How to start a gym business in 8 steps
The COVID-19 crisis has made the whole fitness world hold its breath. By the end of 2020, 17% of clubs closed their doors permanently, and over 44% of the fitness industry's workforce lost their jobs, according to the Global Health and Fitness Association. Most people would see those numbers as doom and gloom, but an enterprising entrepreneur views change in the marketplace as a chance to innovate.
Here's a step-by-step guide, so your gym doesn't end up being part of the 50% of small businesses that fail in the first five years. Read on to learn strategies to launch your gym and combine your love of fitness and helping people into a successful venture.
1) Create a gym business plan
"Forget Plan B. To test yourself and grow, you have to operate without a safety net."
Arnold, not everyone can work with Terminator-like efficiency. For us mere mortals, we have to come up with the plan first. So when you're ready to Schwarzenegger a roadmap, here are questions to ask yourself before you start a business:
- Executive Summary: How would you describe the business and your potential success?
- Overview: What's the business's background, legal structure, and other key attributes?
- Industry Analysis: What does market research reveal about the gym industry in your area, including size, opportunity, and current trends?
- Competitive Analysis: Who are your competitors, and what are their strengths and weaknesses?
- Marketing: What is your marketing strategy to reach potential customers?
- Management: What unique skills do you bring to the business?
- Operations Plan: How will you manage the day-to-day tasks of the business?
- Financials: What are your estimated revenues, expenses, and profits for each of your first five years?
2) Find your gym niche
Your niche is your area of specialization that distinguishes your company from the competition. In a noisy marketplace, a niche is like screaming your potential customers' names. It helps them turn their head to focus on your business.
Brand-new gym businesses often make the mistake of accepting every paying person with a pulse. Each person who comes to your gym should fit the mold of the people you're trying to help. Unfortunately, saying yes to everyone means saying no to those most suited for your gym and hurting your long-term retention rates.
Your research from your business plan phase should help you understand the individuals you want to attract, often known as your target audience. In addition, determining the area's demographics, picking the type of gym you want to start, and focusing on your expertise helps you attract the right clients.
Check out the following niches to decide the kind of fitness facility you want to create.
Family fitness center
- Athletic and country clubs are examples of family fitness centers.
- They often provide a range of exercise choices, such as group fitness classes, personal training, and strength and cardio equipment.
- Children, teenagers, adults, and seniors may all work out in family fitness and wellness facilities.
- These health clubs often provide youth courses and programs such as daycare, sports clubs, swim lessons, and summer camps for kids.
- Other amenities, including massage, sauna, steam rooms, and tanning, may be available for a charge.
Specialty fitness center
- Typically, this niche concentrates on a single specialized fitness activity or class such as aerobics, boxing, cycling, dancing, Pilates, and yoga.
- During the week, specialty fitness facilities often offer several classes with varying degrees of intensity.
- Instructors are qualified for a specific fitness activity.
- Because of the boutique style, unique design, and excellent instructors, specialty fitness facilities are typically more costly.
- Monthly packages or subscriptions are often available as an alternative.
- Traditional gyms often provide a range of exercise choices in one place, such as fitness classes, personal training, and strength and cardio equipment.
- They may offer childcare, massage, sauna, steam rooms, tanning, and other services.
- These extra benefits are often available for a charge.
Wellness center and medical fitness
- These fitness facilities offer physical therapy or other medical services to clients to help them manage, recover from, and avoid health problems.
- Wellness centers often employ professional personnel that specializes in client management, tracking, and measurement.
- Besides group exercise courses and gym equipment, they often provide a range of educational programs for physical and mental health.
3) Choose your gym location and fitness equipment
Many gyms start because personal trainers grow beyond basements, parks, or a school's borrowed weight room. They transform a side hustle into a full-time endeavor. Before they know it, they need to expand to a fitness studio. So what should you think about when finding a spot?
Well, people can't buy a gym membership if your location has poor accessibility. In addition, a variety of factors influence what commercial space you pick. Here are a few things to consider:
- Adjacent tenants. Your brand and message are affected sometimes by things beyond your control. So, you don't want to set up shop next to a smoke shop, pizza place, or liquor store.
- Clean sightlines. They help gym-goers see what equipment's available and make it easy for staff and personal trainers to watch the facility and address client needs.
- Competition. Don't choose the same plaza as other gyms.
- Foot traffic. A centrally located place is always a boon, but these spots usually come with a high price tag.
- Natural light and high ceilings. These are the keys to making even a tiny space feel accommodating.
- Noise. A silent gym is an oxymoron, so pick a place where you won't be a nuisance to the community.
- Parking. How will people get to the gym? Will they walk from nearby housing, take public transit, or get dropped off by their parents?
- Property manager. Facilities with on-site management or building maintenance will make your gym run smoother if you need a key for a new staff member or have a quick plumbing, electrical, or HVAC issue.
