Opening a gym can be a very profitable venture. That is, if you do it correctly. I’ve worked with over 500 fitness businesses since starting FitnessTexter in 2011. I’ve talked to successful gyms and I’ve talked with unsuccessful gyms. I could always tell which gym owners had thoroughly planned the opening of their gym from start to finish, and those who had the idea of starting a gym, a little money in their savings account, and started their gym without putting much thought into long-term costs of running a gym.
Here is a list of the most basic, as well as long-term, costs of starting and running a gym. Take a look at the financial calculator to see when your gym will turn a profit.
I’m not an affiliate for ANY of these businesses. They are not paying me to rep their brands or link them(but my 2 friends will buy me a beer). Check my links and you’ll see they don’t have any affiliate tags. Check out other blogs that link equipment companies and it’s almost always an affiliate link.
State Business Incorporation Fees
Starting a business is more than just buying a location, putting up a sign, and having people flood in your doors. There’s a lot that goes into the pre-starting phase of business. First and foremost, you’ll need to incorporate your business in your state, as well as get a federal Employer Identification Number (EIN) number for your business. Incorporation costs money, whereas the EIN number is free. Even if you don’t anticipate having employees at the start of opening your gym, it’s still a good idea to get one.
Building Your Gym’s Website
Have you seen some of the gym websites out there?!? Yikes! They’re horrible. In today’s Google lifestyle, you can guarantee that a person is going to creep your website and Facebook page before they even think about stepping foot into your business. If your website is ugly, you might as well just give up. A good website is going to run you a couple thousand dollars, but it’ll pay for itself 10X when it convinces people that your business is the real-deal. Those cheap-ass online website builder sites are going to produce a cheap-ass website that will diminish your brand before you’ve even had time to build it. Holler at my good friend Mat Vogels if you want a sexy website. The guy is a design genius and usually has stuff done within the month.
Pay Attorney for Waivers & Contracts
Here comes another money-pit; lawyers! You probably just said to yourself, “I don’t need a lawyer, I’ll do it myself.” Here’s what could happen when you do it yourself. Lawyers exist for a reason; they help businesses protect themselves from lawsuits, the government, the IRS, you name it. They’re your business body guard. Ask around on Facebook and someone will surely have a legal referral they can give you. I used a lawyer in NYC to write just one of my business contracts, and it cost a $1000. Your savings account will get depleted pretty quickly, but it’s worth it in the long run. You might be able to find a free gym liability waiver online, but it only takes one typo for a sneaky member to find a loophole and nail you with a lawsuit.
Buying Business Insurance
Gyms are inhernently dangerous. People are exerting themselves beyond their normal levels. Because of this, someone might get hurt and make a claim against your gym. Even if it was a normal-use injury, it’s still a possibility. Even worse, what happens if you have an equipment failure injury that wasn’t covered in your membership waiver? It’s best to get some quality business insurance to cover your butt. A good friend in Denver, Whitney Smith, has been in the commercial insurance industry for years. She underwrites a lot of big Denver businesses. Give her a ring and tell her Patrick from FitnessTexter sent you (then she’ll have to buy me a beer!). I honestly can’t tell you all the reasons why you need business insurance, I just know that if you don’t, one bad accident claim can bankrupt your business.
Leasing Fitness Center Location
Now you’re past most of the boring parts of starting a fitness center. Once you get through the lawyers, the incorporation, the insurance and the website design, you get to start doing the real work; finding a spot to build your gym. There’s a good chance you already have a location eyed up, but if not, have no fear, the internet is here to help. I use CityFeet for my commercial property searches, but you can also use LoopNet; either will do. A word of warning; fitness businesses aren’t the safest business bet, so many commercial landlords are hesitant to lease their facility without a healthy security deposit. If you intend to build out the facility, you’ll need to find a commercial contractor as well. As I said at the beginning, starting a gym ain’t cheap.
