Deciding to pursue your passion and open your own gym is an exciting and somewhat challenging venture. From selecting the perfect location and purchasing equipment to hiring great coaches and developing your business plan, there’s a lot of logistics that go into a successful opening. But the work truly just begins once you open your doors. It takes a lot of work, dedication and financial management to run a successful gym that will be around for years to come.
Each year our team surveys gym owners from around the world to determine what successful gyms are doing to build financially strong businesses. We ask these business owners a series of financial, emotional and operational questions and compile their answers in our Boutique Fitness Benchmark Report. This report provides invaluable data for both current gym owners, as well as those thinking about opening a gym, as it provides lessons on what it takes to be successful. Learn from thriving gyms, and follow these three tips to open a successful gym.
1). Stay on top of your cash flow
Running a successful gym or boutique fitness studio comes down to successfully managing a budgeting and maintaining an average monthly profit which will keep your doors open for years to come. We discovered thriving gyms generate $20,791 a month in profit, while their less successful counterparts average a monthly loss of $2,473.
To generate profit like the thrivers, managing your expenses is just as important as maximizing your revenue. It may sound obvious, but if you’re spending more money than you’re making, your business won’t be open long.
2). Don’t start off in a huge space
A common mistake many new gym owners make is starting off in too big of a space. Rent/mortgage is one of the largest expenses for gym owners, and is something that can seriously eat into your cash flow. In fact, struggling gyms spend 90% of their monthly revenue on rent/mortgage while thriving gyms only spend 14%. When you add in payroll, which is typically their second largest expense, struggling gyms are spending far more than they’re making each month on these two expenses alone.
When starting off, aim to pick a space big enough for your members to comfortably workout. However make sure it’s not too big, otherwise you’ll be left with a rent/mortgage payment and utility bill that will be tough to pay. Thriving gyms have far less square footage per member than struggling gyms, with 21 square feet and 50 square feet respectively. These gyms do a good job making the most of their space and filling their classes. Using your gym check in software you can get a good idea if classes start getting packed, look for opportunities to optimize your schedule and add new class times before making the jump to a bigger space.
3). Charge the right price
It’s a common practice for new gyms to discount their services in order to get people to sign up for memberships, however, we recommend avoiding this practice. Discounting devalues the service your providing your members, and significantly cuts into your revenue. Thriving gyms charge an average of $163 per month for unlimited memberships, while struggling gyms charge $130. While this might not sound like much, having 100 members on unlimited memberships will enable you to generate over $39,600 more a year than a gym charging $130.
You opened your business because you are passionate about fitness, and understand the impact it can have on people’s lives. You decided to open a boutique studio with personalized training and a strong community because you realize these factors makes a huge difference in keeping your members loyal and dedicated to achieving their goals compared to giant health clubs. Keep this in mind when determining the price of your packages and memberships.
Interested in learning more about what gym owners are doing to build financially thriving businesses? Get your free copy of our Boutique Fitness Benchmark Report!