T Nation

Calling all gym owners...need serious advice

A friend and I have been talking seriously about opening our own gym. I live in a city with 42,000 people and we have two gyms…one a YMCA, the other being basically a YMCA with better music. We would like to set up a 24 hour facility (something neither of the two gyms offer), and we plan to have much better equipment than the other locations (reverse hyper, glute-ham, etc.) We are not looking at this as a “pipe dream” but something that we intend to accomplish. What we don’t know are the operating costs, different types of licenses we need, etc. I know that starting a gym is not cheap, but we could literally destroy the competition if we could just get started. Could someone advise on what we need to look into? Many people in town are extremely dissatisfied with the gym quality we have here, and there would definitely be a huge market for something that’s not necessarily top-notch but decent quality with a knowledgable staff. Thanks in advance!

I have worked at a gym for two years. I dont know much about operational costs but can tell you some selling points that we have.
No contracts. month to month is what we do.
We do however charge an initial fee along with the memberships fee. we offer different rates depending on what people qualify for, ie students get a lower rate, seniors are yet lower, we give law enforcement, military, couple memberships, family discounts. guest fees and nonmember fees as well incase some just want to try it out. Let me know if you want some more input Id be happy to oblige.

I don’t think i agree with you greg. The key is long contracts so that you have garanteed bussines. At Bally’s we have three year contracts. I would say that 75% of people will quite with in 6 months. So in six months you would only get the initiation fee + 6 month membership costs. With a three year contract you get initiation fee + 36 month membership costs. So for every one person that signs up with a contract you would need to generate 6 people to profit the same amount of money. Remember the key to running a succesful gym is to target “soccer mom’s.”

Thanks a bunch for the advice, guys. We would be happy to get any input as this is all new to us. It is actually good to have these crappy gyms here as it shows us how NOT to run a gym. Actually the financing is going to be the most difficult part for us, obviously. What we were also thinking is trying to find a building in the north central area where we live, as the YMCA is on the east side which is the shady area of town and a lot of women don’t like being in that area at night. The other gym is basically in the center of town but there’s not much else around it. In the north central area we have our two malls, a grocery store, numerous shopping plazas, etc. Rent isn’t going to be anything cheap, but in the long run I would definitely say it would be worth it. Any additional comments/ideas are welcome. One question I did have is approximately how much time would it take from starting from scratch to opening our doors if we caught a few breaks? Six months? A year?

With all due respect (and this will sound like I’ve got none), Bally’s is one of the last places anyone should be taking advice from. 36 month membership? And people generally quit after 6 months? You’re hosing them for 30 months of membership if my grade 4 teacher knows what she’s talking about.

Instead of helping your membership and doing the things to ensure their success, you hope they drop out! I'm all for making a buck, but that's just fucking sleazy.

Concentrate on what this business was built around: Helping people get in shape! Not ripping them off!

Maybe you look at things differently (most likely, you do), but realize you’re the sleazy used car salesman, the crooked cop or the con artists of the industry.

If da bling bling is all that matters to you, Congradulations.

What are your objectives? Why do you want to open the gym? Do you plan to have your gym be a lucrative business that you can support yourself with or are you more concerned with having something that will be better than the YMCA and with better equipment? If you want it to be lucrative in a town of 42,000, you have your work cut out for you. That’s not too many people to market to, but it can be done. I’ve lived in several small towns where some good people sunk their life savings into opening great gyms with state of the art equipment and wonderful facilities only to see them tank because the owners knew very little about the “business” side of running a gym. Unfortunately, many bodybuilders, personal trainers, and others in the fitness industry often fail to make any money because of a lack of fundamental knowledge about accounting, marketing, sales, and other business related areas. I currently work as an independent contractor(personal training) inside a Gold’s Gym in a medium sized city. The owner of the facilty and many of the sales staff know very little if anything about health and fitness, yet they gross anywhere from $75,000-100,000 per month in new memberships. The owner of the gym is a businessman and also owns restaraunts and other small businesses in the area. He never even works out, but he has a multi-million dollar gym business. I’m all for starting a new gym such as the one you are proposing, but just make sure you do your homework and realize your risks. Establish clearly defined business objectives and if you don’t know a lot about business, do extensive research or take some classes. I’ve seen too many start-ups like yours fail. Good Luck.

