How to Start a Gym

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Quick Reference

Are you someone who always has to fit a trip to the gym into their schedule? Gyms are active, fun environments where you can set and meet personal fitness goals, and it’s easy to see why gyms are appealing to anyone looking to lose weight, get active, or just maintain their health. If you’re familiar with the gym atmosphere and have a passion for fitness, opening a gym of your own could be a promising and rewarding business opportunity.

Read more to learn how to start a gym.

Business Overview

Gyms offer fitness services to the public, and most operate on a monthly or yearly membership basis. Many people use gyms because of their ability to access equipment that they can’t afford to purchase for their homes, and gyms also offer a social factor that can make working out less isolating. Gyms frequently offer specialized classes and events to keep members motivated and draw in new members. With other perks like childcare and personal trainers’ availability, it’s easy to see why gyms have become so popular.

Industry Summary

The gym, health, and fitness club industry is a $36 billion industry, states IBIS World. The industry has grown by approximately 3.5 percent each year from 2014 to 2019, and that growth is expected to continue. In 2019, the industry should bring in 36 billion in revenue.

With the increased demand for gyms, health clubs, and fitness clubs, the number of businesses has also grown to 111,055. Industry employment increased to 808,932. The typical gym has also evolved over this time, with more gyms offering low-cost memberships and extended hours to fulfill customer demand for affordable, accessible fitness options.

Industry Trends

Currently, the health and fitness industry is booming in the United States, according to Forbes. About 20 percent of American adults have memberships to fitness clubs, and there’s potential for that number to increase.

A number of factors are driving this industry’s growth. Health insurers have begun to incentivize healthy lifestyles by paying for gym memberships for people on certain plans. The insured have to prove that they use the plans for the insurance company to continue covering costs.

Societal shifts have also resulted in an increased focus on fitness. The use of wearable health devices, like FitBits and the Apple Watch, allows people to focus on and track their daily activity. Increased awareness of healthy eating can drive people to seek out exercise opportunities and head to the gym.

Budget-friendly gyms are making gym memberships accessible to people who couldn’t previously afford them. The popularity of mud runs and obstacle races also incentivizes people who weren’t previously runners to take up the sport. This all means increased opportunity for gyms.

Who is the target market for your gym?

While most gyms appeal to adults wishing to improve or maintain their fitness, different types of gyms are designed to appeal to different audiences. A niche gym with specialized classes, workout options, and a unique environment will appeal to a different audience than a more general gym will. Factors such as price point, the types of classes, marketing methods, location, and more will all affect a gym’s target market.

Skills, experience, and education useful in running a gym

There’s no requirement to have a business degree to start a gym business, but the process will be easier and smoother if you have certain skills and experiences.

Experience working in or managing a gym. Nothing replaces the value of having been a personal trainer or worked in or managed a gym. This type of experience gives a new gym owner a unique understanding of the challenges of keeping a gym running smoothly.

Athletic and fitness industry knowledge. A background in or knowledge of the athletic and fitness industry can help a gym owner identify market needs and create a gym that meets those demands.

Employee training and management experience. Gyms require multiple staff, and an owner who knows how to train and manage employees can ensure the gym is well-staffed with quality employees. Experience in interviewing and hiring employees will also be valuable.

Customer service skills. Working with customers is a daily aspect of owning a gym. Previous customer experience can be valuable, and a gym owner who is skilled in customer service can teach employees these same methods.

Marketing skills. Any gym requires marketing. An owner who understands their target audience and who can take on or guide some of the marketing efforts can save the business money while improving the effectiveness of the marketing.

 

Costs to Start a Gym

The cost of starting a gym can vary significantly depending on the gym’s size, the amount and type of equipment it contains, its location, and the overall type of the gym. Plan to spend between $20,000 and $50,000 for a very basic facility, and as much as $100,000 to $200,000 for a more upscale facility with comprehensive quality equipment.

Common startup costs for opening a gym include:

  • Lease and facility renovation expenses
  • Gym equipment such as dumbbells, plates, bars, squat racks, isolation machines, mats, bikes, treadmills, rowing machines, etc.
  • Locker rooms, showers, and benches
  • Supplies like towels, chairs, TVs, and sound systems
  • Signage

Steps to Starting a Gym

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your business should be to write a business plan.  Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related:
How to write a business plan
Free sample business plans

Step 2: 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.

Related: Comparison of Business Entities

Step 3: Name the Business

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a gym

Step 4: Select your Location

Leasing a space for a gym can be a significant expense because of the size of the space needed; a large commercial gym will require between 3,000 and 4,000 square feet of space. A property in a popular retail location can help increase gym attendance and memberships since many people seek the convenience of going to the gym on the way home from work or running errands. These high-traffic areas can cost more to lease, but that additional expense may pay off in increased business.

