The global health club industry could reach $70.1 billion by 2032 according to PR Newswire. The projected compound annual growth rate (CAGR) for gym businesses from 2023 to 2032 is 3.8%, making now a great time to get involved.
Starting a gym can be a rewarding business venture that taps into this growing industry. First and foremost, identify the ideal location that targets your customer demographic based on psychographics and area traffic analyses.
This guide will walk you through how to start a gym. Topics include market research, competitive analysis, registering an EIN, obtaining business insurance, forming an LLC, and improving customer focus.
1. Conduct Gym Market Research
Market research is important to forming your GMgym. It offers insight into marketplace trends, your target market for gym members, and even where to source equipment for your own gym business.
Some information you’ll learn through personal trainer market research includes:
- Membership penetration rate sits at 16% of the population, indicating room for further growth.
- The rise of budget-friendly gym chains shows an opportunity to capture cost-conscious consumers.
- Providing a quality experience and results will be key to building loyalty and retention.
- Real estate is a major cost consideration when opening a full-scale health club, with average club sizes between 10,000-20,000 sq. ft.
- Partnering with supplement companies can bring more customers and increase revenue.
- Innovative gym concepts like garage gyms, micro gyms, and outdoor training areas provide alternatives for lower capital needs.
- Offering specialty services like one-on-one personal training, group fitness classes, or recovery treatments can boost revenue.
- Catering to mobility needs and chronic conditions through tailored programs presents an opportunity.
- The youth athletic performance segment also shows a strong rise as parents invest more in child development.
The pandemic accelerated digital fitness demand. Providing hybrid gym access, virtual classes, and coaching sessions responds to this emerging preference. Wearable device integration and fitness tracking app features will continue advancing to motivate members.
2. Analyze the Competition
Thoroughly evaluating the competitive landscape is vital when assessing the viability of a new gym. Begin by identifying existing gyms, fitness centers, or boutique studios within a 20-minute drive time, as this represents the target region from which you’ll draw members.
Some ways to better know your competition as a gym or fitness center include:
- Driving around to visit these facilities first-hand provides observational insights into their location, facility condition, apparent customer demographics, and differentiation elements.
- Tracking foot and car traffic patterns around these sites at different dayparts indicates customer demand.
- Research competitors online to gauge pricing models, class and equipment offerings, reviews and ratings, marketing messaging, and brand personalities.
- Monitoring social media engagement and following established local gyms shows their customer connections and retention techniques.
- Conduct an online survey within the target area to gain market research on consumer fitness priorities and preferences.
- Directly asking residents what gym attributes and programming matter most to them and what causes them to cancel memberships yield actionable insights.
- Identify the differentiation gaps where competitors are falling short of meeting community fitness needs.
Competitive analysis gives you the information you need to be successful as you start your gym endeavor.
3. Costs to Start a Gym Business
When launching a gym, substantial upfront investment is required before opening the doors to members. Securing a commercial property lease or purchase carries significant costs to accommodate workout equipment, amenities, and projected member capacity.
Starting a successful gym means encountering startup and ongoing costs. Let’s break down the expenses you’ll encounter as you get started.
Start-up Costs
Outfitting the gym space is another major start-up expense. Quality equipment for strength training and cardio averages $125 per sq. ft, so $1.9 million for a 15,000 sq. ft facility. Other amenities like indoor cycling bikes, athletic flooring, software, audio/visual systems, and more can add $500,000.
Additional start-up costs include $2,500 for business licensing and permits, $5,000 for initial legal and accounting fees, $50,000 for marketing and pre-opening promotion, $15,000 for gym management software, $10,000 for website and app development, $5,000 for gym amenities like towels/laundry, water stations, signage.
Budget $40,000 for the first 2 months of payroll, insurance, and fixed costs before member revenue kicks in.
All told, starting a 15K sq. ft full-service gym would require around $3.5 million in start-up capital. Joining a value-style gym franchise like Planet Fitness reduces real estate and equipment costs substantially, to around $2.4 million.
Ongoing Costs
Once the gym opens, monthly expenses average $20 per sq. ft covering payroll, amenities, facility cleaning/maintenance, utilities, insurance, software subscriptions, and all other overhead. That equates to $30,000 per month or $360,000 annually for a 15K sq. ft gym.
Additional ongoing costs include 5% of revenue allotted for marketing plus annual capital expenditures ($100 per sq. ft) for upgrades/replacement of aging equipment and systems. High-performing gyms generate around $750 per active member annually, but reaching substantial membership takes consistent marketing and community outreach.
