Using fitness and energy as start-up capital

Business Partners Limited, the leading entrepreneurial risk financiers for formal SMEs in South Africa, saw the potential of Mululu’s Dream Body Fitness, and agreed to a loan of R800 000 which will be used as working capital and to kit out a health-food counter for the gym.
Steve Mululu
Dream Body Fitness

A computer business is lucky in the sense that it can install its own office network. Similarly, a livestock farmer’s family gets its meat for free, or at least at cost, and a construction firm can build its own offices and storage facilities.

But what advantage does the owner of a start-up gym have? If you ask Steve Mululu, a 44-year-old Johannesburg fitness entrepreneur, he would say he has the greatest advantage of all: lots and lots of energy.

Mululu, who is eight months into his harrowing start-up ordeal, describes his independent gym built from scratch in an upmarket Johannesburg shopping mall as a place where people come to buy energy. While ordinary gyms mainly sell the idea of weight-loss and fitness, Mululu’s Dream Body Fitness gym sells the idea of higher energy-levels for its clients.

His success so far suggests that business owners everywhere can learn not only from Mululu’s business story, but also from his fitness philosophy. If you join a gym to lose weight, says Mululu, chances are that you will pick it up again soon after losing it, if you lose anything at all. The fact that the highest concentration of overweight people can be found at ordinary gyms is evidence of this, he says.

But if your main focus is to increase your energy levels, and slimming becomes a non-issue, amazingly, it leads to sustained weight-loss. The reason is that a focus on increasing energy levels lets people think much more holistically about their health; they tend to tackle getting fit more realistically, and start including small changes to their eating habits and emotional lives that incrementally give them just that little bit of extra energy they need to continue with what Mululu calls their body-transformation programme. The energy gained by continuing further reinforces the will to continue, and leads to lasting change.

Mululu, a boxing and body-building champion, refined this approach in his sixteen years as personal trainer. The fact that he became one of the top personal trainers in Johannesburg thirteen years after he arrived dirt poor from Kenya in search of a better life is testimony to an extraordinary drive – all fuelled, he would say, by the energy he gets from his approach to fitness.

He has been using every ounce of his considerable reserves of energy over the past few months to get his gym started. He had perfected the idea of a “personal transformation centre” in his head, but he did not have much by way of assets and savings to finance a gym from scratch.

True to his holistic approach to things, he started talking to and negotiating with every conceivable player in the industry (and in his life, starting with his wife, who agreed to support his nerve-wracking decision to quit his job). He negotiated with equipment suppliers, landlords, financiers, his existing clients, friends, family members and future customers.

It wasn’t easy. Many of the clients whom he trained in the gym where he had worked were experienced Johannesburg business owners, and most advised him against the idea. Not only was the economy in a slump, they said, but independent gyms had a tendency to fail. Besides, they weren’t sure they’d follow him to his new gym which would not be as conveniently situated for them.

But rather like his approach to fitness, Mululu took what he could from every discussion, and leveraged it for the next one. An equipment supplier agreed to a good repayment plan to kit out his gym, provided all the other aspects of his plan came together. This helped him sign a supportive deal with a landlord. All the while he was fine-tuning his business plan based on the probing questions all the players were asking him.

So strong did Mululu believe in his dream that a significant portion of his start-up funding came from pre-sales to customers who signed up even before the gym was kitted out. One of the scariest parts of his start-up story was the arrival of the gym equipment only a day before he promised them he would open his doors.

He survived his fair share of starting-up crises, of which a leaking swimming pool was only one, but was soon faced with a cash-flow crunch. He had exhausted all his avenues for funding among family, friends and suppliers, and his business was too young for the appetites of institutional financiers such as the banks. “To be honest,” says Mululu, “Business Partners were the last people I approached. Everyone else had said ‘no’.”

Business Partners Limited, the leading entrepreneurial risk financiers for formal small and medium enterprises (SMEs) in South Africa, saw the potential of Mululu’s Dream Body Fitness, and agreed to a loan of R800 000 which will be used as working capital and to kit out a health-food counter for the gym. In return for the risk, Mululu will be paying a tiny percentage of his turnover as royalties for the life of the loan.

Having survived his scariest months, Mululu says he has now moved into a phase of “nicer challenges” towards building a “community of fit people” around his gym. And he still has loads of energy left for it.