Business Question for Ya

Off Topic
21

[quote]pushmepullme wrote:

[quote]jjackkrash wrote:
Piercing only matters when there are assets behind the entity to get to. It sounds like he does not have 50k cash to plunk down, so most of his assets are probably in his house and retirement, for the most part neither of which you can get to in Texas, either in tort or contract, unless the contract is a mortgage with the house listed as a security. If there are attachable assets, they can be gotten to, regardless of the form he chooses, in the case of a tort. And he is going to have to kiss any note or lease he signs, so the form won’t matter in a contract case either. I’ll leave it to you guys to argue about tax consequences (I don’t do tax), because, for the most part, that is all that really matters in choosing the form (unless he has partners or investors, or wants the shield this particular asset from other creditors, which is a whole other ball of wax). Also, I agree insurance is a very good idea, and that it would be required in a commercial lease, but if the shit really hits the fan, that’s when the insurance company pulls out the coverage lawyers and he finds out how all those little exclusions work–I can tell you right now they don’t work in his favor. Frankly, unless he is experienced or has good representation, where he is really going to get b-fu*ked is negotiating a commercial lease with a bunch of sharks, not in the form of entity he chooses.

Good luck, opening a business is risky. :slight_smile: [/quote]

I love insurance. “Man, my life went to hell, but at least I have insurance!”

Then you look at the coverage terms: “In the event your Life goes to hell (an “Incident”) we will pay to you enough money to repair the damage caused by the Incident, provided such Incident is not an Excluded Incident”

“Definitions: ‘Excluded Incident’ - any event in which your Life goes to hell.”[/quote]

I am no fan of insurance companies, but typical a CGL (“Commercial General Liability” or “All Risks”) are on state-mandated coverage form. (Look to see if the policy is from an “Admitted” Insurance company in Texas, for example.)

The thing he’d get in a gym are: dipshits hurting themselves, fights, and rapes.

These are square under a CGL policy.

22

[quote]countingbeans wrote:

If it really has been moth balled this long they might not be too aggressive. And in this market, at least my real Estate client, is more than willing to negotiate.

But in general, I agree with you, and like I said needs a lawyer.[/quote]

I have no doubt they wont be that aggressive. In fact, I cant even get them on the phone. I called the city about it and it turns out they haven’t had a business in there for over 15 years. They gave me the same phone number I had for them as well as a PO Box#. I’ll keep calling and snail mail them sumfin.

This city’s downtown is filled with unoccupied warehouses and the biggest corporation we have here employs 2400 people. We’re not talking about a booming metropolis here…220,000 people. I wonder if I can schedule some time to talk to the owner of Metroflex in Arlington. It’d be worth it to pow-wow with someone in industry. Its about 2 hours drive from Waco.

23

[quote]Jewbacca wrote:

[quote]pushmepullme wrote:

[quote]jjackkrash wrote:
Piercing only matters when there are assets behind the entity to get to. It sounds like he does not have 50k cash to plunk down, so most of his assets are probably in his house and retirement, for the most part neither of which you can get to in Texas, either in tort or contract, unless the contract is a mortgage with the house listed as a security. If there are attachable assets, they can be gotten to, regardless of the form he chooses, in the case of a tort. And he is going to have to kiss any note or lease he signs, so the form won’t matter in a contract case either. I’ll leave it to you guys to argue about tax consequences (I don’t do tax), because, for the most part, that is all that really matters in choosing the form (unless he has partners or investors, or wants the shield this particular asset from other creditors, which is a whole other ball of wax). Also, I agree insurance is a very good idea, and that it would be required in a commercial lease, but if the shit really hits the fan, that’s when the insurance company pulls out the coverage lawyers and he finds out how all those little exclusions work–I can tell you right now they don’t work in his favor. Frankly, unless he is experienced or has good representation, where he is really going to get b-fu*ked is negotiating a commercial lease with a bunch of sharks, not in the form of entity he chooses.

Good luck, opening a business is risky. :slight_smile: [/quote]

I love insurance. “Man, my life went to hell, but at least I have insurance!”

