Starting in the Gym Business

Diceicle

Admin feel free to move.

This is a relatively niche query so thought it better to post here.

I have an opportunity to invest in the set up of a new gym.
I know nothing of the business end - though I am a gym member fwiw.

The business partner is younger than I but is experienced in the gym sector.

Before the rubber hits the road I'll have to go over his business plan and his figures.

For reference the gym is CrossFit style.
Apart from rent, rates, insurance etc - is there anything that's not obvious that should be coated in?

whippet

like any startup business reality can get lost in the dreams.

Equipment and equipment maintenance can be exceptionally expensive.
Toilets, showers facilities need to be maintained

I don't run a gym but I have thought about getting involved in running one and investing a few bob .. but I just can't seem to get my head around the financials. Each and everytime I look at it .. it becomes more and more like an expensive hobby.

I don't like the normal type gyms and prefer club type gyms .. but unfortunately you can't get rich off something that does not have 100% focus on the commercials.

I might be wrong but i'd expect that the operating costs of the business are covered by the membership fees and then the profits are generated by value adds - Personal training, classes, merchandise sales and walk-in business.

When I say operational costs that would include the basic wage of the people working in the gym. But when I punch in the numbers it just does not make sense really.

The Davestator

I have managed various different gyms over the past 15 years and have decided that there are easier ways to make money!

It can be done, but insurance, claims, rates, water rates, attrition etc must be considered.

Invest in someone who understands sales (actual selling) from the get go would be my number 1 piece of advice.

Panic Stations

I'm sure you've already done this but I'd definitely research surround competition. See where they are, what they're offering and how much they're charging.

Obviously gyms are costly to start up and maintain and your heavily reliant on customer retention. Marketing and some form of sales structure will be crucial for getting it off the crowd in order for it to break even as quick as possible. Websites and everything of the sort will cost money, as well as cost per acquisition of customers.

Of course anything you charge will be subject to what equipment you have, what services you offer, location and competition.

OP could you expand on what you mean by how your partner is experienced in the gym sector? Is he the owner, personal trainer etc?

Diceicle

whippet wrote: »

like any startup business reality can get lost in the dreams.

Equipment and equipment maintenance can be exceptionally expensive.
Toilets, showers facilities need to be maintained

I don't run a gym but I have thought about getting involved in running one and investing a few bob .. but I just can't seem to get my head around the financials. Each and everytime I look at it .. it becomes more and more like an expensive hobby.

I don't like the normal type gyms and prefer club type gyms .. but unfortunately you can't get rich off something that does not have 100% focus on the commercials.

I might be wrong but i'd expect that the operating costs of the business are covered by the membership fees and then the profits are generated by value adds - Personal training, classes, merchandise sales and walk-in business.

When I say operational costs that would include the basic wage of the people working in the gym. But when I punch in the numbers it just does not make sense really.

Thanks. I'm sort of the same mind.
The way its been explained to me though, the numbers sound good. Too good in fact.

So the sensible part of my brain says - something is missing from the picture being painted.

Sticking with the Crossfit example - a CF gym in my area costs almost 1500 a year.
If they have a constant 80 person membership thats 120k a year. I fully accept costs, tax etc have to come out of that - but it appears reasonably profitable - as an additional income stream so to speak.

Tell me how

Diceicle wrote:

Sticking with the Crossfit example - a CF gym in my area costs almost 1500 a year. If they have a constant 80 person membership thats 120k a year. I fully accept costs, tax etc have to come out of that - but it appears reasonably profitable - as an additional income stream so to speak.

How many staff do you envisage?

120K doesn't sound near enough revenue to pay for all overheads and wages for at least 2 people, in my view.

Diceicle

Panic Stations wrote: »

OP could you expand on what you mean by how your partner is experienced in the gym sector? Is he the owner, personal trainer etc?

He was regional manager for a gym chain and has experience in the PT end of things. Someone else would be brought in to manage the day to day aspects and do marketing etc.

It would be targetting a higher end. Not big-box gym crowd. I understand Sports Direct gyms are coming to Ireland and they're like a £5 a month in the uk.

btkm8unsl0w5r4

120k a year wouldn't touch the edges of the fixed costs. Your looking at 50k in rent minimum + VAT, insurance, electricity, internet and phone, fitout costs, equipment loans, advertising, signage, rates, wages etc....120k would be a dead loss. He is underestimating the costs big time.

