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Starting a Fitness Center



starting a fitness center

Owning a gym is a common dream that many people have.  The story typically goes something along the lines of that they love being in a gym; seeing the beautiful people and hearing the grunting, the yelling and the clinking of weights.  They are passionate about bodybuilding/training/etc and the work seems pretty easy – shoot the bull with some buddies, workout whenever you want and make lots of money in the process.  Just because you like to work out does not mean you can run a successful business. Running a gym is completely different than being a customer of the business. Everyone likes eating, but wouldn’t want to own a restaurant.

It could turn out like this but especially in the first few years, you will eat, breathe and sleep owning a business.  Your social and/or family life will probably suffer as you will spend most of your hours at your business until there is enough money to support you and some employees to take the day-to-day operations off your shoulders.  Many owners find out that when they open a gym they don’t work out anymore after a full day of  training employees, bookkeeping, paperwork and dealing with customer service issues.  While many younger entrepreneurs go head strong into starting their fitness center the real world experience will make the lesson of the work that goes into running a business very real.

There are so many options for consumers today to choose from that there are a lot of small niche gyms which means there is just enough to keep them open as opposed to years ago when gyms were typically not more than a weight room and cardio room.  Now you have a multitude of classes, crossfit, rock climbing, etc.  Not to mention the pricing pressure gyms are facing.  What used to be $40 membership is now $20, sign up fees used to be $250+ now they are $99, and contracts are almost out the door.  The trick survival in today’s market is to be better than the competition and offer something different or better to convenience them to go to your facility rather than the competition.

Before sinking money into opening a fitness center you need to ask yourself why you want to open a gym? If you are doing it because you think there is an easy opportunity to make some money while you keep your current job, you need to rethink that plan.  Next to restaurants and trucking companies, gyms fail the most as your startup cost is so high.  Your overhead expenses (rent, electric, loan, etc) will be the same whether you have one customer or one thousand which makes it a real struggle to get up to the level where you get to break even. There is also the constant maintenance, cleaning, etc. to stay on top of and the liability that is on your shoulders if you don’t keep these things in order is frightening.

What Kind of Gym Do You Want?

There are two primary types of gyms models that are available.

The first, which is most common is a fitness center.  These models are focused on the general population that like the idea of joining a gym but rarely go.  In the past (and to some extent today) the best way to make the most money was to sign this group up for 12 month contracts with monthly electronic fund transfers (EFT).  Most of these gyms see well over half of their annual memberships starting at the beginning of the year with the New Year’s resolutions.  By the time the contract is up and they could cancel they decide to stay because it’s January again and “this year is going to be different”!  To entice them to renew their membership they don’t use, most gyms have gone to a very inexpensive monthly fee (like under $20) as it isn’t a huge financial burden to keep it open if they decide to start using the gym.

This is the most profitable type of gym but will have a much higher initial investment as this customer expects higher end amenities such as newer equipment, very clean facility, saunas, juice bars, etc.  This type of gym will also not try to get many of the hard core fitness buffs and weight lifters as they intimidate the other members and too many will cause a drop in membership.  Keeping these people out of your gym is easy by not having the heavy equipment and weights for them to train with.

The other type of gym is targeted to the hard core users.  These fitness centers usually consist of specialized equipment and free weights.  Unlike the example above people don’t need the new equipment or spotless facility.  The overhead is much less and is easier to start.  The downside is that the profit potential is much smaller as the portion of the population that’s serious about strength training (or whatever your specialty is) is very small. If you want it to be a full-time business, then you definitely have to get beyond being just a niche gym and build a client base of school age athletes.  Your price point will be much higher for this type of facility, but since you have the equipment that meets their needs, people aren’t going to mind.

Needs for your community and a feasibility analysis are a must to see if there is a potential for a profitable business.

Is it better to lease of buy gym equipment?  It really depends on the type of gym you have.  Most of the big gyms lease either all or a majority of their equipment which is how they keep the newest latest and greatest in the gym, appealing to the mass market member.  Leasing is a good option because you get to use it at a lower cost than purchasing and it keeps you from getting stuck with expensive equipment that will most likely become obsolete within a few years.

For gyms that focus on the hard core members, buying and even buying used is typically a better way to go as the members don’t require the specialty equipment.

If you are buying equipment note that most equipment companies keep very little stock on hand and expect 4-8 weeks to have it arrive.

Starting With Lower Risk

So, many of you will read this and still want to open a gym, but are a little leery of doing so.  What are some options?

For starters, why don’t you start working at a facility?  Especially if you can go to one outside of your community and won’t see you as a threat, many people will let you come in to see the inner workings and get a taste for what is involved.  This way you can gain the necessary experience, become exposed to the areas of operation, etc, so that when you start your own gym you can hit the ground running.
Another option could be to start out small with a studio and then grow from there. You could do personal training or set up specific training times for a number of specialized clients like athletes, hard core lifters, etc.  If you can start out this way, your job of getting a loan to expand your business is easier because you have a track record and established client base.   In this option you can start off with less equipment and grow Trying to start off with $50K+ in equipment would be tough. I would just get a power rack, tires, sandbags, dumbbells, weights, and a couple of benches. You can always add more from there and picking up used equipment then re-painting or getting new pads put on them is a great way to go.

Opening a fitness center isn’t going to be easy or a guaranteed success and if you like to work out today accept that you may not be working out for awhile as you get the gym off of the ground.  Before starting be sure to do your demographic research to see if there are enough people to support your gym.  Also know how many gyms you will be in competition with and how far they are and factor that in to your demographic research to be sure there aren’t too many gyms for your area.  If you plan on starting be sure you have money set aside so you can live for six months without a salary.  Worst case is you don’t have to use it but if you do, you can focus on building the business and not stressing on keeping food on  your table.

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