Buying Weight Lifting Equipment
Okay, so you’ve got the lawyer stuff done, set your business up legally, now what? Well, it’s time to spend even more money. This time, it’s gym equipment. First and foremost, think about what kind of gym you’ll be starting. If you’re running group classes, you’ll need enough equipment for every single person to be doing the same thing as one. That means if you have classes of 15 you’ll need to have 15 squat bars, 15 sets of weights, 15 weight belts, etc. You get the gist. Classes are a great gym model, but they can also be more expensive to start. If you’re opening a “do-it-yourself” gym like Crunch Fitness, then you’ll need to buy a pulley-based equipment. This is safer for your client to use and will(hopefully) lead to less injuries. Rogue Fitness is a big supplier of many CrossFit boxes. PreCor is a big name for your do-it-yourself gyms, and ProMaxima sells about everything.
Purchasing Gym Management Software
Up there with purchasing your gym equipment, you’ll most likely need to purchase the gym software to run your business. This software takes care of member checkin, billing, email updates, credit card reminders, class scheduling, and pretty much anything else you can think. They’re not cheap, but they make running a gym a lot easier. The big names are MindBody and ZenPlanner, but GymRXSoftware out of Colorado has sick prices and great reviews. Support the little guys!
Paying Employee Wages & Benefits
Unless your business is just going to be you, there’s a good chance that you’ll need to hire a few people. Ideally you’ll be able to have your significant other help out, but even so, having someone at your gym during all open hours is going to be a necessity. Payroll doesn’t have to be that nerve-wracking. However, when it comes to running a business, there are times when you do it yourself and there are times when you pay the pros to do it. Payroll is one of those jobs. People like getting paid on time and if you don’t pay them on time, you’ll have trouble in the end. ADP is obviously the biggest player in the payroll world. I think they ran the payroll for most restaurants I worked at during college. ZenPayroll seems like a much more “hip” payroll company. I personally love using Intuit for all my tax stuff, so I’m sure their Intuit Payroll is solid.
Tracking Your Business Finances
Since I was already pimping them in the last section, I might as well just say that Intuit Self-Employed is absolutely AMAZING when it comes to running a business. You connect your bank accounts and credit cards, and it automatically tracks your monthly income and expenses and even helps you pay quarterly taxes. You’re paying quarterly taxes, right? If you’re lucky enough to own a business (and not have any employees), then it’s for you. If you have employees that aren’t 1099 contractors, you’ll need to find a better expense tracker. PaySimple, my old employer, was actually working on some small business expense tracking stuff back in the day. I bet they’ve nailed it down really good by now.
Advertising & Marketing Budget
Here’s where you get to have a little more fun with your money. Gym advertising and marketing is pretty simple. You need to get the word out about your facility, and then make those people fall in love with your gym. You’ll first want to set up all your social media profiles, but I’d stay away from Twitter. It’s not the best for gyms. A Facebook and an Instagram should suffice. Spend money on getting gym members, keeping gym members, and building community. The rest should fall into place quite nicely.
Paying Your Personal Salary
If there’s any money left over at the end of the month, you get to pay yourself; hooray! I think it’s a smart bet to figure you won’t pay yourself for the first 6 months of running your business. That’s why it’s so important to have a healthy financial cushion before your start your business. You need to take into account all the expected expenses, as well as all those unforeseen expenses that are surely going to add up.
This blog most might have been a bit of a buzzkill for you; but it’s better to be prepared for the difficulties that lay ahead of you. Starting a gym can be a great experience, but be prepared, it’s going to cost money. It might be a good idea to find a business partner so you’re not absorbing all the startup costs yourself. Either way, good luck!
If you can think of any startup costs I missed, please shoot me an email(info@boostfitnessmarketing.com) or leave a comment below. I’ll make sure to add it to the list.
Image Credits:
GrassRootsy.com
The post Basic Startup Costs of Starting a Gym appeared first on Boost Fitness Marketing.