Congratulations, you’ve turned your passion for fitness into owning a gym! You are your own boss and you’re living your dream while helping others get healthy and fit.
If only it were that easy…
According to statistics published by the Small Business Administration (SBA), about twenty percent of business startups fail in the first year.
Even more staggering, about half succumb to business failure within five years, and by year 10, only around 33% are still left standing.
How can you ensure that your gym is among the third that makes it?
Avoid these costly mistakes that seasoned gym owners have made and you’ll not only survive, but potentially thrive in today’s competitive fitness industry.
You’ve imagined this moment for years, the doors open to your new fitness studio, it’s perfectly laid out, the amenities are lux, the classes are knock-your-socks off, the sound system is killer, your instructors are trained to the nines and you’ve got a beautiful retail boutique stocked with the latest trends in fitness wear. Surely, the masses will pack it in.
And cue the crickets…
Chances are, if you have not brought a previous following with you, you may discover what many others have about owning a gym.
In the first weeks and months you and your instructors may be teaching to classes of 3 or 4 people and sitting through no-show training sessions.
Take time to learn about the fundamentals of marketing, from social media and websites to lead-gen and SEO. Check out How to Build Your Fitness Business with Email Marketing or Local SEO Solutions for Fitness Businesses, or our free downloadable guide, How to Grow Your Fitness Business Using Social Media.
Lastly, remember, it takes time to build a loyal customer base.
In the beginning, you will experience a high degree of turn-over. Also, the fitness industry as a whole has a high turnover rate.
The most successful gyms maintain over a 70 percent retention rate year-over-year but the average is closer to 50 percent.
That means you can take heart that turn-over is normal, yet part of gym ownership is constantly filling your pipeline with new customers and working hard to retain the customer you do have.
We can't say this enough.
As a gym owner or boutique fitness studio owner you are also a small business owner.
This means that you are the CEO, CFO, CMO, director of customer service, a personal trainer, web designer, social media photographer, retail buyer, sales manager and, yes, even the janitor.
There are days where, in addition to teaching inspiring classes, you may spend time pouring over sales reports, motivating your staff, listening to your students latest life challenges, editing your class schedule, sending out e-newsletters, posting on social media, doing laundry, cleaning shower drains and making bank runs.
Many new fitness studio owners don’t realize that owning a gym is more than the prestige of being the boss and teaching when and how you want.
The job involves a lot of administrative work and staff and facilities management. The fitness industry is ultimately part of the service industry and customer relations is a huge part of the job.
From the outset it’s critical to have cash savings when owning a gym. According to ABC Fitness Solutions, it can cost anywhere from $50,000 to millions to start a gym or fitness studio. That’s just the initial investment.
What many don’t realize about owning a gym is that you are likely to operate in the red – at a loss – for the first 6 months to a year, at a minimum.
If you don’t have the cash in the bank to cover your operating expenses, you may want to consider a line of credit or small business loan.
Check out our blog on cash flow management, How do I get fitness customers to pay in advance? 8 Strategies to Ensure You Get Paid
As we’ve already discussed, the fitness industry is known for high turn-over. This can be costly for gym owners and it’s far better to keep the members you have than to constantly be spending money to acquire new ones. Plus, increasing your gym’s retention rate by just a few percentage points can exponentially increase your monthly revenue.
Lastly, a high retention rate generally means a high satisfaction level which can translate into positive word-of-mouth referrals and brand buzz that will continue to drive new business.
For more helpful tips on increasing member retention see our post, How to Win Back Gym Members: 6 Re-Engagement Strategies.
Avoid the mistake of trying to do it all, all the time. You will burn out and that’s the last thing your gym needs. This day in age there are bountiful technological solutions to running your fitness business without the stress of administrative burdens.
Reach our article on How to Automate Your Fitness Business.
Recurring revenue is critical to long-term successes in gym ownership. This is because recurring revenue gives you a solid foundation of predictable money into your business each month. This can dramatically improve cash flow.
One of the best ways to create recurring revenue is by creating and cultivating an auto-pay membership program.
This can increase both your retention rate and your class attendance rate, ultimately boosting your overall success.
The bottom line: getting customers to commit to a monthly unlimited program at your gym means that they are unlikely to work out at competing gyms, are more motivated to make the most of their investment by attending more frequently, and a natural loyalty and sense of belonging and community begins to form.
The upside for you as a gym owner is that you know exactly how much money you can expect each month from membership sales and project revenue into the future to plan cash flow more precisely.
Here’s our blog on how to set up a successful recurring membership program for your gym, 6 Keys to Growing Your Fitness Business by Selling Memberships.
Let's say it louder so people in the back can hear...
Test, measure, and record everything!
A huge mistake many embarking on gym ownership make is to not pay attention to the numbers.
Yes, you got into this business because you’re passionate about fitness and not necessarily accounting and admin, but measuring and tracking key performance metrics is crucial to your gym’s success.
Knowing your fitness business’s numbers starts with having the right fitness business software. You must have quick and easy access to reports that will show you, in a user-friendly way:
The more you give attention to key metrics, the more you can adjust your class schedule, types of classes, instructors, pricing, marketing and customer service strategy. Without these numbers you are simply a boat afloat without a rudder.
Trying to operate without fitness business management software or picking the wrong software for your fitness business can be another huge mistake. As a gym owner you want to make sure that your fitness business software:
Ultimately you want a fitness business software that provides a seamless experience for your customers and makes it easy for you to post your class schedule online, sell passes and memberships, track attendance, measure business performance, automate adim tasks and support marketing and communication.
When first starting out, you know your gym’s the best and you want everyone to experience it. New gym owners can make one of two mistakes with pricing: Going out with prices that are too high, because you’re valuing your services above what the market will bear, or being nervous about being new and underpricing your services thinking you’ll attract a lot of customers.
Both of these methods have pitfalls.
First, if you are way above what the competition is charging, chances are, unless you truly have a high-end, VIP luxury experience to offer, customers will quickly figure out that fitness classes are fitness classes and they will go elsewhere to get a better deal.
On the flip side, by underpricing yourself you undermine pricing in your entire market and risk “cheapening” what you have to offer. People expect to get what they pay for, and discount fitness can equal subpar in the minds of customers. Also, it’s easy to quickly drop prices, but it can be a hard road back to raising them again.
The smarter path is to price your services appropriately based on your expenses, required profit margin and market rates. Then do a brilliant job communicating the value of your gym in your marketing efforts.
Owning a gym can be an incredibly rewarding experience. Go eyes-wide-open, spend the appropriate time and attention on these key business areas and in the long run the fruits of your labor will far outweigh the challenges of running your business.