'Lean and Mean'

'Lean and Mean'

TAMPA BAY: GEOFFREY DYER

Chief executive officer, St. Petersburg

by Janet Leiser | Senior Editor

Like pushing for one more rep in a good workout, Geoffrey Dyer has always pushed his Lifestyle Family Fitness to expand and grow by one more club.

Good employees, rising property values and a credit card with a $50,000 limit.

Geoffrey Dyer, a tall, lanky Australian, doesn't take all the credit for the success of his growing business: The Lifestyle Family Fitness founder points to his employees.

Then the entrepreneur credits the escalating value of Florida waterfront property over the years with enabling him to create one of the 10 fastest growing health clubs in the country.

And there was help from American Express.

When Dyer needed cash to acquire a club or to pay for renovations - if he was at the top of his credit line on his American Express - he refinanced the St. Pete Beach home he'd bought for $105,000 in the early 1970s.

"Back then banks didn't trust the health club industry," Dyer says. "We were always lean and mean."

The entrepreneur pulled nearly $700,000 equity out of his family's home as he grew Lifestyle Family Fitness from a small club in Lakeland to 45 locations throughout Florida, Ohio and North Carolina. The company is aggressively opening more clubs in other states and plans to issue an initial public offering within two years. Revenue at the St. Petersburg-based company is expected to hit $100 million this year - a milestone for companies.

Dyer, 56, is the Review's Tampa Bay area Entrepreneur of the Year. Last year, the man who was once an overweight teenager was a finalist for the same award.

"It took 17 years to get to the first seven clubs," Dyer says from his office on the fourth floor of the Franklin Templeton building near Ulmerton Road and Interstate 275. The company leases 22,000 square feet for its corporate headquarters and plans to double its space next year.

Growth has been more rapid since 1999.

That year, Dyer made a risky decision he compares to walking off a cliff: Lifestyle Family Fitness became the first health club to offer month-to-month contracts.

It made employees more focused on customer service and it fueled further growth. The following year, he took on a new partner, Stuart Lasher, who initially invested $2.5 million to establish a solid organizational infrastructure for Lifestyle.

Climbing obstacles

Dyer, like many entrepreneurs, had a humble beginning and faced many obstacles in building the company, especially since the health club industry was fairly new and made up primarily of moms and pops.

"I used to make $100 a week as a fitness instructor, and you never forget that," he says.

There were times he worried the business might not survive as he used all free capital plus loans to start new locations.

"I'm sure it's the same with any entrepreneur," Dyer says. "The tremendous risk is in the first five to six years. Every club you open could put you out of business. You make the wrong decision and you're done."

A year after he started the first club, Dyer took an extended trip to Melbourne, Australia, to visit his family. He returned to find out he'd been voted out by his partner, the majority shareholder.

Within a year, Dyer's luck turned. The ex-partner offered to sell to Dyer for no money down with a promise to pay. He signed the note as a hurricane swept through the Tampa Bay area.

The going was tough for a while.

Dyer worked long days, often spending the night on a couch in the Lakeland club. In 1987, he opened a second club, in Winter Haven, east of Lakeland. And in 1991, Bally offered him a club in Brandon for $10.

"They didn't want it," he says. "They thought it was a country town that couldn't support a health club."

It was a huge gamble.

He assumed a lease with $11,000 monthly rent payments. The showers and air conditioning didn't work. The club's bathrooms were usually out of toilet paper. Still, 700 members used the club daily.

If the members stayed under those conditions, Dyer figured the club was worth buying, especially since he knew Lifestyle would do a much better job in meeting the needs of members.

"It was a risk," he says. "We doubled the size of the company with one venture."

Within 12 months, that club was profitable.

Before long, he'd opened other clubs in Lakeland and Bally announced it was closing three Tampa Bay area clubs, including the old, tired Tyrone Boulevard location in St. Petersburg that Dyer had used for years.

Dyer once again assumed the lease on a building that was in disrepair. He doubled the company's size, this time with the 42,000-square-foot location, and it too was a success. He also took over two other Bally clubs.

Sports pays off

In 1999, Bally's called Dyer and offered him $8 million for the eight clubs he owned. "They wanted to reestablish their presence in this top 13 TV market," he adds.

Dyer, who says the company was never flush with capital, was tempted by the offer.

He turned to Stuart Lasher, a co-founder of National Business Solutions Inc., St. Petersburg. He knew Lasher through his business partner, Steve Esrick. Dyer and Esrick had played racquetball regularly for years.

Three years earlier, in 1996, Esrick and Lasher had sold their company, National Business Solutions, to Paychex for nearly $150 million.

Lasher asked Dyer what he'd do if he sold.

Dyer said he'd probably open another club. Lasher replied, "Why would you want to sell if you already have existing clubs?"

Lasher extended an offer: He'd invest in the company if Lifestyle changed the way it did business. Dyer would have to hire a chief financial officer, expand the club manager system and hire a new executive team.

"The guy who ran six clubs couldn't run 60," Dyer says.

He agreed with trepidation. Then he hired a new vice president of sales, a new vice president of operations, a new vice president of construction and a new vice president of marketing.

"We had a $12 million revenue stream in 2000 and we spent a million dollars on just the executive team," he says. "That was a huge risk."

Todd Bright, the CFO who joined in 2000, is now company president.

"The key to my success is that I have such a great team," Dyers says. "It has been tremendous."

He's talking about Lasher and his other directors, such as Don Burton and Craig Scher, as well as his employees.

The company acquired clubs in the Sarasota-Manatee area and in Ohio. Years 2003 through 2005 were phenomenal.

The push was on to become a national player.

In 2004, Lifestyle took on more equity through the Burton Partnership, led by Don Burton, and Ballast Point Ventures, part of the Raymond James group.

More executives were hired.

Dyer's role is much different today than it used to be. Bright is responsible for much of the day-to-day operations. And Dyer no longer needs to pull equity out of his home to pay for a new location.

Expansion is no longer a gamble; it's more of a calculated risk. Lifestyle only opens locations in cities with specific demographics that allow it to open a minimum of three clubs.

Dyer still works six days a week, and he worries about strategy and culture.

"My job in the future is to remind everyone what made us successful and make sure we all remember it's about the front desk staff and the group fitness instructors," he says.

In 2000, with only 10 clubs, the board set its "big hairy audacious goal" of hitting $100 million in revenue in 2006 with 50 locations and being among the top 10 clubs in the U.S. by growth.

He expects Lifestyle to hit those goals this year.

And he's enjoying the company's success, as director Don Burton advised him to do.

"Every entrepreneur thinks they'll jump from one success to another," Burton told Dyer. "But I haven't seen it happen too often. Enjoy your success because it may not happen again."

Entrepreneurial TIP:Invest significant capital in the executive team so you're surrounded with the best talent available. Then reward managers with ownership options so they make decisions as an owner, not an employee.

BY THE NUMBERS

LIFESTYLE FAMILY FITNESS

Year Revenue* % change

2003 $26.6

2004 $35.8 34.6%

2005 $54.0 50.8%

2006 $80.8 49.6%

2007** $98.4 21.8%

* in millions; ** Projected

Year Employees Total FTEs

2003 898 360

2004 1,021 740.5

2005 1,618 1,169

2006 1,868 1,381.5

2007 1,942 1,451.5