Then you look at the coverage terms: “In the event your Life goes to hell (an “Incident”) we will pay to you enough money to repair the damage caused by the Incident, provided such Incident is not an Excluded Incident”

“Definitions: ‘Excluded Incident’ - any event in which your Life goes to hell.”[/quote]

I am no fan of insurance companies, but typical a CGL (“Commercial General Liability” or “All Risks”) are on state-mandated coverage form. (Look to see if the policy is from an “Admitted” Insurance company in Texas, for example.)

The thing he’d get in a gym are: dipshits hurting themselves, fights, and rapes.

These are square under a CGL policy.[/quote]

Sure, those are square, and any company will pay them because they are black and white and the company doesn’t want to get in bad faith trouble. But we both know insurance companies make more money when they don’t pay claims, and so are more likely to deny whenever possible. The forms are shitty and designed to give traction for denials.

24

[quote]admbaum wrote:

[quote]countingbeans wrote:

If it really has been moth balled this long they might not be too aggressive. And in this market, at least my real Estate client, is more than willing to negotiate.

But in general, I agree with you, and like I said needs a lawyer.[/quote]

I have no doubt they wont be that aggressive. In fact, I cant even get them on the phone. I called the city about it and it turns out they haven’t had a business in there for over 15 years. They gave me the same phone number I had for them as well as a PO Box#. I’ll keep calling and snail mail them sumfin.

This city’s downtown is filled with unoccupied warehouses and the biggest corporation we have here employs 2400 people. We’re not talking about a booming metropolis here…220,000 people. I wonder if I can schedule some time to talk to the owner of Metroflex in Arlington. It’d be worth it to pow-wow with someone in industry. Its about 2 hours drive from Waco.
[/quote]

Shit they might be slum lords, belly-up or even inherited property at this point.

It that place is part of some trust or idle estate, you are shit out of luck, lol. It is going to be like pulling teeth to get anything done.

But I don’t see how writing a letter will hurt you.

You can also, assuming texas is anything like MA, look up the name of the company that owns the property, on the Sec of state website, and get the president & secretaries name. Then look up to see if that person is dead, lol.

25

man…you guys really know your stuff…I got lotsa new stuff to learn.

26

[quote]countingbeans wrote:

Shit they might be slum lords, belly-up or even inherited property at this point.

It that place is part of some trust or idle estate, you are shit out of luck, lol. It is going to be like pulling teeth to get anything done.
[/quote]

That might actually work out in his favor. If this property has been idle for years, eating up $2k in property taxes every year, they may be willing to dump this property for half it’s appraised value if adambaum plays a little hardball. It doesn’t seem like they have any incentive to keep the place and Adam has all of the leverage.

27

[quote]LankyMofo wrote:

[quote]countingbeans wrote:

Shit they might be slum lords, belly-up or even inherited property at this point.

It that place is part of some trust or idle estate, you are shit out of luck, lol. It is going to be like pulling teeth to get anything done.
[/quote]

That might actually work out in his favor. If this property has been idle for years, eating up $2k in property taxes every year, they may be willing to dump this property for half it’s appraised value if adambaum plays a little hardball. It doesn’t seem like they have any incentive to keep the place and Adam has all of the leverage.[/quote]

I meant getting them to do the fitup, my B.

You sir, are correct.

28

Man those hardcore gyms…everyone says theres not many around…there’s a reason for it…they don’t prosper. There’s a reason why all the cardio machines and shit is all taken up and then theres the 2 squat racks that are elft untouched in every gym. Cause no one is fuckin hardcore lol…you’ll have a group of them and that’s it. That definately won’t pay the bills. With 220,000 people how many do you think want to go balls to the wall with their training?

