The most recent data on the US fitness industry is from the IHRSA. According to their 2017 research on the fitness industry, fitness studios and gyms attracted over 70 million consumers in that year alone. This is a record high since the IHRSA began tracking statistics in 1987. As well as that the number of members totaled 60.9 million, which was up 6.3% from 57.3 million in 2016.
These numbers paint the picture of an industry that is in a very good place at the moment. With the millennial generation spending more on fitness that college tuition, there is huge potential for this market to grow in the future. Reading these numbers can give you cause for hope as you open your first fitness business.
But here is the catch.
With increased market potential comes increased competition. This is especially true in the class-based boutique sector who are rapidly becoming the workout of choice for fitness enthusiasts. We talk to a lot of first-time fitness business owners here at Glofox and these conversations give us an insight into the journey they go through setting up their studios.
So using these insights and our own research into the industry, we have decided to put together a guide to opening a fitness business that you can use to map out your own fitness business journey. Click on a section below to travel down the page.
The Beginner’s Guide to Opening a Gym
Picture this: It’s the day after you have left the relative safety of full-time employment and you are sitting in front of a blank screen in your garage with everything in your life now relying on this.
Panic sets in.
But it shouldn’t. Of course, there is a massive risk to opening your own fitness business but thousands before you have succeeded and thousands after you will succeed again. It will take planning, research and lots of hard work. To get you started, take a look at our blog on the Essential Resources You Need To Start Your Own Gym in 2019.
Firstly, let’s take a look at the advantages of opening your own gym.
What Are the Advantages of Opening Your Gym?
A healthy industry: As we talked about in the opening of this article, the fitness industry is in a great place right now. In 2018 US health club revenue increased to $32.3 billion, up from $30 billion in 2017 which amounts to a 7% growth. As well as this the industry has proven to be recession-proof as you can see in the graph below:
Since 1996 the US fitness industry has grown 3.5x. This is 42% then the overall growth of Gross Domestic Product in the United States which stood at 2.4X. In that time also memberships have also grown and the growth has sustained during recessions.
While these stats show great promise for the next time a recession rolls around they are by no means a guarantee. However, if you do the right things in terms of running a business you should be able to meet the challenges of a recession head-on.
Boutique is booming: Class-based boutique studios is the sector in the fitness industry that has seen a lot of growth in the past number of years. The rise of the boutique model has coincided with the decline of the big box gym. Between 2012 and 2015, memberships to boutique fitness studios grew by 70% in comparison to memberships at traditional gyms that grew by 5%. There seems to be a boutique studio popping up in every town and city across the US and even the globe. F45 seems to to be opening a new studio in a different part of the world each week and Soulcycle recently announced their plans to expand into the UK market. This is the brand’s first expansion outside the US. There is no doubt that there is an appetite from the market for this type of fitness experience.
You’re the boss: This something that everyone will tell you about starting a business. You are the boss, you make your own hours, you drive the direction of the business and you answer to no-one. On the surface, this looks great and there definitely are advantages to owning your own business. However, there is more than meets the eye.
While you are the boss, in theory, the reality is that you are answerable to your employees, your customers and the commitments you make to vendors and suppliers. You are now the last line of defense and the blame will ultimately fall on your shoulders when things go wrong. Be prepared for this.
What Are Some Tips for Successfully Opening a Gym?
Write a business plan: It is often said that more than half of new businesses fail in the first year. However, according to the Small Business Association, the percentage of businesses that actually fail is closer to 30%. There are many factors behind a business failing but one of them is definitely poor planning. 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.
To avoid this make sure you have a comprehensive business plan. Start with the “Lean Canvas” Plan. Then move into a more extensive business plan that will be more useful when you need to attract investment. We value the importance of a business plan so much we wrote about the 9 key elements you need to include in a great gym business plan.
Start small: It’s good to dream big and has ambitions to be the next Orangetheory or Soulcyce but the reality is that you will be starting with just you. In some cases, you will have a business partner but in any case, it won’t be glamorous in the beginning. The advantage of this is that it gives the time and space to make mistakes that you hopefully won’t make when you have a bigger staff. Keep the following in mind:
- Focus on sales and marketing
- Begin with a couple of classes and try to get them full on a regular basis
- Take one day and dedicate it fully to calling prospects and following up on other leads you may have
Get the right systems in place: In this day and age, it is essential that you have the right systems in place to run your fitness business. This includes management software, sale, and marketing tools. We will go more into software later in this article. It’s not just the software though, you need to have the systems in place in terms of having a sales cadence where you follow up with leads on a regular basis. According to Hubspot, 79% of Marketing leads never convert into sales – the common cause of this is poor lead nurturing.
