Reposted from www.abcfinancial.com
There are several key criteria to consider when calculating the cost of owning a gym. If you know all of the included costs ahead of time, you will be able to plan accordingly in order to maximize your profits.
Location will likely be the largest cost of owning a gym but will also be the biggest factor in gaining foot traffic and potential customers. Rent mainly depends on where you plan on opening a gym; the cost of opening a gym in downtown Los Angeles will be significantly higher than the cost of opening a gym in the surrounding suburbs. In order to make the right decision, you need to balance out the rental cost with the location in the city. Another item to consider related to location is the demographics you want to target for your gym. If you are considering opening a gym for an audience between the ages of 18 and 34, it might not make sense to open it in the suburbs or rural areas since 26% of a city’s population is made up of this age group compared to 23% for suburbs and 21% for rural areas. Remember, high traffic areas are best, but if the cost is insurmountable, then it may not be worth it.
Your second highest cost is your equipment. Gym equipment can be what differentiates you from other gyms and propels you to the top. However, this doesn’t mean you should blow all of your budget on equipment. For a commercial gym, equipment costs can range between $300,000 and $500,000. For smaller gyms, costs tend to be around $100,000. Take a look at your finances to figure out which category you fit into comfortably. Luckily, in many of these cases, costs are fixed, which means that you only have to buy them once and you should be good to go. You may need to upgrade and maintain some of your equipment in the future, but that will be a far lower cost.
When it comes to employees, you have many decisions to make. You need to decide how many workers to staff, how many personal trainers to hire, and what to pay each of them. With all of these decisions, you need to find the right balance between quality of staff and reasonable costs. There are several employee positionsthat could be beneficial to your gym’s success. These positions include a cleaning crew, floor watchers, a front desk to answer the phone as well as questions about the facility, and fitness consultants to sell memberships. Additionally, your trainers need to be licensed, so you can either hire licensed personal trainers or hire non-licensed ones and provide them the ability to obtain a license.
Additional Upfront Costs
There are a few additional costs of owning a gym, but these are largely dependent on you. To open a gym, you need certain permits and licenses, but the cost of these vary on number of employees. Furthermore, you may want to plan ahead by hiring legal help to gain the necessary insurance and avoid any issues. Lastly, gym management software can help you run an organized gym.
While the cost of owning a gym may seem high, remember that you will attract members who pay a monthly fee. One thing to be aware of with memberships as it indirectly relates to gym costs, is membership delinquencies. It is a real possibility that some of your members will “forget” to pay their monthly fee, which means less revenue for you. New gym owners do not always recognize membership delinquencies as a possibility, so to avoid trouble down the road, you may want to include this category when tallying profit. Gym management software and payment processing can help mitigate these risks.
To learn more about the current state of the gym industry and owning a gym, check out our infographic! https://bit.ly/2yj6LoD
Reposted from www.abcfinancial.com
Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting, turnaround and brokerage firm specializing in the gym and sports industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars, webinars and workshops across the globe on the practical skills required to successfully to overcome obscurity, improve sales, build teamwork and market fitness programs and products. In addition, his company will buy gym equipment from gyms liquidating or closing. Visit his Web site at: www.fmconsulting.net or www.jimthomasondemand.com.