People join gyms and pay monthly fees all the time to lose weight and get in shape. However, the business model of gyms revolves around more than one source of revenue. Streams of revenue can include:
- Gym memberships
- Personal training
- Fitness classes
However, there is much more required when starting your own gym business plan. You have to make sure your company is legally compliant, planned out, and properly registered.
Keep reading to learn how to start your own gym and whether this adventure is right for you.
Step 1: Plan Out the Business
To be successful as an entrepreneur, it is important to lay out a clear plan. Starting your own gym business plan can be complicated, but this helps you figure out specific details of your business and any potential obstacles.
Before even thinking about the question ‘What do I need to open a gym?’ there are some vital logistical obstacles to overcome. Here are a few important questions to consider:
What costs are required to open a gym?
To start your own gym, the start-up costs can be significant. Some modest gyms may require $200,000 to $400,000. Large gyms with many classes and services can easily cost over a million dollars. Buying a franchise can be less costly, but there is a franchise fee, sometimes making it expensive to get started there as well.
If you want to scale your gym in the future, it can require a lot of money. To keep your gym modern and ready for customers, it has to have everything. Your gym should include a large range of equipment, free weights, and cardio equipment. Before considering how to open a gym, think of whether you can afford to do so.
What recurring costs are there for a gym?
The initial investment in gym equipment is the largest initial expense in starting a gym business. However, ongoing expenses could include equipment repairs or updates. The next-highest costs are the labor costs of your workers and the monthly rent bill. These recurring costs can increase if you hire more workers, offer more services, or make any renovations.
How do gyms make a profit?
Usually, gyms collect standard monthly membership fees. To make extra money, gyms offer other services as well. Extra revenue comes from various classes from inside the gym. Some of these could include yoga, Pilates, or Crossfit.
While gym memberships are charged every month or sometimes just annually, the cost of these extra classes can be charged up-front, and more frequently.
How can gyms be more profitable?
It is easy to generate more profit from your gym. As the gym space expands, you can rent out parts to other business owners. By doing this, you can create another steady, reliable stream of income. Gym owners might lease their space to chiropractors, tanning salons, or even massage therapists. By opening your own gym, you can create extra sources of income for yourself and others.
How much are you able to charge customers?
Usually, gyms charge between $20 and $50 per month for their membership fees. They also require their members to sign onto a one or two year contract, with extra fees to initially begin. Sometimes, gyms offer special deals for people that pay for a full year in advance. In the high-rent areas, you are able to charge more for monthly fees, classes, and other services like tanning.
What will your business’s name be?
If you do not already have a name in mind when starting your own gym, picking the right one can be frustrating. You can use business name guides or even use a name generator to help brainstorm some ideas. If your company is a sole proprietorship, it might be good to have a business with a name that is different than your own. When you think of the question ‘What do I need to start a gym?’ having a catchy business name is the first step.
Before registering the name of your company, do some research. Check the state’s business records, federal trademarks, social media platforms, and web domains. Doing your due diligence will prevent legal challenges from happening later. Remember to register your domain name before someone else has the opportunity to. Once you have done this, you also might want to set up a professional email account that includes your new name.
Step 2: Create a Legal Entity
There are several types of business structure. These include sole proprietorship, partnership, limited liability company (LLC), and corporation. By establishing a legal entity like a sole proprietorship, you will be able to avoid being held personally liable if your business is ever sued. You can either start an LLC by yourself by paying some fees or hire a business formation service. When thinking of the question ‘What does it take to open a gym?’ it is important to make sure your company is actually a legal business first.
It is important to remember that LLCs require registered agents. Usually, formation packages for LLCs include these services for a year. Alternatively, you can act as your own registered agent or choose to hire another.
Step 3: Register the Business for Taxes
Before ever starting a gym business, you are required to register for taxes at the state and local levels. To do this, you need to apply for an employer identification number (EIN) for the company. This number is like a social security number, but it is assigned to a business. They can be obtained for free online, by mail, or by fax. Once you have done this, it is easy to legally open your business.
Step 4: Open Business Credit Cards and a Bank Account
Opening your own gym requires a lot of financial responsibility. This is one of the most important things to consider when thinking of how to open a gym. To protect any personal assets you may have, you need to open business banking and credit accounts. By accidentally mixing business and personal accounts, your belongings may be wrapped up in a legal battle. Some of your valuables that could be at risk include your home or car.
