How to Open a Gym: Your Step by Step Guide (2020)

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Fitness Center

Do you love fitness and think “Wouldn’t it be awesome to open my own gym?” In an exclusive interview with the founder of Lab Athletics based in Bellingham, Washington, we asked Jake Brog to share his story.

As Jake’s launch demonstrates, creating your own fitness brand shouldn’t require you to invest hundreds of thousands of dollars. Best of all, Jake opened his gym business using nothing more than a credit card. Not only was his launch a success, but he was able to pay off his debt without paying any interest.

Following steps taken by Jake, you can learn how to start a gym from scratch.

Step 1: Become a fitness coach or instructor.

Fitness Trainer

Jake is not a serial entrepreneur. Like many young adults, he worked several different jobs before realizing his two passions in life – helping others and fitness.

Unlike some gym owners, Jake Brog did not initially think to himself, “I want to start my own gym.” As you’ll see, that desire came later.

At first, he became a volunteer firefighter. To pay his bills, Jake was a personal trainer and did fitness instructing on the side. Within months, he was managing the gym’s coaching staff and all the core tasks associated with running a fitness facility. Before long, he knew he’d found his professional calling – to open a gym of his own.

Watch the full interview with Jake here:

Get the necessary credentials.

Even if your gym trains you as an instructor, you should consider training from an accredited, third-party organization. There are a number of highly-reputed agencies that offer fitness instructor certifications. Among them are:

And the best part about becoming a certified fitness instructor or personal trainer is that it costs much less than other forms of training. When you are ready to start a gym business, you’ll have all the expertise you need without having to spend $20,000-50,000+ on a formal, college education.

Fitness Instructor Certification Prices

Find a gym that will help you gain experience.

The U.S. Bureau of Labor Statistics notes that fitness instructors are in high demand, with jobs expected to increase by 13% over the next eight years.

If you’re thinking seriously about opening a gym, you should apply for a job as a fitness instructor at a local facility.

Jake worked hard at his fitness job, and before long, the gym promoted him. He quickly gained leadership skills like time management, budgeting, delegation, and conflict resolution. These skills helped Jake to not just open a gym but to also run a gym well.

Step 2: Itemize your gym startup and operating costs.

Man Calculating Gym Business Cost

Like any business startup, launching a fitness facility costs money. Taking the time to itemize every cost of opening a gym can help you create a plan for launch and profitability.

What’s the difference between startup and operating costs?

Startup expenses are one-time costs. Here are some common startup costs associated with opening a gym:

  • Lease security deposit (or 10-30% down payment of the commercial property purchase price)
  • Gym equipment ($1,000+)
  • Starter bar ($275+)
  • Olympic bar ($400+)
  • Fitness matting (flooring)
  • Weight sets (each plate usually costs $75+)
  • Crossfit rig (if applicable)
  • Business attorney
  • Accountant
  • Branding (logo and website)
  • Company computer
  • Bookkeeping software

In contrast, operating costs are ongoing expenses. These costs usually entail the following:

  • Rent
  • Utilities
  • Insurance
  • Equipment replacement
  • General maintenance
  • Advertising

What’s the difference between variable and fixed costs?

The operating cost of starting a gym usually involves both variable and fixed expenses.

Your fixed costs remain the same month-after-month, such as rent and utilities.

Variable costs increase as you get more clients. For example, more clients mean more wear and tear on your equipment, and this could increase your equipment replacement costs.

Frequently forgotten costs when opening a gym.

Jake noted that some expenses took him by surprise. Like most business owners, he realized he needed insurance. Without insurance, he risked losing his business completely should a tragedy occur.

Fitness flooring is another business expense that new gym owners don’t often think about when building their business plan. Soft flooring is important because it reduces the risk of injury for yourself and your students.

Step 3: Keep expenses low, but stay away from low-quality gym equipment.

The more you spend, the harder it will be for your gym business to last.

That said, be careful about sacrificing quality for a lower price. If paying too little for certain kinds of equipment will only force you to replace that equipment later, it will end up costing you more money in the long run.

