Episode #602: Connecting Family Fitness-Lessons from GreatLIFE'S Integrated Approach with Nick Ovenden

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This is Pete Moore on Halo Talks nyc. I have the pleasure of bringing

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to his first Halo Talks Nick Overdin.

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Great life. We're going to talk about what's going on in Dakotas and

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experiences for the entire family. So welcome to the show. Yeah, thanks for having me.

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I appreciate it. So we connected finally a couple of months

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ago after kind of running in concentric circles, I think, around the

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health club industry. When I looked at your site and saw all the,

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you know, the golf courses and the fitness centers, I was in awe that

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I have not visited you guys yet or gotten to know

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you. So we'll use this as the best excuse to start that

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relationship. Oh, it sounds like a great plan. Awesome.

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So give us a little background. You know, you guys have kind of been flying

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a little bit under the radar, I would say, given that,

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you know, there's a lot of chatter about franchise wars and lifetime at bay

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clubs, but you guys got quite an operation going. So give us a. Give us

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a summary. Well, we're about 12 years old. We started out

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just as a. Well, golf and fitness were basically separate entities

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and our owner fell into

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ownership of a golf course by accident. He co signed

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a note and then decided this. He heard about a golf and fitness

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concept, wanted to bring it in town. And I was living in Minneapolis at the

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time and ended up moving back to take over the

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fitness side of things. And over the last 12 years, we've

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grown from zero memberships to 40, 000

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memberships in the Sioux Falls and surrounding area, about 90 mile radius

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of Sioux Falls. And we have six golf courses,

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19 fitness centers and a bowling alley. So.

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Interesting. Yeah, I used to be, I used to be a good bowler. Saturday

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mornings at Westbury Bowl. I think that's where I learned how to do

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most of my, my arithmetic as well. Yeah, I think they

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didn't have that set up on the. There's no electronics so I had like

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nice, like carry the one spares those, those good lessons.

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Unfortunately, kids don't get that opportunity anymore. It all does it for you

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and it does it in colors for you now. And you know, you're

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right. You don't get all that pen and paper stuff anymore. Yeah,

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so. So. So it was an accidental ownership of

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the, of the golf course. It was like

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a personal guarantee. When somebody says, ah, yeah, I'll put my name on a personal

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guarantee. Next thing you know you got to pay, pay up for it. I've done

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that a couple times too many. Yeah, you're exactly. That's exactly how

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it buddy who we co signed a note with and realized

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when the bank called him, he goes, I can either take this thing over or

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write a big check to the bank for the bank to own it. So we

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just took it over and ran it for about a year and then ran into

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this concept of golf and fitness while he was

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on a flight. And then I was a family friend

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of ours. So on the fitness side of things, I was back in Sioux Falls

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and met with them over Christmas break and two months later

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moved back to Sioux Falls to help start the fitness side of things.

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Nice. What we do. Were you in the fitness industry in Minneapolis? Yep,

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I've been. Been in Fitness for 21 years now, so. Okay,

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nice. So how was it coming back home

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and you know, basically like building this operation

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and educating the market on, hey, fitness and

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golf courses, you know, go together now where pre Covid,

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you'd kind of say, like those are two separate holding companies, you

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know, historically. But now I think it's. It makes a lot of sense. I

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mean, I play golf now and it is a great

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workout. We use Halo Health active lifestyle outdoors. So it's nothing better than golf

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or pickleball outside. Absolutely. Well, yeah, golf and pickleball are huge

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right now. So if you go into our facilities right now, literally that's what

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you have is pickleball. And at the golf courses, it's. We have,

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we have both as well. But it's been. It's been fun.

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Even before COVID we. We started putting people together in

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the fitness industry and golf and just saying, look,

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these are things that people can do together. And we want to create as

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many opportunities for people to

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live their great life as possible. Pun intended. Which is actually why

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bowling got involved as well. Because bowling is one of those sports that you can

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play multi generational people can spend time together same thing

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in a golf cart. You spend time together and you get to know each other.

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And same thing in the gym. When you sweat together, titles kind of

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go out the window. You. You work hard together and you don't really think about

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it. It's iron sharpens iron. And it's pretty cool to be able to see that.

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That dynamic come together not only in the fitness center, but

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at the. At the gyms and the bowling alley.

