What Is My Pilates Business Worth?
Understanding Value, Goodwill, Risk, Intellectual Property and What Buyers Actually Pay For
One of the questions I hear increasingly from business owners in the Pilates sector is simple: what is my business worth? It sounds straightforward, but it rarely is.
Many owners instinctively calculate value based on what they have invested, what their equipment cost, how many years they have worked in the business, or what they feel the business ought to be worth. A buyer often sees something different. Buyers rarely pay for effort. They pay for transferable value, and that distinction matters.
There is often a misconception that value sits largely in tangible assets. In a studio, that may be apparatus. In a training business, perhaps course revenues. But equipment alone, or turnover alone, rarely explains what a buyer is buying. A buyer is usually looking at some combination of earnings, predictability of earnings, systems, goodwill, growth opportunity and risk. That is where valuation begins.
Perhaps the most important distinction is between what I sometimes describe as a lifestyle business and an enterprise business. Some businesses in our sector are essentially owner dependent practices; I would call these lifestyle businesses. The owner teaches, manages relationships, drives sales and often performs much of the administration, and in some cases may also be the bookkeeper, marketer and cleaner. Such a business may provide a very good income and a rewarding way of life, but it may not create substantial transferable business value. Much of its value sits with the owner.
That is not a criticism. Many owners have consciously built precisely that, and for the right owner such businesses can be highly successful. But it does affect valuation, and it also raises a further distinction that is often overlooked. The value of such a business may differ depending on who the buyer is.
If the buyer is another instructor owner, willing to step into teaching, management and some of the owner’s functions, that buyer may be acquiring a viable income producing opportunity. They may be able to justify paying for goodwill, continuity and systems because they can continue extracting value through their own labour. But an investment style buyer, or an owner who will need to employ others to perform all of those functions, may see the same business very differently.
A seller may be valuing the income the business generates for them. A buyer may be valuing the profit left after replacing them. Those can be very different numbers, and understanding that difference is often central to realistic valuation.
In many such cases, what changes hands may be assessed less as the transfer of a scalable enterprise and more as a combination of goodwill, client continuity, lease value and apparatus assets. That is one valuation framework. But a profitable business that can operate without the founder may be viewed through a very different lens. Where a business has strong recurring revenue, reliable profitability, documented systems, management not dependent on the founder and demand capable of supporting multiple sites, the buyer may be acquiring more than an income stream. They may be acquiring a model.
This is where replicability matters. Replicability changes how capital views a business, because once a concept appears capable of being reproduced across multiple sites, valuation may begin to reflect strategic value as well as current earnings. That can be a very different order of magnitude.
But there is another layer here that deserves equal attention, and that is opportunity.
Value does not always sit only in what a business is currently doing. It may also sit in what it could become.
Some businesses are constrained by physical realities. A studio may have reached the limits of its current size, timetable or staffing model, and be performing well within those constraints. That may still make it attractive to a buyer seeking a stable, profitable business that works well in its current form, even if growth would require creating an entirely new site or effectively cloning the concept elsewhere.
Another buyer, however, may be drawn not principally by what the business is today, but by the opportunity they perceive still within it. They may see under utilised capacity, pricing potential, digital opportunity, expansion of services, improved systems, stronger conversion, or growth that can still be achieved without changing the essential shape of the business.
That too can affect value.
A business may attract one valuation because it is a well functioning, profit generating proposition.
It may attract another because the buyer sees unrealised opportunity.
And those are not always the same valuation logic.
Sometimes a buyer will pay for certainty.
Sometimes they will pay for potential.
The most attractive businesses can sometimes contain both.
This is one reason different buyers may value the same business differently. One may value maintainable earnings and dependable returns. Another may value growth embedded within the current model. Strategic value often sits precisely in that difference.
Recurring revenue is often one of the first things a buyer will look at. Predictable membership income, subscription models and contracted revenues generally create more confidence than sporadic or highly variable turnover. Profitability matters even more. Turnover alone can be misleading. A £300,000 studio with weak margins may be less attractive than a £180,000 studio with strong profits. Buyers buy earnings, not vanity revenue.
Retention matters too, because a stable customer base reduces perceived risk. Systems matter, because documented operating procedures, reporting and processes help a business feel transferable. In many cases, reducing owner dependence is itself a form of value creation. Equally, there are factors that may erode value. Weak financial reporting, informal systems, short lease security, client concentration risk, declining memberships or difficulty retaining staff can all affect how a buyer assesses price.
There is no single formula by which small Pilates businesses are valued. In practice, businesses in our sector are often considered through some combination of asset value, earnings multiples, goodwill and strategic value to a particular buyer.
But there is another layer of value increasingly relevant in the Pilates sector, and one I believe many owners underestimate: intellectual property, digital assets and operating leverage.
I have reflected on this in considering the potential value of Mbodies Training Academy as I explore a sale of that business. Historically, much education delivery in Pilates was built around a traditional model. You marketed each course, recruited each cohort, hired a venue, paid instructor trainers and incurred support costs. Much of the revenue generated was substantially consumed by the overhead attached to delivering it.
That model can work, but it can be labour intensive and margin constrained.
What changed for Mbodies was the digitisation of a significant proportion of the learning materials during the Covid 19 lockdowns into assets capable of generating returns from each learner without equivalent repetition of delivery cost. This was combined with he new willingness of Instructors and new learners to learn in a hybrid style rather than purely face to face. Once a video library, online curriculum, learning systems and supporting intellectual property exist as assets, the business may continue generating revenue without proportionate increases in manpower.
That can change the economics materially and potentially the valuation logic too.
The question becomes not simply what does the business earn, but what earnings can these assets continue to support. That is a different proposition.
This also links to operating leverage. One of the most significant changes in many businesses today is the extent to which technology can reduce manpower intensity. In my own case, the time required to operate all of my businesses today is materially lower than under earlier delivery models. Part of that reflects digital infrastructure, part automation, and increasingly part the way intelligent systems, including newer AI supported tools, can reduce administrative burden.
That matters, because a business able to operate with lower overhead and reduced manpower may generate stronger margins, and stronger margins can affect value.
This is also where I have seen the market itself change. Five years ago, much of my consultancy work was with lifestyle business owners, often excellent teachers whose businesses were financially underperforming relative to the hours, energy and love being invested. Much of that work involved helping owners build stronger systems, better pricing, improved conversion and firmer commercial foundations, so that returns better reflected the effort being put in.
Increasingly now, with the growth of apparatus based Pilates, I spend more time working with investors and operators seeking profitable models capable of replication. Those conversations are often less about sustaining an owner operated business and more about scalability, unit economics and whether a model can work beyond a single founder.
That shift matters, because it means owners should be clear which market they may one day be selling into.
Are they building a rewarding owner operator business?
Are they building a stable profit generating business likely to appeal to another working owner?
Or are they building something capable of attracting enterprise value through scalability and opportunity?
Those are not necessarily the same proposition.
But they may lead to very different valuations.
Rather than asking what could I sell my business for today, it may be more useful to ask what would increase its value if I wished to sell in two to five years. Improving recurring revenue, reducing owner dependence, strengthening systems, improving reporting, increasing profitability, developing assets that generate returns beyond direct labour, and building growth opportunity within the business are not simply operational improvements.
They are forms of value creation.
Many owners wait until they want to exit before asking what the business is worth. That is often too late. Value is usually built before sale, not at sale.
If there is one principle I would leave with, it is this: buyers are rarely valuing how hard you have worked. They are valuing what they believe they can take forward from what you have built.
That is where value sits.
Chris Onslow
Pilates Business Specialist Consultant