Not sure if you are ready to take the leap from employee to boss? This guide will help you answer some hard questions about your ability to make the transition to a business owner. Because let’s face it, isn’t the goal of all personal trainers to go out on their own?
Today we will cover a few different aspects of gym ownership as well as make some assumptions about the type of gym you’ll be opening. For starters, we’ll look at the following three areas:
There are plenty of articles on opening a gym that will tell you “put a business plan together” or “figure out your credit score.” This is not one of them.
After reading through this you should be able to answer the following questions about yourself:
Let’s make some assumptions about you, the potential gym owner.
Unless you’re a trust fund baby, there’s some real financial questions you’ll want to ask yourself before understanding if you’re ready to take the plunge into gym ownership. If you are a personal trainer the good news is you’ll always have income from your consistent flow of clients.
However, opening a gym means that you’ll simply be adding to your expenses and making something of an estimate that in time, operating your own gym will be more profitable and rewarding than working for someone else.
You are booked, consistently, for 30 sessions a week for $50 a session. This would equate to about $6,000 in income a month, which , based on many small business gym models, should be the minimum income you are receiving that will still allow you to eat while the rest of your income goes back into the business.
So, if you can make about $1,500 a week and carry that over into your business, you may afford yourself the pleasure of not struggling too much. Of course, this will vary state to state. $1,500 in Manhattan would rent you a dumpster whereas that kind of money would give you a damn Costco-sized space in the middle of Indiana somewhere. I hear there’s some big corn-fed cats out there; maybe it is a good place to start a gym?
That said, understand the local market rents so that you know what you might be paying in rent. A good resource for this is CBRE, a commercial real estate resource site where you can get industry trends as well as look up rents of commercial space in your hood.
Considering you’re just starting out, you’ll probably want to get some space in the 500 SF to 1,500 SF range. I’m also going to go ahead and recommend that you lease and not buy; you’ll still have to prove that you can make your business model work, and given that you likely don’t have a proven business record, getting a loan for commercial real estate will probably be tough because of the level of risk the bank will have to take on you (which they probably won’t).
The amount and cost of the equipment you need will greatly depend on your business model. If you run a yoga studio you don’t need anything other than special flooring and some mirrors. If you run a CrossFit gym, the equipment you buy can probably keep you in a nice $10,000 price range.
A personal training studio of about 1,000 SF would likely run like $15 to $30k in equipment costs. If you are in need of more expensive equipment, leasing it is often a safer bet. Leasing gym equipment means you’ll have to worry little about wear and tear (the leasing companies will generally help with maintenance), and you’ll be able to upgrade to new equipment when you start to make a little coin. Leasing equipment is also much more affordable up front, making it a good option for trainers who need to scale their businesses as they grow them out.
Utilities fall under the essential expenses category and are fixed, meaning they are the same from month-to-month. These include things like:
Before entering a lease, try to get some hard numbers of what these numbers were for the previous/existing business owner so you can compare location-to-location.
I think it was Chris Rock who said “they should call insurance ‘in case [expletive] happens.’ But if [expletive] don’t happen, shouldn’t I get my money back?”
In your case, you’ll have to buy two forms insurance:
You find the perfect gym space. A nice shell of a warehouse that you’ve already mapped out the locations for your little office, water fountain and stretching area.
Right before you sign the lease you find out that the landlord puts the burden of the construction to do these things on you.
Some leases will allow you some wiggle room to place the burden of the buildout on the landlord while others will not. Construction costs can be expensive and therefore prohibitive to new business owners so before you sign, find out if the landlord will carry out buildouts or if they fall on you. You can also negotiate these into the lease, so make sure anything you do is penned on the contract.
In addition to using my charm to get new clients, I’ve had to invest my fair share of money into attracting new ones. Chances are, so will you.
There are a lot of different forms of marketing – search engine optimization, mailers, networking events, workshops, etc. – and you’ll want to ensure that you’ll know how much you can dedicate to these versus the kind of return you can get.
According to the U.S. Small Business Administration, most small businesses should dedicate about 7 to 8 percent of their gross revenue to marketing. Rather than thinking of marketing as an expense, think of it more as an investment that pays itself back.
It is likely that you’ll be wearing a lot of hats at your new gym. In addition to running the day-to-day operations such as paying the bills and training, you’ll be pulled in a ton of different directions that make it seem like you can work 80 a week and still not get anything done.
A lot of business owners need to learn how to delegate tasks that don’t require their expertise, and this is where hiring someone will come in. Often, a small business can get away with hiring someone to answer the phones, maintain a presence in the gym while their training or away, and handle some remedial work that doesn’t necessarily require the expertise of the owner.
Budgeting for an employee is tough, but if you find that you can make more money by hiring someone than you would by not having them there, try to get an intern or someone you can pay minimum wage.
Personal development. Sweet, this is where I get to tell you that you’re an awesome person and you can do anything you set your mind to.
Actually, I’m not. That’s what your mommy is for and I ain’t your mommy.
Here’s some hard and fast truth. You might fail. You might not have what it takes to be a business owner. You might be a great trainer but a terrible business man/woman and you may flop.
This has a lot to do with your drive as a person and as an entrepreneur. Being an entrepreneur means you are in the mindset of short and long term planning. In business, as in life, things may not happen overnight and even the smallest wins may take months of work.
Drive is a character trait that allows you to persevere through tough times, make decisions that are good for your business (but not necessarily what you want), and to act in ways that improve your chances of success.
This should be more of a quantitative answer than a qualitative one. For instance, were you successful enough as an employee to get 30 sessions a week? If so, you probably have the ability and drive to move onto the next step. If not, what makes you think that opening a gym will mean that it gets any easier to attract new clients?
