Getting a handle on your gym’s finances from the start is one of the most critical challenges to having a successful business. Billing, budgeting, payment processing, and — especially — proper tax filing, all need to be on your radar. And one of the most fundamental components of financial management is understanding your gym’s profit and loss, otherwise known as a P&L statement, or income statement.
What Is a Gym Profit & Loss Statement?
A P&L statement is a glimpse into your business’s finances provides an overview of your revenue, expenses, and net income over a specified period — typically monthly or annually. Think about it like this…
How many times do you get a first-time client walk in with little to no foundation? Do you turn them away? No way – you just start. You get the baseline recorded – weight, BMI, physical ability or weaknesses and it’s one rep at a time. And while they may not become an Olympic athlete, they are going to live a better, healthier life.
You don’t need to be a financial expert to understand the foundation of operating a successful business and we don’t plan to turn you into one. Let’s get the baseline down, get a pulse on your finances and from there, it’s one rep at a time. Your revenue and expenses like your nutrition and exercise; inputs are equally as important as outputs and you have control over both. Also, like your nutrition and exercise, if you don’t record it, you tend to leave things out.
Why Is It Important to Understand Your Gym’s Profit & Loss Statement?
As a gym owner, you need to be intimately familiar with your profit and loss statement because it provides essential information about your business’s financial health and performance. This information can help you make informed decisions about operations and keep a pulse on your business.
Here are just some of the things you can do with a good P&L statement:
- Monitor revenue and expenses: Track income over time, identifying trends that may impact profitability and adjusting operations, such as reducing costs or increasing revenue-generating activities.
- Identify opportunity: Spot the best chances for growth and expansion by analyzing revenue sources and expenses.
- Evaluate financial performance: Get a clear glimpse into the reality of your business’s economic performance, which, ideally, is on an upward trend.
- Troubleshoot problems: If something goes awry, dive deep into your P&L to correct the course and get things back on track.
Consequences of Ignoring Your Gym’s P&L Statement
If you don’t have a grip on your gym’s finances and profit and loss statement, you will miss critical information about your business’s financial health and performance. That will inevitably lead to all sorts of problems in the long run, like inaccurate financial planning, missed opportunities, and potential financial trouble. Regularly reviewing and analyzing your gym’s P&L statement is critical.
The Structure of a Gym P&L Statement
You can create your own profit and loss statement from scratch or use one the many financial management templates available online through Microsoft. This will help you organize your thoughts and financial information.
Keep everything recorded in one place. Whether this is on your software platform or on paper, write it down and make it a habit. Break it out by category and make sub-categories for both revenue and expenses. You don’t record your last leg day on the same line as your cardio tracking, so don’t do that to your finances.
- Membership Revenue
- Personal Training Revenue
- Drop-In Revenue
- Retail/Merchandise Revenue
- Events and Camp Revenue
- Other Revenue
- Utilities and Building Expense
- Certification or Professional Fees
- Marketing Expenses
- All Other Expenses
Evaluating Your P&L
Now that you have your revenue and expenses in one place and broken out in a comparable time, where do you stand? Take your monthly revenue less your monthly expenses – is that number positive or negative? Your breakeven point is the amount of revenue you need to cover your total expenses. If your net income is less than zero there are two ways to approach it, increase revenue or decrease expenses.
Similarly, if your net income is greater than zero, you’re not done. Just because you are at your goal weight or just hit a personal best doesn’t mean you can’t improve. Whether you are in a good place right now and just want to get better or recognize that something needs to be done now you know what you are measuring against.
How Often to Update Your Gym Profit and Loss Statement
You’ll want to review your P&L statement regularly, since a financial oversight can spiral out of control if left unchecked. As most of your revenue and expenses are monthly – rent, utilities, monthly memberships – let’s stick with that.
Make sure that you are tracking revenue and expenses consistently and accurately. This means recording all sales and expenses, such as rent, utilities, payroll, and equipment costs. This helps ensure that your P&L statement is accurate and not based on misinformation.
Need More Gym Financial Management Tips?
With this information, you are off to a great start! But keep in mind that your profit and loss statement is only one piece of your gym’s overall financial health and stability. If you want help with other financial aspects of your fitness business, check out our A-Z Guide on Gym Financial Management. It is an in-depth, easy-to-understand primer on all the important financial info you need to know for your gym.
[Download the Financial Guide]
Blog originally published May 1, 2017 and updated March 27, 2023.