The world of sports is continuously evolving and changing. With society becoming more and more health-conscious, the demand for gyms has been on the rise.
Every year the number of gyms is increasing. For those unfamiliar with operating a fitness studio or gym, it might seem like an easy prospect to undertake. Still, many things must be considered when opening a gym or fitness studio.
Knowing exactly what is to be done, how it is to be done, and when all of this has to happen can be challenging for anyone new in this business.
Opening a gym can be a fascinating venture, but it is also a huge undertaking. If you dream of opening a gym, this is the guide for you! We have included everything from gym equipment to personal trainers and fitness instructors.
We will go through how to open a gym step by step and what to do before your grand opening. This article contains all the information you need to know about opening a gym and much more!
What Do I Need To Know Before Starting A Gym?
Read up as much as you can before taking the plunge into starting a gym. You’ll need to know a lot, from legalities to having an actual business plan.
Before you even start looking for a facility, you must put aside at least fifty percent of your initial capital. Putting together a total for what you need will be challenging, but don't be afraid to ask for advice from people already in the industry.
If you do not know someone personally, consider joining a local CrossFit gym and offer your time and service as a volunteer. More than likely, the owner will be willing to take some of their time to show you the ropes on how they went about opening their business.
Just make sure to keep in mind that many CrossFit affiliates started running their gyms in spare rooms and garages, so don't say no to your dream location before you've even considered it.
Speaking of locations, try not to break the bank on rent right off the bat—and of course, rent will vary depending on what kind of area you want to be in.
Once you've done your research and decided on a location, it's time to get things rolling with the real estate agent. Things will move quickly once the offer is accepted, so sit down and map out how much money you'll need upfront (equipment, etc.) and what your monthly overhead will look like (rent, utilities, etc.).
Worst case scenario: you need a business loan. You will have to put together a business plan and meet with a lender to determine how much you'd be able to borrow for the gym.
If it's not enough, don't give up—maybe look into alternative funding options such as family or friends.
As you can see, there are many moving parts during the early stages of starting up a gym. If you have more questions or concerns, contact your local business association for help to get started!
Is Opening A Gym A Good Investment?
While opening a gym is a very competitive business, it’s possible to make it a good investment.
The key is to differentiate yourself from the other gyms and gym franchises out there. For example, if you're going to open a boxing studio, regardless of your business model, you will have other boxing studios as competitors.
You’ll need to make sure you’re providing a unique experience for your guests, and figure out a plan for how your particular gym will stand out from the rest.
Requirements For Opening A Gym
It's not possible to put together a guide in just one article, so in this first part, we will go over the basics you need to know before opening up your facility.
There are five prerequisite steps that need immediate attention:
- Required documents
- Location
- Legal stuff
- Equipment
- Partners/employees
1. Required Documents
If you want to open a gym, it's necessary to make sure the legal stuff is in order before you start moving equipment into your space.
The first thing we're going to cover is the business. What kind of business will your establishment operate as?
- A sole proprietorship?
- A partnership?
- An LLC?
- A Corporation?
All of these options are available, and the one you choose will determine how your gym is legally structured. Most people do not realize that this can play a role in determining how successful your business will end up being.
The second part has to do with insurance. Most states require health officials to inspect all gyms for proper insurance coverage before they are allowed to operate. Without this, your business may have difficulties getting off the ground or be shut down altogether.
The third thing that has to be considered is zoning laws. These will determine whether you can operate in a particular city or not.
Lastly, there is a business license. To legally open a gym, you must have this license in place with your state/city.
This brings us to the next step: finding a suitable location for your gym.
2. Location
Many factors go into finding a location for your new gym. When deciding on where to open up shop, it's vital that you consider the following things:
- Is there a demand for your product in this area? Are there already many gyms nearby? Or are you looking to start something new and fresh?
- What is the rent/lease of the building you have in mind? Does it fit within your budget?
- What is the location of the building? Is it on a busy street, easy to get to? Or is it hidden away down an alley with no one passing by?
- Another thing that you need to consider once you find a potential location is whether you will gain visibility by putting up signs and billboards. Will people know that your gym is there?
- It's also important to consider where you and your clients will park. Do you have a parking lot on-site or nearby? And if not, what options do people have in the area to park their vehicles?
