Marin SBDC

Pelo Fitness

“Marin SBDC Advisor, Paul, helped me get my financial house in order, turn empty space into retail sales opportunities set up a solid strategic plan for future expansion and secure the capital necessary to pull it off.”

All Client Stories

Pelō Fitness, located in San Rafael, CA, is a dedicated indoor cycling studio built from the ground up to give people the best cycling and fitness experience possible. With the help of the Marin SBDC, Pelo Fitness was able to stablize its finances, turn empty space into retail sales opportunities, and set up a solid strategic plan for future expansion.

Profile

 In addition to indoor cycling, Pelo offers Body Align and TRX strength training classes – all designed specifically to complement and complete the cycling workout. In one hour, with professional instruction, great music, and the top-of-the-line bikes. Pelo offers a workout calibrated to meet each person exactly where they are.

Pelo was started by Alan Roberts who has a passion for cycling and fitness and who has personally experienced the big difference being on a bike has made in this own life. His vision was to make cycling classes and fitness easy, available, and fun for people of all fitness levels. 

One of Pelo’s unique competitive advantages is a simplified process that lets participants register online, choose their bike online (just like an airline seat), show up, climb on and ride. 

Alan’s long-term vision is to have 5-8 locations in the greater bay area and then expand the brand through franchise and licensing opportunities.

Challenge

Tony came to the SBDC only a few months after starting his business. He was highly focused on the product and customer, but still sought guidance on how to run his new food business to ensure that he didn’t make any costly mistakes.

He was paired with SBDC advisor, Anni Minnuzo, who helped him understand everything about packaging his products for the North American market and successfully selling products in stores. They worked on the distribution process, pricing, branding, sales–as well as determining the best course to get into stores and making his products stand out on the shelves.

The pandemic caused Tony to spend many sleepless nights, unsure of how his business was going to grow and what challenges he would face. Pre-pandemic, 50% of his business was selling to supermarkets, and 50% was selling cakes to food services/restaurants. The pandemic caused him to lose all the cake sales to restaurants but was able to make up for that loss by selling more products online. The shifting costs of goods created another challenge for Tony, with flour increasing by 60%, chocolate and eggs rising to 40%, and packaging doubling in price.

Game Plan

During the first few months of working with Paul, most of the attention was devoted to effectively managing the dynamic cash flow situation. Alan and Paul spent several meetings analyzing what historical information was available to create forecasts and budgets that Alan could use to start predicting revenues and expenses to ensure there was adequate liquidity.  An extensive analysis of all major expenses was conducted to determine if any expenses could be eliminated or reduced.  Also examined were all the current debt and equity tables to understand what opportunities there were to reduce the amount of cash out on a monthly basis to service start-up debt.

The next step was to determine if there were any ways to utilize the retail space to generate additional revenue.  All options were examined including adding more classes, expanding the types of classes, integrating retail merchandise, and selling cycling accessories.

“One of the best things about working with [SBDC Advisor] Paul and the SBDC is that it helped me grow at a pace I could handle.”

ALAN ROBERTS, OWNER, PELO FITNESS

As Pelo was creating a lot of forwarding progress on the financial aspects of the business, Paul and Alan turned the focus of their meetings into creating a business model and expansion plan that would allow Pelo to grow to five regional locations and attract the investment capital required to fuel the expansion.

Results

  • Began with a studio that was half empty to now you can’t even get into the classes on the weekend!
  • Increased sales by 25% in 12-months.
  • Turned empty space into money through merchandise sales – making $3-5K/month in boutique sales alone
  • Leveled cash flow – Now have guaranteed monthly income with different fitness programs and packages, so no need to worry about hitting monthly expenses
  • Learned that is was best to grow organically and not too fast
  • Have obtained $160,000 in equity investments
  • In 2014, will be opening up another location in SF 
  • Managed to turn location of studio into a hot spot for fitness
  • Hired 14 employees

Learn More about Pelo Fitness