Hire the right people: At the beginning, you will more than likely be on your own. However, as you grow, you will need to hire trainers, management and operations staff. The people you hire will be responsible for carrying out your vision for the gym. You won’t always be lucky with the people you hire and it’s common to make hiring mistakes along the way to building a great team. We go through everything you need to know about hiring gym staff successfully in a recent article.
The Mistakes to Avoid When Opening a Gym
The saying goes that mistakes are the stepping stones to success. And the thing is you will make mistakes. However, mistakes will happen so we have decided to list the most common ones that will occur in the first year business.
What Are the Mistakes Most Start-Ups in the Fitness Industry Make?
They don’t prioritize pre-sales: No matter what type of gym you are running the reality is that a hell of a lot more money is going out in comparison to what’s coming in with things like rent, electricity, equipment salaries, and insurance.
It is estimated that the average start-up the cost of a gym is anywhere between $10,000 to $50,000 depending on the size of the gym. Pre-selling memberships before the doors open can be a great way to cover these gym costs. It’s also the perfect way to kick off your marketing strategy and get your name out in the local community. Read our article on 5 Ways You Can Sell More Memberships for Your New Fitness Business for some great tips for kickstarting your pre-sales strategy.
They don’t create a retention strategy: When we wrote our article on the gym retention statistics you should be retained for 2019 one statistic, in particular, stood out.
“It costs nine times as much to acquire new members as it does to retain existing ones”
So to keep this member paying as long as possible you need to make retention a priority for your fitness business. And, like the marketing side of the gym, you can’t just dip in and out of retention, it needs to be an ongoing process.
- Build a community with events
- Keep up regular communication with the member to show you are interested in how they are doing.
- Track their progress so they can see that your studio is giving them the results they need.
- Run referral programmes to gauge if members are willing to recommend friends. If they aren’t this is a huge opportunity to intervene and discover any underlying issue
Thinking leads will appear out of thin air: The truth is that while you have boundless enthusiasm for your gym, the average person will see it as just another gym in the area. This is called the “build it, and they will come” mindset. You need to get out of that and into “making it their only choice” mindset by throwing yourself into the trenches of marketing and lead generation.
The problem with a lot of first-time gym owners is that they see marketing as a campaign or an event or a strategy. And because they think like that, it becomes something the dip in and out of, something that is given a lot of effort for a couple of weeks and then picked up again at another point down the line. However, this is the wrong way to think about things.
Marketing is not just a campaign, event or strategy. Marketing is the continued implementation of all of these things and more so you constantly drive new leads and attract the right type of people your fitness business. In our blog 9 Top Social Media Tips For Fitness Business Success, we talk about the importance of not underestimating the power of ads for lead generation.
The Costs of Opening a Gym
The startup costs for opening a gym business can vary massively depending on the size, location, facility and the type of gym you plan on launching. The basic start-up costs can range from $10,000 to $50,000 on average. However, the cost can exceed this also. Note that it’s almost impossible to give an entirely accurate estimation that represents all gyms. Different gym owners start up different types of gym businesses, and the start-up costs will differ depending on the facility.
Let’s take a look at some of the costs you could incur.
How Expensive Is Fitness Equipment for a Small Gym?
Like the location of your business, the price range of gym equipment can have a broad spectrum. First, you need to determine what type of gym or fitness center you’re looking to create. If you plan on running classes, you’ll need to have enough gym equipment that every person in the class has a machine. If you’re a personal trainer or have years of experience in the fitness industry, you’ll likely have a good idea of this.
The cost can vary from filling out a personal studio of around 1,500 sq ft for $10,000 to a fully kitted out commercial gym for $50,000. Commercial gyms usually take up approximately 3,000 to 4,000 sq ft. Be sure to shop around and do your research, will you be paying a one-off cost or leasing your gym equipment? There are pros and cons for both, so you’ll need to decide which option works better for your business.
Another point to consider when thinking about your finances is your gym supplies, furniture, and gadgets. Your clients will expect your business to be properly decked out with towels, chairs and flat-screen TVs. Other items to consider are telephones, printers, sound systems, and computers, all of which you need to run your gym properly. Take a read of our latest article on where to buy gym equipment for more information.
