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When Two Become One: Dissolving a Partnership

When Two Become One: Dissolving a Partnership

Like the splitting up of once head-over-heels newlyweds, the parting of ways in business is often tricky, sad and more than a little complicated. Add in the complexities of an all-star cheer business, and breaking up can get downright sticky.

So what happens when one of the partners of an all-star gym wants to retire or pursue other passions?

Legal experts advise not waiting until one person is ready to retire—or wants out—to discuss what will happen with your beloved gym. Business litigator Jay McDaniel, founder of the McDaniel Law Firm, P.C. says it’s imperative to think about not just getting into a business but getting out of it—especially when it comes to cash.

“The cost of not having planned for the exit as one of the principal owners of the business is usually multiples of hundreds of what it would have cost to have done it at the time,” he says.

For Freedom Athletics, Inc. founder and owner Nancy McDowell, buying out her partner in 2006 was pretty straightforward and snag-free, even though she and her partner had never discussed what might happen with the gym if either coach wanted out. At the time they started Freedom from scratch in 2003, McDowell says, “it was just bubblegum and lollipops. We were coaches. And we had all these kids and it was awesome.”

Fast-forward three years, and McDowell’s partner decided she wanted to pursue other career paths. Fortunately, she says, the gym’s attorney was a family member, so the transfer of ownership was seamless. And according to McDowell, there has never been a hint of ill will: “We have a very good relationship. She’s done choreography for me [since the split], so it worked out really nicely.”

D.S. Briggs, Tumbling Director of Metro East St. Louis-based Pride Kids Sports Center, has a different perspective on buyouts. Years ago, he was a staff member of a buyout that was initially treated like a merger so as not to lose key support from its team families and community. In that situation, the gym he was employed by wasn’t necessarily looking to buy or acquire another program, but when they were approached by another gym to join forces to compete with a mega-gym moving into the area, the merger worked—at first.

“Maybe about a year or two later, we ended up buying the program out completely [rather than being equal partners] because things had deteriorated to the point they had no option but to sell,” he says.

Briggs says to make these types of buyouts work, the new owner needs to be sensitive to just who the “old” gym was. “The gym that is taking over has to respect the client and the culture of the smaller gym,” says Briggs. “It takes time to assimilate a whole gym culture into a different culture; it can’t be rushed into or expected to survive without hard work by the perceived leaders in both gyms.”

And, as always, communication is key, says Briggs. “You have to have a lot of open honest discussion about the goals, hopes and dreams, and what really are the personal dreams and philosophies of both programs,” he explains. “You have to figure that out right from the beginning. Otherwise, it’s not going to work at all.”

And when it comes to what McDaniel calls “business divorce” (when one partner wants out), he says most business owners don’t prepare for it when they are just starting out. In his experience, only about 25 percent of his clients have given it real thought. Most, he says, find it difficult to focus on an event that could be 25 years away. “The idea is, ‘we will deal with it someday’ or ‘yeah that’s a good idea’. [They always say], ‘We’ll get back to you,’” shares McDaniel.

Avoid that trap and start planning now for a smooth exit with these helpful tips:

1.   Put in agreements to buy and sell. “You come to agreements on how you are going to value the business and you put in place funding for it,” says McDaniel. “That way, the person who stays has funds to buy the other person out.”

He adds that one effective way to do that is by taking out life insurance policies on the principals of the company. With that method, if one of the co-owners dies, the business will have the proceeds of the life insurance policy to pay their family the value of their share of the company.

And when it’s time for retirement, the business will have the cash value of the life insurance policy to pay the retiring partner or withdrawing partner.

2. Incorporate a deadlock clause. McDaniel also suggests putting a deadlock clause into a well-drafted business plan, which can save a lot of heartache down the line. “It basically says that if we can’t agree, then I can make an offer to buy a proposal,” he says.

3. Steer clear of a DIY split. Things can get particularly dicey when the people splitting up attempt to do it themselves. That’s a big no-no, according to McDaniel: “Never do it yourself. About half of my litigation cases come from do-it-yourself business entities. Get a decent lawyer.”

4. Communicate, communicate, communicate. In McDowell’s case, she feels fortunate the process went so smoothly. A key ingredient, she stresses, was talking through everything from the beginning. “Be very honest and upfront from the get-go. Be very clear about what you want. And put it in writing.”

