, like to have a plan B up and running so quickly. That's really fast and that's not easy to do and they did a really great job that they kicked ass. So really well done. Um, and just looking at it, there were those are like some very committed, long-term, long-time members and they kind of like banded together, stayed together and now they're still working out together like three miles away and in general in the gym world people say to market to folks that live within a three mile radius, so they're just outside of the, the industry norm for like a, a, a geography space, and so they're not like next door but they're they're the neighbor across the street kind of thing, and so, uh, there's that side of things. So they've been up and running for like three weeks at this point, or two weeks, three weeks of things. So they've been up and running for like three weeks at this point, or two weeks, three weeks. And they have, of my four original managers, they have three of them like the core management team. Three of the four are there. One of them, I think, is just taking a life break from gym leadership, which is great. That's totally fine.

Speaker 1:

And then about two or three days ago, you know, for the past week, corporate has been asking us to give them logins, permissions over social media accounts. So we're doing that, we're sending out invites to be like admins of Facebook groups, facebook pages. And then yesterday probably like eight people got added to be admins of multiple Facebook pages the public page, the members page, everything. So it looks like the transition is nearly done. They kicked my wife and me out of the Facebook groups, so we don't really know what's going on anymore, uh. But lo and behold, lo and behold, uh, about two days ago in one of the pages it was announced by one of the instructors that the original management team from six months ago they are back and they will be managing the studio, it's not. The folks have been doing it over the past. I don't know four months or so, four or five months, three months, but the most recent team it's going to be the team that disbanded months ago One of the people that got fired and someone who quit because they were upset that I fired that person and they're coming back and, uh, that'll be interesting because the, the recency, the vibrancy, the, I guess, the popular people at the gym, they're all working out three miles away now and they're at. They're in a rented space. I don't know what that commitment looks like, but they're now in a rented space. And so the recent proactive, like positive, uplifting, magnetic management team they're now three miles away. They're not in my studio or the studio anymore, and now that I don't know who the buyers are, because their emails were added as like new admins and I recognize them I know who the owners are now. The owners and the old management team are now admins of everything, so it'll just be interesting.

Speaker 1:

The club was losing big money every single month, and that was when I was taking no pay. Even if I didn't pay my, my loans, I was still losing money, and so I'm I'm curious how this will pan out. I hope it works out well for the new buyers or the new owners. I don't know where they're buying equipment from. They might be buying it from my bank, because my bank has seized the equipment, so they could be buying it used. Corporate may be saying hey, now that the equipment is gone you must buy brand new equipment from us for a fee of some sort. I don't know. We'll see what happens, and so, either way, new owners are coming in. The popular folks have moved up the street to a rented space. They're running their own deal from 5 am to 7 am. So I don't know what's going to happen with this studio. But this will be the third ownership cohort in the past year and a half. The person who owned it before me or the team that owned it before me, I think they owned the studio for like a year and a half or two years. I owned it for a year and one month before I couldn't keep it open. So this will be the third set of owners in two years, and so I'll be observing.

Speaker 1:

I guess there's not really much else I can do If folks ask me how to work with the members, how to work with corporate, how to work with the managers, the new ones or the old ones. It's not beneficial for me to be helpful and it sounds bad because I'm a very helpful oriented person. But if I say something negative about corporate, something negative about managers, something negative about members, I don't want to be accused of damaging someone else's reputation, their, anything about them. So if there is negativeness associated towards any of those folks, I can't I don't believe I should voice that. I need to keep it kind of vague, the way that I have historically on here. If it's something positive and uplifting, then I can definitely say that like that's totally fine and allowed, but I'm not obligated to take those phone calls or respond to those texts or handle those emails.

Speaker 1:

I'm being cordial with corporate. They're asking, like, the login for the Instagram page, how do we access the, the email blast tool, and that's all in the spreadsheet. So I can send them the spreadsheet and they're good to go. But if folks are asking like hey, can you do a sit down training session and how to work with our, our CRM platform, like, the best I can say is well, no, I've had management teams, I've been an absentee owner. I don't know how that works. You'll have to reach out to them. Here's their contact info, their email, their phone number. I don't know. I know how like two or three things work, and everything that I know how to work. Other people know how to work.

Speaker 1:

Corporate sent me a disenfranchisee letter stating that I'm not allowed to associate with the brand anymore or pretend like I'm an owner, which is fair. But they also said I'm obligated to give them aid and support and things which I have so far. Uh, I have no, there's no reason why I would prevent them from acquiring the studio and running it. They have everything they need, so they're good to go. So this will be interesting. Just, all in all, the new owners have full-time careers. There's no way they can manage a business. They can manage a gym because they have their own. The owners are two professionals. One owns their own business, one is a very well-ranked employee within a company. So there's no way they're going to drop their jobs to run a gym, and it'll be absentee owners. Whether they're engaged or disengaged, I don't know, but it'll just be interesting to observe and that's all we really can do. So I'm learning oh no, what's the learning from this? And then we'll wrap up the convo.

Speaker 1:

I'm learning that there is a superiority complex to being a business owner. If you're gonna be involved, then, yeah, you think you have harder work ethic, more intellect, more business acumen, you're better at sales. There's something that you can do that the other guy didn't do, or other gal, I guess. Whoever you're talking to. And the superiority complex I had is, I thought I, I thought I knew I would not be as good as at people management. I thought a more hands-off people management would work. It did. It kind of worked in some areas. It did not work in other areas, and so that's something that I'm learning and taking away.

Speaker 1:

And with the new owners, they have more, I imagine. They have more resources, they have more management experience. They might be better at sales and marketing, I don't know, but we will let them run with it because it's their baby now and there's nothing I can do to help and support beyond this. Everything that corporate has asked for they have received. They don't need anything else from me Everything that the owner well, I haven't even heard from the owners, they didn't even ask me well, how much they were losing each month and this will be the interesting part Each month, corporate demanded or required demanded for profit and loss statements and I did what was asked.

Speaker 1:

I did not go above and beyond, but I gave them what they requested and was obligated to. When talking with the CEO, he was surprised to see that I had a business loan, an SBA loan, and that was in 12 months of profit and loss statements. So I don't know if they actually looked at my PNLs or they just wanted them on hand, but either way, there was lacking knowledge on seeing my SBA loan and so this owner this owner could have requested those profit and losses because corporate had those in their possession and corporate I believe what's possible is corporate could say yes, we are not the owners, we don't have profit and loss statements, but they have access to them and so, if it would, they ought to have forwarded them to the new buyers. So the new buyers know right away they're going to be losing six grand a month, day one. Uh, they may not have an sba loan. Let's pretend they paid cash for everything. They still have management teams, they still need instructors. They're now down members, likely if everything stayed the same, but they have no sba loan. They're losing five grand a month, day one, and maybe they want that, maybe they don't know that, but I hope corporate informed them of how the prior owner was doing because that was in their possession, that knowledge of my P&Ls.

Speaker 1:

So we'll see what ends up happening. I'll pause there. I've made the point. So that's where things are at. That's where it's going. We'll end up finding how it goes months and months from now. But one thing I learned day one or month one, I was expecting to make seven grand. I lost eight and it took 12 additional months to see things collapse. And so the new owners. I will say they lose four grand a month just making numbers up. They have deeper pockets, less losses. So it'll take, let's make up a number. It'll take three years before they end up folding if they have the same net worth, and they probably have a higher net worth. So it may be a long time before I find out how things unfold. But unfold one way or another we shall. That's all right. That's where we're going. Let's rock and roll.

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Nathan Platter

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