How to Open a Gym

How has the 2020 pandemic affected gyms, health clubs, and the fitness industry?

The 2020 COVID-19 pandemic has been painful for gyms large and small, and major fitness chains like 24 Hour Fitness and Gold’s Gym have filed for Chapter 11 bankruptcy. However, from following CDC gym guidelines and other COVID-focused fitness industry best practices, fitness centers can push through the pandemic.

There’s good news too. Despite lockdown closures, gyms are seeing signs of recovery. Customers say they miss going to the gym, and by March 2021, group exercise studios alone are expected to have recovered to their 2019 levels. The upshot? The more your customers trust your safety practices, the better the chances your gym may emerge from the pandemic in good shape.

Opening your first gym location is going to take some time, effort, and a little fieldwork. From understanding your market’s demographics to working your time management skills, you can have what it takes to open your own gym and lead your fitness business on a path to profitability. Follow the checklist below to help you set your gym business startup routine:

Just like crafting a workout, fitness goals, and wellness plan for a client, your gym needs a business plan that guides your journey as an exercise entrepreneur. Consider the following as you create your gym business plan:

• Which niche or unmet need does your gym fill in the local market?
• Where will you have locations, and what federal, state, and local laws apply? How will your gym incorporate online fitness or remote options?
• What scale are you aiming for? Whether one location or many, being part of a franchise or having your own brand, know how big or small you want your gym business to be.
• How will your fitness business set SMART goals? Setting down business objectives that are SMART — Specific, Measurable, Attainable, Realistic/Relevant, and Timely — keeps you focused on the twisty path of startup, operations, and growth.
• What potential problems may threaten your business? Fitness trends change. An economic downturn tightens purse strings. A competitor undercuts your business model. A new state health regulation is costly to implement. Troubleshooting now can help you save your business later.
• Who is in your market? Understanding your ideal customer is key to attracting and retaining members.

A foundational part of your fitness business is choosing the right business structure. Technically speaking, a sole proprietorship could be the easiest way to start. However, the capital needs, liability concerns, and potential higher taxation can make a sole prop the wrong choice for your gym business.

Instead, consider starting an LLC, or limited liability company, along with an operating agreement (especially if you are starting your gym with fellow business owners). Establishing an LLC helps you divide shares, structure buyouts, shield personal assets from liability, and can even lower your business taxes. If you’d like some help, an LLC formation service can handle the creation of your business entity on your behalf.

The average startup costs for a basic gym range $10,000 to $50,000. However, your actual costs may be higher, depending on factors such as:

• Facilities costs: Rent by square footage, renovation expenses, utilities, security, sanitation, etc.
• Government and legal fees: Licenses, permits, legal paperwork and filings, registration fees, business insurance, etc.
• Payroll
• Fitness equipment
• Don’t forget your technical equipment and services either, such as gym membership management software and computers. You’ll also need to get the word out, so budget marketing and advertising spends for things like trade shows, website development and hosting, and any print, broadcast, and online ads.

How do you fund your gym startup costs?

Managing cash flow is key to keeping up with your gym’s costs as a new business. Here are a few ideas to fund your gym:

• Government available resources: Federal business loans through the Small Business Administration can be accessible to many startups, but the process can be long and not everyone qualifies.
• Leasing: Financing-to-own agreements can help you finance gym equipment, usually with a 2–5 year term. You may have to pay a higher interest rate, but approval can be easier than bank loans.
• Bank loans: A commercial bank loan may help you open your doors, but it’s a good idea to polish your gym’s business plan first. Also consider whether you can offer collateral, and if you’re able to offer 3–5 years of financial projections.

Anytime Fitness. Crossfit Zone. Oxygen Gym. Sound familiar? They should, which is why naming your gym is a crucial decision. There’s no one way to name a fitness business. A good rule of thumb to follow is to try to make your gym’s name reflect your brand, its values, and resonate with your market.

As part of figuring out how to name your LLC, check that your gym’s business name is available for everything from government registrations, to domain names and social media accounts.

Figured out your gym’s name? Great! Now it’s time to:

• Register your business with the appropriate state and local authorities
• Request an EIN (employer identification number) from the IRS for your gym’s business taxes
• Open business financial accounts, such as a checking account or business credit card
• Apply for relevant business licenses, zoning permits, etc.
• Get the correct business insurance, liability insurance, and other insurance

What type of gym equipment you need depends in part on the services you’ll offer. From Pilates to cycling, every type of workout or fitness regimen has its own equipment needs.

Nowadays, fitness equipment can also be things like computer servers. In addition to on-site offerings, a growing number of fitness centers are broadening their offerings with digital and off-site options like virtual classes and fitness apps.

Outline the types of equipment you’ll need for your fitness services, including any cardio equipment, free weights, and the like. Also, develop a digital plan for fulfilling the online options members will also be able to use. From there, you can develop your procurement plan to get the equipment you need in order to open your doors.

There’s more to success than simply opening your fitness center. From postcards to online reviews and more, you’ve also got to spread the word.

Set up a gym website that outlines who you are, what members can do at your gym, how you help them meet their wellness goals, what membership options are available, and how to get in touch.

Consider advertising with area print publications, TV and radio stations, and online, such as Google Ads and Facebook Ads that target your local, ideal customers.

Challenges, videos, a free personal training session, fitness and workout content, intro packages, limited-time free passes, and product giveaways are other ways you can leverage social media and word of mouth to generate interest in your gym. As people respond, you can then work on getting them to become — and stay — members.

The global market growth in health club memberships means that fitness entrepreneurs can build a solid customer base for broad or niche gym businesses. Here are a few ideas for services to consider:

• General fitness
• Personal trainers
• Boxing gym or martial arts-based fitness programs
• Crossfit gym
• Yoga gym
• Pilates gym
• Boutique fitness
• Mobile fitness or home fitness programs
• Workplace fitness