The business plan is one of the foundational documents of any business. In this article, we go want to give you an overview of the essential areas of creating a business plan that you need to know. We will also go through the 9 key elements you need to include to create an effective gym business plan.
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What Exactly Is a Business Plan?
The business plan is a formal document that lays down who you are as a business and gives a realistic picture of where the business will go in the future. At a fundamental level, it is a document that shows how exactly your business works, how it’s going to succeed and the steps you need to take to get there
Going deeper into what exactly the business plan will show the following key things:
- Description of the business
- The products and services
- The customers you are targetting
- How it earns or will earn money
- Leadership and staffing
- Marketing and communications
- Financing: money, costs, revenue
Think of the business plan as a roadmap that will guide you along the often bumpy road to fitness business success. For gym owners entering the fitness industry for the first time, a well-researched business plan is the best way to keep your business on track, especially in the first year.
Planning vs. Non-Planning
An interviewer once asked the enigmatic world heavyweight champion, Mike Tyson, about what thought his opponent was planning for an upcoming fight. His answer was as blunt as the force of one of his famous left hooks: “Everyone has a plan until they get punched in the face.”
This attitude towards planning has become popular in the entrepreneur and start-up culture where “learning by doing” is favored to producing a meticulous business plan that may need to be tossed in the bin at the first sign of trouble or change. There are a few different opinions and studies on the topic.
Carl Schramm, an economist, and former CEO says that the business plan is set to a calendar which can’t work in business. Meanwhile, entrepreneur Cat Le Blanc built up start-up that makes $24,000 a month without the need for a business plan. However, she does say that the business plan is still essential for those start-ups reliant on investment.
However, there have been several studies conducted that support the need for a business plan in every industry. One study analyzing the relationship between planning and success in small firms looked at 11,046 businesses and found that planning increased business performance. Other studies have found that having a plan can accelerate the speed of growth of a company. One saw that companies who plan grow 30% faster than those who don’t while another found that 71% of fast-growing companies have plans.
Do You Need a Plan?
Let’s put it this way. There is no disadvantage in not doing one. The trend towards throwing the business plan out the window seems to most popular in the tech world where companies don’t operate in the traditional sense. A fitness business still runs on the same traditional model it has always done, even with the significant changes in technology that have occurred in recent times.
From talking to fitness entrepreneurs around the world, we have gained insights into how they run their fitness businesses and more often than not the most successful ones have a business plan. And this is backed up by research conducted across all industries. According to a study that was undertaken by Palo Alto Software and validated by the University of Oregon in the United States showed that you are twice as likely to become successful with a plan than without them.
What Is the Importance and Purpose of a Gym Business Plan?
One of the most common reasons that any fitness entrepreneur would write a business plan would be to give investors a document that shows and comprehensive overview when asking for investment. The most common example of this would be the gym owner going to a local bank to ask for a small business loan. However, there are many other things that the business plan can be used for:
Planning: The primary purpose of the plan is, you guessed it – to plan. Writing a gym business plan can be a useful exercise to help you clarify exactly what your ideas are for the gym. It can help you understand the scope of the fitness business and figure out the resources(staffing, equipment, facilities) you need to get going.
Idea Evaluation: As a first-time fitness entrepreneur you will be full of different ideas for your gym that you will want to implement. By getting them down on paper through various rough drafts of plans, it will help evaluate what has the best chance of success. This allows you to focus your time and energy wisely.
Research: By sitting down and doing out a gym business plan, it forces you to research the different factors that are going to affect the success of your business. These could be things like your ideal customers, your target market, the cost of a facility and equipment, the competitor’s in your area and any other market forces that could affect your business growth. YoWhen it comes to the fitness industry, the last thing you should do is go in blind!
Competitions: Loans are not the only type of funding that may be reliant on a robust business plan. Competitions that award business plans with mentorships, grants or investment capital are quite common at a local and national level. Similarly, there are competitions that award “best entrepreneur” that usually require a business plan as part of the application process.
Case Study: Ibrahim Mohammed of MYGYM Bristol
Now let’s take a look at how Glofox customer Ibrahim Mohammed used the business plan to lay a solid foundation and then take MYGYM Bristol to the next level
How His Business Plan Laid the Foundation for Success
Fitness entrepreneurs start gyms for a number of reasons and what drives them on in the pursuit of their goals can differ from person to person.
For Ibrahim Mohammed, MYGYM Bristol was born out of necessity. His journey in fitness started with Taekwondo, a Korean martial art defined by its fast and high kicking style. During his time as an instructor at a club based out of the University of the West Of England (UWE), he found himself and other combat clubs facing the prospect of having to leave the building they were housed in due to its upcoming demolition. It put him and his Taekwondo club into a tailspin for which they were unprepared.
He decided to take it upon himself to find a new space in Bristol for the club but soon ran into difficulties, with the majority of leisure centers and gyms in the city unable to accommodate them. And when he discovered that other clubs from UWE were experiencing similar problems, he was struck with an idea.
“I decided to approach the other clubs and see if they would be up for supporting a venue that would be there to cater to their hiring needs,” says Ibrahim. They jumped on board with the idea and, alongside his business partner Luke Boulton-Major, they approached UWE with their concept.
“In the end, it took us 4 to 6 months to find a space in Bristol,” says Ibrahim. And once we found it, the University agreed to a 3-year contract with us which paid the rent for the first while.”
And so in September 2012, MYGYM Bristol opened its doors to customers for the first time on Dean St. in the south of the city. While initially a martial arts venue to house UWE’s combat clubs, Ibrahim soon added a fully-functioning gym on the back of the growing demand he noticed for such a facility in the area. He opened MYGYM Bristol as a fully-functional gym in January 2013 and hasn’t looked back since.