3. The Legal Stuff
Once you've picked the kind of business structure you want and have found the location, it's time to get the legal stuff in order.
The first thing you need to know is that even if you're planning on operating as a sole proprietorship (the easiest way to go), you will need an Employer Identification Number (EIN) and a Tax ID number. Why? Sole proprietorships are taxed as regular, private individuals.
The next thing you'll need to understand is how to form an LLC or Corporation. It's no trick, but it does require some research.
If you decide to go with a regular, non-professional Corporation, the general rule is that all shareholders must be active gym members. This means that if you have ten members, nine must be active participants in the gym.
The last thing to consider is insurance. You will need this for your gym before it can open its doors!
4. Equipment
You'll need to have several pieces of gym equipment before your gym is fully operational. These include racks, pull-up rigs, dumbbells/bars, benches, climbing ropes, medicine balls, and plyo boxes.
5. Partners/Employees
Here is where it gets interesting! Opening your gym will require you to become a business owner and operator. For some, this is their goal. But for others, it's overwhelming, and they'd instead not take advantage of this opportunity.
The great thing about opening your gym is that you can find other people to help run it for you if it becomes too much to handle by yourself.
6. Opening
When you're ready to open your gym, there are still a few more things to consider.
- It's essential to understand the state and city laws for opening a new business.
- You must register your business with the local chamber of commerce. This is where many people slip up and forget to do this critical task.
- Lastly, you will need to get your finances in order. You can't open up a gym with credit cards or money that isn't yours.
Why Is Conducting A Feasibility Study Critical?
Opening a gym is tough. The question is, how do you know if it will be successful and profitable? If you're just starting and don't want to waste time and money opening a gym that won't bring in any new revenue once opened, conducting feasibility research is the best way to go about it.
One of the most critical processes in opening your gym is conducting a feasibility study. The results of this process are crucial when determining whether you should move forward with opening your gym or not.
This essentially means that before you take out a loan, doing plenty of research into the feasibility of opening a gym in your area is necessary. This research should cover the following areas:
1. Demographic Information
The first thing that you should look into is what kind of demographic your area affords. The study should tell you about the total population, average income levels, and other pertinent information.
This way, you'll be able to choose an appropriate site to build on as well as determine whether your envisioned clientele can afford to visit your gym regularly or not.
2. The Location
You should know where most of your target market lives to choose an appropriate site for your gym. For example, if most of your customers live within the city limits, opening up a gym in the suburbs is not a good idea.
3. Competition
There's a commercial for every product, so you should also study your competition to properly position yourself as a leader in the field.
You can learn about your competition by going to their websites and reading what they have to say, or visiting them personally, or through a trusted referral source.
4. Market Demand
You should also study the total potential demand of your targeted market. If you don't have a large customer base, then a gym might not be a good idea since it will cost too much money to keep running.
You can conduct this research through Moneytree, using the Yellow Pages, or through a local Chamber of Commerce.
5. Training and Skill Requirements
You should also research the type of training that opening a gym will require and your current skill set to determine whether you have enough experience to open one successfully.
You can gather this information from those who've been running gyms for years or by talking to those who've already opened one. You can also take courses on how to run a gym if you don't have enough experience.
6. Your Financial Requirements
Lastly, you should conduct your research into the financial requirements involved in opening a gym and other associated costs you might incur.
This includes buying equipment, paying rent or a mortgage, and hiring qualified employees.
You should also find out whether the financing available to you is reasonable based on your credit history as well as what the terms are since it will affect how much money you have to borrow for start-up costs.
How Should You Set Up The Company’s Legal Structure?
As the owner of a gym or fitness center, you will want to choose an appropriate structure for your business. This means speaking with your financial advisor and attorney about which form of business is right for you. There are two main types of structures: sole proprietorship and corporation.
The distinction between the two is usually clear-cut; however, a hybrid form of a corporation called a Subchapter S Corporation may be a good choice for some gyms. The characteristics of all three structures are as follows:
Sole Proprietorship
In this structure, the business and its owners are legally inseparable. In other words, you cannot separate personal assets and business assets.
This is the least expensive way to start a business, but it also means you are personally liable for all your business debts; i.e., you will have to use your savings to pay any outstanding debts if the gym closes down. Most privately-held companies in America choose this form of structure.