If you are still uncertain how you will sustain your new venture that is ok. At least you’re honest enough with yourself to know that opening a gym before you are good at marketing your services is probably a bad and risky decision.
If you need a little fine-tuning, check out our Business and Sales: The Guide to Success as a Personal Trainer class. You’ll learn step-by-step how to grow your personal brand and land enough clients to open that gym you want. Like I said earlier, opening a business is often a well-planned process that is one to three years in the making.
Saving money is a characteristic of someone who is ready to start a business. If you get a few extra clients one month and have a few extra bucks you have a few options. You can reward yourself with something nice or you can make the smart decision and put it back into the business. Being a business owner often means staying committed to your goals and giving up things that aren’t related to the growth and success of your venture.
There is often this pipe dream that business owners are all loaded. They have no limit to how much they can make and are always busy so therefore they must be killing it, right?
While this is certainly a lofty ambition, it’s not always the case. Getting to that place can take years of hard work and planning. Investing in your business – saving money – is often the first step to provide yourself and your business the long term goals it needs when the unexpected happens, you suddenly lose five clients, or your rent goes up.
Another inaccurate assumption about business owners is that they can make their own schedules and have free time whenever they need it. This can be true for some, but for trainers ours schedules are based around those of our clients.
When we are not training, we are often tasked with making business and marketing decisions, networking, cleaning the gym, or a number of other things that we’d all much rather do later and get beers with the homies instead.
Be prepared to put what little free time you may have as a new business owner back into your business for the first few years. This requires sacrifice and dedication but is a must-have characteristic of a business owner who is growing their gym.
Anyone can workout with someone else, but do you have the communication skills necessary to attract people to you? Personal trainers, and especially personal trainers that want to become business owners, need to have an outgoing nature and a keen ability to talk to people.
You’ll find (if you haven’t already) that people are paying you because they think you’re cool to hang out with and make the experience of working out less brutal.
Some people are just too introverted to manage relationships appropriately and this type of personality trait makes it hard to run a business that puts relationships at its core. Be prepared to give your clients or potential clients 100 percent of your attention and make them feel good about themselves regardless of what stage they are in their lives.
Alas, the boring yet highly important skills you’ll want to learn or familiarize yourself with before opening your gym.
While you don’t need to be a QuickBooks ninja, you’ll want to learn a few things about Profit and Loss, balancing your accounts at the end of the month, and profit to expense ratios for starters. Hiring a bookkeeper or CPA for the end of the year accounting purposes is well-advised, and many firms actually offer free accounting software classes (like QuickBooks software) so that you learn how to keep your business and personal accounts separate and understand what you can attribute to business and how to pay yourself as well as your employees.
Whether it involves the contract for your lease, buying supplies for your gym, or hiring employees or marketers, you’ll want to go into every business relationship with the mindset that everything is negotiable.
Like the example of negotiating tenant buildouts into your lease, understanding that both sides of the contract may be after different things will help you get more of what you want and for cheaper. A good book on this topic is Getting to Yes: Negotiating Agreement Without Giving In and will help you understand that listening can often be the difference between getting what you want and arguing for something that the other party doesn’t care about.
A sort of subcategory of negotiation, learning how contracts work (or don’t) is a valuable business skillset. For the most important ones such as real estate or contracts involving large sums of money, it may be worthwhile to enlist of the help of attorneys.
For the other ones, don’t blindly sign them without reading through them first. Your ability to avoid long-term contracts that may be better suited for short-term contracts may help you be more nimble with vendors or other financial obligations.
Marketing will likely be the lifeblood of your gym. It helps bring leads in the door and helps to upsell existing clients.
For me personally, social media has been a major proponent to my success. Joining conversations, “liking” other people’s posts, and publishing interesting or engaging content on my networks has started a lot of conversations that would otherwise never have happened. Some areas of marketing that are especially important to a small business:
In business, there are a lot of things you can do yourself and a lot of things you may choose to hand off to a professional and pay for. For me personally, I knew that getting my site to rank in the search engines was going to be way too big of a learning curve so I hired a professional SEO company.
Similarly, I wanted my books to be consistent and didn’t want to raise any red flags with the IRS so I enlisted the help of a CPA firm to help with my accounting.
I had the patience to learn how to use the aforementioned Canva graphic design site so I actually save a lot of money on graphic design.
The point is, spend your time doing the things you can and be smart enough to know when it’s best to hand off things to a pro.
Your time is the most precious thing you have and is often the thing that can be wasted the most. Time management is an inherent skill but is also one that can be learned. If you are wondering how you might be able to improve your time management skills use this nifty little Priority Matrix to help you put your tasks in order of importance.
Does it make sense to advertise in the Yellow Pages to Millennials? Does it make sense to send out mailers to an area that is mostly commercial? No? Well, then you practiced good common sense there.
Some business decisions are highly technical and require tons of research and risk and others are just pure common sense. Don’t spend more than you make, don’t bite off more than you can chew, don’t put all your eggs in one basket, etc. You get the idea.
It’s one thing to be passionate about helping people and personal training and another to love doing the small things that allow you to put time into your website, mailers, art, logos, marketing, contracts, etc. If you don’t also have an interest in that other business stuff you might as well stop now.
You’ll notice that a lot of the advice and tips in this guide are a bit subjective. That’s because every business is different and the decisions you make and the risks you take will be your own.
The overarching theme of understanding if you’re ready to open a gym has a lot to do with previous/existing success, your ability to plan and forecasts expenses and your finances, and taking a hard look at yourself to determine whether you have the drive and ambition to go out on your own.
Jump on in, the water’s fine.
Bonus: use this checklist to see if you’re ready to take the leap.