When shopping for a location, look for industrial spaces over commercial spaces.

A danger that many gym startups encounter is succumbing to the pressure to find a commercial or shopping center storefront. According to Jake,

If you look at the survival rate of gyms that are in industrial areas versus commercial, hands down you’re going to have so many more gyms that have been successful in industrial areas.

Reflecting on his decision to lease in an industrial area, Jake says,

My best business decision during launch was finding a very affordable space to start my gym in.  It allowed me to start my business without a crazy amount of risk, pay off my equipment loans fast, and become profitable in the first 12 months.

Start small.

Jake started his gym in a single industrial storage bay with a few hundred square feet. The smaller area allowed him to pay less for rent and more on quality equipment.

When opening a gym, it’s not important to do everything. Instead, figure out what you need in order to succeed.

When you start small, you can grow gradually with the confidence that increasing your space and equipment will generate profits right away. Today, Jake leases four bays and is already needing more space to keep up with demand.

When shopping for fitness equipment, think quality over quantity.

Poor-quality equipment will require you to replace it sooner. Additionally, bad equipment increases your risk of injury and can lower results for your clients.

Because of its high quality, Jake’s favorite equipment brand is Rogue Fitness. And because Jake saved money on rent, he was able to invest in top-level equipment.

Rogue fitness is a very high-quality brand. They’re made in the U.S.A. These guys [crossfit big rigs] we’ve had for five years, and they’re not going anywhere.

When you start your own gym, keep in mind that there are certain costs that you should not cut corners on. Don’t be afraid to spend a little extra if you are confident that it will be a worthy, long-term investment.

Step 4: Consider all your funding options

Jake did not have $10,000 just lying around. What he did have were determination and great personal credit.

Why do you need a business plan to start your own gym?

Man Writing a Business Plan

After deciding to open his own gym, Jake created a business plan. Initially, he built his gym business plan hoping that it would help him secure a business loan.

Even without a loan, Jake’s gym business plan did force him to do his homework. In his plan, he outlined the following key sections:

  • A quick summary of the business (elevator pitch)
  • A detailed company profile
  • A description of the target fitness market
  • Legal setup
  • A list of products, services, and pricing model
  • A plan to generate revenue from day one
  • Financial projections

For most small businesses, writing a business plan allows you to pitch lenders and investors. While not every gym requires outside funding, an extra injection of cash can help you build your business faster.

For a detailed example of a business plan, check out the SBA’s business plan page here.

What do you need to secure a business loan?

In Jake’s case, no amount of business planning would open doors for him to get a traditional business loan.

“What I found out is: the business plan is awesome, but in the real world, the banks are like, ‘We’re probably not going to loan you any money because you have no skills in business.’”

The truth is that most business startups usually can’t get a traditional business loan. Even the SBA prefers to qualify businesses that have existed for a few years and have already demonstrated their ability to create profits.

Jake leveraged a 0% introductory interest rate on a credit card to launch his gym!

Since a traditional business loan was out of the question, Jake got creative. Due to his good credit score, Jake qualified for a credit card with a 0% introductory interest rate.

And here’s the kicker. Having built a solid business plan, Jake knew that he had a good chance of making enough sales so that he could pay off his credit card debt before he would accrue any interest charges.

Step 5: Establish your financial goals.

Jake’s financial projections helped him establish realistic financial goals. Within months, not only was he successfully paying all his bills, but he was generating a modest profit.

If you’re considering buying an existing gym, make sure you you go through the following questions, which are critical to understand whether or not an existing business can meet your financial goals.

How much will you charge?

Any fitness business must decide what they offer clients and how much they must charge.

In our interview with Jake, he outlined different types of gym services. Typically, your gym should offer one or more of the following:

  • Monthly membership
  • Large, medium, or small group classes
  • One-on-one personal training

According to Jake, the most lucrative fitness pricing model is the large group class. That said, the larger the group, the more concerned you must be about the safety of your customers.

If your fitness approach involves low-risk exercises (such as those movements that do not involve heavy equipment), your classes can be larger. This model allows you to generate profits faster.