I would talk to an accountant or a lawyer to see what they have to say. You could price the equipment yourself by simply talking to a distributor. The problem you will probably run into is that to make money you will have to have your gym accepting of women (you know the kind of women I’m talking of) and the men who just want to socialize. Somehow this must not scare off the hardcore guys and gals too. When you figure that out fill the rest of us in too.

I got a membership to a gym for Christmas. It’s $100 for 3 months (hours: 7am-9pm closed Sun.) or $350 for 1 yr. and you get a key (= 24/7 365 days). The owner says he does the year/key thing because most people drop out 3-6 mos. If some pays $350 there more likely to stay. He has a boxing ring, free weights, machines, punching bags, tread mills, and everything. The gym has cameras in it so if people are coming in @ 2 am and causing trouble or breaking stuff he reviews the tapes every morning and can press charges against them.

Appreciate the advice, SpaceMonkey. We’re not totally ignorant to the business side as we both have management experience; however I do agree that taking some basic courses would be a great idea. I have taken some accounting courses in the past, although I could use a refresher. Right now we both work in the retail industry and we want to try another avenue, although in a sense we would still be selling. Yes I would like to have my own place to work out, but this is not my primary reason for starting up. If I could start out making even $40,000/year I would be happy. I don’t need to be a multi-millionaire, and I agree that we don’t need the top of the line equipment, but we certainly would want to offer more than what the current gyms do, and believe me this wouldn’t take much.

Like I said before month to month. Nobody wants to shell out money to a gym and not be able to go. Some people get sick, some die, some get a better job and move on. We have a lot of repeat customers because they work for an airline and are only intown for a month at a time or two weeks. Our biggest competitor has basketball courts and raquetball courts. We do not and we have four gyms and are looking to open up 3-5 more in the next 5 years. We do have a pool, hot tub, steam room, and dry sauna, spinning classes and aerobics.
I would also think about opening in june. We opened our last gym in june and there were people banging on the doors to come in.
We also offer corporate rates which I think is key. I often ring up checks for 300 and all the way up to 20,000$ A month! We have three corporates that give our gym over $20,000 checks a month. And thats just at our gym. The other three get large corporates as well.
On the promotional side I would think about having a radio station do a remote when you open. and offer discounted rates to the first x amount of people or maybe just for that day.
Also I found a website through ISSA that helps people to open their own gym.

www.healthclubtech.com/

On the one hand I would by no means
go with the required 36 month contract –
that seems like a very severe shafting – but distasteful as some think it is, you should
make yearly contracts the core of your business. Sure, have monthly, weekly, and daily rates, but these will have to be far higher.
For example, the weekly rate ought to be about 20%, no less than 10%, of the annual rate, and the monthly rate about a third of the annual rate. (These figures are very approximate and can vary.)

Here’s the thing. A regular, faithful member is spending, what, perhaps 3 hours per week in the gym on average? 150 hours per year? Now where in the world can anyone go and use thousands of dollars worth of equipment, in a large space, with staff to help him, for only $1 or $2 per hour?!? Nowhere! And you won’t make money at that rate either.

He or she can only do it if there are five other people also paying but not there, by their own choice.

Which is better, if you need X dollars per year? For those who work out faithfully to have to pay relatively heavily every month, carrying all the load of your facility; or to let them pay only 1/5 as much, while four slackers carry the rest of the load?

And even the slackers are not getting such a raw deal. After all, they agreed voluntarily – I’m assuming you have an ethical sales staff and it’s not a question of people being manipulated into a contract – and the fact that they HAVE paid for the whole year almost undoubtedly does cause them to come back and get started again, if only for a few weeks, more than they would without the membership already being in place.