The Pros:
This structure lets you "get to business" the fastest because it requires filing only one form with your state to register the name of your gym.
You are taxed as a sole proprietorship, which means your business income is included with your taxes.
If you need help managing payroll or taking out insurance, you can hire your spouse, parent, or child; in this case, you will not have to pay an employer's contribution to that person's salary.
The Cons:
If the business fails and has creditors or is issued for some reason, its owner(s) are personally liable for all debts and legal judgments. Another downside is that the owner has to pay self-employment tax, over 13% on all net earnings.
Corporation
A corporation is a legal structure created by state law and given many of the rights of persons, such as perpetual succession and limited liability.
This means that you can protect your assets from any business debts or legal judgments.
The Pros:
You can often deduct all expenses before you pay tax on your net income, which keeps money in your pocket. The corporation itself pays no taxes but is taxed at a later time when it distributes profits (i.e., dividends) to its shareholders/owners; and you will have to pay an employer's contribution for anyone you hire.
The Cons:
A corporation takes a long time and costs money to set up. It requires more bookkeeping than other structures, and its owners will probably have to file a tax return for the corporation and its taxes.
In addition, the IRS will expect two tax returns every year for corporations with more than one owner.
Subchapter S Corporation
A Subchapter S Corporation has some of the characteristics of a partnership and some of the elements of a corporation.
It is taxed like a partnership, but it offers limited liability protection to its shareholders, just like a regular corporation.
It must follow all the provisions of Subchapter S to avoid taxes like a regular corporation, i.e., it cannot have more than 75 shareholders; its shareholders must be individuals (not other companies); its owners must report their share of the corporation's income on their tax returns, and all profits go directly to the shareholders/owners without being taxed at the corporate level.
The Pros:
This type of structure is the cheapest and easiest to set up; however, if you need help with bookkeeping, payroll, or insurance, it will cost more than when you use a spouse, parent, or child (who can be paid in cash). It has fewer administrative requirements than a regular corporation.
The Cons:
While it can offer limited liability protection, it does not protect you from all business debts. Also, the IRS will expect two tax returns every year for Subchapter S corporations with more than one owner.
In a sole proprietorship or a partnership, the business and its owners are legally inseparable, so the owners are personally liable for all company debts.
Corporations, on the other hand, are entities separate from their owners; therefore, if a corporation closes down or has to file for bankruptcy, its owners will not be held responsible for its debts.
How Can We Fund Our Start-Up?
Before anything else, ask yourself this: how much money do I need? And be specific. How much will it cost you to operate the business until you break even?
This is an important number because if you're unable to reach that number, your business won't survive, and you'll lose all the money you put into it.
How will you get the money you need? You can take a part-time job or even borrow from your family and friends, but in the long run, that may not be enough to sustain your gym.
And if you're planning on borrowing, then make sure to check out this Biz2Credit Lender Directory, where they have thousands of lenders that specialize in small business loans.
There are many factors to consider before choosing a loan option, but you should look at your options and see which one is best for you.
There are different types of loans out there, including:
- SBA Loans
- Alternative/Private Loans
- Lines of Credit
- Cash Advance Loans
But before you get to that point, go back and ask yourself whether you need all the things your gym is supposed to have. It doesn't matter whether it's a CrossFit box or any other type of gym; you'll need some essential equipment.
And don't forget about the rent. The monthly payment can be a massive problem if you don't research and find the correct location.
Why Is Location/Site Selection Significant?
The location or the site selection for any business is now more critical than ever. This is because all companies are now internet-driven.
The people you want to reach come to your site via results from search engines like Google, Bing, and Yahoo. They use terms like "personal trainer Houston" or "gym membership Houston." They search for YOU. This is why it's critical to get the keywords right when choosing your location.
The time spent searching for a site will pay off in terms of better business because people can find you more easily, which means more gym memberships sold, more personal training clients, and more.
Building near an apartment complex or commercial building is fantastic because the members are likely to stay longer. They are always available, and you don't have to worry about them moving or canceling.
The worst place for a gym is in an industrial park where people don't spend much time. This location will just not cut it.
The best way to pick the perfect site is by looking at all the major commercial areas and industrial parks. Check out where all the big guys are, like 24-hour Fitness, LA Fitness, Bally's, etc.
