Shark Tank Advice

Scenario.

Play as if you are a shark tank investor.

A Boutique Fitness Facility aka affectionately self-referred to as 'Two Idiots with Bikes'

Tired of hiring themselves out and abiding by corporate rules and various personality issues with the management of fitness facilities, two fully certified personal trainers opened a fitness facility. Each trainer was certified in the indoor cycle (aka Spinning), personal training, strength, high-intensity training, and TRX. The facility was housed in the finished basement of one owner's personal residence. They invested $3000 that covers startup equipment costs. Startup equipment included spin bikes, fans, weights, step benches, and mats. Over time they upgraded the spin bikes and added more features such as resistance bands, ropes, TRX equipment, kettlebells, and other items for approximately $1000. Based on periodic feedback from clientele, they added some yoga classes and another instructor to teach additional spin classes. The owners taught 90% of the classes themselves and did not take a salary from the business. The yoga classes fully funded the yoga instructor. The additional spin instructor costs approximately $150/month. Costs included $500 monthly for insurance, $200 monthly for utilities, $80 for music licensing. Clientele paid $10 per class unless they purchased a package of 20 classes for $85 or 10 classes for $65. They ran approximately 26 classes a week. Unless there were 2 clients in a class, the class was canceled. The business averaged 4 clients per class and averaged canceling 3 classes per week. They also had personal training clients who paid 20 per session. The business averaged 8 personal training sessions per week. The tax rate is 20%. Depreciation on the equipment is 20% a year. The efficiency of the business is compromised from time to time based on clientele - since this is a boutique business that runs classes of 5-6 individuals, personalities and drama sometimes require the business owner's significant management time in the form of communications with clientele.

Between the two of them, they could earn $800/month by contracting themselves out to other facilities. Additionally, without the business, the trainers could conduct personal training sessions in the basement facility using the equipment they already have and would incur insurance costs of $60/month, no music licensing fees, and $100 utilities.

What would you do in Detail? ?

Recommendation/Advice - What do you advise these owners to do? Give a special focus on production and costs in this scenario. References Welcomed.