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Get Your Business Out of Debt in Three Steps

Use these simple steps to eradicate your debt and live the life you've dreamed of.

What if you walked into your facility tomorrow and everything was paid off?

What if there were

  • no weight equipment or treadmill payments due;
  • no payments due for a rubber floor or a state-of-the-art sound system; and
  • no loan bills due—that is, no bank requesting its piece of your pie plus interest?

What if instead of paying the bills (aka “your debts”) every month, you could put all that money into a savings account and begin to build true wealth? Does this sound like a fairy tale?

Making, spending and thinking about money take up a substantial portion of our entrepreneurial lives. It’s safe to say that most people would like to have more money available to provide for their family, secure their future and enjoy their free time a little bit more.

If we don’t keep more of what we make and if we don’t have enough money because we’re swimming in debt, then we restrict our ability to enjoy the fruits of our labor and experience life to its fullest.

Swimming in Six-Figure Debt

When my wife, Cassie, and I opened Avenu Fitness & Lifestyle on January 16, 2006, we faced many sleepless nights thinking about how we were going to make enough money to pay off the $220,000 debt we had racked up. Every decision we made was based on how much money we could pull in, not on what was best for the community of clients we served. We were stuck on the debt treadmill, paying the minimum amount due just to keep the doors open, the lights on and food on our table. We could only dream about not having to make our monthly debt payments.

Just like the clients who come to us sick and tired of living unfit and unhealthy lives, we needed to lay out a plan of action. The first step to eliminating our debt was to truly understand our financial situation.

Step 1: Know Your Numbers

Before you can create a plan to get out of debt, you need to answer a few questions:

  • How much money do you make each month?
  • What does it cost to keep the doors open and the lights on each month?
  • What should you pay yourself to begin building the life you’ve always wanted?
  • How much money do you need to set aside for taxes each month?
  • Do you have an organized accounting program?

I can hear the pushback: “Who has time to keep up with those details?”

I understand that you’re training clients and working 12–14 hours a day. But spending all your time training—without pulling back to get to know your numbers—could leave you closing the doors early on your dreams.

To keep your finances in line and avoid the mad dash to figure it all out at tax season, do this:

  • Schedule a weekly “IN30 Financial Fitness” session (preferably on Friday), then spend that 30 minutes a week walking through items 2 and 3 below.
  • Review and update your check registry. Make sure your bank online registry and your accounting program (e.g., QuickBooks™) registry match down to the penny.
  • As you review your expenses, make a note next to each: Need or Want.


Need:These expenses are required for you to run your business (rent, utilities, paying yourself, payroll, taxes, liability insurance and debt payments).

Tip: Look to lower your monthly payments by calling service providers and asking, “How can I lower my bill?” Most businesses will offer you a loyalty discount or provide you with a slightly lower-end package to save you money.

Want: These expenses are not required for you to run your business (new workout toys, music and magazine subscriptions, lunches and dinners on the business dime, T-shirts, and swag gear).

Tip: Learn to say, “No for now, not forever.” That means you should cut these expenses until you’ve built up solid savings and become debt-free. The key to building true wealth is to run as lean an operation as possible, constantly trimming the fat.

After a few months of these weekly sessions, you’ll understand what an average month looks like. This sets you up for success in the second step: budgeting.

Step 2: Determine a Budget

To help our fitness clients gain awareness of how they eat, we ask them to write down everything they put in their mouths. This information helps them understand their current habits, and it enables us to give them guidelines they can follow when they’re stressed, feeling emotional and looking for some comfort food.

The same holds true for spending habits. Step 1 was to determine what your average monthly expenses are. Step 2 is to create a monthly budget. Schedule 60 minutes at the end of every month to do the following:

  1. List all your “need” expenses and their totals.
  2. Subtract your total expenses from your monthly income. Is there money left over? We’ll discuss what to do with it in Step 3.
  3. Keep yourself accountable to your “need” budget by updating your spending in your weekly IN30 Fin­ancial Fitness sessions (see Step 1).

Tip: Make sure that your operating costs (aka “what you spend”) are at least 25% lower than what you pull in.

The key to building wealth is to keep more of the money you make. This sounds simple, but most people spend the majority of their money on ongoing debt and unnecessary impulse buys. Creating and sticking to a budget will make you feel like you got a raise, without needing to add more clients to your schedule.

Step 3: Pay Off Debt

Trying to keep more of the money you make while you’re in debt is like telling your clients to run the fastest mile possible with a 50-pound weight vest strapped to their body. If they ran without the weight, they would speed up, feel lighter, stop hurting and enjoy the journey more.

To get the debt monkey off your back, complete the following:

  1. On a sheet of paper, list all your debts, from smallest to largest.
  2. Pay the minimum required amount on all debts except the smallest one. Take the lump sum you uncovered in item 2 of Step 2 and, every month, apply that money to the smallest debt until that debt is paid off.
  3. Once the smallest debt is paid off, take the monthly amount that was going to that smallest debt and add it to the amount you were paying on the next-smallest debt on the list. You essentially make two payments on one bill, creating massive momentum to tackle the debt.

This is a process lined with personal discipline, much like the determination it takes your clients to lose weight. Once you mark off a debt payment for good, a sense of hope drives you forward and creates massive momentum toward becoming financially fit.

Imagine If . . .

The adages that “Everyone carries debt” and “Debt is just part of being in business” are slowly fading. Companies like Facebook, Michael Kors, Chipotle, Whole Foods, PetSmart, Urban Outfitters and CVS rock a debt-free business model, with ample cash lying around to do some amazing things for the communities they serve.

Even Visa—a company whose sole purpose is to give people the freedom to buy things they don’t have the money for right now—operates by a debt-free standard.

So what could you do with the additional $1,000–$3,000 you would have in cash each month if you operated without debt? Think about how much better you would sleep at night knowing you were financially secure.

You could build a team that could take on more clients and give you more room in your schedule to work on your business instead of in it. You’d be able to leave the gym at a decent hour to spend quality time with family and friends. And you could establish a brand that would create lasting impact on the community you serve while giving you the life you’ve always dreamed of.

Cassie and I finally paid off our debt, just 22 months after implementing the three simple steps outlined above.

We created our dream schedule, team, business and life. Because we were willing to live like no other, today we can live like no other.

Brent Gallagher, MSS

Brent Gallagher is the owner of Avenu Fitness & Lifestyle, a brand measuring the quality of the life one can live, not just their biceps and waistline. He has created a one-of-a-kind, unorthodox, 30 minute approach to training, nutrition and life thatÔÇÖs an unsuspecting experience from the typical workout. Brent invests time coaching high performing leaders and challenging fitness businesses to come to blows with the status quo by redefining whatÔÇÖs possible for the communities they serve. See more information at www.BrentGallagher.com

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