As SpaceMonkey said the absolute key is sales and marketing. You can have a shitty gym with old worn out equipment but if you know how to present it and manage it and take care of your customers then it can be several times more profitable than the high dollar gym with fancy equipment etc. Theres a book out called “how to make millions in the health club industry”…it does a pretty good job at explaining the marketing end of it. It would be a real benefit if you or your partner had some experience in the selling and promotion of gym memberships as this will make or break you. It doesn’t have to be a “you win/customers lose” type of deal either. I would strongly caution against month to month memberships with no contracts as I’ve yet to meet a gym owner who hasn’t been burned on this. What’s the minimum amount of time it takes someone to get in shape anyway?? I would also caution against staying open 24 hours from the get-go. If you get started and you’re making money then that’s something you might consider if you think it will increase your profit margins. But a lot of time it does nothing but add greatly to your operating expenses. As far as your opening goes a strong promotion and grand opening is absolutely essential. Done correctly you should be able to get a strong presale generating cashflow before you’re even open. In a town the size of yours a good presale should generate a bare minimum of 500 members. You do this fairly cheap through telemarketing (call and give everyone in the phone book a free trial membership and then allow them to exchange their free trial for a discounted full membership etc.), lead boxes, flyers etc. without ever spending money on radio or television. There are several fitness consulting companies that specialize in membership drives, etc. Most of the time if you’re starting out new the benefits of using a consultant far outweight the negatives as not only will you learn how to manage, promote and generate the best service and highest profits in all aspects of your club but you’ll be able to make most likely a whole lot more money than you would otherwise from the very start.

You should go down to your city hall and tell them what you want to do. They’ll be more than happy to inform you about licenses, fees and or bilaws.

I have never owned a gym but I have run several businesses.
bigrob you said “Instead of helping your membership and doing the things to ensure their success, you hope they drop out! I’m all for making a buck, but that’s just fucking sleazy. Concentrate on what this business was built around: Helping people get in shape! Not ripping them off! Maybe you look at things differently (most likely, you do), but realize you’re the sleazy used car salesman, the crooked cop or the con artists of the industry. If da bling bling is all that matters to you, Congradulations” again you said “Concentrate on what this business was built around: Helping people get in shape” WHAT?? I am not saying that you should not try and help people but to run a business the most important thing has to be keeping the business profitable. If the gym fails who are you gonna help? If the gym makes money how many employees are you gonna have? how many tables will you have put food on? come on bigrob, people have kids to feed. If you are so gungho about helping your fellow man give this guy some money to open his gym with.

Teddykgb you said “What we don’t know are the operating costs, different types of licenses we need, etc. I know that starting a gym is not cheap, but we could literally destroy the competition if we could just get started” again WHAT??? you don’t know what capital you will need, you don’t know the zoneing laws, you don’t know much at all about it but you are sure you can “literally destroy the competition” the “competition” is there for a reason. maybe you can make it work, maybe you can destroy the competition but you need to learn more about business or it IS nothing but a pipe dream. Don’t mean to sound to harsh and I know your gonna say “thats why I started this thread” but you should have more info before you even THINK about oppening ANY business. People always want OTHERS to tell them how to do something. Learn, read all you can on opening a business, managing a business, all local zoneing laws, building codes, tax laws, fire codes, get ALL the info you can from equipment manufacturer, look into leasing vs. buying equipment (think and give the benefits of each, I did not think you could), etc… people give many reasons why they think businesses fail but I think there are a couple of big ones, they are not realistic (they don’t realise it will take 2-3 YEARS to start seeing a profit), they do not have enough money (again the wait will be 2-3 YEARS for profits and you are gonna need atleast twice the money that you think you will when you open your doors), they do not have the dedication it takes (I know you will say that you could work 18hrs a day 7 days a week but first go out and get a second and third job that you hate, if you can keep it up for a year you MAY have the dedication). I could keep going and going about this and you probably think I am trying to discourage you, I AM!! but wait and see how discouraged you get every day when you first open. anyway GOOD LUCK and I do mean it! I hope all goes well and I hope you get some of my points.