4. Form a Legal Business Entity
When establishing a fitness facility, properly structuring the legal business entity is critical for managing liability risks and supporting future growth plans. The four main options each have important considerations:
Sole Proprietorship
A sole proprietorship provides the easiest route requiring only a business license for a single gym owner operating under their identity without separate business registration. However, the owner assumes unlimited personal liability for debts and legal claims, putting all their assets at risk. This danger grows with more gym employees and customers.
Partnership
Forming a general partnership splits gym ownership between two or more individuals personally sharing profits and liabilities. This allows pooling start-up funding and expertise which can improve chances of success. But similar to sole proprietorships, each partner’s assets remain vulnerable in litigation scenarios which are ever-present in the fitness industry.
Corporation
Establishing a corporation creates a distinct legal entity protecting owner assets from corporate liabilities. This appeals for risk mitigation but double taxation of profits can restrain gym income. Corporations also require extensive formalities like shareholder meetings, directors, annual filings, and records which add administrative burdens.
Limited Liability Company (LLC)
Forming a limited liability company (LLC) has emerged as the preferred gym ownership structure combining personal liability protection with pass-through taxation advantages. LLC operating agreements provide excellent flexibility to run manager-managed or member-managed to adapt to a gym’s evolving needs.
5. Register Your Business For Taxes
Before hiring employees or accepting payments, every gym must obtain an Employer Identification Number (EIN) which serves as a business’s tax ID number with the IRS. This unique 9-digit code identifies your legal business entity.
Applying online at IRS.gov for an EIN is free, simple, and takes under 10 minutes. Simply navigate to the EIN Assistant Tool and respond to a series of prompts confirming your business structure, ownership details, physical location, and reason for the EIN. This self-service application eliminates mailing paperwork to the IRS.
Additionally, gym owners must research their state and local requirements for sales tax collection and remittance licenses/permits if selling taxable services and goods. For example, California levies sales tax on gym membership fees. You’ll need to register with the state taxing authority to obtain a Sales & Use Tax Permit.
Most states don’t charge fees when initially registering for sales tax compliance. However, expect recurring accounting expenses for properly handling monthly, quarterly, or annual tax paperwork. Pricing sales to include applicable taxes at point-of-sale simplifies collection.
6. Setup Your Accounting
Keeping accurate financial records is imperative for gym owners to track revenue and expenses, remain tax compliant, provide financial reporting, and support future growth plans. Attempting DIY accounting without business experience exposes gyms to major risks of errors and penalties.
Accounting Software
Implementing small business accounting software like QuickBooks streamlines recording daily transactions from the gym floor to the back office. QuickBooks seamlessly syncs with bank/credit card accounts to automatically import sales, payments, payroll runs, and more to reduce data entry.
Hire an Accountant
Outsourcing bookkeeping activities to an accountant brings expertise for recording figures across gym systems into the proper General Ledger accounts per GAAP standards, ensuring accuracy. They’ll handle payroll, taxes, and regulatory filings, and provide clean financial statements to manage cash flow, lending applications, and benchmarking.
Open a Business Bank Account
Just like personal finances, separating gym funds into dedicated business accounts avoids commingling assets. Besides legal compliance, distinct accounts prevent misunderstanding income and expenses. Analyzing financial institution statements also facilitates reporting. Expect some monthly fees depending on account transaction volume.
7. Obtain Licenses and Permits
Every fitness facility must ensure full legal compliance by securing required governmental approvals before opening. Find federal license information through the U.S. Small Business Administration. The SBA also offers a local search tool for state and city requirements.
One of the first gym certifications needed is meeting fire and safety codes per occupational requirements of assembly facilities. Commercial gyms must install fire sprinkler systems, emergency exit signage, and specific equipment like extinguishers or audible alarm systems based on square footage.
Submit registered construction plans to regulators to ensure the physical gym layout, equipment/system installations, and finishes meet building codes and disability access guidelines like the ADA. From parking spaces, ramps, door widths, and flooring to pool regulations, ensuring your gym’s architectural compliance upfront adds peace of mind against lawsuits.
Gyms providing childcare, classes/camps serving minors, or employing anyone under 18 years must undergo comprehensive youth safety policies, staff background checks, and annual staff training under state provisions for youth sports/activities. Some counties require additional recreational facility licenses when serving youth.
Group exercise studios offering instructor-led classes must certify the space complies with occupancy maximums based on square footage. Ensure sufficient exits, submit floor plans, post room capacity signage, and train staff on protocols. Consider inspectors a resource before opening.
