5 Things You Need to Consider Before Opening a Gym
As accountants for the health and fitness industry, we’ve worked with a fair few established gym owners over the years, as well as people looking to launch their own gym. Whilst it’s an amazing industry to be in, generating more than $80 billion in annual revenue worldwide, there are some things you should consider before jumping in head first.
If we’ve learnt anything in our time it’s that proper planning and strategising before launching your business is key to its success, and the same can be said for starting a gym. Too often entrepreneurs rush into new business ventures without taking the time to consider all the small things. By the time they realise what they’ve gotten themselves into, it’s too late and they end up closing down.
Taking the time to consider everything before launching will help your new gym last the test of time. Are you a personal trainer looking to take that step into becoming a gym owner? Here are 5 things you need to consider before opening a gym.
CREATE A BUSINESS PLAN
Creating a business plan is the first and most crucial step of creating a new business. If prepared correctly, it can serve as a roadmap to success, providing clarity on all aspects of your business, from finance and marketing to operations and services.
Your business plan should include:
the results of your market research (identifying common problems gym members face in your area, and your solutions to these problems)
competitor research (who is your competitor, what are their strengths, weaknesses and market position?)
what kind of budget are you going to need and how will you manage the initial finances? Will it be profitable?
what equipment will you require?
what are your goals and objectives? Once you’ve created a thorough business plan, you can confidently move forward into the next steps.
CHOOSE THE RIGHT STRUCTURE
Getting the correct structure in place before launching will save you A LOT of headaches in the future. There are four main business structures to consider:
Sole trader (when an individual trades under his or her own name, or under a business name)
Partnership (when two or more persons or entities create a business together)
Company (has a separate legal existence from its owner)
Trust (a family or discretionary trust or a unit trust)
Before choosing a structure, you should ask yourself the below questions:
Am I going into business with someone else?
Will I bring in a business partner or investor in the future?
Do I have assets in my own name that I wouldn’t want to lose?
Will I have employees?
Is this a high-risk business?
What are my plans for growth?
ALL THINGS FINANCES
This is a big one, as the main focus of any business is to make money, right?
We recommend preparing a forecast, as it will be able to roughly show you what the first 6 to 24 months of your business will look like so you can work out the following questions:
Do you have the cash reserves to pay for things like the bond and equipment?
Will you need to borrow money?
Do you have the prerequisites for a loan and can you get pre-approval?
How many members do you need to pre-sell membership to?
How many members do you need in order to be profitable?
How else can you make money other than memberships? (great ideas include personal training packages, group training classes, leasing space to trainers and massage therapists, and selling nutritional supplements)
How will you fund yourself during the first 3-6 months of business (do you have operating and living expenses saved?)
On top of the expenses for bond, rent, equipment etc, we recommend you save at least 3 months’ cash reserves equivalent to your monthly budgeted expense to cover any costs that pop up during the first stages of opening.
HOW WILL YOU FIND MEMBERS?
A gym is nothing without its members, so it’s important to ask yourself how you are going to get them!
The first step is to identify your ideal member. Who are they? What are their demographics/psychographics? Where do they hang out, both offline and online? How do they like to communicate? What are the problems they face that your business solves?
From there you can begin to create a marketing plan that targets this ideal member.
You also want to try to sell as many memberships as possible before the doors open to your new gym, so creating a pre-sale is key. Perhaps you could create urgency by offering a discount for a limited time only to new members, and get the message out in areas you know your target audience is spending their time, both offline and online.
WHO WILL YOU WORK WITH?
Surrounding yourself with a powerhouse team is so important to the success of your business. But before you decide to bring on anyone, you should ask yourself what roles you most need help with. You may feel comfortable running the gym itself, but what about the other sides of the business, such as sales, marketing and accounting?
Outsourcing the areas of your business that you consider your “weakness” can be pivotal to its growth. Are you an amazing salesperson? If not, bringing on a sales manager would help you. Are you terrible with numbers? An accountant could take care of all things finance for you. Create an organisational chart to map out all the positions that need to be filled before your gym is opened, and work backwards from there.
Cover off these basics (even if your name is in most of the boxes):
Strategist/Leader – to maximise value & ensure plans are implemented
Marketer – to generate potential members
Salesperson – to convert potential members to actual members
Product/Service Development
Operations (running the gym, sessions, cleaning etc)
Finance –bookkeeping, payroll & tax (yes, we can do that for you!)
HR
Admin/IT – keeping your member list up to date, writing policies, answering the phone, managing your website
We will be writing a detailed blog around the segments of your business, so stay tuned!
CONCLUSION
Opening a new gym isn’t just about finding the rent space and equipment. There are a lot of things you need to plan and strategise about before your launch. By taking the time to consider all of the above, you will be able to better ensure your gym becomes the successful business you’ve dreamt of!
If you’d like any further assistance in regards to opening up a gym, please reach out to us. We have extensive experience in this industry and would LOVE to help you open the gym of your dreams.