Changing hands

By Julio Chuy
Staff writer

BEVERLY — Selling a new business idea can be a challenge for an entrepreneur, but buying an established business can be a just as tough.

Already having a customer base and cash flow is one of the advantages of buying an existing business; the down side is you may inherit the business' bad habits, according Lori Laviolette-Kaliton, co-owner of North Shore Athletic Club in the Cummings Center. Lori and her husband, David Kaliton, who recently bought the health club, are already finding the experience of owning a business rewarding.

"This is something we always wanted to do," Laviolette-Kaliton said. But they are also learning about the time necessary to develop a new identity for the business under their ownership, above and beyond the daily business chores and work to attract new members.

"When you start your own business, customers don't know anything about you," Laviolette-Kaliton said. "But when you take over a business, reputation is something you have to deal with, whether that is bad or good. If it was bad, you have to tell customers you're different and when the reputation is good, you have to tell people that the reputation will be maintained."

Although owning a business is the American dream, people don't often realize how much work and cash running a small business requires, according to Kevin Donovan of Hamilton, who is senior partner at Northeast Business Partners in Cambridge. "Very few people know how much cash you need to buy an existing business and to keep it running," said Donovan, who brokered the sale of North Shore Athletic Club.

Both owners have experience in the health and fitness field — Kaliton as a licensed physical therapist and Laviolette-Kaliton as a health club manager — which led them to the idea of owning a health club. But through their research, the couple found that opening a brand new facility was not an option. Although Laviolette-Kaliton refused to say how much she and her husband paid for the business, she says the price was much less than the cost of starting their own fitness center. "The investment on equipment and a location would have been too great," she said.

In September, the couple took over the 26,000-square-foot health club, which employs five with 30 subcontractors who teach exercise classes. The club offers group exercise, strength training, massage and personal training. The former owners of the health club sold the business because they wanted to dedicate more time to their family life, according to Laviolette-Kaliton. But when the new owners took over the business, it was not in top financial shape, she said. "The club was losing money and members," said Laviolette-Kaliton.

Buying a business that is losing money is not always a deterrent for those considering the purchase, according to Fred Young, director of the Small Business Development Center at Salem State College. "If you're a good manager and have the capital, you can turn the business around," he said.

As a new owner, changing way a business operates is a thing that has to be done, according to Lori. "Whether you have owned a business for years or are a recent buyer, you have to find ways to improve your business," Laviolette-Kaliton said.

The couple is now trying to adapt the club's look and feel to reflect their personalities, as well as build marketing efforts and member services. Eventually, Laviolette-Kaliton said, that would include expanding the club into a health and wellness center.

Owning a health club has been Laviolette-Kaliton's dream, and now she has experience others can learn from. She suggests that people thinking of taking over a venture have a good understanding of the business, and work with professionals, such as a certified public accountant and a broker, to look after the buyer's interests.

"See how the business runs and how the operation is handled," she said, advising potential owners to spend time there to observe firsthand how things are running. But most important, she said, have a transition period where the former owner leads the new one into the daily operation of the business.