How Much Does Fitness Studio Legal Fees and Insurance Cost?
There are plenty of commercial and legal fees that you will need to pay before your gym is set up, so factor this into your budget. You’ll need to pay for the cost of applying for a business license. As well as that you need to register a new business with local authorities and trade name registration. Task lawyers with the job of writing up business contracts, membership contracts and setting up legal documents. However, all of this can come up at a high price.
To start with you will need several documents like a Certificate of Incorporation and Employment Agreements. It’s recommended you hire or at least consult a lawyer for this. Expect to pay around $200 per hour for these kinds of services. Although the cost can vary depending on the legal documents you require, expect to rack up to approximately $15,000 in legal fees for a medium scale gym.
Gyms deal with a large amount of foot traffic and are no doubt prone to on-site injury. You’ll need to have business insurance in place to cover several different possibilities. This includes general liability, theft, workers’ compensation, and property casualty insurance. Even if you have a bulletproof membership contract and waiver, you still may get an angry client on your hands if they’ve injured themselves on your premises. For a small gym with one desk clerk and no more than $100,000 worth of gym equipment, expect to pay up to $6,000.
For a complete overview of the costs of opening a gym in 2019, take a read of our recent blog on the topic.
3 Key Things You Need to Know About Opening a Gym
In this guide, we have gone through the beginner’s guide, the mistakes you need to avoid and some of the costs involved in opening your own fitness business. So let’s take a look at 3 more things you need to know about opening a gym.
Develop More than One Revenue Stream: As we discussed in our blog on different practical product and service streams for your gym or studio, gyms and fitness studios can’t really rely on revenue from memberships alone. It’s very common for a gym owner in their first year of business to just focus on acquisition.
And while this is obviously key to the survival of your fitness business when it’s in its infancy, you should definitely develop at least 1 to 2 other revenue streams. Not only do they bring in that extra bit of revenue that could be crucial to your survival, but they also can help with your acquisition and retention strategies. The most successful businesses diversify into different revenue streams alongside raising revenue through core memberships.
The most practical revenue stream you can develop in the first year is events. The benefit of putting on events is that it gets your members out of the class environment and into a more relaxed setting. This enhances their member experience and works towards improving retention. When it comes to marketing the event can be a great way of showcasing your gym or studio to the general public. The revenue comes in from ticket sales and exposes your business to potential new prospects.
Make playbooks for everything: With owning a gym, there will be a great deal of throwing stuff at the wall and seeing what sticks. Too often though this experimentation is not recorded and it takes longer to develop a process that works for the key areas of your business.
The hectic nature of the first year means that there might not be a chance to step back and take a breath. By doing this though you can figure out what has been successful and what hasn’t. From that, you can develop shared based practice across the business.
From things like your digital marketing strategy to how you organize and incentivize your staff, there needs to be a record of what works and what doesn’t. Think of the following examples:
- Did you run a successful Facebook Ad campaign that brought it a record number of leads?
- Are your consultations contributing to long-term member retention?
- Have you developed a sales pitch that is improving your number of sign-ups?
Take what is working well in each area of the business and develop a playbook. By developing a playbook, you will be able to provide a resource for staff training and implement a proven working strategy throughout your new gym. Building out great playbooks not only takes testing and experience but lots of research. For some great resources check out The Essential Resources You Need to Start Your Own Gym in 2019.
Reach out and build a network: No person is an island, and it is foolish not to source outside opinions from those around you. And, while the advice of family and friends can be helpful, it is better to talk to people who have been there and done that. By building a network of mentors and collaborators that you trust, you can get ideas out of your head and bounce them off people with different perspectives.
You are probably thinking that building this type of network is easier said than done, but there are two simple ways of doing this:
- Contact owners of profitable gyms and studios outside your local area who you are not in direct competition with you. Ask them to do a short interview on the areas you feel you need help with most and try to see if you can help them with any advice of your own. Build the relationship from there.
- Get in touch with business owners outside the fitness industry to get an entirely different perspective of running a successful business. This may be precisely what you need to solve an issue. As well as that there is an opportunity to develop a potential business relationship for the future, especially if they are local.
Opening a gym can be tough and the first year of running any small business is a steep learning curve, especially the first time of asking. There will be a lot of challenges and adversity along the way and moments where you feel like giving up. But if you take these lessons on board and anticipate what’s coming down the line, you will be in a better position to handle these challenges and will be better able to handle any adversity that pops up in the future.