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This is Pete Moore. I want to let you in on a little secret. There's

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this company called promotion Vault. And what they do is they give out rewards

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from retailers that allow you to incentivize your

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members without having to do zero down and one month free

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or giving Away shakes or giving away T shirts. What you want to

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do is build a rewards program that lasts, that people

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value and that doesn't discount your own products and services.

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So here's the deal. There's something called Rewards Vault. The Rewards

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Vault is going to allow a member to set up their own profile.

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They are going to answer questions, you are going to get those answers, you're going

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to be able to target those members and you're going to reward them inside your

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club, inside your spa and outside of the club and outside

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of the spa to get them to become loyal, to get them to

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pay their monthly dues and to be rewarded properly

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for the actions. A lot of companies are cutting back on rewards. You shouldn't

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be Promotion Vault. Your answer, trust me, this is real.

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So how do you, how do you present the company for

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memberships or how many different membership options are there? Because I

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could imagine it could be a laundry list of, oh man. A la

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carte versus like, hey, here's three options to pick from one of these

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three. So it's, it's kind of fun. I love that you asked that because it,

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it's it. We've gone back and forth of like, do you tear it? Do

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you have all these things? Because the traditional golf courses do you have like, you

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know, weekday memberships, you have senior memberships, you have all these. And really we looked

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at it from a value proposition and said, how do we make it as simple

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as possible? So we have basically three tiers of

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membership. So it's single, couple or family member

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memberships. And then you can either choose the Fitness plus

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membership or the golf and Fitness plus membership and that's it.

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We do have some additional add ons with some recovery at, at a few of

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our locations and things. But the goal is to make it all encompassing so when

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you come in, you're just part of the great life community. We also have community

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partners where we have 75 member benefits that people have when they

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go to local establishments around the town.

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So really the goal is to make it as inclusive as possible

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and make it as simple as possible for marketing so that people know that they,

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once you're a member, you're just a member of the whole community. Got it?

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What has this done? If you're, if you're at

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liberty to say, but what has this done to

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independent fitness operators and independent golf

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courses? Our golf courses around

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here are, I mean we're, we're not fighting each other, we're not

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fighting each other for the, for our members. We're Fighting for more tee times.

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Okay. There's just not enough tea time to have. It's a, it's a great

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problem to have. And to be honest with you, where we're at, we,

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we're friends. We, we play in the same sandbox with a lot of, a lot

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of different community members. And we, we,

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we actually partner with some of the, like the crossfits and stuff in town because

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we don't have CrossFit within our facilities. And our goal is

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to educate our team members as much as possible to know what's

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all out there so that people walk into our facilities, say, hey,

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my name's Pete, I'm coming in. I, I really want a membership. And our goal

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is to slow it down and say, well, what are you looking for in a

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membership? Cause if we don't have it, we want to be able to have people

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in the community. Because the worst thing we can do is say we're going to

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sign you up. And then you come in here and you're like, I'm looking for

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a boxing gym. Well, we don't have boxing in our community. In our, in

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our gym. Let's get you down the street and hook you up with that person.

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So we have partners with several people. Is that like a referral or is that

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just kind of like a cross marketing and not really

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barter changing hands? It's, it's more of a, hey, let me call

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the person down the street and get a hold of them and get you connected

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to them. Because we know eventually you'll probably

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be in our community at some point within the great life community. And if we

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can do what's right at the beginning, we think long term, it's,

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it's the best fit. So that's smart.

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So when you, when you combine the golf courses and the bowling alley

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with the fitness centers, did you see a material

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drop in attrition? Because you've got

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so many things that people could do that's like, hey, you know, I'll find

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something here. I'm not going to just like drop out. Yeah,

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100%. And it's, that's why we,

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we've done something that's a little unique in that we don't do online signups

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and that's purposeful. And every time that I go someplace national, they're like, what are

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you talking about? Like, yeah, we don't do any of that because we want to

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make sure that we can tell you what our buffet of options

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look like in person so that your journey is going to change.

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Throughout time. And we want to make sure that we can walk with you through

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that journey. So it's. It has helped to be able to have so many different

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options because people's life change, their circumstances change.

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But if we can keep them connected to something that we offer, the

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membership rates are going to stay or the memberships will stay there. So we're.

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We're roughly about a 30% annual attrition rate, which

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is, which is a pretty good number that we obviously like to

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get that lower as much as possible. But we're roughly at

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30%. And then from a team member perspective. Perspective, we have a lot of team

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members that have been around for a long time as well. So our annual team

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member attrition's at 24 and a half percent. So that's great.