There is a trend for smaller, boutique studios like Crossfit, high-intensity training, etc., which may allow for a lower cost in rent.

Regardless of your facility’s size, it’s imperative that it’s convenient for the customer to get to, whether that means close to home or on their way to or from work, and offers easy parking.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

There isn’t specific licensing to open a gym, but there are general local, state, and federal registrations most businesses will need, including a sales tax permit, Employer Identification Number, and Occupancy Permit, among others.

While not a license, obtaining certifications may be important in demonstrating the credibility of your gym and be able to charge more. The American Council on Exercise (ACE), National Academy of Sports Medicine (NASM), International Sports Sciences Association (ISSA), American College of Sports Medicine (ACSM), and National Strength and Conditioning Association (NSCA) have certification and business certifications and business courses.

Related: Common business licenses, permits, and registrations by state

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 to start a gym is another.  Funding to start a gym can be difficult as the costs for renovations and equipment can be quite expensive.  In order to get a loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Get your Marketing Plan in Place

Gyms depend on marketing to bring in new members, and marketing can get expensive. Many gyms use marketing methods such as paid advertising, social media marketing through Facebook, Instagram, and Pinterest, direct mail pieces, flyers, email marketing, and even radio ads. A gym owner may oversee much of the marketing or choose to hire a marketing professional or firm to take on the job.  There is no shortage of competitors from large mega-centers, boutique gyms, and city-funded facilities in most markets. A gym owner will spend a significant amount of their time marketing to new customers and keeping the existing ones coming back.

Related: Low-cost ideas to market a new business

Step 8: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the business’s income and expenses.

Step 9: Get Business Insurance

A gym needs multiple types of insurance to be fully covered:

  • Commercial liability insurance protects the gym if a member is hurt while working out or on the property.
  • Commercial property insurance helps cover the cost of a gym’s equipment, inventory, and the building itself if an event like fire ever damages the business.
  • Worker’s compensation insurance is required to help cover employees if an employee is injured while on the job. This insurance can cover the cost of their lost wages and medical bills.

The cost of insurance policies will vary based on factors like the value of a gym’s equipment, the number of employees, and even the gym’s location. Contact multiple insurance companies to request quotes to better understand the typical policy costs. When comparing the different policies, be sure to consider the premiums, deductibles, and overall quality of the coverage that each policy offers.

Related: Types of insurance your business may need

Step 10: Hiring Employees

Gyms require plenty of staff to keep them running. According to PayScale, the average gym manager salary is $34,328 per year, while personal trainers earn an average salary of $39,498. Group fitness instructors earn about $22 per hour, while front desk receptionists earn about $32,919 per year. These salaries can all vary by location, and an employee’s experience will also affect the salary they can expect to earn.

In addition to budgeting for employee salaries, a gym’s budget needs to include expenses like workman’s comp insurance, paid time off, and unemployment insurance contributions.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your 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 accounting for your business

How much can you potentially make owning a gym?

The profits of a gym vary wildly and are affected by the gym’s size, membership fee, marketing strategy, and more. RDX Sports gathered data from a number of gym owners, all of whom are making over $100,000 per year. The owners interviewed had relatively new gyms, and the salaries averaged out to $143,000.

Remember that the success and profitability of a gym depend on whether it fills a need in the community. Finding a way to offer something that other gyms don’t need, like specialized programming or programs for children, can help drive business to a gym. Your profitability and salary will also be affected by any debt you may need to take when starting the gym.

Things to consider before starting a gym

Starting a successful gym is a serious undertaking, but it may be a rewarding business if you’re passionate and knowledgeable about fitness. Because the health and fitness industry is thriving, new gyms continue to open, meaning there’s competition in the market. For a gym to survive, it needs to differentiate itself from the competition. From the atmosphere to the course offerings to other membership incentives, finding a hole in the market and designing a gym to fill it can contribute to the business’ success.

With the intense pressure from competitors aggressively lowering prices on memberships, it’s critical to add services such as personal training, massage, sauna, or specialty classes.

If the challenge of finding the perfect location, branding and developing your gym, sourcing quality equipment at affordable prices, and coming up with a marketing plan sounds overwhelming, you may want to consider franchising a gym. National chains offer franchise opportunities that take some of the legwork out of starting a new business. There will still be plenty of challenges to overcome, and you’ll have less control over some aspects of the business, but this may be an appealing way for you to start your new business.

 

Resources:

Association of Fitness Studios
International Health, Racquet & Sportsclub Association
National Gym Association, Inc.