To find these sites, you can do a quick google search for "gyms Houston" or "LA Fitness Houston" or something similar to that. Look into an area near your house or work and see what locations are available. The key is to look for a busy site, preferably near a major road. You don't want your potential members to have to park very far from the front door.
The most critical part is being in an area where people want to be! They have to be near the gym so they can work out.
Always remember this: You don't open a gym for you; you open a gym for everyone else. It's a business that provides a service and must meet the needs of the people you are trying to serve.
Identifying Insurance Options
You may need business insurance. Sometimes people think their homeowner’s policy covers them, but it does not. Get specific quotes from multiple carriers to ensure you have coverage for yourself and your equipment.
You should identify the insurance options available to your business. If the gym is a sole proprietorship, you'll need to have health insurance for yourself and any other employees. Any other employees will also need car insurance.
You should also consider life insurance since death can leave a massive void in a family's finances. Unforeseen accidents could also lead to sudden deaths, so you should consider life insurance for employees.
The best way to go about the process is by identifying all possible risks in advance and then working out a suitable insurance plan.
Also, you should make sure your location meets the requirements in terms of zoning laws. Most gym businesses are shut down due to non-compliance with local ordinances. Having the right place is essential. You may have all the necessary equipment, but if your gym isn't zoned correctly, then you'll still be forced to close.
Design And Build Out Your Gym
Creating your own gym is something many people dream of doing. It's an exciting venture, but it also brings with it a ton of work.
A new gym owner must be prepared for anything and everything that comes with opening their business to the public.
This includes securing prime real estate, hiring key staff members, obtaining equipment, marketing the facility, and incorporating the proper design elements that encourage patrons to come back time after time.
Your local gym is a business like any other, and the goal of running a profitable business should always be at the forefront of your mind.
You must carefully consider every element of your new training facility to entice members to sign up and stick with you for years to come.
A key element of making a new gym successful is creating a welcoming and enjoyable atmosphere that encourages others to come back time after time.
Part of the fun in visiting your facility will be admiring the way it looks while you're there, so why not take a few minutes to improve both the appearance and function of your space?
Here are some elements of creating a gym that will look attractive to new members.
Layout
The layout you choose for your facility is essential, as the location and distribution of equipment throughout your space can encourage patrons to come back time after time or avoid your gym.
Your goal should be to keep things simple by placing your most famous pieces of equipment in apparent spots and including the more obscure ones that your members might need from time to time.
A popular way of breaking up a training facility into zones is by separating it into strength and cardio areas, which gives guests a clear indication of what they can expect from their visit. This way, they don't have to worry about missing out on an essential piece of equipment!
Room Design
When designing your gym, you should also focus on making each workout area unique and exciting, which can be achieved by giving each room a different color scheme or separate identity.
You might have a heavy bag hanging from the ceiling at one end of the facility painted red to signify the power zone, while the other end has blue padding on the ground to show where members can test their stamina.
Facility
Each training area within your new facility should be designed with a specific purpose in mind that encourages guests to use it for an extended period, which means placing some pieces of equipment more prominently than others.
For example, a Smith machine might be placed in the strength zone instead of hidden away in a corner since it requires more space, while cardio equipment can take up less room.
Experience
The average fitness enthusiast who visits your gym probably won't have a large amount of experience working out, which means individual pieces of equipment should be clearly labeled for easy use.
You might think markers and sticky tack are enough to make everything clear, but you'd be surprised how many people have trouble figuring out which machine does what! It might also be worth creating a short FAQ sheet near the cardio area for quick reference.
Relaxing Area
When designing your new gym, it's important to remember you will probably want to include an area where members can relax between workouts, such as a dedicated seating area or simply some chairs around the water cooler.
This break room should also include signage that encourages people to clean up after themselves when they are finished using any equipment to avoid unsanitary conditions in your facility.
Fitness Equipment
Equipment that helps members warm up before a workout should be placed in an easily accessible location, while a cooling down area with free weights and a padded floor might be designed for post-workout stretching.
Since many people will begin their workouts at home by using essential equipment such as dumbbells or resistance bands, it makes sense to include a range of free weights in your new facility that caters to these needs.
