The fitness industry is quite lucrative. The IHRSA estimated the fitness industry revenue at $94bn in 2018. For comparison, the revenue of the vegan food market in 2019 was $11.3bn.
That’s why many people – even non-fitness professionals – are tempted to become gym owners. But 81% of fitness businesses fail in the first year. Those are scary numbers. So if you want to start a gym from scratch and do it right, then this guide is for you.
In this article, we’ll cover the step by step process that’ll help you start your gym business from the ground up. And also share the common mistakes entrepreneurs make so you can avoid them.
Skip ahead to:
- Why should you start your own gym from scratch?
- Biggest mistakes when starting a gym from scratch
- to start a gym from scratch
Why should you start your own gym from scratch?
If you’re a personal trainer then owning a gym can help you create your own brand. It can also offer you more creative freedom as compared to what you’ll get as a trainer in someone else’s gym. Your own business can last for years, even when you’re no longer coaching or training clients yourself.
Starting a gym from scratch is a better option for some because buying an existing gym may require more money upfront. Whereas, you can start a new gym from a small rented studio depending on how much funds you have and scale it as you go.
But before you start working on your business plan, you should also know the risks involved with fitness studios.
These can be:
- Injuries on the premises
- Liability from personal trainers
- Membership data breaches
Biggest mistakes when starting a gym from scratch
Successful business owners learn from mistakes. But these aren’t necessarily their own mistakes. So before starting your business, you should do your homework and observe what others have done wrong so you can avoid those mistakes.
Here are some common pitfalls that you need to be aware of when starting a gym from scratch:
- Incomplete business plan or static plan with vague goals.
- Not doing effective market research
- Choosing a bad location with restrictions on large gatherings, parking issues, rush time traffic and safety issues.
- Not focusing on marketing the business.
- Lacking knowledge about required permits, licenses and certifications.
How to start a gym from scratch
Now that you have a general idea of why you should start a gym business and what you need to be aware of, let’s dive into how you can do it.
Here’s your step-by-step guide on starting a gym from scratch:
Create a business plan for your startup
Most successful businesses start with solid business plans. To create one, you’ll need to identify your business model and business needs. This plan should outline your goals for your business, and chalk out the actionable steps you’ll take to achieve the set goals.
Some helpful sections you can include in the business plan include financial forecasting, mission statement, objectives such as the average number of sales, active customers, memberships you want to have in a certain time frame and what progress looks like for the new gym.
It doesn’t have to be complicated. All you need is a roadmap of your strategies, goals, dates, milestones, and finances. Also, this plan is not set in stone once you make it. You can revisit it monthly or quarterly to check if you’re on track with your projections and make adjustments as needed.
You should validate your idea either before or during the business planning phase. That should help you with forecasting decisions and minimize the risks involved with your new business. Only about one-third of small businesses survive for longer than 10 years. So idea validation is an important step you shouldn’t skip.
Conduct demographic and market research
After your business plan is set you need to identify your target market. Even if you have a general idea of your demographic, you still need to conduct thorough research to define your customer base.
It helps to be specific about who your new gym is for. That way, you won’t spread yourself too thin trying to cater to different audiences with different needs. For example, you need different fitness equipment for cross-fitters and other fitness enthusiasts, so it might be tough to cater to both of them as a startup.
Remember, you can always expand later and target more people. But start with a niche and establish your small business before broadening your target audience.
Next, you’ll want to do market research on your ideal users. That includes gathering information such as their age, gender, where they live, work and spend their leisure time, what’s their average budget for fitness, their struggles, and what do they hope to achieve from your gym.
You can later use this data to decide on the type of classes you’ll offer, design your commercial gym or wellness center, and find the perfect location for the gym based on parking space and foot traffic.
Calculate startup costs and operational costs
Getting your finances in order is critical for your gym. That includes your business costs, the cost of opening a gym or startup costs, bank loans, and business license fees and so on.
The operational costs include monthly rent, staff, utilities, equipment, maintenance and advertising. Startup costs on the other hand are one-time expenses such as business registration charges, startup insurance fees and fitness equipment charges.
