Requirements and Tips for Opening a Gym

Opening a gym can be a great investment as many more people commit to losing weight and getting fit every year. There has been an increase in physical health awareness over the past decade, with nearly 50% of U.S. adults trying to lose weight in the last 12 months and, according to the CDC, the most commonly reported method was exercising. Gyms provide guidance, convenience, support, and equipment, which most individuals are looking for in their exercise routines. When done right, opening a gym can be the best decision you make.

Here's what you need to know about moving forward and opening a gym.

Know the Importance of Branding

First and foremost, it's important to establish your brand and how you want to be perceived. Then you can move onto building your business plan with a clear understanding of how you expect to present your brand to consumers.

Your brand represents the services you will offer and should be strong enough to differentiate you from the competition. It will ultimately increase the value of your company and make you more memorable to consumers. A good example is Planet Fitness and its introduction to a new "judgment-free" fitness industry experience.

According to Athletic Business, Chris Rondeau, CEO of Planet Fitness, advises gym owners, "The key to success in business is not to be afraid of doing things differently [and] don't be afraid of going against the grain. When you think of the Apple (AAPL) iPhone, people didn't realize there was anything better than the flip phones offered to them by every phone company out there. Apple wasn't afraid to abandon the flip phone and the competition by creating something new."

Business plan and loan requirements

According to Chron, having a well-written business plan and the finances to support your business endeavor is the first requirement for opening a gym. A business plan is the foundation of your business and guides you through each stage of your journey as a business owner. Without a plan, you not only won't be accepted for a loan, but you run the risk of disorganization and not being prepared. As the great Yogi Berra once said, "Without a plan, even the most brilliant business can get lost. You need to have goals, create milestones, and have a strategy in place to set yourself up for success."

When your brand is established and you're ready to move on to the next step, keep in mind this layout developed by the U.S. Small Business Administration to implement in your business plan:

Executive summary

Briefly explain what your company is and why it will be successful. This section is significant because it's your 'first impression' and will influence the investor's decision to continue reading. Consider what you decided on for your brand and brand message.

Company description

Detail what problems you solve, the consumers you'll serve, and your competitive advantage. This can include location, expert trainers, and any other strengths your gym will have.

Market analysis

Go over your industry outlook and target market. It's important to understand your market so you can meet and exceed their expectations. This includes an industry overview, a complete detail of your target audience, market size, location, demographics, trends, and behaviors. You should also get familiar with your competition for reference, so you know your market's needs, how you can meet those needs, and what you can do better than the competition.

Organization and management

Here you will need a description and layout of your company's plans for legal structures and who you plan on running it.

Service or product line

Go over the gym service you will offer in detail. Do you plan to have additional offers like a juice bar, exercise classes, trainers, and more? Gyms that offer more than equipment in their memberships or at their location will help distinguish your brand from the competition.

Marketing and Sales

Cover your marketing strategy thoroughly in this section. This strategy will evolve and adapt over the years, so don't expect to have the same plan always, but make it a good place to start and build from. Professionals who've worked with gyms owners many times before are a great option for developing your marketing and advertising strategy so you have more time to focus on the business itself.

Funding request

When asking for a loan, you'll need complete details on the funding you need for the coming years and your repayment plans. According to TRUiC, you can expect average gym costs between $200,000 and $400,000 to get started with ongoing costs on gym equipment that can initially cost you $200,000 or more. Equipment financing is a customizable option that works with your fitness facility needs. Sage, however, adds the costs of:

• Location - up to $800,000
• Certified trainers - $500 to $800 per certification
• Licenses and permits - depends on local standards.
• Fees - averaged around $9,000
• Insurance is required when owning a fitness facility as an added protection for you and your business. Places like NEXOFit are great for protecting your assets so that you can focus on more important matters - your customers!

Also, consider costs like building improvements and remodeling, computer network and POS system, employee uniforms, miscellaneous gym supplies, merchandise, and operating cash.

Financial projections

Give forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. The fitness industry is continually growing in popularity, so use this to your advantage. For instance, Statista reveals that the market size "has been steadily increasing in recent years, exceeding 96 billion U.S. dollars in 2019," with around 174 million members worldwide.

Appendix

Include any requested information and additional documentation like resumes, pictures, legal information, etc. The more you have to offer in preparation for opening your gym, the better prepared and trusted you will be perceived to be when requesting a loan.

Legal Responsibilities: Business Entity, Taxes, Business Banking and Accounting

A business entity is required to protect you personally from any liability risks associated with your business. In a broad sense, 'entity' is synonymous with 'person' and defined by BEA as any individual, branch, partnership, associated group, association, estate, trust, corporation, etc. with legal rights and responsibilities. Aside from registering for taxes, there are a few more legal responsibilities to be aware of.

Legal Zoom provides these legal responsibilities for forming a business entity:

• Filing formation paperwork
• Setting up financial and tax accounts such as getting a federal Employer Identification Number (EIN), opening a business bank account, and register with state and local taxing and licensing agencies.
• Get business insurance
• Get protected by contracts like Nondisclosure Agreements (NDA), Employment Contracts, Intellectual Property Assignments, and Terms and Conditions.
• Stay up to date with state agencies.

Business banking and credit cards are also a requirement for keeping your personal life away from your business. In order to keep liability risks separate, you also have to keep income and spending separate. Not to mention taxes and accounting will be much easier to file and manage since it's important to keep a detailed record of income and expenses.

Reach Out to Experts for Additional Guidance

There are many ins and outs associated with opening a gym and meeting all the requirements it entails. Fortunately, there are also experts like NEXOFit who have extensive knowledge and experience in helping fitness facility owners get their business up and running and keep it thriving in the years that follow.