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Yeah, good stuff. So it sounds

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like you got a great culture, you got activities for, you know,

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anybody who wants to. To stay active or be entertained.

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You guys pulled off a ESOP transaction which has not been

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the. Not been like the

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structure of choice for. For many operators in our

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industry and in the industrial side. I've seen it

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done several times. But it's

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an employee stock option program. You want to,

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you know, give. Give our audience a little bit of like how that may

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have, you know, evolved or how that came to be a good idea and

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how, know, we can talk a little bit to give people a little taste of

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what this structure equates to. Yeah.

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Succession planning is something that I've always been very interested in because if you look

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at the history of time, succession planning is usually when things fall apart.

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So we, we come from our. Our owner is.

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And founder. He. He's a strong, visionary guy. So if we relied

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100% upon him from a seeding

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money and from a vision standpoint, we'd be in trouble.

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And as he's aging, he's in his late

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70s now. We've talked about succession planning for five or six years

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and there's a couple of different options. It was going through venture

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capitalists, it was going through another. Some other places. We have some

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bigger outfits in Sioux Falls that we have, or it's

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this employee stock option purchase plan or an

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esop. So we went down this path for the

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last six years to see if it made sense or not. And really

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what, what the determining factor was is that long

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term, he wanted to make sure that the legacy

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was remained of what we're trying to do. So

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it was important to make sure that we had the employees were taken care of

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because he had. Had Franchises and not fitness, but in food

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and beverage in the past and has had sold them off in the

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past. And they lost culture, their culture and the people

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didn't benefit from what they'd worked on for 35

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years. So this was the next option that said, look,

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it makes sense because not only from an owner, he was able to get

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paid right away, but he's also being able to stay connected.

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He actually is officing two doors down from me right now. And

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so he's still very much a part of what we do and in the

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culture and then we can maintain that for many years to come. So

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anybody. The way we have it set up is it you only have to be

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18 years old, been an employee for one year and

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then every time, every year that you work a thousand hours,

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you'll get stock option, you'll get stocks or shares

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that following year. Gotcha. So just so the audience

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understands, basically the owner is

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borrowing money against the business that they're going to take out on

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a tax advantaged structure.

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So they're going to minimize their taxes. And then the employees basically

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own the common stock of the business that has a debt security

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above it. And as that debt security gets paid down, then the

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employees own more and more of the company has that kind of

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payment plan kind of winds down. Yeah, so.

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So it could be either an outside debt security or it could just be

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the owner is getting paid off of that seller. Note I believe

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is typically how it's structured. And

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when that happened, how much of that is

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in like the public domain? How much is it that you

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want your members and employees to know about this? That you know,

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not only are we homegrown but also, you know, know now

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employee owned. It's. We,

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we basically shot it from the mountaintops because there's.

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Yeah. I mean to be honest with you. So we put team member owned on

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all of our vehicles, on all of our doors

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just to make sure that people know that not only from a team member standpoint,

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all of our team members are taking. We always talk about an ownership attitude and

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making sure that you're stepping in like you own the place. And now we go,

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you actually own the place. You have shares in this, you have,

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you have an vested interest in this business. How do you make sure

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that we're making the right decisions going forward?

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Although they don't have a say in it. So they don't sit there and say

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I want to spend money this way. They at least have some.

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They feel like they're making a difference because they are Making a difference to the

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bottom line with what they, they do each and every day. So it's that interactions

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and from a membership standpoint, the more members that we can drive and

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the more members we can save and keep connected, that's

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our bread and butter. And that's been a huge benefit

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for that too. Yeah. Just one question, because I have not been

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part of an ESOP post transaction. I've helped

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structure some of them. Do all the employees

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get a copy of the financial statements at the end of the year?

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Not the actual financials. We, we've always been very

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transparent with ours, so we, we show all of our leaders

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all of our, basically everything in the backside of all of

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our dollars and cents, but they'll get a valuation at the

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end of every year and then they'll get a number of shares that

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they get as well. So. Gotcha. Yeah, I'm

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shocked sometimes when I a meeting with someone and they're like,

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no, we don't, we don't share the P L. They just know what the member

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number is and the, and the revenue. It's like if you're

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gonna hire someone and pay them to be responsible for

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a P L statement, you got to give them the whole P L statement or

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else it's kind of like not really worth your incentives

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aligned with, you know, almost like masked information. So

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I'm glad to hear that you guys are open with it and everyone knows what.