Noise ordinances related to music volume, equipment density, or late-night/early-morning classes may apply for gyms within mixed commercial/residential zoning areas. Acoustic wall/ceiling treatments or sound reduction construction techniques prepare you to meet decibel standards.
Consult attorneys, architects, contractors, or adaptive reuse specialists with commercial gym experience within your state and county to guide owners through license and permit processes from initial planning through launch.
8. Get Business Insurance
Operating a fitness facility without adequate insurance exposes the company and its owners to severe financial perils. It only takes one serious accident or lawsuit to bankrupt an uninsured gym. Various policies create a shield against claims seeking monetary damages arising from member injuries, employment practices, natural disasters, and other covered losses.
A member tweaks their back on a faulty cable crossover machine, racking up $150,000 in medical bills and lost wages. Without proper liability insurance, the member sues the gym and owners personally to recover costs. A serious injury can run into the millions after legal fees.
An outbreak of Legionnaire’s disease traced back to a gym’s misting fan or hot tub could prompt a public health lawsuit if operating an unsafe facility. Without coverage, the business bears full responsibility.
A fire sparked by faulty wiring destroys $2 million in gym equipment, furniture, and reconstruction costs. Lacking business property insurance, the gym might never financially recover.
Review all policy terms, limitations, deductibles, and exclusions before binding coverage. Now is the time for risk transfer through insurance, not after disaster strikes.
9. Create an Office Space
Having a dedicated office provides gym owners and staff workspace for administrative tasks, meetings, consultations, and sensitive conversations beyond the open gym floor. Private rooms facilitate paperwork, phone calls, planning sessions, interviewing instructors, and addressing member concerns while multitasking operations.
Home Office
A home office works for sole proprietors initially but limits growth. As staff and members expand, conducting business where children, pets, and household distractions persist looks unprofessional. Storage constraints and internet connectivity issues also often arise when working from home. Expect costs around $2,000 to outfit a 10×10 ft home office.
Commercial Office
For leased commercial gyms inside shopping plazas or fitness complexes, an on-site office should already exist. This allows managers accessibility while providing instructors spaces for meal breaks or between sessions. Build enough rooms for future hiring as well since available offices prove useful for other things like private training.
Coworking Office
If launching a garage gym or rented space lacking existing offices, consider joining a coworking community like WeWork. Beyond addressing administrative needs, the change of scenery and networking with other entrepreneurs curbs isolation while enabling flexibility. Hot desks start at around $350/month.
10. Source Your Equipment
Launching a gym requires outfitting the space with fitness gear to facilitate strength training, cardio exercise, classes, and amenities. Quality commercial equipment is a primary budget line item when opening a facility. Consider all procurement options from showroom purchases to pre-owned deals.
Purchasing shiny new gear from retailers like Rogue Fitness, LifeFitness, and Matrix, allows custom ordering to meet program goals with warranty protections. Tour model showrooms or request quotes from comparison shops.
Buying used gym equipment through auction sites like GovDeals, and commercial realtors listing club closures saves substantially over retail. Facebook Marketplace and Craigslist also post local deals. Inspect functionality before purchasing and factor in some rehab costs. Used gear runs $50-$150 per square foot.
Rentals enable access to modern equipment on monthly terms instead of a one-time large expenditure. This preserves capital for other startup costs while building membership before major buys. Rates run $3-$8 monthly per unit.
Leasing equipment over 3-5 year terms often works best for growing gyms looking to regularly refresh gear. This shifts equipment costs to ongoing operating expenses rather than large capital investment which aids cash flow. Be sure to negotiate fair market end-of-lease valuations to avoid balloon payments.
11. Establish Your Brand Assets
Crafting a compelling brand identity helps gyms attract members through what makes their facility and culture unique. Leveraging visual, verbal, and experiential expressions of the brand across touchpoints builds recognition and loyalty over generic competitors.
Get a Business Phone Number
Acquiring a memorable business phone number gets you found and provides callbacks for the website/address. Cloud-based systems like RingCentral enable professional call management, voicemail transcriptions, SMS capabilities, virtual faxing, and more professionalism.
Design a Logo
A logo symbiotically captures your gym’s personality and offerings. Bold, active wordmarks suit high-energy boxes while an emblem containing weights, a heart, or a bullseye appropriately brands precise training gyms. Or abstract icons evoke feelings. Looka’s AI logo maker combines images and fonts tailored to your niche.
Print Business Cards
Business cards establish credibility upon meeting prospects, at community events or tradeshows. Simple designs highlighting your logo, motto, and contact info suffice when printed professionally. Vistaprint offers 500 basic cards for under $20.