29

By the way I’m not putting you down, I want you to do good…I just don’t want you getting fucked over

30

[quote]rasturai wrote:
Man those hardcore gyms…everyone says theres not many around…there’s a reason for it…they don’t prosper. There’s a reason why all the cardio machines and shit is all taken up and then theres the 2 squat racks that are elft untouched in every gym. Cause no one is fuckin hardcore lol…you’ll have a group of them and that’s it. That definately won’t pay the bills. With 220,000 people how many do you think want to go balls to the wall with their training?[/quote]

While you’re absolutely correct, you also have to factor in how much he pays for all of the property and equipment. If he buys the place for 25k, puts another $40k into the place (fixing it up and buying equipment and weights), and financing all of this with a 30 year note at 8%, his monthly payments will only be about $500. He’ll have other expenses such as utilities, maintenance, wages, insurance, etc., but his expenses won’t be high and he won’t need thousands of members to stay in business.

Edit - Just 100 members paying $20/month gives him 2k/month to pay his bills. Seems feasible to me.

31

But what reason do you have to believe that there are that many “hardcore” clients willing to switch gyms within the vicinity? He’s already stated that even when the local chains are at their busiest the squat racks are still empty (great indicator IMO).

Honestly I think a gym aimed at the general public is best… but one that is friendly to “hardcore” clientele will yield the greatest returns.

Have the cardio machines, aerobic classes and any other crap that attracts overweight housewives…

but build a quality weight training area for people who are “hardcore”

32

[quote]therajraj wrote:
But what reason do you have to believe that there are that many “hardcore” clients willing to switch gyms within the vicinity? He’s already stated that even when the local chains are at their busiest the squat racks are still empty (great indicator IMO).

Honestly I think a gym aimed at the general public is best… but one that is friendly to “hardcore” clientele will yield the greatest returns.

Have the cardio machines, aerobic classes and any other crap that attracts overweight housewives…

but build a quality weight training area for people who are “hardcore”[/quote]

Not sure if this post was directed at me, but I agree with you. I was just saying it wouldn’t take too many hardcore members for the gym to stay afloat.

FWIW, the gym I used to go to was pretty hardcore and it was ran just as you describe. It was cheap ($20/month, no enrollment fee) and had cardio machines so it attracted many non serious trainees but was also friendly with regards to grunting, chalk, squat racks, power rack and an oly platform.

That gym was freakin’ awesome.

33

[quote]LankyMofo wrote:

[quote]rasturai wrote:
Man those hardcore gyms…everyone says theres not many around…there’s a reason for it…they don’t prosper. There’s a reason why all the cardio machines and shit is all taken up and then theres the 2 squat racks that are elft untouched in every gym. Cause no one is fuckin hardcore lol…you’ll have a group of them and that’s it. That definately won’t pay the bills. With 220,000 people how many do you think want to go balls to the wall with their training?[/quote]

While you’re absolutely correct, you also have to factor in how much he pays for all of the property and equipment. If he buys the place for 25k, puts another $40k into the place (fixing it up and buying equipment and weights), and financing all of this with a 30 year note at 8%, his monthly payments will only be about $500. He’ll have other expenses such as utilities, maintenance, wages, insurance, etc., but his expenses won’t be high and he won’t need thousands of members to stay in business.

Edit - Just 100 members paying $20/month gives him 2k/month to pay his bills. Seems feasible to me.[/quote]

Thats how I was rolling the numbers in my wittle head. I have a good chunk of equipment already…1 squat cage, 1 decent bench, 2 oly bars, a few specialty bars, oly DB handles, about a ton of plates, kettlebells, and chains, heavy bags, speed bags, thai pads, and various other type pads and bags for kickboxers. I dont plan on having too many machines, but the ones I will get will be plate loaded. For cardio, I can think of nothing better than push/pull sleds that my buddy is fabricating for me along with some other strong man apparatuses. Theres a little run of parking lot thats about 65 yards which should be enough for sprinting. No treadmills, or ellipticals or anything cardio bunnyish. The biggest part of my startup is gonna be the building and the repairs I’m gonna have to make, insurance, and another 10-15k in equipment and flooring. I got about 20 people that I train with now and I got another 20 or so interested. I projected my break even in 3-5 years depending on how this building deal shakes out. I can make this work.