-Lindsay Martell

Getting to the Point(s)

Getting to the Point(s)

When Randy Dickey, owner of South Carolina-based ACX Cheer and head of the All- Star Gym Association, unexpectedly had to fly a photographer to an event, the exorbitant price of the airline ticket stunned him. But when he pulled out his credit card, he solved the problem—without spending a dime.

Ever since Dickey first signed up for the American Express Platinum Business Card in 1999, he has been covering gym expenses and reaping significant benefits. “We run everything in the business through the credit card,” says Dickey. “Every month, we rack up several hundred thousand points and use them to pay for everything from flights to hotels, as well as to offset the cost of coaches’ and team rooms.”

For those gyms looking to follow in his cost-saving footsteps, expert Eric Rosen advises evaluating your spending habits before applying for a points-based credit card. “Look at what your typical expenses are,” says Rosen, managing editor of ThePointsGuy.com. Some cards focus rewards on category spending (awarding cash back or merchandise for specific purchases); other cards provide airline miles and cover hotel costs.

For gyms that travel to competitions mostly by car or bus, a card that offers cash back on gas purchases makes good sense, according to Matt Schulz, senior industry analyst for CreditCards.com. On the other hand, frequent flyers might want to consider a card that offers airline miles and/or hotel perks. A co-branded card, one that has a relationship with both airlines and hotels, can also offer some incredible benefits. “If you do a lot of traveling by air, over the course of time, you’ll get some great rewards,” he says.

The same idea applies to hotels. For instance, if you always book rooms at a Marriott, having their card may mean some extra nights for free. “You have to have a feel for what you are hoping to get out of a card. Knowing how you are going to use the card should determine which one you select,” Schulz notes, adding that having separate cards for airfare and hotel can help to maximize the rewards. Also, using a card with transferable points means you’ll have more options when it comes to redeeming those points.

Although charging all your gym-related purchases with the goal of getting something free in return is a great idea, Schulz emphasizes the importance of paying off the entire balance every month. “If you don’t, interest charges will make any rewards less of a bargain,” he warns. Also, keep in mind the difference between a charge card and a credit card: a charge card gives the user bigger spending power, but requires full payment every month or a hefty fee and penalties will be assessed. A credit card has pre-set spending limits—carrying a balance will incur interest, but the amount will not be as taxing as the charge card fee/penalties.

The Fine Print: Fees, Bonuses and Penalties

Most credit cards carry an annual membership fee, and those that don’t typically offer fewer and smaller rewards. Fees often range from $50 to $450+ and usually determine the value of the benefits. “If there is a $100 fee and you get a free bag check every time you travel, this could be worth it for [gym owners] that fly a lot,” Schulz notes. “But if the fee is $500 and you travel sporadically, it’s not a good deal. You need to look at terms and conditions and do a little math.” It can certainly be beneficial to have more than one card, but if you are paying a fee on several and only using one, you should reevaluate your strategy.

In addition to reaping travel and accommodation perks, some cards offer rental car insurance and lost luggage coverage, access to airline lounges and other amenities. In many cases, extra rewards like these can offset the cost of fees. Also, almost all cards have bonus signups, so you could earn as many as 50,000 free airline miles from the start. “You should wait until a good offer comes along,” Rosen says, cautioning that most of these cards come with minimum purchase requirements.

Also, gyms that compete overseas (including Mexico and Canada) may incur foreign transaction fees if they use their credit cards for purchases. “What many people don’t realize is that, even if you are in the United States and you purchase something from another country, you may be charged a foreign transaction fee,” warns Rosen.

When it comes to signing any financial document, experts emphasize the importance of reading the fine print. Dickey learned this lesson the hard way: “When I rent a vehicle with my American Express Platinum, I can [take advantage of] car insurance,” he explained. “But at one point I realized that they don’t cover 15- passenger vans and large SUVs.”

Using a credit card wisely can be a cost-effective way to run your gym. “You’re spending the money anyway,” says Rosen. “Why not look for ways to get a return on it?” Just ask Dickey. Based on personal experience, he asserts that every gym owner should be using reward points: “If you’re not, you are just giving money away.”

-Phyllis Hanlon

Visit our blog this Thursday for a list of credit card recommendations from The Points Guy’s Eric Rosen!

The Secrets to Moonlighting

The Secrets to Moonlighting

Is it possible to balance a second job on top of owning a gym? We ask three cheer professionals who’ve been there and done that.

