How NOT to Start a Gym Business
The following is a guest post from David Cross of Evo Fitness:
Grand talk, bold aspirations, youthful exuberance, and an abundance of boundless enthusiasm. With the drive and determination of the underdog, ready to challenge and beat the huge franchise gyms in their own backyard. This was our chance, our time, bring it on.
It’s now two and a half years since my business partner and I opened to the doors to our dream gym, Evo Fitness. The aspirations and motivation we had at the start are still there, but they’ve taken a severe beating along the way. So much has been learnt, and so many of our cock ups could have been prevented with more planning, more thinking, and a little less gung ho bravado and dick swinging.
We paid the price the hard way. Take heed, and pay attention. Basics often get forgotten in the heat and excitement of the moment. Take a step back from the brink, reassess, then reassess again.
Location, Location, Location
Where you start your facility is crucial, the last thing you want to do is move because six months down the line it’s not working. Trust me. You need to know the market around you, the average age, income brackets, other businesses in the area, parking, access, and visibility. Don’t assume any of this. Walk around the area you want to be. You miss a lot of things when driving. It’s only when on foot that you’re able to take everything in.
Does the area need your style of gym? If you’re looking at a leafy retirement suburb, there’s a good chance it won’t be good for a hardcore garage facility. The area may have many big blue chip companies, but the majority of the workforce could be low paid warehouse workers with only a handful of top execs. This will kill any high-premium personal training facilities. Make sure your vision for a gym, is the same as the area’s vision of a gym. You can always change people’s views but it’s a damn sight easier when they already dig, and can afford, your style.
This is one of those expenses that grind you more than the ever-increasing cost of fuel, but it is essential. You’re about to sign up to more debt and risk than you have probably even contemplated. Financing of your equipment, bank charges, interest payments, lease costs, insurance, and liability covers. People pay us because we know health and fitness - what do you know about the inner workings of a landlord lease agreement?
If you’re like me, probably very little, and as much as you understand the basics, it’s the small details that will cost you the most money. What happens when the air conditioning breaks down, the boiler stops working, the toilets don’t drain, and you’re late on your loan, annual increases, and excesses for insurance claims? These are the small details that differ from contract to contract and will come back to rob you of your hard earned money when you least expect and need it. Cough up the money, hire a specialist in this field to navigate, and even negotiate a better deal on your behalf. Don’t be afraid to walk away from something because the details don’t fit your plan. You have a lot more bargaining power than you imagine.
Visions of Grandeur
Let’s face it. We’ve all seen DeFranco’s facility, Eric Cressey’s new set up, IFAST, Iron Sport, etc., etc., with plenty of open space, 20-25m of lush green Astroturf, gleaming equipment from Eleiko and EliteFTS. It’s every strength nut’s wet dream. Unfortunately, unless you are Joe De Franco, Eric Cressey, or the like, with years of experience, a proven track record, and more clients than you know what to do with, you need to downsize your vision and rejoin reality. These guys and many like them started with no more than a double garage worth of space, a few pieces of second hand mixed equipment and a couple of mates to train. Anything more than this and you’ll either end up with a financial time bomb for a lease agreement and a facility that’s packed to the rafters with space and very little else.
As I just mentioned, equipment from Eleiko, EliteFTS, Perform Better, and like are fantastic. Quality, style, robustness, and everything you could want from equipment manufacturers. This comes at a huge price though. While they undoubtedly would look majestic in your new setup, would your clients notice or even care? Will they give you a return on your investment? Yes, they will last a lifetime, but let’s face it, a solid Power Cage, custom built by your local metal works, to your specifications or an equally solid cage imported from China will do exactly the same, with the exact same life span but for a fraction of the cost.
Those 50kg+ dumbbells - do you really have any clients that will utilize these, or is it just some over indulgence for your own training? Rumble rollers are great but so is a piece of PVC gutter piping at a fraction of the cost. Unless you’re being bank rolled by Sheikh Mohammed or Bill Gates, these are the bottom line costs that will give you more buffer to save your ass when the going gets tough, and it will get tough. You can always sell off your equipment and upgrade at a later stage, but for now, keeping things simple and staying in business is top priority.
Financial planning, cash flow forecasts, startup costs, monthly expenditure, and break-even points are all essential tools for the success of your new business. Funny thing about these spreadsheets, they are only as good as the information you put in. If you put in guesstimates - what you hope to achieve, what you think you’ll do - you’re setting yourself up for disappointment and failure.
Don’t get me wrong, you need to be positive about things, but until you have people signed up and money in the account then your cash flow forecast is zero. You need to work on worst-case scenarios. Worst-case scenario is that nobody signs up. You have to base all of your planning on not having any income for the first six months. If you can still make the spreadsheets and business work on this principle, then take the next step.
Egos Will Ruin You
We’ve all deviated from our training plan and let our ego get the better of us. Sometimes it pays off, other times it’s damn near crippled us. I still have images of the movie with Kevin Costner, Field of Dreams: “If you build it, they will come.” Thanks Costner, another dream crushed! The truth is you need to do everything in your power to make people aware of your gym and get people in your gym. Nothing should be over looked or beneath you. Whether it is handing out promotional flyers at the nearest traffic lights, offering free or heavily discounted sessions to local businesses and friends, or going to local running clubs and selling the benefits of strength training. You need to sell. If you’re not prepared to sell your business, then why on earth will anyone sell it for you? For your business, any exposure and additional revenue is better than sitting on your ass waiting for people to come to you. Lose the ego.
The South African market is very young, naïve, and uneducated in relation to our more established cousins in the United States, United Kingdom, Australia and the like, especially in terms of strength and conditioning facilities or real training. We need to get more numbers through the door by adjusting our game plan, without selling out to the gimmick-ridden fads and lunk alarms of the big corporate franchises.
Quality personal training unfortunately has a low priority and fairly high monetary entry point for the majority of households. We need to bring down that entry barrier to generate more clientele. We have now introduced semi-private training to maximize our hourly earning potential and added group classes to our schedule. Both options dramatically reduce the monetary entry point for potential new clients. Once through the doors, they will start to have a greater understanding, appreciation, and need for the other services we offer in relation to training, massage, nutrition, rehab, and supplementation. We are providing a one-stop shop, a destination for all their health needs. Price is always a factor, but once through the door quality and convenience have a greater value than price itself.
In finishing off this piece and reading back to myself, I’m cringing at how many things we got wrong along the way. Whilst we have learnt from our mistakes, we will always make more new ones, but by taking the above processes and implementing our adjusted game plan, I am confident we will make a lot less and be more successful because of it.