Like every other meathead growing up, I thought I wanted to open my own gym one day. The thought of having your very own place with the equipment you want, the music you want, and the people you want is very appetizing. I’ve heard the schemes from my fellow meathead friends for years. Yet, the one thing no one seems to take into account is that, even though it is a gym, it is still a business. And if you want your business to stay in business, then you had better take care of your finances.
Running a gym is more than just throwing some bars and plates on the floor and getting your pump on 24/7. It takes a lot of behind-the-scenes, sometimes boring behind-a-desk work to keep things running smoothly. So, if there is anyone out there who is still interested in opening their own gym one day, let me give you some financial guidelines to help you out. I didn’t know all of these going in, but I wish I had.
1. Don’t go into debt for something that can’t potentially make you more money
Unless you have a good amount of cash sitting around, you are probably going to have to borrow money of some sorts to start your gym. Building costs, equipment costs, office supplies, marketing materials, IT supplies, cleaning supplies, and more start stacking up quick. The small number you thought you needed is probably much higher than you realize. More than likely, you will need a bank loan, a personal loan, or investors (getting any of these is not easy by the way). Assuming you can get someone to lend you money for your gym, you will now be in debt to them—and their number one priority is making sure they get the money you owe them, plus whatever interest is owed as well. Only once you pay this off will you begin making a true profit off your business. So, my advice is don’t go into debt for something you can’t potentially make money off of. If you plan on putting a $250K facility in the backwoods of West Virginia, you better have one hell of business plan for attracting enough people to that place. This goes for education as well. I spoke with a young man who was trying to grow his personal training business. He had gone to college for a music degree and had over $100K in student loans. It can be difficult to climb out of that hole and very disheartening when you aren’t making any money off of that degree. Be smart about what you borrow money for. Make sure it is worth the risk.
2. Start saving from day one
We have all heard of a rainy day fund. Well, in business you have the potential for many rainy days, weeks, and months. When I first opened my business, I worked 86 hours a week for three months without any personal income. Every dollar I earned went back into the business, or more specifically, the business account. I wanted to build as much of a financial cushion as I could. Not every business or person has the ability to do this, but if you can save even just a little, save it. This will help relieve some (although not anywhere close to all) of the financial stress that comes with running a business, and it will help you better navigate rough times. Also, this can help prevent you from going into greater debt if you need to expand, buy new equipment, hire someone, etc. Saving is preparation for the knowable and unknowable future.
3. Prioritize your expenses
You need to know what the bare minimum is to keep the lights on. Then you need to know what your monthly cost is to keep the facility running the way you want it to run. Knowing these two numbers will help you have a better grasp on what kind of sales you need to hit in order to keep your dream alive and hopefully make a little money in the process. You can analyze your expenses vs. your sales and make much better decisions on whether certain costs are worth it. For an example, when I first opened the gym, I did all the cleaning myself. As I made more profits, I hired a cleaning crew to clean the gym once a week. As the membership grew, I paid extra for them to clean it twice a week. Eventually I hired several employees to help manage the gym, and part of their responsibilities includes daily cleaning. Now, this is not an expense that is necessary to keep the gym open. If worst came to worst I could go back to cleaning the gym myself, but my current situation allows me to grow the business much more effectively.
4. Make sure your skills and product are marketable and fairly priced
I was in a local nutrition shop the other day and grabbed a card for a person trainer because of what he had on the front of it. (I like to do research on competitors in my field). On the card he said his type of training was called “Neuro-Integrated Conditioning Kinetics." Out of curiosity, I sent him an email to see what exactly this was. His response was filled with lots of similar “sciency” words and claims, so I simply asked if he had any schooling or certifications for what he did, or if he had ever competed in any physique or fitness-type contest. His response was that he never competed nor received any schooling. He also gave me his prices which were significantly lower than any personal training prices around town. Clearly something was off. If he provides the best training in town, one would expect his services to be priced similarly to other equal quality services. To me this is a red flag implying that his skills aren’t what they claim to be. You need to be good at what you do and offer a reasonable price for whatever product or service you are providing.
5. Live beneath your means
When I first graduated college, I didn’t make much money at all the first year and a half out of school. I was doing different strength and conditioning gigs and was trying to find exactly what I wanted to do. I eventually started personal training while taking additional schooling for physical therapy. Although I started making a good bit of money personal training, I continued to live as though I was making the same amount of money as I did in that first year and a half. Eventually I decided against physical therapy and continued training and saving money. This is part of what allowed me to open my business and be able to work three months without any personal pay. I try to apply this same strategy to my personal life for two reasons: 1) in case hard times hit, I don’t want to have too many expenses that I can’t afford to pay for, and 2) it allows me to give more.
Hopefully this insight has been helpful to any future gym owners (or current gym owners) out there. Business is stressful, but with good financial strategies you can help manage that stress a little bit. I wish all of you the best of luck!
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