I just read that Metroflex has an affiliation program which will help with marketing, but I’m sure it’ll be expensive. You guys know anything about how these gym affiliations work? I wonder if T-muscle has one. I plan on having a little shop in there as well. I could fill it with Biotest.

34

[quote]admbaum wrote:

[quote]LankyMofo wrote:

[quote]rasturai wrote:
Man those hardcore gyms…everyone says theres not many around…there’s a reason for it…they don’t prosper. There’s a reason why all the cardio machines and shit is all taken up and then theres the 2 squat racks that are elft untouched in every gym. Cause no one is fuckin hardcore lol…you’ll have a group of them and that’s it. That definately won’t pay the bills. With 220,000 people how many do you think want to go balls to the wall with their training?[/quote]

While you’re absolutely correct, you also have to factor in how much he pays for all of the property and equipment. If he buys the place for 25k, puts another $40k into the place (fixing it up and buying equipment and weights), and financing all of this with a 30 year note at 8%, his monthly payments will only be about $500. He’ll have other expenses such as utilities, maintenance, wages, insurance, etc., but his expenses won’t be high and he won’t need thousands of members to stay in business.

Edit - Just 100 members paying $20/month gives him 2k/month to pay his bills. Seems feasible to me.[/quote]

Thats how I was rolling the numbers in my wittle head. I have a good chunk of equipment already…1 squat cage, 1 decent bench, 2 oly bars, a few specialty bars, oly DB handles, about a ton of plates, kettlebells, and chains, heavy bags, speed bags, thai pads, and various other type pads and bags for kickboxers. I dont plan on having too many machines, but the ones I will get will be plate loaded. For cardio, I can think of nothing better than push/pull sleds that my buddy is fabricating for me along with some other strong man apparatuses. Theres a little run of parking lot thats about 65 yards which should be enough for sprinting. No treadmills, or ellipticals or anything cardio bunnyish. The biggest part of my startup is gonna be the building and the repairs I’m gonna have to make, insurance, and another 10-15k in equipment and flooring. I got about 20 people that I train with now and I got another 20 or so interested. I projected my break even in 3-5 years depending on how this building deal shakes out. I can make this work.

I just read that Metroflex has an affiliation program which will help with marketing, but I’m sure it’ll be expensive. You guys know anything about how these gym affiliations work? I wonder if T-muscle has one. I plan on having a little shop in there as well. I could fill it with Biotest. [/quote]

Dude, good for you man. You seem to be very serious and have done your homework.

35

Think about an affilliation with CrossFit nuts, if someone hasn’t taken that niche.

Serious lifters and crossfit people get along well, even if they don’t necessarily overlap.

And I am specifically thinking “let them use your place for a fee” — not be a crossfit place, but have some equipment for them.

36

[quote]countingbeans wrote:

[quote]OsakaNate wrote:

[quote]countingbeans wrote:

You also need to consider form of ownership. I recommend an S-Corp, and keep this shit off a Schedule C unless you want to risk losing everything you have ever or will ever have. DO NOT RUN A GYM AS A SOLE PROPRIETORSHIP. Texas has to have a department of revenue page you can search for the proper paperwork to fill out. Or go to a local small CPA firm and pay them to do it for you. You are going to need them to do your 1120S & 1040 at the end of the year anyway. So figure 3,000-5,000 for a decent accountant.
[/quote]

What exactly does this mean?[/quote]

Which part? I could write multiple chapters on that paragraph.[/quote]

This part:

I do not have a background in business, accounting, or law, but I am interested in it. I like reading the threads where y’all talk about this stuff, I always learn a lot.