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They probably learned a lot about business by, by actually understanding how

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the, you know, the engine works. Right. Well, the, one of the things

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that we talked about too is in the, at least in the fitness industry, in

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the 20 some years that I've been in it, a lot of my friends have

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gone into and said, well, I want to go on my own gym. And they

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go to it and they don't realize all the different components of owning your

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own gym. So because you're a good trainer doesn't necessarily mean that you're going to

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be training. If you own your own facility, a lot of times you're gonna have

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to do the back end work and you're gonna have to pay all the other

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things and take care of the business. All the other things that go along with

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being a business owner, which is great, but our goal is to make sure that

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they're educated before they make that decision and not afterwards and go,

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oh man, I didn't realize what I got myself into. Yeah,

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well, I've seen too many, you know,

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CrossFit trainers that, that open up their own locations

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on SBA. Loan or F45 or

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Fitness Together. There's people need to do their research and

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understand, you know, you're going from training and generating revenue to

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actually like operate a business and you only have a certain amount of hours in

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a day. Yeah. So yeah, I hear you.

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From a standpoint of, you know, personal training, is that,

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is that a big component of your business and is it also sports specific?

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We do a little bit of everything. We don't really do a golf specific, but

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we have sports performance and we have trainers. We have about

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40 trainers on our, on our team. But we,

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we really trade our trainers as people that are there to provide an experience

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for our members and to connect. So as we, as we have

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people that are in the facilities that are one on one training or group

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training, one of their main things is to, is to make sure that they're

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creating the community and interacting with all the members so

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they're not making it look like an inconvenience to,

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to a member for being there. So to answer your question,

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we do have some specific things, but it's really for kids

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training and then we have the one on one or the

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small group training for, for the adults. But we also

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have 100 and almost 200 group fitness classes of all

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sorts that are in our facilities as well every week

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that are the attendance on those things. I think we averaged like

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26 or 27 different or 27 people in

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each class on all those. So it's, they're, they're very

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well attended and people just like to be connected.

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This is Pete Moore. Here's the last tip for you of the podcast.

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304
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306
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307
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308
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309
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recovery train yet, your time and your stop

310
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311
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recovery and spas end up saturating your market.

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00:19:16,660 --> 00:19:20,100
Having your members walk out of the club and going into one of their locations

313
00:19:20,100 --> 00:19:23,740
for 200 bucks per month where they're paying 39 to

314
00:19:23,740 --> 00:19:27,580
you. Let's become an expert in workout recovery. If we

315
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316
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forward to helping you augment your products and services

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00:19:38,660 --> 00:19:42,510
to meet the demands of your members. And hey, let's get people

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happy, healthy and sweating. And the recovery should be

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just as good as the Workout.

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I'm seeing a trend where people are taking out more of their group X

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than, than putting it in and I don't know if I can find a cycling

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studio inside of a health club where I live anymore. They're

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chant those are cycling discycled out man. That was

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still a soul cycle evangelist. But I'm like

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one of the few remaining I think unfortunately.

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And one question about when you're owned by

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as an ESOP now and the founders not actually

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going out there anymore and say like hey let's go buy a golf club, let's

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go buy a bowling alley, let's go buy another fitness center. How does

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the. How do decisions get made based

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on like creating shareholder value versus like

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you know I guess what I'm thinking is like I've never heard of like an

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E Gunpad and I wonder if you could like

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you know, go on hyper growth and kind of like you know,

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turn it into something that it wasn't supposed to be. Yeah.

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There we have a board. So everybody answers to a

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board. So any, any major decisions we decided on,

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okay there's five of us on the board. We sit there and

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anything over X amount of dollars we, we go there and say any major

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changes or going different market, building a large

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facility, whatever that might look like, we go to the board to talk through it

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with them. But we haven't had

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like from a day to day standpoint that's not really a, that's not really a

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thing. Our, our org chart still stayed relatively the same.

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So we're still out there innovating and

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there is a fine line of like how do you figure out what's going to

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drive valuation? But our goal is not the valuation

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portion of it. It's the experience. And we know that the experience and the behaviors

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are going to drive a better valuation and a better long term

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dollar amount at the end. So

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I don't know if there's a right fit or if I answered your question but

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it's, it's really. Yeah, no, it's just an interesting like different

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set of guiding principles or like

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maximizing value for not XYZ private

356
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equity firm that wants to you know, get this thing,

357
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increase revenue, decrease cost and then let's sell to the next guy. You know,

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it's actually any, any decisions you make that are short

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sighted you will pay for in the long term. Right. Because

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you're going to always be sitting in that same seat. And I don't think you

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could unwind it esau for like seven years or maybe Even more.

