Before I tell you about creative deals I’ve done and what else I'm building toward - I want to tell you about the time I bought a gym for free and still went broke.
Every week I'm going to walk you through a real creative deal - mine, my network's, or one in the news. The structure. The terms. Why it worked or didn't. Wins and wreckage both, because every guru in this space only shows the wins, and that's how you end up making my mistakes.
Speaking of…
The Deal: Too Fit Gym
Years ago I owned a supplement company called Too Fit. We had a warehouse we couldn't afford and a business that wasn't making money. Across town, a CrossFit gym was about to lose its lease for the same reason: they couldn't pay. But not something we knew.
Two distressed parties. One empty space. One set of unused gym equipment and one member base looking for a new home.
So we made a pitch: bring your equipment, bring your members, we'll absorb the LLC under the Too Fit banner, and you can keep operating out of our space. We acquired the gym for $0.
On paper, this was creative finance at its finest. 1+1=3.
In reality, 1+1 was two leaks in the same boat.
What I didn't know then: Creative structures solve the deal. They don't solve the business. We had no due diligence on member churn or the annual contracts. There were no capital reserves. We were already bleeding, and we absorbed another bleeding operation thinking the combined entity would somehow stop the bleeding.
It didn't and the gym flopped. Too Fit went belly-up. I came out $30,000 in debt and went and got a job to dig out.
The lesson I paid $30K to learn: Free doesn’t mean cheap. A $0 acquisition with no operating runway costs more than a $50K acquisition with $50K in reserves. The side door gets you in. Fundamentals decide whether you survive.
If I were running that same deal today with reserves, real diligence on the member list, a 90-day operating plan and not just hope - it could have worked. The structure wasn't the problem. I was.
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Coming up:
Next week: how I acquired a loan servicing platform, using a note plus cash as the down payment. That one worked.
After that: the game-day Airbnb play that turned my house hack into a part-time rental for full-time rent.
If you've done a creative deal — (won or lost) hit reply. I want to hear about it.