As our economy rebounds from the “Great Recession,” juggling multiple jobs is a common conundrum for many people—and cheer professionals are no exception. In fact, for gym owners, balancing more than one job might be a necessity regardless of what’s happening in the economy. As most owners will candidly share, opening a gym is something you do because you’re passionate about cheer, not because you want to get rich quick.

Just ask these three moonlighting entrepreneurs, who know the perks and pitfalls of juggling jobs all too well.

Stefanie Nelson: In 2010, Stefanie Nelson started North Florida Elite with two 6’ x 10’ folding mats and a small rented space. At the time, she was working as a middle school science teacher, but realized that she missed coaching, so she started a tumbling program. Fast-forward to 2013, and her Starke, FL-based gym is now 6,000 sq. ft., with tumbling programs, cheer classes, a special needs team and half-year/all-star teams. Despite the growth, Nelson still juggles her teaching job with the demands of running a gym—something she’s trying to mitigate. Shares Nelson, “My ultimate goal is to not have two jobs.”

Doing double-duty makes for a very hectic life. Nelson works until 8 p.m. Monday through Thursday, and she’s working at the gym until 9 p.m. on Fridays. On Saturday, she’s paying bills and grading papers. She also leans on her “overly organized” husband, who runs the house and helps coach when she needs him. (The gym recently lost a coach so he’s filling in for the time being.) “He’s the glue that holds it all together,” Nelson says.

People who are thinking of holding down their full- or part-time job and opening a gym shouldn’t have any illusions about the dedication it requires, but Nelson says the rewards can make all those late hours pay off. “The main thing is seeing the girls and wanting them to experience success on—and off—the purple floor,” she says.  “I want them to see that there’s more to the world than our little town in Florida.” (A few students have written about Nelson’s influence in their life for their college essay applications, which she says has been especially gratifying.)

Nelson’s advice to future gym owners is to “be organized and do it because you love it and not because of the money. I don’t want a thankless $100,000 a year job. Make sure you get into it for the right reasons. There have been days when I thought, ‘Why not sell the gym and not work 70 hours a week?’” But for Nelson, the thrill of seeing her athletes succeed both on and off the mat is what makes it all worthwhile.

Leslie Pledger-Griffin: Like Nelson, Renegade Athletics owner Leslie Pledger-Griffin understands the sacrifices that must be made in order to get a gym off the ground. Pledger-Griffin first started teaching tumbling out of the wrestling room in her high school at just 15 years old, and she met her husband at a cheerleading competition. They started their all-star program together, and Pledger-Griffin balanced her job in education for a year before leaving to work full-time at their 12,000 sq.-ft. facility in Calhoun, Georgia.

When she was juggling, Pledger-Griffin would leave the house at 6:30 a,m. for her teaching job, work until 3:15 p.m., drive to the gym and work there until 10 p.m. “You are exhausted,” confides Pledger-Griffin. “You still have to cook supper, wash and iron clothes and, on weekends, you often have practice or competitions. Then you start all over again on Monday.”

On that note, Pledger-Griffin advises anyone working and running a gym simultaneously to take ample time for self-care—whatever it takes. “Time is valuable,” she shares. “There is no shame in taking a nap if you can squeeze one in between jobs. Eat and sleep when you can.”

Another of Pledger-Griffin’s keys to sanity is to “work smarter, not harder.” For Renegade Athletics, she utilizes the web-based class management system Jackrabbit so that she can answer account questions or schedule classes from anywhere. “You can do it from your other job, from home or even from your smartphone,” explains Pledger-Griffin. “It’s the best money we spend each month.”

Michelle Epps: Meet Michelle Epps, who owns Cedar Hill, TX-based Twisters Spirit Athletics. At one point, Epps was working full-time, working on her MBA and running a new gym all at the same time—with a staff that had no real competitive cheer knowledge. “We were learning as we were going,” Epps says of those early days. One of her biggest challenges of running a gym while holding down a second job was “keeping a high level of quality at both jobs.” Yet Epps knew from the beginning that if she were forced to make a choice, she would choose her gym: “It was, and still is, my passion and my purpose. It is that thing that I would do for free.”

Epps stresses the importance of knowing when to work—and when to take some much-needed away time to recharge. According to Epps, it doesn’t do you or your athletes any good of you’re burned out and low on energy. Her calendar was and is her “best friend,” and staying organized and coming to realize that you cannot please everyone are also key lessons she has learned along the way.