The good news is that you can purchase a range of affordable equipment from most fitness stores or retailers that don't take up too much room, including medicine balls and kettlebells, as well as adjustable benches.
Low-Impact Workout
In some cases, you might want to include some essential cardio equipment in your facility that provides a low-impact workout for people recovering from an injury or who do not have the strength to use other types of machinery.
Most gyms will have at least one treadmill, exercise bike, and an elliptical trainer that members can use, while some might even include a few recumbent bikes or a rowing machine.
Stretching or Calisthenics
Every new gym should have a large area dedicated to stretching or calisthenics that encourages people to get their blood pumping before they begin a workout. It could be part of the floor space or simply an open area on top of your reception desk, depending on how much room you have available.
In addition, many fitness fanatics will begin (and end) their workout with a set of crunches, lunges, and push-ups to keep their muscles healthy and strong.
Space For Group Fitness
For those who don't want to spend too much time working out, it might also be worth creating space for group fitness classes that are run several times per day.
This will encourage members to work in a team environment using cardio equipment that uses the latest technology to provide a fun and challenging experience.
For example, instructors might choose from an assortment of workout videos and use high-tech machines such as elliptical trainers and stationary bikes.
Staffing Your Gym
One of the most underestimated aspects of owning a gym is staffing. When you start, it's easy to think that you can handle all the training, keep your eye on the business, and take care of all the problems that arise. Gym owners need to train all gym members, mainly in specialty fitness centers.
In reality, it's better to have at least two other people who are competent and reliable working with you.
In the first few years of a Gym's existence, you will suffer from an overload of work. In addition to providing training sessions, keeping track of the finances, and keeping on top of advertising and marketing your business, there is a lot of paperwork involved in owning a gym.
Therefore, staff members are critical. It would be a shame to be forced to close down your business because you were worn out from too many years of working by yourself.
You should not under any circumstances hire anyone who does not fully understand and agree with the concept of gym training.
If someone is only in it for the money or has no appreciation for this training style, you will have a hard time working with them. In addition, there are specific basic requirements that you should look for in people who work at your gym, such as:
- They need to communicate well enough with clients to explain and demonstrate exercises adequately.
- They need to understand and implement all the training principles involved.
- They need to motivate clients and keep them on a consistent training program.
It is not necessary for your staff members to have the ability, or desire, to train themselves as hard as they can teach others.
You may think you want someone who has been "around" who knows everything about training, but this is unnecessary. In the beginning, all you need is someone who knows what they are doing and who can train people properly.
Your staff members should at least have a few years of training themselves under their belt if possible, as well as some primary education in human movement or exercise science.
I do not believe there is much value in giving someone an education in Kinesiology, P.E., or other college subjects unrelated to strength training. Those things are suitable for individuals but do not help them become better gym managers or trainers.
There is very little room for incompetence in the gym business unless you want your gym's reputation tarnished by someone who does not know what they are doing. That's why your staff must understand and believe in gym training.
Marketing Your Gym
What about marketing? Marketing is always essential for any business. You can go with DIY marketing or hire someone. DIY marketing is free, and you can do it yourself, but your results may vary.
Marketing is such an essential part of business success. The fitness industry offers market research for a fitness business within a gym space.
It's one of the most cost-effective ways to build your company and increase your bottom line.
There are many ways to boost your business, but it comes down to brand awareness, building relationships, creating traffic, and getting conversions.
Here's what you'll need to make it work for you:
- A logo that stands out.
- A good slogan that is memorable and stands out.
- Glossy tri-fold brochures.
- A professional website.
- A blog.
- A Facebook page and a Twitter account which you update regularly
- A way for people to sign up online or an inquiry form that is sent to your email.
Conclusion
In conclusion, starting a gym can be challenging, but it is all about having the right tools and strategy to look at it. If you understand what steps to take, you won't have to worry about taking any wrong ones.
Ensuring you have the budgeting and planning down will help you know how much your members will pay and if you have enough trainers to help with the membership. To succeed, you must learn from your mistakes as well as others.
If you've ever thought about owning a gym before, this is the way to go. With so many gyms being bought by big corporations, it's hard even to believe that having your own one-on-one personal gym would be possible!
You can start and run a successful gym, as long as you follow these steps and think of new ways to differentiate yourself from other gyms around town. It is all about planning and hard work. Good luck!