Ibrahim’s journey to becoming a gym owner may have been slightly unorthodox. However, the foundation of his achievement is something that is replicated across the board by most successful fitness entrepreneurs.
It’s a gym business plan.
Before you even lay down a mat or set up any equipment, the business plan is something you need to create to know where you are going and how you are going to get there.
“What I believe is that once you write down what you are going to do, you know exactly how to go about it, rather than guessing along the way” explains Ibrahim. “You know how you are getting from A to B and on to C.”
Obtaining Crucial Funding with the Business Plan
As the gym grew over time, Ibrahim found the plan extremely beneficial in bringing MYGYM to the next level. He explains: “One of the big milestones for was to try and own the building. To achieve this, we approached the Regional Growth Fund which had funding from the EU for any emerging start-up that had real plans.”
Using the gym business plan they had created as part of their application process led them to receive the funding they needed to finally own their building, which Ibrahim says has had an extremely positive knock-on effect for the rest of the business.
“We received £80,000 in funding, and we were able to use that to secure our property which we now own,” he says. “And this has led to a reduction in the overall costs of running the business and has enormously increased our asset value.”
So as you can see from Ibrahim’s experience, a business plan is vital not only in starting up your gym, but it’s also a key document that can help your growth and development.
An important point to note is the plan itself is an evolving document that grows with your business. Think of the MYGYM Bristol journey. From a strictly martial arts venue for hire, they have evolved into a fully-functioning gym that now has the addition of Olympic weightlifting and power-lifting facilities.
And on every step of the journey, Ibrahim has gone back and changed his business plan to reflect where he is and where he is going. Because that is what the business plan essentially is. Its a snapshot of the current state of things in your gym and where it’s heading in the next 3 to 5 years.
How Do You Write a Business Plan?
The significant progress of MYGYM Bristol comes down to concise planning and a proper business mindset. Ibrahim’s success in this regard is partly down to his background, holding a degree in marketing and information systems from the University of the West of England, which helped him formulate the business plan in the beginning
You don’t need to have a business background to write a business plan, but you need to get into a business mindset when it comes to laying out your vision for the gym. A large part of this is being realistic. Think about where you are right now, where you want to be in the future and, crucially, the steps you are going to take to get there.
Not only is there a debate over whether a business needs a business plan or not, but there are also differing thoughts on how long the business plan should be. Companies regularly use two types of methods: The traditional business plan and the lean start-up plan.
Ash Maurya created a tool called The Lean Canvas, which is a one-page business plan template for start-ups. Maurya is the founder and CEO of Leanstack which provides tools, workshops, and content centered around the lean startup model. His Lean Canvas business plan template promises to cut down on time and the hassle it takes to write a plan by simplifying the process.
However, there are also business experts who still advocate the longer and more detailed business plan. One reason for this is that a lot of banks and financial institutions favor the more extensive business plan template. Here are some useful resources for creating longer-term plans.
A compromise between the two might be the best for your gym. The one-page lean style business plan template may be useful for opening a gym and getting it going and then for internal direction. But if you are serious about getting funding to take your fitness business to the next level, you will need a more detailed gym business plan.
The 9 Elements Needed to Create a Great Gym Business Plan
In this section, we will go through the 9 key things you need to include in a traditional business plan.
This is a paragraph or sentence on your business, outlining its character and goals. It is pretty much the ethos of the company. For example, Ibrahim defines the mission statement of MYGYM Bristol as “Deliver excellence in fitness and healthcare and enriching people’s lives through fitness and nutritional advice.”
A summary or overview of the business plan. This is usually the first thing any potential investors will read, so it needs to be clear and concise. Give a brief description of your gym and give a summary of the market analysis that has identified your unfulfilled need. Then explain why your gym is uniquely qualified to meet those needs.
The company, analysis provides a snapshot of your company in its current state. The most important topics to write about here are its founding, current business stage, and legal structure.
Identify strengths and weaknesses along with your opportunities and threats to your business. This is known as a SWOT Analysis.
Focus on writing about what your market is about and specific niche your gym fits into. Think of things like:
- Are you interested in a general or a particular type of fitness?
- Do you focus on beginners or more experienced gym goers?
- What are the current trends in your industry?
This is the part of the plan where you identify your ideal customer. This is very important especially for boutique gyms as going for a “one size fits all” approach may result in poor customer retention. Think clearly of the type of person who would benefit from your kind of gym and focus on them.
Analyze the competitors in the local area and divide them into two main categories:
Direct: This includes gyms similar to yours in the local area who are going after the same type of customer.
Indirect: Categorize indirect as every other type of gym in the local area and other types of health and fitness based businesses that target your market with different kinds of products and services.
Lay out the key members of your management team and the skills and experience they can bring to help grow your business. This is not the fitness experts and trainers you hire but people with business experience. It is important to show any potential investors that the right people are in place to help your gym succeed.
Within the business plan, you need to lay out how you are going to acquire members. The best place to start is to lay out the 4 Ps – Product, Price, Promotion, Place.
- Product: The classes, memberships, and items you offer for sale in your gym.
- Price: The cost of what you are providing. The product and pricing mix can be a good way of getting ahead of your competitors.
- Promotion: The marketing strategy you will use to convince people to attend your gym. For advice on marketing strategy read our guide to developing your own.
- Place: The physical location of your gym. This will also include your online presence.
Counting the costs of your project is an essential part of your gym business plan and the section that will be scrutinized the most by potential investors and lenders. You need to know what money is coming into the business and what is going out.
You need to detail things like revenue streams and external funding as well as laying out Income Statements, Balance Sheets, and Cash Flow Statements. Base these on reasonable and valid assumptions about the market.