Location location location, dont assume you have a USP that means you will get a cut of the clients if your sitting looking at 3 other gyms. You have to stress test the costs also, assume they will double (from a reaslitic starting point) and see is it still viable. Too many places fall down come rent review, after a sweetheart initial rent free period or discount rate.

Have somebody experianced in the industry look at the firgure, something sounds off to me.

Diceicle

Tell me how wrote: »

How many staff do you envisage?

120K doesn't sound near enough revenue to pay for all overheads and wages for at least 2 people, in my view.

To be honest that remains to be seen as I would be little more than an investor.
I'd need to see that all in the financial breakdown - so its a fair comment.
Though as its been explained to me - staffing would be very mininmal. Mostly consisting of part-timers to cover classes and peak times.

From my end I'd be looking for a reasonable return on investment rather than what I'd think of as a wage - but that might as well be same thing at the end of the day - its money going out..

JayRoc

The costs of running a gym are usually huge (and always, always , always underestimated) and tbh it's a very difficult industry for business owners to make money.

Box-style gyms have the additional risk of the local council deciding they don't like the cut of your jib and requiring various (expensive) building standards are met before they allow you to open/continue trading

Mellor

JayRoc wrote: »

Box-style gyms have the additional risk of the local council deciding they don't like the cut of your jib and requiring various (expensive) building standards are met before they allow you to open/continue trading

Most of those standards would apply from the get go regardless of council getting wind or not.
Have to also consider planning permissions required

Gumbo

Biggest problems with gyms in dublin is having the legal planning, fire safety and disabled acces in place. The big boys have it sorted (Ben dunne etx)

But the smaller guys opening up in industrial estates, taking leases and transforming them without planning, fire cert and disabled access certificate is rampant.

The costs to do this before hand is significantly lower than afterwards. I believe Dublin City Council are chasing about 20 smaller units across the city at the moment and I suspect many of these will close down now all because of complaints made against them.

My advice, if in it for the long term, sort your planning and regulatory certificates out now before you open.

WHIP IT!

I'm routinely amazed by the sheer amount of gyms, clubs and fitness 'places' that are around these days. There must be about 30 within 15 minutes of me - ranging from large commercial gyms, leisture centres, smaller independent places, niche facilities like CrossFit/Boxing/Curves-style operations... I just don't see how they can all survive.

I'm no businessman, but have been self-employed for a little while (unrelated field) and it just does not add up to me. I'd imagine it is an extremely difficult industry to make money in.

I was in a small industrial estate in Celbridge recently for a team training session at an independent facility - and there are two other "gyms" within yards of it! One CrossFit and one, I think, kind of targeted at women...

DM_7

No surprise to see the pop up fitness places now as the economy recovers. People with little idea what to be at but wanting the look a certain way from what they see (all over ads, social media etc) are paying out money to look better and often cash in hand for PT sessions.

On the plus side, more established places are updating their gyms.

Long term outside the big operations I don't see how an investor in a start up in this sector will get a return. I expect it is a lot like food sector and needs a lot of time invested to get it running smoothly. Look at the amount of work Transform has to do (as he has posted himself) to get his business working well. Will someone on salary work that hard for investors in a start up?

This high end 1500 cost sounds like a short term membership, people will get value, reach a goal or learn enough then life will get in the way or they will move somewhere cheaper. Can an expensive niche gym really compete with places that are open 6 to 11?

Mellor

DM_7 wrote: »

This high end 1500 cost sounds like a short term membership, people will get value, reach a goal or learn enough then life will get in the way or they will move somewhere cheaper. Can an expensive niche gym really compete with places that are open 6 to 11?

That's about the going rate for a legitimate strength and conditioning gym for a year

Transform

DM_7 wrote: »

No surprise to see the pop up fitness places now as the economy recovers. People with little idea what to be at but wanting the look a certain way from what they see (all over ads, social media etc) are paying out money to look better and often cash in hand for PT sessions.

On the plus side, more established places are updating their gyms.