37

[quote]OsakaNate wrote:

[quote]countingbeans wrote:

[quote]OsakaNate wrote:

[quote]countingbeans wrote:

You also need to consider form of ownership. I recommend an S-Corp, and keep this shit off a Schedule C unless you want to risk losing everything you have ever or will ever have. DO NOT RUN A GYM AS A SOLE PROPRIETORSHIP. Texas has to have a department of revenue page you can search for the proper paperwork to fill out. Or go to a local small CPA firm and pay them to do it for you. You are going to need them to do your 1120S & 1040 at the end of the year anyway. So figure 3,000-5,000 for a decent accountant.
[/quote]

What exactly does this mean?[/quote]

Which part? I could write multiple chapters on that paragraph.[/quote]

This part:

I do not have a background in business, accounting, or law, but I am interested in it. I like reading the threads where y’all talk about this stuff, I always learn a lot.
[/quote]

An S-Corp is a form of corporation where the owners have limited liability, which means claims against the corp can only be paid with corp assets, not the owners assets (ie, OP won’t lose his house if someone sues him). There are strict guidelines as to what can be called an s-corp as opposed to a c-corp. A c-corps income is taxed and then distributions are taxed as well, which, in effect, is double taxation. An s-corps income is not taxed but distributions are taxed which makes it a superior form of business, so long as the owners can meet the criteria (a quick google search will give you the criteria if you’re interested).

A sole proprietorship has unlimited liability which means the owner can be held liable for claims against the business (again, the OP could lose his house over a lawsuit). It is taxed only once, all profits from the business go on a schedule c which is attached to the owners personal income tax return (1040).

This is a quick rundown as there are specific guidelines for each type of business.

38

Thanks Lanky…my business coach confused me when he explained it to me. I understand it better now.

39

[quote]LankyMofo wrote:

[quote]OsakaNate wrote:

[quote]countingbeans wrote:

[quote]OsakaNate wrote:

[quote]countingbeans wrote:

You also need to consider form of ownership. I recommend an S-Corp, and keep this shit off a Schedule C unless you want to risk losing everything you have ever or will ever have. DO NOT RUN A GYM AS A SOLE PROPRIETORSHIP. Texas has to have a department of revenue page you can search for the proper paperwork to fill out. Or go to a local small CPA firm and pay them to do it for you. You are going to need them to do your 1120S & 1040 at the end of the year anyway. So figure 3,000-5,000 for a decent accountant.
[/quote]

What exactly does this mean?[/quote]

Which part? I could write multiple chapters on that paragraph.[/quote]

This part:

I do not have a background in business, accounting, or law, but I am interested in it. I like reading the threads where y’all talk about this stuff, I always learn a lot.
[/quote]

An S-Corp is a form of corporation where the owners have limited liability, which means claims against the corp can only be paid with corp assets, not the owners assets (ie, OP won’t lose his house if someone sues him). There are strict guidelines as to what can be called an s-corp as opposed to a c-corp. A c-corps income is taxed and then distributions are taxed as well, which, in effect, is double taxation. An s-corps income is not taxed but distributions are taxed which makes it a superior form of business, so long as the owners can meet the criteria (a quick google search will give you the criteria if you’re interested).

A sole proprietorship has unlimited liability which means the owner can be held liable for claims against the business (again, the OP could lose his house over a lawsuit). It is taxed only once, all profits from the business go on a schedule c which is attached to the owners personal income tax return (1040).

This is a quick rundown as there are specific guidelines for each type of business.
[/quote]

I see. Thanks for the rundown. I’ll Google those when I get a chance.

Another question, if I may:

Given the liability issues, would you ever recommend someone run as a sole proprietorship? It seems that if you have any circumstances that a lawsuit may occur that the liability would be a pretty big risk, so I would think that the type of business would be somewhat limited.

40

[quote]rasturai wrote:
Man those hardcore gyms…everyone says theres not many around…there’s a reason for it…they don’t prosper. There’s a reason why all the cardio machines and shit is all taken up and then theres the 2 squat racks that are elft untouched in every gym. Cause no one is fuckin hardcore lol…you’ll have a group of them and that’s it. That definately won’t pay the bills. With 220,000 people how many do you think want to go balls to the wall with their training?[/quote]
Yeah I definitely agree with you there. I would love to open my own gym but I think a more logical approach is to just work with high school/college teams as an assistant S&C coach (which is what I’m pursuing) and use their facilities.