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How to Start a CrossFit Gym

How to Start a CrossFit Gym

Are you a CrossFit fanatic and spend a copious amount of time at the gym? You may have paid your bill and wondered what it would be like to be on the receiving end of all those monthly payments the gym collects. If you have a passion for CrossFit and have some knowledge about it, opening your own CrossFit gym to utilize your skills may be a great new career choice and a way to be your own boss.

Business Overview

CrossFit is an intense style of working out, doing multiple types of exercise in a short amount of time. Exercises include various types of weight and strength training, cardio, and gymnastics. A CrossFit box has the facilities and equipment for CrossFit workouts, and members pay a monthly fee which is generally higher than fees for traditional types of gyms.

Industry Summary

According to Statista, the health and fitness club market in the United States reached over $96 billion in 2019, increasing at a steady rate previously year after year. According to the Global Health and Fitness Association IHRSA, there were over 41,000 fitness centers with over 73 million members in the U.S. as of January 1, 2020.

The health and fitness club market suffered due to the pandemic and safety concerns and shutdowns, however, IHRSA reports that health clubs retained 7 out of 10 members in 2020. Health and fitness, however, continues to be a priority for many people and should continue to thrive and grow.

CrossFit gyms have been and continue to be a trend in the industry. According to a University of Tennessee report, there are over 14,000 CrossFit gyms (called boxes in the industry) worldwide with over $4 billion in revenue.

Target Market

Your target market will be people interested in health and fitness who follow trends in the industry and are willing to pay a premium membership fee for a CrossFit gym as opposed to a traditional gym.

Skills, Experience, and Education Useful in Running a CrossFit Box

There are several specific skills and education that you will need to open a CrossFit gym.

  • Certification. At a minimum, you will need to have a Level 1 CrossFit trainer certification.
  • Affiliation. You’ll need to be a CrossFit affiliate. You can’t just open a gym and call it a CrossFit gym.
  • Knowledge of your market. You need to know your target market in your area and how to market to them.
  • Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • Customer service. You’ll need to be able to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.

Checklist for Starting a Crossfit Gym

Starting a crossfit gym can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your CrossFit gym should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you to think through all the aspects of the business and then serves as a guide as you begin.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect CrossFit gym name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Related: Tips for naming a gym

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a crossfit gym, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

Your gym should be in a convenient location with easy access for your target customers. You should also avoid being near another gym so that there is less competition in your specific area.

Make sure you have adequate locker rooms with secure lockers, shelving, toilets, and shower facilities too.  If your existing facility doesn’t already have this, be sure to get a few quotes as it can be expensive to add.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Each state has different requirements regarding licensing for a gym. Most commonly, there are specific requirements for what can be included in a membership contract. There are additional state requirements if your gym offers personal trainers to be aware of as well.

At the local level, some cities will need to obtain special permits and follow certain requirements.

Last, there are some general business licenses needed such as a local business license, sales tax number, and Employer Identification Number.

Related: What types of licenses does a CrossFit gym need?

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding from lenders or investors to start a CrossFit gym is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Some entrepreneurs use their own funds, a home equity loan, or credit cards, but you are putting your funds at risk and will have payments that may or may not be more than those of a business loan.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

A CrossFit gym will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a CrossFit gym include social media marketing and online advertising. Developing a website can be a significant expense, but it can also give your CrossFit gym greater visibility online.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a CrossFit gym. A few of these include:
General liability insurance can help protect you from third-party claims of bodily injury and property damage.
Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Property and casualty insurance protects you if your equipment is damaged.

The cost to insure a CrossFit gym will vary depending on several factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: What types of insurance does a gym need?

Step 10: Hire Employees

You will need employees and CrossFit coaches to help run your gym. It’s important to know that all coaches and trainers will need to have their CrossFit certification before training, under CrossFit licensing. You’ll have to decide if you want to pay for their training or have them do it on their own.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up Membership Software

Good software programs will make your box easier to manage. These specialty CrossFit systems help manage setting up memberships, getting paid each month automatically, social integration, and WOD tracking.

Two popular programs are WODIFY and ZenPlanner.

Step 12: Set up an Accounting System

Setting up an accounting system for your CrossFit gym is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a CrossFit gym?

Here are the typical costs you will face when you open a CrossFit gym.

– CrossFit certification (use of the CrossFit brand, logo, and marketing materials) $3,000 (annual fee)
– Mortgage, lease or rent deposit $750-$6,000
– Utilities $150-$500 per month
– CrossFit gym equipment such as barbells, bumper plates, dumbbells, kettlebells, rowing machines, medicine balls, jump ropes, climbing ropes, gymnastic rings, and lots more $5,000-$25,000
– CrossFit affiliate fee $3,000
– Insurance $600-$1000

How much does a CrossFit gym owner make?

The monthly membership fee for a CrossFit gym is $100 – $200, so the number of members that you can acquire will drive your revenue. If you charge $150 per month and have 200 members, you can make $30,000 per month in revenue. Keep in mind, though, that you will have significant ongoing expenses. The average CrossFit gym makes about $40,000 per year in profit.

Are there grants to start a CrossFit gym?

It’s extremely rare to find a grant to start a CrossFit gym. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a CrossFit gym?

The NAICS code for a CrossFit gym is 713940, which is classified under Fitness and Recreational Sports Centers.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours