Shaping up: two Israeli expatriates turned jobs in a fitness warehouse into a fast-growing $20 million business selling high-end gym equipment.

It takes a trick of fate to bring together three Israeli strangers in South America--only to be rejoined in Los Angeles when they started a business selling everything from weights to stair-climbing machines.

After a modest start that was twice interrupted by calamities, L.A. Gym Equipment Inc. has eight retail locations in Los Angeles and Orange counties. While 72 percent of its business comes from retail operations, commercial sales have become increasingly important. L.A. Gym now sells in bulk to universities and high schools, residential developments, hotels and resorts, personal trainers and corporate clients.

Ran Radzewsky, Eli Ner-Goan and Ziv Barzily met in 1984 while spending their early 20s backpacking through South America and ran into each other again a year later in Los Angeles. Each had run out of money to continue their globe trotting, so they decided to settle in L.A. and find jobs.

Within a few months, each had saved $800 and, on the advice of a friend who was selling T-shirts at swap meets around the area, decided to pool their resources. They called themselves E-Z Run and bought closeout and returned athletic merchandise from a Joe Weider warehouse to resell at swap meets.

After three years, Barzily left to explore his faith, leaving Radzewsky and Ner-Goan peddling goods at 10 swap meets and county fairs in Los Angeles and Orange counties.

The swap meet business started to peter out in 1988 so the pair sought Storefront space. Incorporating as L.A. Gym Equipment, Radzewsky and Ner-Goan opened a store on Long Beach Boulevard in Lynwood, close to the indoor swap meet in Compton that had been E-Z Run's most successful location.

Where the money is

Lynwood is far from the health-crazed neighborhoods of the Westside, but it was close to the real money in L.A. Gym's business.

Compton customers wanted heavier weights and bodybuilding equipment, and L.A. Gym's revenues were tied directly to poundage. With dumbbells retailing for 50 cents per pound, bulkier weightlifters bought heavier weights and that provided a greater revenue stream.

The gym equipment business can be broken down into three quality and price grades--A, the highest, B and C. In its early days, L.A. Gym dealt used equipment and low-end, or C-line, fitness equipment.

Selling mostly weights, vitamins, clothing and boxing gear, L.A. Gym Equipment recorded revenues of close to $830,000 in 1989. (The Lynwood store began as a 1,000-square-foot storefront in a strip mall, and at one point wound up covering 60 percent of the center.)

In 1991, the business expanded by buying Olympia Health and Fitness on La Cienega Boulevard near Pico Boulevard, for $60,000. Radzewsky and Ner-Goan increased their visibility and the quality of product because the inventory of Olympia was in the A and B range. With the added sales from the Olympia operations, L.A. Gym Equipment recorded $3.5 million in revenues in 1992.

But just as things were picking up, the 1992 riots cut into sales. "The business became only the immediate neighborhood and not many people drove and came from where they used to come," Radzewsky said.

The riots spelled the end for the Lynwood store. Revenue fell steadily, from $1.25 million in 1992 to $788,000 in 1995, bottoming out at $530,000 in 1998, when it was shuttered.

Though they were losing money, Radzewsky and Ner-Goan hesitated to close the store where the business started. "When we closed it, financially it was a relief," he said. "Emotionally, it was hard to close it. It was closing our roots."

Adversity wasn't done with L.A. Gym. In 1994, the Northridge Earthquake collapsed the Santa Monica (10) Freeway on La Cienega Boulevard a few blocks south of L.A. Gym's store. A new Sherman Oaks store was red-tagged for several days.

With two $50,000 loans from the Federal Emergency Management Agency to keep those stores afloat, L.A. Gym was able to retain its focus on expansion.

Bigger is better

These days, Radzewsky and Ner-Goan operate from a cavernous two-story warehouse on Sherman Way in North Hollywood. Radzewsky's office is behind a nondescript partition toward the back and has the feel of a construction trailer.

The office and warehouse space blend together, with administrative offices sharing the first floor with the stock while sales and marketing operate on the loft-like second floor, where a weightlifting belt signed by Gov. Arnold Schwarzenegger--pre-politics vintage--hangs on the wall.

Radzewsky and Ner-Goan cut decidedly different figures. For all the time he spends around gym equipment, Radzewsky does not look like a bodybuilder. His partner looks like he tests all the machinery--frequently. Still, Radzewsky remains a convincing salesman for fitness through thrice weekly Pilates sessions.

Meanwhile, the company has started selling to the L.A. County Fire Department as part of its Wellness and Fitness Unit in 2000. The $650,000 contract has been well worth the investment, according to Capt. George Cruz, a 16-year department veteran who runs the unit.

Cruz said L.A. Gym has been quick in dealing with the 158 stations in the program, which he said is wildly popular from station to station. "They're reasonable to deal with because of their flexibility, which is vital for us because of the geographic diversity of the department," Cruz said.

PROFILE

L.A. Gym Equipment

Year Founded: 1988

Core Business: Retailer of specialty fitness equipment

Revenues in 2002: $19 million

Revenues in 2003: $22 million

Employees in 2002: 72

Employees in 2003: 80

Goal: To cover the Southern California market with retail stores

Driving Force: Striving for excellence, which means not being better than the competition but the best we can be