In Jake’s case, he chose the CrossFit model. While he does a lot of group classes, he knows that he must keep classes smaller. This approach also affects how he prices his memberships. Jake noted,

Basically, our memberships are between $149 and $170 a month.

He arrived at this number after calculating realistic financial goals based on his costs and the value he brought to the local fitness market.

Breaking even means that your business is no longer costing you money.

Break even graph

Over the course of his first year in business, Jake invested between $15,000-20,000.

To actually break even on rent and then also to start paying off the credit card – the debt that I’d incurred – I had to be making about $1,000 a month.

Jake’s personal bills and debt were very low, and his low cost of living further helped him break-even. After ten clients, he was paying his bills with a little extra to spare.

Break Even

Sales ($) = Costs ($)

You should also know how many clients/memberships your gym needs to be paying your bills. If you go too long and are unable to keep up with your costs, it will be much harder to stay in business and eventually enjoy those profits!

Profitability means that your gym sales are greater than your costs.

After you’ve broken even, your next goal should be to seek higher levels of profitability. To help them achieve profitability faster, most gym owners don’t take a paycheck right away.

Profitability

Sales ($) > Costs ($)

Once generating a profit, Jake’s first priority was to lower his debt. Since he had only so many months before his 0% interest promotion would run out, he committed himself to pay off his credit card as soon as possible.

It was about 6 months into the business where I finally felt comfortable that I had enough money coming in where I was going to be able to pay off that credit card debt that I’d incurred.

Sustainability means that your gym is successful enough for you to take a paycheck.

After generating a profit, your final goal should be sustainability. When you feel confident that your business can sustainably generate a profit, you can begin to enjoy greater perks.

If you’re talking about actually having some substantial profit, having some freedom, extra money in the bank account, for me the big landmark was about 100 clients.

Sustainability ensures that you have a regular paycheck (how much you make depends upon your financial goals). Additionally, financial freedom can allow you to hire employees so that you have more time for yourself and your family.

Sustainability

Sales ($) = Costs ($) + Owner Paycheck ($) + Business Savings ($)

Today, Lab Athletics employs five people, and Jake is able to focus on more big picture decisions, such as how to grow his brand.

Step 6: Identify the type of person you want to join your gym.

People Running on Treadmill

You should never build one gym that fits every type of client. Like any small business, you should have specific kinds of people in mind in your community.

By defining who your target audience is, you can better understand what your customers need and how to deliver value to them.

What is their income level?

Jake knew that his approach to fitness catered to an audience with more financial resources.

Most of our clients are definitely high-end people that have pretty serious jobs.

This insight helped Jake create a strong pricing model, as well as tailor his training to those with a certain budget.

What is their age?

Your gym will typically serve an ideal age range. Because we all tend to lose functionality with age, your fitness model may be better suited for those that are older, younger, or middle-aged.

In Jake’s case, he specialized in helping middle-aged adults that are in generally good health. These ideal customers had known what it was like to be in amazing shape, and they wanted more than “general good health.”

We’re definitely catering to people that are initially coming in because they wanna lose some weight. They’ve let themselves go. They wanna be the athlete that they used to be back in high school or college.

What is their mindset?

When opening a gym, the mindset of your clientele will determine whether or not you can succeed. Fitness facilities need customers that are driven and know what they want. Oftentimes, those people just need a little direction and incentive.

Step 7: Incentivize gym membership referrals before spending money on advertising.

While Jake enjoys marketing and advertising, he knew that to succeed, his gym needed referral power.

How can your gym incentivize referrals?

Referral graph

Obviously, no one will refer friends and family to your business if your services are mediocre. When you get your first batch of clients, you must pay attention to their wants, needs, feedback, and results.

The best metric of how we’re doing as a gym is how many referrals we’re getting every month. If we’re not getting referrals, we’re not doing a good job.

When your customers are happy, they’re more likely to refer others. You can also offer discounts to your clients for referring their friends/family.

What should you do if a client is unhappy?

