Whether you are a fitness buff or entrepreneurial spirit, if you have considered buying a gym or starting your own business in the lucrative health and fitness industry, you have quite the exciting journey ahead of you. 

With over 183 million gym-goers and counting, the U.S. fitness industry is in a constant state of growth. Gyms across the country are even finding creative ways to stay profitable during the COVID-19 pandemic, like live stream workouts and equipment rentals, and are ready to welcome their members back at full capacity as soon as it is safe to do so.

10 Steps to Start Your Own Gym

Starting your first business (or any business, even if it’s not your first) can be intimidating, so we’ve put together a list of the 10 things you need to do when starting a gym. Follow these steps, put in the work, treat your customers well, and you are well on your way to success!

1. Evaluate your goals, strengths, and weaknesses

Before deciding how to move forward with your gym, you’ll have to do some careful introspection. Consider your skill set, experience, and strengths as you decide how to move forward. Do you have previous experience as a business owner or as a gym owner? 

Note the areas in which your knowledge is limited and where pulling in some outside help may be necessary. If you try to do everything yourself, you are likely not going to get far. Prioritize, recruit help, and delegate as needed. 

Be sure to document your specific goals and expectations, and keep them realistic. While you never know with 100% certainty if a business is going to succeed, it’s a good idea to map out best and worst-case scenarios and make sure the numbers all align.

Also, consider your familial obligations and work/life balance. Being a business owner requires many long hours, especially in the early stages of your gym. If you’re not willing to put forth the hours or invest in hiring a general manager to manage the day-to-day operations, then you might want to reconsider opening your own gym.

2. Determine your business structure

While a startup business is great for the creative entrepreneurial spirit and gives you more freedom as a business owner, a lot of responsibility falls on your shoulders. You have to formulate a plan for everything from real estate selection, construction management, business planning, supply chain, marketing, technology, legal processes, financing, and accounting. 

While you will hire help for many of these duties, you will also want to do your due diligence to ensure that you are hiring the right person for the job and to make sure nothing falls through the cracks.

Starting a business from scratch is not your only option. Franchising is immensely popular in the U.S.—as of 2020 there are 539 different fitness franchises.* Many of them still have territories and gyms for sale in optimal markets. Franchising is great for someone who is analytical, good at following systems, and willing to sacrifice creative freedom in order to minimize trial and error and shorten the time to break even. 

Franchise opportunities do come at a cost—an initial franchise fee and ongoing royalty fees in exchange for the brand trademarks, business model, and franchisor guidance. But as a franchisee, you get access to brand marketing, proven business models, technology, carefully selected vendors, special vendor pricing, and more. This tradeoff is one advantage of franchising vs. starting your own business from scratch

3. Perform market research

Before mapping out the details of your business, you will need to determine where you fit into the fitness industry at large. In order to run a successful gym, you’ll need to capitalize on a unique value proposition, something to set you apart from the competition. 

First, you’ll need to identify your niche or the type of gym you want to open. This can be a fitness club or big box gym (think along the lines of Crunch Fitness, Gold’s Gym, Planet Fitness, and Anytime Fitness) or a smaller-footprint, premium-priced boutique fitness studio (CITYROW, Pure Barre, Orangetheory Fitness, UFC Gym). 

Boutique fitness studios vary quite broadly, usually specializing in one or a few types of small group fitness classes: yoga, barre, cycling, rowing, high-intensity interval training, pilates, dance, etc. According to industry trends in health and wellness, boutique fitness studios have been growing in appeal in recent years and popularity continues to climb. Gym-goers, especially millennials, are looking for experience and quality over a cheap price, and many boutique fitness members belong to two or more studios.

Once you’ve determined your niche and unique value proposition, you’ll want to perform market research to determine your target demographic. Focus groups, surveys, competitive analyses, third party market reports, and census data can all give you insight into your target market and where to find them. This information will also be critical in determining the optimal location for your gym. 

4. Establish a legal business entity

Seek advice from an attorney or accountant to determine what business structure best suits your needs. You’ll also need to apply for any necessary licenses and permits. 