The ability to delegate is another crucial tool. Epps urges gym owners to accept the fact that you likely can’t—and shouldn’t—try to take on every single duty yourself. Ask people for help, surround yourself with a great support staff and prioritize. It’s easy when you’re multi-tasking to think that every issue that comes up is urgent; learn what has to be tackled today, and what can wait until tomorrow. On the same note, Epps also advises future gym owners to know their niche and focus on making that great, rather than trying to tackle everything at once.

As far as taking that huge leap and quitting your job to focus on the gym, Epps says, “I think the first step in making the decision to work at your gym full-time is knowing that this is your passion. This is the job that gets you up in the morning and keeps you up at night thinking of ways to make it better.”

In other words, work hard, work smart and go into this for the love of the profession and the kids. If you have to balance two or more jobs—as many owners do at first—take one day at a time and remember that you went into this because it’s your passion. Or, as Epps says, “the thing you would do for free.”

-Dina Gachman

Vision Boards: Your Success GPS

Vision Boards: Your Success GPS

Walking into Cheer Fusion in Fredericksburg, Virginia, it’s hard to miss the colorful posters lined up above the mirrors. Filled with platitudes like “Practice Like a Champion” and goals like “I would like to cheer for college and get a scholarship,” these homemade vision boards provide a creative source of motivation for the gym’s teams—as well as a much-needed means of focus and direction.

Ever since Mandi Spina, program director at Cheer Fusion, first implemented the practice of making vision boards two years ago, she says they’ve had a big impact on her gym. “We ask the teams what they see in their future and [how they envision] the epitome of cheer,” says Spina. “We give them a month to work on the vision boards and then showcase them [in the gym]. The kids explain why they used the photos they did and talk about what’s special to them.”

Spina notes that the finished boards feature a variety of photos, many depicting complex moves or memories with fellow teammates. Many of the athletes get creative, making door hangers or even video recordings. Age often determines the content; for instance, the 5- to 8-year olds focus on big bows and trophies, but the older girls emphasize goals.

The practice effectively enhances performance, especially for youth cheerleaders. “A lot of the younger athletes amaze me with their visions. They post pictures of stunts they want to do,” she asserts. “They want to become those pictures on the boards. It pushes them toward their goals and provides a constant reminder.”

A Powerful Roadmap

Joyce Schwarz, founder of The Vision Board Institute and author of The Vision Board Book, defines vision boards as visual maps comprised of pictures, power words and affirmations depicting changes you’d like to make in your life. “They represent the best of what’s to come. It’s really about living and appreciating what we bring to others,” says Schwarz.

Schwarz utilizes an acronym, GRABS (Gratitude, Receive, Acknowledge, Share), when teaching others about vision boards. “[Creating vision boards] should be coming from your heart, not your head. Work with the senses, do word association with colors,” she advises. For instance, an athlete who wants to go to Worlds might picture the experience of traveling to Disney World—and all the sights, sounds and emotions that would entail—while creating his or her vision board. Adds Schwarz,

“Envision what you want to accomplish and act as if it’s already happening.”

At Diamond Springs, CA-based All Star Elite Cheer, vision boards are an integral part of the gym’s annual Team Bonding Night. Each member of the team contributes to the creation of a group board, using supplies from its Vision Box. “The process itself was great because it led to some great conversations about the things that were important to them as a team,” says gym owner Karen Wilson. “We now have the boards in the gym, and at every practice, we go over to them and remind ourselves of the things we put on there. It has been a great tool.”

What’s Your Vision?

Manifestation isn’t just for athletes—many business owners swear by the practice as well, even in corporate America. Three years ago, Kim Lawton, COO/Partner at the Inspira Marketing Group, heard about the concept at a leadership seminar and introduced the idea to her staff. “Every year, we incorporate the vision boards to kickstart discussions about our mission, core values, what clients we want and our revenue goals,” says Lawton. “It is a cultural thing and turns into a bonding moment.”

Lawton finds employees will depict personal dreams and goals, as well as professional aspirations. “People are creative. They start with a blank canvas and are totally open to making the vision board more impactful. It has meaning and purpose,” she says.

Vision Board Book author Schwarz points out that many people continually update their vision boards as a living work-in-progress, keeping the focus positive and productive. “This is more than creating a collage. It’s a GPS system that guides you to immediately take steps toward your vision every day,” she says.

Want a step-by-step guide to creating your vision board? Check back on our blog this Thursday for some trusty tips!