- Rent and utilities. You should factor in rent, water, heating, and cooling because these are the highest fixed costs that eat into your cash flow.
- Restrooms and locker rooms. Bathrooms add many maintenance tasks for your staff. Are community restrooms available?
- Signage. If you build it, they won't come, unless they see your sign.
- Square footage. Anything less than 3,000 square feet might feel claustrophobic, according to some industry experts.
- Waiting space. If your gym caters to young athletes, having a place for parents can help ensure your training attention is on the kids, not the parents.
Once you decide the location you're leasing, here are some items for your shopping list:
- Adjustable weight benches
- Battle ropes
- Boxing equipment (gloves, heavy bags, headgear, target mitts)
- Cable crossover machines
- Calf machine
- Cardio equipment (such as bikes, ellipticals, rowing machines, and treadmills)
- Chest press machine
- Dip bars
- Flooring (antislip, durable, insulated, shock-absorbing, temperature-proof)
- Foam rollers
- Free weights (such as dumbbells and barbells)
- Glute ham developers (GHD) machine
- Gym management software
- Hammer strength machine
- Jump ropes
- Lat pulldown machine
- Leg abduction machine
- Leg curl machine
- Leg extension machine
- Leg press machine
- Medicine balls
- Pec deck machine
- Pilates equipment
- Plyometric box
- Power racks/full racksPower towers
- Preacher curl bench
- Pull-up bars
- Resistance bands/tubing
- Roman chair
- Sound systems
- Squat racks/half racks
- Stability balls
- Suspension trainers
- Weight vests
- Yoga mats
4) Figure out your financial plan
Many new gym owners fall into the trap of omitting this step. However, accounting and financial oversight can move a business from fledgling to flourishing. If number-crunching sounds like calculus to you, then lean upon a bookkeeper, software, or accountant. Below are questions to help you do the math.
a) How much does it cost to start a gym?
According to Entrepreneur.com, starting your own gym costs between $10,000 and $50,000. But the pricing can go up to a million dollars, based on the type of gym, location, and whether you're building an ultramodern facility. For example, specialty gyms are almost always cheaper to start than traditional gyms, and you'll pay more to launch the same gym in Manhattan, New York, than you would in Manhattan, Kansas.
b) How do you finance a gym?
You could have started as an outgrowth of your personal training side-hustle, or maybe you want to buy a franchise. But perhaps your piggy bank doesn't hold five figures. So here are some ways to pay the startup costs for your commercial gym:
- Ask friends or family
- Crowdfund with community help
- Finance equipment and with vendors
- Find investors
- Open a line of credit
- Secure a personal or business loan, such as a Small Business Administration (SBA) loan
- Use personal or business credit cards
c) How will your gym make money?
Gym membership usually increases in January, peaks in the second quarter, and then declines throughout the summer months. As a result, the gym industry is cyclical. Most gym memberships are paid monthly, with added income (such as special exercise classes) collected monthly or as a one-time fee. Other income sources include:
- Chiropractic services
- Juice bar
- Massage services
- Personal training
- Supplement sales
- Tanning beds
The typical gym's business model involves collecting membership fees and supplementary income for classes, like:
- Aerobic classes
- Circuit training
- Dance classes
- Jiu-Jitsu training
- Military fitness
- Spin classes
5) Earn your personal training certification
Your business plan research would help you uncover the qualifications, certifications, and expertise needed to open your club. Your customers will rely on you to make them look good and keep their bodies in optimum health.
You may select from various personal trainer certificates with specialty programs such as aerobics, Pilates, or yoga. Also, you’ll ensure that any employees you recruit are appropriately certified. Below are some of the most common personal training certification programs.
- American Council on Exercise (ACE)
- American College of Sports Medicine (ACSM)
- Athletics and Fitness Association of America (AFFA)
- International Sports Sciences Association (ISSA)
- National Academy of Sports Medicine (NASM)
- National Council for Certified Personal Trainers (NCCPT)
- National Council on Strength & Fitness (NCSF)
- National Exercise & Sports Trainers Association (NESTA)
- National Federation of Professional Trainers (NFPT)
- National Strength and Conditioning Association (NSCA)
6) Get your paperwork in order
Your new business is moving from a dream to a reality.
a) Register your gym with the state
Before you start helping others meet their fitness goals, you must set up your business entity with the state and local business authorities. Start by selecting the type of business structure for your cleaning business, such as sole proprietorship, limited liability company (LLC), or corporation.
b) Apply for your EIN
Your Employer Identification Number (EIN) identifies your business for tax purposes. Fortunately, it's free and easy to get your EIN from the IRS.
c) Meet licensing requirements
"No pain, no gain." This step separates dabblers from the doers. Below are some permits and licenses that may be required depending on what services you offer and the type of gym you run.
- Business license or permit. Almost every business must have a standard license to operate.