If feedback and results are negative, you may need to make some adjustments.

Especially in the digital space, negative reviews are sometimes unfairly accusatory. When you receive negative feedback, it’s important that you listen to the criticism and look for opportunities to improve your gym.

Above all, never attack critics. Instead, thank them, offer them a gift, ask probing questions, and commit to (realistic) changes. Even if you can’t win back an angry client, others will see your response and want to give you their business.

What kind of advertising works best for your gym business?

Social media pay-per-click (PPC) ads became one of Jake’s favorite mediums once he had achieved sufficient word of mouth for his gym. For middle-aged audiences, Facebook ads are among the best-performing in the fitness industry.

Step 8: Teach consistency among your clients.

You want your gym members to keep coming back. Not only is it important that you teach consistency, but you must also earn trust with your customers by delivering results.

Gym memberships last longer when your clients see results.

Jake and his team know that when clients see results – weight loss, bulk, or increased physical functionality – they will keep coming back.

Customer retention is more profitable than customer acquisition.

Customer Retention Graph

It is a proven fact in economics that constantly chasing new customers will cost you more money than retaining as many of your members as possible.

Since repetition is the key to results in fitness, creating ways to remind your clients to stay consistent should be part of your gym’s services. This could include encouragement during training sessions, follow-up phone calls, or even email newsletters.

At Jake’s gym, they showcase successful clients on a wall to inspire other members to persist toward their fitness goals.

Step 9: Scale your gym business from within.

Jake warns against jumping too fast towards a multi-location strategy.

Can you open more gym space at a low cost?

The fewer the costs you have to manage in your gym business, the easier it is to “ramp-up” (that is, break even with your costs and become profitable). In the fitness industry, it can take large gyms several years before they generate a profit simply because they started in too big a space.

The first bay I rented out was this back bay here – so just that one garage door. There was nothing in here. We didn’t have a bathroom. It was basically about 400-500 square feet of a garage unit. That was $250 a month… We have four bays now.

If you find an industrial location with the potential for slow expansion, you can build out your gym smarter, just as Jake did.

Can you add more classes?

In your current location, think about ways to exhaust its potential. Jake says,

We could always add more class times… Let’s say we’re doing large group training right now, we could also offer an additional service that is small group training for an additional cost.

Can you extend your gym hours?

Gym usage graphIf you have the time and employees to facilitate extended workout hours, you can cater to those that prefer to workout at different times of the day, including early morning or later in the evening.

Remember that opening a new gym location is a major expense.

With each new fitness center location, you will have to sign a new lease, pay more in utilities, and fill with equipment. It many ways, it’s like starting a gym all over again. Jake advises,

So there’s ways to scale inside your facility versus going and starting another gym, two other gyms, and actually just make that one facility a lot more profitable than going and trying to replicate facility, facility, facility.

Before you establish a new location, make sure that demand justifies the investment and that you’ve filled the space you currently occupy.

If you think at some point you’d want to sell your business, scaling too quickly could negatively impact the value of your business.

Step 10: Arm yourself to replicate success.

Once your gym is a success, you should look for big and small ways to replicate it.

Seek more training.

You and your team are worth investing in greater knowledge and fitness skills. Qualifying your staff to do more with less is a great way to increase your sales and lower your costs.

Jake also found that investing in a coach did wonders for his gym business.

You can learn so much and shortcut your success by learning from someone who is the professional you want to be or has been extremely successful doing what you want to do.

Read books that improve your mindset and soft skills.

Man Educating Himself

Jake’s favorite book is The eMyth because it ultimately inspired him to open his own gym. Reading instructional and motivational books by experts can enhance your skills and improve your mindset.

Never stop challenging yourself.

At the end of the day, you are the one that must take calculated risks. When asked what advice he would give to those thinking, Should I start my own gym? – Jake Brog insists, “Do it! Just go for it!”

It worked for Jake, and it can work for you, too.

1 comment

  1. Jakes story is incredible! It just shows that you dont need MBA nor big capital to start a business. What he has achieved and the business he’s built is nothing short of amazing!

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