I've been doing some consulting with potential cycling studio start-ups and a common question has been; should I consider leasing vs. conventional financing / paying cash?
My feeling is (to use the expression) Cash Is King for any small fitness business. If you listen to any of the past interviews (you'll find them here) I've done with Indoor Cycling Studio Owners, there are two common themes that keep coming up:
- Studio build out and equipment costs are always considerably more than what's initially forecast in the business plan.
- The business's cash flow doesn't ramp up as quickly as forecast.
Does it make sense to lease your Indoor Cycles... and possibly some of your other upfront hard costs like the audio/AV system, computers, technology PIQ/Spivi and possibly your studio's website? Saving your available cash or line of credit to carry you through a slow start (or surprise expense) maybe a good strategy. But it's a rather complex question to just offer a simple answer.
So I've found a fitness equipment leasing expert and I have an interview scheduled with him for this Tuesday Nov 4th. I met Joe Schmitz from F.I.T. Leasing at the past IDEA fitness conference and felt very comfortable talking with him. He's been in the equipment leasing business for a long time and he's agreed to help me explore the ins and outs of leasing.
UPDATE 11/9/14 Click here to listen to my interview with Joe Schmitz.
Here are a few questions I plan to ask:
- When does leasing make sense for a new studio - or an existing studio looking to upgrade to new equipment?
- When doesn't it?
- Should I lease my indoor cycles directly from the manufacturer?
- What other costs can be included, besides new Indoor Cycles?
- What is the approval process?
- Is it more difficult to get approved for a lease vs. a bank or SBA loan?
- What documentation will you need?
- Is there anything you want to do, or prepare for, in advance of needing your lease funds?
- What happens at the end of the lease?
- Explain any tax benefits of leasing vs. conventional financing or paying cash
Do you have specific questions you would like me to ask Joe? Let us know by Tuesday Nov 4th 10:00 central.
This interview will be published by Friday next week.
Please use the contact form below to explain your questions with as much detail as possible. Also include additional methods of contacting you if you'd like a personal response.
Originally posted 2014-11-02 11:18:40.
John is a member on the AFS (Association of Fitness Studios) Advisory Council.
Holding certifications from; Schwinn, Heart Zones, Team ICG and Life Time Fitness, John's held regularly scheduled cycling classes between 1998 and 2015 when he moved to Florida.
When the weather permits, you'll find him riding and leading outdoor groups by himself or with his Tandem partner (wife) Amy.
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I received some other good questions:
How much can you modify the bike? For example, I want to peel off all the brand marketing decals.
What if you order too many bikes – can you send them back? Can I sell them?
Once you are in the lease, what if you want to change the terms?