- Childcare license. If you plan to offer a play area or childcare, you'll likely need this.
- Healthcare services license. You may need to meet HIPAA regulations and other medical-related laws if you offer these services.
- Seller's permit. You may need this to sell goods or services.Food-handling license. This is for anyone who handles food, so you and all your employees will probably have to get these if you sell supplements or have a juice bar.
- Food safety certification. A single employee or all employees may need this to sell food.
- Music licensing. You can either go through a company or get blanket licensing with music organization ASCAP or BMI.Sign permit. You may need a permit for your sign, or you can hire a sign company to check this box for you.
- Pool and shower regulations. Pools and showers have specific permitting requirements for safety and cleanliness.
- Spa and massage license or permit. You'll need this if this is a revenue source for your gym.
- Zoning, building, fire, and occupancy permits. Your municipality likely requires these permits and grants you a Certificate of Occupancy. Typically, you'll need to show sufficient fire alarms, extinguishers, sprinklers, and adequate escape routes to ensure the safety of your guests.
d) Get gym business insurance
Gyms are places where people push outside of their comfort zones. There's always the potential for the unexpected, so insurance helps you protect your gym members and staff. Every child fitness center needs dependable small business insurance—that's why it's crucial to shop around to lock in the best deal.
Below are key coverages for gyms and fitness instructors:
- Workers' compensation. This coverage protects your employees if they get sick or injured while working in your gym. Every state requires worker's comp, and the consequences of skipping this coverage could cause the state to close your business. (You can get a quick estimate on what you'd pay for workers' comp with our 60-second workers' compensation calculator.)
- General liability insurance. This policy protects your gym if you're sued for an injury or property damage claim. (Expensive lawsuits can quickly shut a gym down.)
- Property insurance. This policy protects your fitness equipment.Business interruption. Supplements your lost business income if you must temporarily suspend the fitness business's operations for any reason.
- Business Owner's Policy (BOP). This policy includes general liability, business property insurance, and business interruption coverage—all in one bundle for gyms.
Depending on your specialty and the type of gym you run, here are:
- Cheerleading and gymnastics insurance
- Dance instructor insurance
- Martial arts insurance
- Pilates insurance
- Yoga insurance
7) Hire your first employees
As soon as you add your first team member, you'll need workers' compensation insurance to operate legally.
After finishing up the proper paperwork and legal requirements, you can find a checklist of what you need before hiring from the Small Business Administration. You may want to start as the sole trainer and add a front desk person. Other gyms rent out space to personal trainers and massage therapists. Positions to consider in your club include:
- Certified personal trainers
- Front desk staff
- Group fitness instructors
- Maintenance personnel
- Marketing and outreach manager
- Membership sales manager
- Operations manager
8) Spread the word about your new gym business
Before creating your marketing plan, make sure your gym's focus is on retention. Building a solid base of happy customers can make sure you have the revenue to experiment. Often a suggestion box or app for complaints and comments can help.
After you've got the bullseye on retention, you can venture out to get fresh blood in the doors. Take a look at these winning tactics to attract new members:
- Build a website. Get the URL for your business name. A service with templates like Weebly or Squarespace can make this easy.
- List your business on Google and Yelp. Sign up for your Google My Business and a Yelp profile.
- Launch your social media profiles. Get your unique Facebook, Twitter, LinkedIn, Instagram, Pinterest, TikTok, and other handles relevant to your niche.
- Create word-of-mouth. Small business owners recognize word-of-mouth advertising is king, and the best way to place your business on the throne is superb service and ecstatic members. Ask satisfied clients for reviews or even video testimonials that you can post to your social media profiles and website.
- Offer discounts and guest passes. Let your members grow your business with guest passes. Give price breaks to members as part of a loyalty program or after they refer a new client for enrollment.
- Hire an influencer. Can a free membership, swag, or good old-fashioned bribery get a local fitness celebrity to check out your gym? Once they post, parts of their audience may try out your club.
- Attend local fitness events. To promote your business, support a 5k, set up a booth at the Health Expo, or advertise at a local sports match.
Bonus: Check out these tips for running a successful gym business
If you're willing to put in the work, you can breathe easy when launching your own gym. When you're ready to inhale some more knowledge, head over to:
- Fitness Business University Site and Podcast: Vince Gabriele is a New Jersey gym owner who understands how to attract new clients. He'll help you grow your business and find a sustainable income.
- The Global Health and Fitness Association: You can join "a global community of health and fitness professionals committed to building their businesses and improving their communities' health and well-being."
- The American College of Sports Medicine: If you want to keep up to date on the newest research and advances in health and fitness, join ACSM.
Yes, this article was a lot to absorb, so here's one way to stay sane as an entrepreneur.
If you're still crazy about starting your own gym, you can get business insurance with Huckleberry in about the same time it takes to finish a few sets of your favorite exercise. (Getting a quote is free, easy, and 100% online.)