A note from Pete: Today I bring you a guest post from my friend, David Crump. With a successful gym of his own, and more time in this industry than I've managed to accumulate, David has gathered a lot of valuable insights for aspiring gym owners. I'd encourage you to take notes if you're entertaining the idea of opening your own space. Enjoy!
Having played a key role in the opening and expansion of my own gym as well as 5 others, I’ve seen or personally experienced a lot of bad moves. The worst part is that most of them seem to be relatively common and can be avoided with a little extra knowledge or planning.
The last thing that I want is for more fitness professionals to experience these challenges, so if you’ve been considering opening your own facility or are in the process of doing so, here’s 5 potential pitfalls to be aware of and how to avoid them:
Mistake #1 - Not Having Enough Clients
Cashflow is the lifeblood of a business and in fitness that comes from paying clients. Quite often, trainers that consider themselves busy underestimate how many clients they actually need to make the transition to gym owner. This typically occurs because some clients are lost in the transition and the cost to run a facility is generally higher than anticipated.
I’m not here to rain on anyone’s parade but this isn’t Field of Dreams; building your dream gym won’t ensure that people come.
When calculating the projections of how many clients are needed to run your gym, you should expect that you’ll lose 10-15% (potentially more if you work in a big box gym) of your roster. Change is hard for most people and even if your clients like working with you it may be too much of an imposition for them to drive to a new location across town or acclimate to a new environment. It’s best to not take it personal and instead prepare for the worst. On the other hand, if they all do transition with you, you’ll be in an even better position than expected.
Mistake #2 - Paying Too Much In Rent
Finding a location for your new gym can be tricky because there’s a lot of things to consider such as what part of town you want to be in, how much space you’ll need, and how much you can afford to spend. I often recommend using non-negotiables as a filter to help make the decision-making process easier. However, price is always the most important factor.
A large space can be very appealing, but it’s best to start small and outgrow it quickly than it is to try to downsize if bills can’t get paid. The ideal solution is to find the smallest and cheapest space that will allow you to deliver a great service without breaking the bank. This will ensure profitability which is priority one.
I would suggest spending no more than 20-25% percent of monthly revenue on rent. While that number is actually high for a mature fitness business, it will feasible for a newer business since there should be significant potential for growth.
Mistake #3 - Choosing A Location That Isn’t Zoned Correctly
I learned about “zoning” the hard way. When opening my first location, I found a space that was just the right size and the price was perfect. I marched down to city hall to transfer my business license over to my new proposed location and was swiftly met with a “No, you can’t do that. This location cannot be used for a fitness facility.”
Naturally, I was crushed, but I learned everything a trainer could ever need to know about zoning.
Cities are designed by planners and those planners choose what areas are going to be residential, commercial, or even recreational. Beyond that, commercial areas feature many different designations and those designations determine the type of building construction that can happen and the types of businesses that can exist in those buildings/areas.
The bottom line is that you can’t just open a gym in any building you want and if you sign a lease on a location that isn’t zoned correctly, you’re screwed.
To avoid this, it is critical to make sure that you confirm your proposed location fits the zoning requirements of a fitness facility. This can usually be done by visiting the local property appraiser website or confirming with the folks at city hall.
Mistake #4 - Not Obtaining Appropriate Operating Documents
There are few things that could be worse than investing your life savings into finally opening your dream gym only to have the local authorities shut you down because you didn’t get some simple paperwork.
Sounds extreme, but it can really happen.
The last thing most trainers are probably thinking about during the planning stages of opening a facility are the licenses or certificates needed, but it’s important to do your due diligence. While requirements vary from state to state, it is likely that you’ll need a city or county business license (maybe both) as well as a Health Studio Certificate from the Department of Agriculture.
The best method to making sure you’ve got your bases covered is to do a quick internet search for the requirements of opening a fitness facility in your state as well as the requirements to run a business in your city. Follow that up with a call to your local city hall to see if there is anything that you missed and you should be pretty well covered. An hour of investigation could save you a ton of headaches or days of lost revenue.
Mistake #5 - Spending Too Much On Equipment
When most trainers think about opening their own facility, they often dream of a large, beautiful space filled end to end with all the nicest equipment. However, that grand vision carries a huge price tag that is more likely to result in financial ruin than a steady stream of clients with cash in hand.
Most clients don’t care about what kind of equipment you have. They only care about whether or not you can help them reach their goals.
While that statement may seem off-putting initially, it’s actually good news. It means that you don’t have to spend a ton of money, because if you’re a good trainer then you can probably get clients great results with minimal equipment and that’s a huge advantage over the big gyms in the area.
The most successful way to go about choosing and purchasing equipment is to set a firm budget that won’t break the bank and start by purchasing only the equipment that you feel is absolutely necessary to get great results for your clients. Obviously, this will be heavily dependent on your training style, philosophy, or client demographic, but if any piece of equipment won’t be used in the majority of programs then it shouldn’t make the cut. Then as the business becomes profitable you can add in some of those less practical pieces without jeopardizing your finances.
About the Author:
David Crump is an entrepreneur, fitness business consultant, and NSCA certified personal trainer. Since entering the fitness industry in 2006, he has climbed the ranks of corporate management, opened multiple fitness facilities, and helped hundreds of clients improve their lives. Crump has been featured in PFP Magazine, NSCA’s Personal Training Quarterly, and is a regular contributor to The Personal Trainer Development Center. Additionally, he currently owns and operates Spark Fitness, a private training facility in Orlando, FL and works with trainers around the country to help them achieve their dream of opening their own gym. More info can be found at davecrump.com.
* If you’d like to learn more about opening your own facility don’t miss David’s presentation at the 2018 NSCA Personal Trainer’s Conference in Baltimore on October 5th-7th.