Common Business Structures:

Sole Proprietorship

  • Does not require any filing/registration to form 
  • Personal assets and business assets are not legally separated
  • Full liability
  • Low-risk businesses, not recommended for a fitness business

Partnership

  • Similar to a sole proprietorship but with two or more owners
  • Can offer limited liability for some or all owners depending on the structure

Limited Liability Corporation (LLC)

  • Separates personal and business assets
  • Removes all personal liability for business risk

C Corporation

  • Used more commonly for larger businesses that will later be sold
  • A separate, taxable entity
  • Medium-high risk businesses

S Corporation

  • Similar to a C Corporation but limited to 100 shareholders
  • Some additional tax benefits
  • Not available in all states

5. Form a business plan and secure funding

A detailed business plan is necessary in order to achieve the funding to start your own gym. You’ll want to include:

  • An executive summary of the business
  • Business overview
  • Industry information
  • Your target market
  • The competition
  • Pricing
  • Sales and marketing
  • Operations
  • Technology
  • Gym details
  • SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis and risk
  • Finance

If you are starting a franchise, you can include the franchisor’s proven financial track record and leadership experience in your business plan. Many franchisors will provide guidance with your business plan creation.  

Funding sources for business startups and franchises alike include SBA loans, loans from friends and family, home equity financing, and 401(k) business financing. You’ll want to get with an accountant to determine the best course of action for your business. 

6. Tackle legal and administrative matters early

Be sure to take out any necessary insurance policies, such as liability insurance, worker’s compensation, and business income insurance (check out a complete list of recommended policies).

Create liability waivers for your clients to sign prior to joining. As a gym owner, you will need to protect yourself against litigation arising from injuries or accidents that might occur in your facility. There are several free online tools to help you draft a liability waiver, but it’s best to seek legal advice to ensure everything is in order. 

In addition to insurance and liability, you’ll want to properly set up your accounting with the help of a certified accountant so you don’t run into any issues come tax time.

7. Select the right location 

One of the most important decisions you will make when starting a business is where to put it. As mentioned before, your market research will play an important role in determining the best location for your business. 

Consider age, income level, and consumer habits in your desired location. These should align with your target market. If not, you need to start looking at alternate locations. Also, take into consideration the average cost of rent and how it fits into your budget.

Once you’ve narrowed your search, you can start looking at specific listings. During your search, you’ll want to pay close attention to the traffic flow, foot traffic, proximity to public transit, and visibility of the location. If everything is favorable, you’ll next enter into lease negotiations and the drafting of a letter of intent (LOI). Once the appropriate build-outs are completed, you will then need to obtain a Certificate of Occupancy from your local officials. 

8. Grow your brand awareness

Digital advertising is the most influential form of advertising these days. In order to get ahead, you’ll have to take advantage of this platform. If you’re not familiar with how to do it yourself, enlist help to set up a website, social media, and online ads. Publishing search engine optimized (SEO) content will also increase your website traffic and visibility. 

This is another area where franchises offer significant perks. Franchisors typically own and operate branded websites and social media accounts that create brand awareness and generate buzz. National PR will also help drive clients to your business and add a bigger punch to your local advertising efforts.

9. Hire the right people for your gym

Selecting the right employees for your business will be a huge factor in your success. Take the time to flesh out a recruiting and qualification process for candidates. Some careful planning now will ensure only the best candidates get selected to represent your company. 

For class instructors or trainers, you might want to develop an audition process to get a feel for their training style and level of ability. This could be in the form of a sample class with specific guidelines for easy benchmarking and comparability. 

Your employees are the face of your business. Their interactions with your customers can make or break it. That’s why it’s important to not only select qualified and capable employees but to also provide ongoing training in customer service.

10. Keep your customers your top priority

Gyms always experience a certain level of customer churn. This is nothing to be concerned about as long as overall membership levels are meeting or surpassing goals. But, the more you do to ensure the satisfaction of your existing customers, the faster you will see your profit margin grow. 

Your customers are your biggest advocates! Happy customers will tell their friends and family about your business and post about it on social media. At the end of the day, if you create the best possible experience for them and provide value to their lives, your customers will happily spread the word! 

Franchise With Us!

Download our Franchise Lookbook for more information on the CITYROW franchise opportunity. Get in touch with us today to discuss the next steps in opening your own CITYROW Studio!

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*Gym & Fitness Franchises in the US – Number of Businesses