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I don't even know if you could protected, period.

363
00:22:29,490 --> 00:22:32,890
Right? Yeah. The interesting thing is every, every

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esop. So my, my whole thing is when I, when we started looking into it,

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I'm like, I want to go find ESOP companies that have, that don't like it,

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that are trying to unwind it or some that are that, that

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like it because obviously you get the ones who love it. But I'm like, there's

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people who don't like it. So I talked to some of those people and the

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ones who are trying to unwind it said, well, I didn't do what we had

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hoped to do. And I said, well, what did you hope to it to do?

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Well, I hope that people would appreciate it. I said, okay, well how are you

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explaining it to people? They go, I don't know, we don't really get it. I'm

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like, okay, there might be an educational component to it,

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but really, really we want to just make sure that we're, we're

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providing for me as we're making decisions. I'm like the

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day to day decisions that we're making, I know affects the guy that's

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right next to me, that affects the person working the front desk.

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And we're all kind of in it together to make sure that we're making

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decisions that are the best for all of us. And to be honest with you,

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I tell our team all the time, like, I'm not going to make every perfect

381
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decision and I will apologize but, and I'll own it, but I'm

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going to make decisions the best that we possibly can for the company and for

383
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you. So yeah, no, that's great, that's great. It's

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unique opportunity. So yeah, I think you're the only person in the

385
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fitness industry or the golf industry that I've talked to that

386
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that affected this ESOP structure.

387
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So yeah, maybe you're the, the poster child for it and then you can

388
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tell people, I've educated everyone. It's perfect. Well,

389
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you know, we're only a year into this thing, so I could let you know

390
00:24:03,720 --> 00:24:07,320
in the next few years, do a follow up. But all right, you can put,

391
00:24:07,320 --> 00:24:09,920
you can put it on, you can wrap it on the back of your trucks

392
00:24:09,920 --> 00:24:13,080
like Timo, this is what an ESOP means. You could get it for like chat,

393
00:24:13,080 --> 00:24:16,660
GBT or something. Yeah, pop it up there. All right, well

394
00:24:16,660 --> 00:24:20,300
look, it's great to connect with you here. Appreciate getting the,

395
00:24:20,300 --> 00:24:23,580
the background on what you guys are building. It's exciting and

396
00:24:24,060 --> 00:24:27,860
you look forward to, to stopping by getting around to golfing up

397
00:24:27,860 --> 00:24:31,260
there and see what you guys have built. So it sounds like a

398
00:24:31,660 --> 00:24:33,740
special place. So thanks for coming on the show.

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This is Pete Moore on Halo Talks, your captain speaking. I am the

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00:24:46,190 --> 00:24:49,910
founder and managing partner at Integrity Square. We've been around now

401
00:24:49,910 --> 00:24:53,430
for 15 and 1/2 years. We have been helping

402
00:24:53,430 --> 00:24:56,910
people like yourselves get capital, do mergers and

403
00:24:56,910 --> 00:25:00,550
acquisitions, consulting, strategic advice in the health,

404
00:25:00,550 --> 00:25:04,390
active lifestyle and outdoor halo sector, trying to help

405
00:25:04,390 --> 00:25:07,530
as many entrepreneurs as possible get to the next level,

406
00:25:08,170 --> 00:25:11,610
take that inflection point and be the force behind your growth.

407
00:25:12,170 --> 00:25:15,730
We are helping companies that have at least $3 million of

408
00:25:15,730 --> 00:25:19,290
EBITDA, around $10 million of revenue and

409
00:25:19,290 --> 00:25:22,650
we are positioned to help you get institutional growth capital

410
00:25:23,370 --> 00:25:27,170
or to negotiate deals with strategic partners. If

411
00:25:27,170 --> 00:25:30,990
you go to integritysq.com isq q

412
00:25:30,990 --> 00:25:34,550
you can see our capabilities. Deck Happy to set up a consultation at any

413
00:25:34,550 --> 00:25:38,150
time that is free of charge and we look forward to you

414
00:25:38,150 --> 00:25:41,790
helping solve obesity, loneliness and diabetes.

415
00:25:41,950 --> 00:25:42,910
Go Halo.

416
00:25:56,440 --> 00:26:17,560
Sam.