Also, you can learn to build business credit to get more advantages. By getting a business credit card, your company’s credit history will build up over time. Once your credit gets higher, you can qualify for better interest rates and higher lines of credit. Your business accounts also make filing for taxes much easier.
Step 5: Set Up the Business’s Accounting
To comprehend how your business is performing financially, you need to have detailed accounting. Make sure you are keeping accurate records of your sources of income and expenses. If you are not sure how to do this, hire a bookkeeper or accountant. Having the right financial information is crucial when thinking of how to open up a gym.
Step 6: Obtain Licenses and Permits
Before you can open for business, you need to have the right permits and licenses. If you do not do this, you can acquire expensive fines, and your business could be shut down. For the most accurate information, you should contact the local county clerk’s office.
Here are some types of licenses and permits you may need:
To keep gym-goers focused on workouts, many gyms play music. However, permission has to be acquired from the license holder to play their music in a business. You can get a ‘blanket license,’ which allows you to play a wide variety of songs from multiple recording studios. These licenses are obtained from Performance Rights Organizations, rather than your county.
Certificate of Occupancy
Usually, gyms are run out of renovated commercial spaces or even warehouses. Businesses that have a physical location are required to obtain a Certificate of Occupancy. This certificate confirms that every regulation, zoning law, and building code has been satisfied.
Typically, it is the landlord’s responsibility to get this certificate. Due to this, make sure your landlord has one before signing any lease. Also, if a major renovation is completed, a new certificate has to be issued.
Visiting the gym and using various equipment can be risky. These risks are even greater for people with medical conditions or for those who lift heavy weights. Because of these risks, gyms should have their members sign a waiver that accepts personal responsibilities for injuries sustained at the business.
Step 7: Purchase Business Insurance
For your gym to operate legally, you need to have business insurance. In the event that your business experiences a loss, business insurance can help protect the financial wellbeing of your company.
Depending on the risk of the business, insurance companies offer various policies. If you don’t know exactly what risks your business could face, start with general liability insurance. Most small businesses require this coverage, so this is a good place to begin.
Another insurance policy to consider is workers’ compensation insurance. If your business wants to employ people, your state will most likely require you to purchase this policy.
Step 8: Define the Brand
To help stand out amongst your competitors, you need to build a brand for your company. This includes what your business stands for, and how it is perceived by the public.?
Promoting and Marketing Your Gym
To help attract new members to your gym, advertising locally and word-of-mouth is two ways. If a gym has just opened, they might offer special discounts for members or take out ads in the local paper. Your local newspaper can help a lot in spreading the word to people without technology. Free personal training services may even be offered by some gyms if it helps attract new gym-goers.
How to Gain Repeat Customers
Since gyms are often seen as a commodity, you have to find a way to differentiate your business. Big fitness chains target specific people and demographics. You can use these same tactics in your own gym. You could market your gym as a specialty gym for women, or other targeted groups.
Many gym owners would respond to “what does it take to open a gym?” with: “a lot of work.” This is because starting your own gym requires a lot of financial and personal responsibility. Additionally, it is difficult to attract customers and keep them coming back to your gym. However, once you get a customer base, the business will be a breeze.
Step 9: Establish an Online Presence
By having a website, customers will easily be able to learn about your gym. Be sure to include all the services you offer, like fitness classes and tanning salons. The more you have at your business, the more attractive it is to customers. This is also the place to advertise special deals and other unique aspects of your gym to your consumers.
You can also create social media pages to build more personal relationships with customers. Try to create a profile on every platform to build the broadest customer base possible. You can even try hiring social media influencers to promote your brand. When you think ‘what do I need to open a gym?’ think of customer engagement and a strong online presence.
Is the Gym Business Right for You?
To understand how to start your own gym, it is important to research the whole process. When considering how to open up a gym, you should think about your physical location, business permits, potential customers, and more. Making a small mistake when setting up your business can cost you down the road.
Many gym owners report getting to work at 5 A.M. and not leaving until after the sun has gone down. Clearly, this line of work requires a great work ethic. However, you can learn many valuable skills while building your fitness company. If you are passionate and dedicated to the gym business, then you will be destined to succeed.