Print Business Cards
Securing a matching domain acts as your digital HQ. Aim for .com containing your gym name or keywords. Use hyphens if taken. Namecheap offers best-value registrations and hosting. Never scrimp on domains.
Design a Website
Well-designed websites quickly tell your story to convert visitors into members. For under $150 monthly, Wix empowers building gorgeous responsive sites through drag-and-drop simplicity including SEO optimizations. Or hire a web developer on Fiverr starting around $500 delivering custom designs and functionality enhancing user experience. This drives conversions.
12. Join Associations and Groups
Joining industry groups builds camaraderie among fellow gym owners while guiding them to avoid pitfalls. Tapping into other’s experiences through local networks offers marketing tips, vendor referrals, coaching insights, and other best practices that accelerate growth.
Local Associations
Seek out regional fitness business associations like the Health Club Association annual conferences, workshops, and networking events centered around current gym trends and regulations. Building bonds within these groups leads to referrals and advice during launch.
Local Meetups
Attending meetups like those found on Meetup allows mingling with other fitness entrepreneurs in relaxed settings to exchange ideas one-on-one. Look for gyms or studio meetups in your area. The connections made by handing out cards may become future employee leads or transition to partners in other ventures later on.
Facebook Groups
For broader reach, tap into mass Facebook communities like Gym Owners United with over 8.6K international members discussing insurance, marketing, finance, programming, and every gym topic imaginable. The crowdsourced knowledge and troubleshooting here provide immense value.
13. How to Market a Gym Business
Implementing an ongoing marketing strategy is imperative for acquiring new gym members while keeping existing members engaged. Balancing digital promotions with community outreach expands visibility. But first, tap friends and families to join while requesting referrals.
Referral Marketing
Offer 3 free training sessions to early members who refer sign-ups. This kickstarts word-of-mouth buzz as class participants recruit friends for added accountability, bonding, and deals. Building referral rewards into your membership model incentivizes publicity.
Digital Marketing
Digital channels allow targeted promotional campaigns using behavioral data but require constant testing.
- Run Google/Facebook paid ads promoting introductory specials to drive sign-ups from searchers and zip code-targeted demographics using coupons in the display copy.
- Start a branded YouTube channel publishing weekly workout videos, healthy recipes, and gym tour footage. Optimizing video titles for search helps surface content.
- Guest blog for regional publications highlighting specialty services driving visitors back to your site for booking.
- Leverage Google Business profile and request customer reviews to boost visibility for local searches.
- Send e-newsletter promotions and class announcements to engaged subscriber lists plus retarget lapsed members.
Traditional Marketing
Traditional options establish a local presence but offer less measurable results.
- Print full-color flyers distributed at events, local shops, and residential complexes making it simple to find and contact you.
- Get sponsor signage inside youth athletic facilities to capture sports parent segments.
- Negotiate branded workout towel distribution at nearby apartments or corporations to raise awareness as people publicly carry them.
- Seek partnerships with trainers or nutritionists to co-host community workshops bringing together target demographics while demonstrating expertise.
Consistency across digital and physical touchpoints boosts impressions and traffic to convert prospects into members. Monitor performance and double down on what moves the metrics.
14. Focus on the Customer
Delivering exceptional customer service distinguishes successful gyms through earning member loyalty and referrals. In an industry that promises life-changing results, those who guide members along their journeys using individualized support and compassion tend to thrive.
For example, fitness consultants should tailor onboarding processes by introducing gym amenities while collaboratively setting improvement goals based on ability levels and aspirations rather than handing people a generic workout. This level of attentive start fosters accountability. Staff might offer weekly 15-minute progress checks after the initial month rather than leaving members directionless.
During workouts, floor staff circulating to coach proper form or spot sets makes members feel more confident. Having adequate exercise equipment and amenities to meet demand also caters to customers. Small touches like chilled eucalyptus towels, fruit-infused water, and sanitization spray bottles throughout the gym floor reinforce the service commitment.
When members achieve milestones like body fat reduction or strength gains, recognition from staff and even rewards programs intensify loyalty. Simple shoutouts on social media or printed certificates validate progress they’ll proudly share with friends. Fulfilled members become brand advocates referring family and colleagues.
Essentially, fitness businesses sell inspiration through experiential environments and emotional connections as much as physical activity itself. Developing a motivational, supportive culture rooted in caring for all members at every touchpoint seeds the atmosphere for referrals and repeats. The opportunities stem from understanding each individual’s wellness vision.