Kelly i could have went the rest of my life without hearing about lead boxes and trial memberships. God i hated that job so much. haha

Teddy I will try and help you as this is something that i myself are hoping to accomplish in a short while! And as we live in different countries it will be no problem to me! You basically want to figure out what you want to cater for, my recomendation ( a whole lotta ppl ) It is all very well saying that you want to help ppl and transform there lives , i agree this is a benefit but you don’t want to be rippin ppl off, although you are in this to make a profit, this means that you don’t go down a hardcore style gym route as many off these have been started and have failed , why ? they are too specific and cater to the minority you want to cater to both the minortity and majority ! You can make alot of money this way, granted the intial outgoings are more than the incomings but it would soon make yoiu money.

You want to advertise, advertise advertise it is the only way that you will get yourself known, sadly this is where alot of money will be spent! before you advertise do some data collection look at what the other gyms offer the improvements that you could have done to your place and most importantly what the ppl want !!! Get out there and ask ppl what the want, questionairs surveys etc.

Offer Class’s as well as your gym, class’s make money there is no denying that! I would dedicate area’s to the gym keep everything neat and tidy (impress’s ppl) such as free weights ( allow chalk and have platforms ), machines and cardio.

You want to hit all the big offices in the area offer corporate specials etc you know corporate fitness , once again these are big money spinners and most importantly client generators. I would also consider as someone else said, offering discounts to special minorities such as fire, police army swatt hospital students and oaps. In would also offer a six month contract that way if they quit you aint rippin them off at all they have only lost six months doh instead of 36 like someone else said. It's all about getting a good rep so you need to get yourself some quality trainers and nutitionalists you can offer these as services ! I would be happy to help more, if i can !

FFB

I work at a gym,I’ve been there for 3 years. Basically you gotta know your objectives. My boss, the owner, has 3 kids. He could give 2 shits about having new or great equipment. He is far behind and basically does 3 month,year,and monthly memberships.3 months-149,year-399,monthly-29 down,39 each month.He gives the usualy discounts-town workers,youth,elderly,family.
If I was to open a gym,I would start like him and just get some cash flowing, but if you want to just rip people off,your in the wrong business. Taking a tun of money from fat asses isn’t cool in my book :slight_smile:

In the end its up to you whether you what type of memberships you have, whether month to month or contractual basis. Some said they have known a few that have been burned that way. My gym has been around for 15 years. Not too bad. I think it has a lot to do with business decisions and management. If they are poor it will reflect on the gym and it will ultimately fail.

A couple simple ideas I though of after reading all of the thread: 1.If you, or a marketing group is going to go door to door, have VERY physically fit people do it, people are more likely to sign up if the person pitching them is in better shape than they are. 2. TREADMILLS are money makers like slot machines are in Vegas. Per square foot, more soccer moms will sign up because of those damn treadmills than any other reason. 3.Have your opening membership drive start in an April, with about six weeks until a begining of June/Mid-May opening. 4. If you expect to make $40,000 a year in the first year of a new business, you are seriously dreaming, insurance on a gym alone may suck all your profits for the first 36 months.

I definitely hear where you’re coming from. I guess I have resigned myself to the fact that the “fitness industry” is not the place to go if you want to make a boatload of cash.
I left a bartending “career” where I made $40-$60 grand a year to do this because I love it. I know I’m a little idealistic about the whole industry and the way its run but I have reasons.
I guess I should just face the fact that it’s a sleazy industry by nature and people are in it to make money. Still, I refuse to do business that way. Will I make it? We’ll see a few years down the road.
Rippin’ off fatties isn’t cool in my books either.