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Discover more You’ll have to itemize every cost involved with opening and operating your gym. It’ll help you keep track of your expenses and allow you to proactively make changes in your business if the expenses get too high.
You also need to understand how you can qualify for a business loan if you need one for your new gym. Your credit score plays a part here, and so does the size of your down payment. It’s best to sit down with an accountant if you feel overwhelmed with the financial stuff.
Figure out your pricing
Your pricing has to be reasonable. It can’t be too high in the beginning because then you’ll have trouble gaining new customers. But it also can’t be too low that you barely survive as a business. Deciding your gym membership pricing is a strategic process where you’ve got to find the sweet spot between breaking even and profitability.
Depending on your customers, you can decide if long-term gym memberships are better or short-term. The ideal customer persona, location of your gym, type of classes you offer all have some role in helping you determine what your pricing can be.
Decide the type of gym
Types of gyms can include commercial gyms, fitness clubs, wellness centers, specialty fitness centers, saunas, and such. You can also categorize your gym according to the type of fitness classes you offer such as cardio, Pilates, and aerobics.
It’s natural to want many customers and the general thought is that the wider your niche, the more people you’ll get. But that might not work for you as a startup. You’ll want to first establish yourself as an expert in one area to attract people to your business, earn their trust and convert them to long-term members.
So it helps to narrow down your niche. Think of it this way; you should have a one-sentence answer for when people ask you what your gym is/will be about.
Get business insurance
Insurance is your safety net. So make sure it’s adequate and it covers all the essentials for your gym such as theft, injury, bankruptcy, and anything else you might need. Certain companies will offer you customized packages so you can include many more things.
The cost of insurance varies widely based on the size of the startup, type of business and level of risk. So you should get quotes from different insurance companies to find the best fit for your gym.
Acquire gym equipment
Based on the type of gym you have, the cost of gym equipment can vary. Treadmills, free weights, medicine balls, pushing sleds, and other fitness equipment are not only expensive to buy but the maintenance is also costly.
There are a few things you’ll have to decide about the equipment. First, decide on what you need. Since a lot of fitness equipment has to be technology compatible, you’ve got to figure out what your gym can accommodate. Also, space can become an issue so you should decide on which equipment is most necessary to have.
Next, you need to figure out whether to buy or lease. Both have their pros and cons so you should check out different vendors and see what works for you.
Remember; never opt for low-quality equipment. That can lead to injuries and a bad reputation for your business.
Hire staff
All gyms need fitness instructors, personal trainers, janitors, and management staff. You might not need trainers in the beginning if you’re an accredited trainer yourself. But you still need some staff to manage the gym.
You can hire people on a preliminary basis first to test them out and see if they’re a good fit. Your team should be reliable and on the same page with your vision, especially if they’re the ones interacting with the customers.
Start with a small team that you can easily manage. Then expand as your gym business grows.
Market your gym
Marketing is one of the key aspects of making your gym business successful. You need targeted marketing according to your users’ demographics and geographics. Consider outsourcing it to a professional if you need to.
Although there are various platforms you can use for this, social media marketing takes the cake. That’s because most gym enthusiasts – Millennials and Gen-Z – are avid social media users. The #fitness is used over 180 million times a day on Instagram.
Some evergreen marketing strategies for your gym include membership discounts and referrals. You can also gather testimonials and find influencers to boost your business online.
Keep it going and growing
A gym business requires a lot of hard work and consistency. But it offers a great ROI when you do it right. So be prepared for slow periods and lost customers. Go back to your business plan when you have to and see what you need to work on more or what needs to be changed.
You have to keep at it and work strategically for some time to grow your gym business. But you’ll eventually have a snowball effect and scale if you follow the steps and do the work.
In summary
Gyms are a profitable business. Owning and running a gym startup can be tough, but there is fitness management software that can make things much easier for you. These can help you get statistics on your customers, offer unique services, and increase your revenue.
Your customers will appreciate you if you can make it easy for them to track their fitness goals, get in touch with instructors, and book classes. You can do all that and more with management tools.
