Want to open a gym? Let’s cut through the bull. Here’s what you need to know
In these times of “the great resignation”, it seems like many people are ditching the corporate world to follow their dreams. If opening your own gym, personal training studio, or boutique club is on your list, read on. I’ll try to cut through the hype.
There are blogs and internet advice sites out there that promote opening a facility for as little as $50,000. They also say that you can find used equipment for “practically nothing” and give examples of buying treadmills for as little as $150. Some also tout how you can keep your full -time day job as your gym business develops. Let’s get real. This is not the reality. It’s not gonna happen.
Your $50,000 will be gone in months and that’s if you even get to the starting line. Cheap equipment will not appeal to your market and will break down quickly. And if you believe your business will grow while you’re doing something else? Sorry, but unless you’re paying someone to be you and who is committed to growing business during the all-important first quarter of operations, it will be “Vaya con Dios” before you can blink an eye.
1. Capital Counts
According to industry statistics from sources such as IHRSA (International Health Racquet and Sportsclub Association) about 80% of new gyms fail in the first year. Yup. Gone. Kaput. Other data shows that for the facilities that make it past the first year, only 50% will make it to year 5. The first major reason for failure? Being undercapitalized
2. Have a Plan
The next reason for failure is lack of expertise in running a club. As a consultant, it’s amazing to me to see how many people think that they can just build a nice-looking space, with some decent equipment, and believe people will join. They have no management systems; no knowledge of what is needed to articulate their vision to staff and the community; no organizational structure; terrible job descriptions (if they even have some); no emergency action plans; no business plan; no plan to properly on-board their staff (or members), and worse- no budget. This “If I build it, they will come” method simply doesn’t fly.
3. How Will Membership Grow?
A third cause of failure is the belief that “my amazing, awesome, fantastic, nobody-has-ever-done-this-before (oh how many times we have heard this) gym is going to be filled by everyone they know. Now this may be true for a few dozen… but if you need 800 members where are the other 700 going to come from?
The fact is simple- there are formulas for success in every market and for every type of active living facility… but if you don’t have the right game plan, and if you can’t afford to invest in each piece of the process, no matter how much you want to make it work, history has proven that it most unfortunately won’t work.
Big Tip: Hire Someone Who Knows the Ropes
So, here’s my shameless plug as to why you should invest in experienced consultants who can help to confirm that your vision will work.
- Market area demographics, club location, and competition analysis to help create your USP (unique selling proposition)
- Assessment of equipment needed, floor planning, and space improvements
- Business plan that will help secure partners and/or financing
- 3 to 5- year budget, with detailed information about where the sales numbers come from, and a realistic break-even point so that enough financing is secured to cover the lack of cash flow in the early months
- Detailed month-by-month marketing plan that outlines all the social media, e-commerce, and paid options that will be used for your specific market
We meet daily with very successful, smart, and experienced people who can do many of the above things and who have tried (and usually fail) to follow strategies that were successful in other industries. This is not rocket science by any means of the imagination… but it is also not a simple process particularly when starting from scratch. But no one has expertise in everything which is why our TEAM at Active Entities has been so successful- We approach every project collectively and offer different viewpoints (yes sometimes contrasting viewpoints!) in our collaborative approach to supporting each client we work with. And in full transparency? We are honest with potential clients if we believe their methodology, vision, and process will fail, we will respectfully tell them so.
The bottom line is there are reasons why active living facilities fail. Get some good advice and don’t be one of them. Being a successful health club entrepreneur is one of the most rewarding life experiences that one can have… as long as it doesn’t become a nightmare!
By Rich Synnott with contributions from Bobby Verdun
Vice President Active Entities