A Perth-based dad knocked back a “wild offer” from a Shark Tank investor. But it ended up being the best call he made.
It’s only been a few years since Perth-based entrepreneur Matej Varhalik turned down a huge investment opportunity from Shark Tank and Boost Juice’s Janine Allis.
The Slovakian-born SpeedFit founder and his wife Zuzana left their home country to pursue a new business idea in Australia after they saw how popular the fitness technology was in Europe.
Mr Varhalik had crippling back pain which led him to EMS (electronic muscle stimulation), a low-impact, high-intensity workout that’s done in just 20 minutes.
He turned to the intense and effective but quick EMS workout after his back pain forced him to stop going to the gym while he was trying to balance life as a busy father, husband and businessman.
“In Slovakia, I was a busy professional with a daughter and for me to go to the gym it was a struggle to find the time,” he explained.
“When I had the back issue, I was told I wouldn’t be able to go to the gym again. I used to play professional handball and I had to stop. Now I am competing nationally and without having the time to exercise I’m now fitter,” he said.
The German technology worked so well for him in Europe that he was convinced it would be a great business idea to bring to Australia.
But after arriving in Australia on a visa to start the business “without a plan to stay”, it was a struggle to convince people the business was a good idea. It was also hard to get the business up and running with little funds after moving from Slovakia without permanent residency.
He began studying a Diploma in Sports and Recreational Management and a Certificate in Fitness in Australia while on a student visa so he could start the business in 2013.
“It was a very difficult start coming from Slovakia with a slower economy compared to Australia and we could only open one store at a time,” Mr Varhalik said.
“We had to convince people it was going to work. It was a real struggle to try to convince people,” he said.
Mr Varhalik said some people thought it was a “fad” and said “some of the landlords thought it wasn’t a real business”.
“We were working as hard as we could to make it work,” he explained. “It wasn’t going anywhere and I was about to close my business.”
In 2014, he tried everything to get some publicly to lift the profile of the fitness technology people were “quite sceptical” about.
The husband-and-wife team managed to get a segment on Today Tonight which featured mixed martial artist Soa ‘The Hulk’ Palelei.
“That changed our business overnight. It was just crazy,” he said.
Mr Varhalik said they made $50,000 overnight after the show aired and they were able to quickly scale up.
“We opened our second location in Claremont straight away to keep up with the demand,” he said. “We were fully booked out. From there we gained momentum and then we started to scale up.”
In 2017, when he made it on Shark Tank after his wife convinced him to apply because she loved watching the show, they were shocked to be offered almost $1 million to fund the business idea, but Mr Varhalik retreated.
“We were not even thinking about it. It was such a wild offer,” he told news.com.au.
“They offered us around $900K, I think, for 30-plus people in the business and Janine also gave us an offer,” he explained.
“We just weren’t ready. It wasn’t right at the time. We were in the beginning of the journey, thinking about our other projects. It was too far advanced for what we were willing to give up,” he explained.
“I’m proud to build the business without that support.”
So, with English as his second language and limited funds from what was left from their relocation from Slovakia, Mr Varhalik decided to try to grow the business himself.
It’s been eight years since he opened the first SpeedFit studio in March 2013 and while it was a hard slog at the beginning, the business is going gangbusters and is on a trajectory to keep growing nationally.
His self-funded business has now grown to 21 studios across Perth, Sydney and Melbourne, with 72 per cent year-on-year growth since the business kicked off six years ago, and is now on track to make $7.6 million this financial year, up from $4.4 million the previous year.
Mr Varhalik has plans to expand the brand further across the east coast of Australia in 2021, with eight more studios set to open this year as he focuses on expanding the Perth-based business in the eastern states in New South Wales and Victoria.
“By end of the year, our plan is to go to 30 locations and provide support to franchisees. We want to increase the number of locations so we can support more people,” Mr Varhalik said.
The entrepreneur managed to acquire several new locations during 2020, including the three studios of a main competitor in Melbourne during the second lockdown.
While Mr Varhalik said the past 12 months had been a “challenging” time, he said “we managed to stay afloat” and added “the government support helped” as they planned to enter the Melbourne market at one of the worst economic times.
During the eight-week lockdown last year, Mr Varhalik said many clients kept paying their membership fees voluntarily, even though they didn’t have to, just to support the business which he said “massively helped us”.
He said his clients are “hooked” and some of them are regulars who have been going to SpeedFit since the beginning.
“We’ve had super loyal clients, some we have had right from the beginning. Word of mouth is a strong point,” he said.
One regular SpeedFit junkie is Amy Hart – now a franchise co-owner at the Kotara studio in New South Wales – who said she was “blown away” by the results.
“A few years back I was carrying some major injuries and found nothing worked for my rehabilitation until I tried SpeedFit. I was not only blown away by the results but the entire, personalised experience and soon became a studio manager,” Ms Hart said.
She loved it so much that she wanted to open her own studio but didn’t have the financial backing to get it up and running on her own.
“I soon realised that what I really wanted was to own my own SpeedFit studio so I approached Matej and asked if there was any way we could make it happen,” she explained. “I was upfront about the fact that I couldn’t afford to buy a franchise on my own but instead of saying, ‘No’, Matej said, ‘Let’s work something out.’”
Mr Varhalik offered to help her by going 50-50 in business with her until she could afford to go 100 per cent on her own.
“The part-ownership model works perfectly for me right now and fits into my plan to not only one day have 100 per cent ownership but also open a few more studios,” Ms Hart said.
“To have someone place that sort of faith, time and money into me is an incredible feeling and I am so pleased that only six months’ since opening we are now the number one studio in the country for the most sessions offered each week.”
Mr Varhalik is also passionate about giving back to the community and has initiated several company-led fundraising activities including raising more than $10,000 for the Starlight Foundation and almost $8000 for bushfire relief during the 2019/20 summer.