Long term outside the big operations I don't see how an investor in a start up in this sector will get a return. I expect it is a lot like food sector and needs a lot of time invested to get it running smoothly. Look at the amount of work Transform has to do (as he has posted himself) to get his business working well. Will someone on salary work that hard for investors in a start up?

This high end 1500 cost sounds like a short term membership, people will get value, reach a goal or learn enough then life will get in the way or they will move somewhere cheaper. Can an expensive niche gym really compete with places that are open 6 to 11?

the fundamental problem is that gyms are now being set up like restaurants we're 10-15yrs ago - vanity projects for people to say they own a gym.

lots will close only because A) they will actually have to pay their tax bill and they will get a shock when they grow up and pay vat they dont have systems in place for training clients

its a very packed industry out there but i wouldnt worry about other trainers, Id be more worried about someone coming into the industry from the likes of IBM, Microsoft, Salesforce, Accenture that understand business and notice a gap in the market

shutup

Transform wrote: »

its a very packed industry out there but i wouldnt worry about other trainers, Id be more worried about someone coming into the industry from the likes of IBM, Microsoft, Salesforce, Accenture that understand business and notice a gap in the market

Just wondering you are talking about in this paragraph. Could you go into more detail ?
Do you mean worried about your own personal PT business taking a hit?

jamesbondings

shutup wrote: »

Just wondering you are talking about in this paragraph. Could you go into more detail ?
Do you mean worried about your own personal PT business taking a hit?

Multi - nationals are beginning to offer their own full onsite gym including pt sessions to their employees. Employees do not have to pay a penny for this and it is right where they work so an hour before work - during lunch etc....showers onsite and no joining fees etc, no brainer.

shutup

jamesbondings wrote: »

Multi - nationals are beginning to offer their own full onsite gym including pt sessions to their employees. Employees do not have to pay a penny for this and it is right where they work so an hour before work - during lunch etc....showers onsite and no joining fees etc, no brainer.

Thanks for info. That’s great news for anyone working there and a nice touch from the companies.
Not sure if that’s what transform was talking about. Maybe it was but it reads like he meant a big company with clever business plans going into the market?

btkm8unsl0w5r4

shutup wrote: »

Thanks for info. That’s great news for anyone working there and a nice touch from the companies.
Not sure if that’s what transform was talking about. Maybe it was but it reads like he meant a big company with clever business plans going into the market?

That fellow knows nothing, he cant even afford a shirt.;)

helimachoptor

Diceicle wrote: »

Thanks. I'm sort of the same mind.
The way its been explained to me though, the numbers sound good. Too good in fact.

So the sensible part of my brain says - something is missing from the picture being painted.

Sticking with the Crossfit example - a CF gym in my area costs almost 1500 a year.
If they have a constant 80 person membership thats 120k a year. I fully accept costs, tax etc have to come out of that - but it appears reasonably profitable - as an additional income stream so to speak.

The CF gym I was in charges €170 - €190 a month. I payed it because it worked for me. i recently changed to a cheaper one (€75 not branded CF but essentially the same)

There's 2 owners, 1 does classes the other does not, there's 2 other trainers (1 left but is being replaced) no idea how much they make but that's people.

they do a lot on social media, which helps to get in new people but also I've referred a few people to it and most are there 12 months plus.


They've got a big unit, lots if equipment, rowers, aero bikes, whatever about letting a ben dunne type membership run on, 170 a month wouldnt.


My current gym is a lot cheaper, however they definitely have more people signed up, but potentially less dedicated/cultish :pac:


There's a gym in South Dublin (wont mention the name but you'll find it if you google) there basic rate is almost €300 per month :eek:


Best of luck OP

Transform

shutup wrote: »

Thanks for info. That’s great news for anyone working there and a nice touch from the companies.
Not sure if that’s what transform was talking about. Maybe it was but it reads like he meant a big company with clever business plans going into the market?

That’s exactly what I was talking about and you can already see it
In the yoga and Pilates community

The other point is equally valid - on site gyms, of which I’ve seen many that
Would look and function better than most Crossfit or s and c gyms I.e. simplified
Programming, always clean (Jesus please clean your gym and toilets!) and
Staff are often paid better

The big box gyms will lose out the most eg Westwood, Ben Dunne, as they’ll find
It increasingly more difficult to find staff that are willing to get burnt out teaching
20hrs per week of classes