Attention All Gym Owners

[Maccabee]

Hey everyone,

I finally realized what I want to do with my life in regards to making a living. These past four years of business school I did nothing but obsess about having my own gym one day. I plan on making that a reality with in the next year or two.

I spoke with certain family members and other people who would be willing to invest and money is not the issue anymore.

What I really need is advice? What should I expect? What were some of the problems you faced? How did you overcome these issues? What about price? What kind of equipement should I have? Which company can I rely on in regards to getting quality dumbbells, bars, benches, etc...? I have a general plan and what I want to buy. I need guidance.

I have a million questions. I will take any advice that you have?

[ghost]

while it is hard, you have to look at the grand picture, too many people focus on the quick buck.... that doesnt exist in gym ownership.

focus on diversification. dont JUST have certain equipment. diversification is the key. that and marketing. You have to be able to market it to just about everyone. Do you just want powerlifters there? Soccer Moms? Cardio queens? bodybuilders? powerbuilders? the every few month lifters?

gotta have a plan of action. and check out different companies as far as equipment.... certain companies, like elitefts have package deals on equipment.

[ghost]

also, think about your location, staffing, ammenities, extras, all that shit.

make sure you have the proper equipement to service your own equipment as well..

[squattingtillipuke]

http://forum.animalpak.com/showthread.php?t=4369&highlight=opening+a+gym

above was about some of the pitfalls...You might want to give it a quick read.

My biggest suggestion - sit down with a current owner somewhere and pick their brain. In your mind you can picture almost everything but someone who has been through it can give you so much more insight than you'd ever think about.

I wish you the best in this endeavor bro.

[Maccabee]

while it is hard, you have to look at the grand picture, too many people focus on the quick buck.... that doesnt exist in gym ownership.

focus on diversification. dont JUST have certain equipment. diversification is the key. that and marketing. You have to be able to market it to just about everyone. Do you just want powerlifters there? Soccer Moms? Cardio queens? bodybuilders? powerbuilders? the every few month lifters?

gotta have a plan of action. and check out different companies as far as equipment.... certain companies, like elitefts have package deals on equipment.

Thank you very much. I happen to be a marketing major lol so thats a good start. I will look into the package deals too.


also, think about your location, staffing, ammenities, extras, all that shit.

make sure you have the proper equipement to service your own equipment as well..

what do you mean by proper equipment to service my own?


http://forum.animalpak.com/showthread.php?t=4369&highlight=opening+a+gym

above was about some of the pitfalls...You might want to give it a quick read.

My biggest suggestion - sit down with a current owner somewhere and pick their brain. In your mind you can picture almost everything but someone who has been through it can give you so much more insight than you'd ever think about.

I wish you the best in this endeavor bro.

Good idea. However I fear that a gym owner would not want to help me because I will be there competition. But I will still try.

Thank you guys.

[ghost]

Tools.


you ever go to bench at a gym and find that the collars are loose? i fucking HATE that. gotta make sure that you have the proper tools to maintain your own equipment.

[Maccabee]

Oh ok lol. That makes sense.

[ghost]

Oh ok lol. That makes sense.

you would be amazed the amount of gyms i have been in where the equipment was failing and they didnt have equipment to fix it.

[IRBS]

- Start Small and expand as your business grows.

- You have to think about what will set you a part from the pack. There are gyms on every corner in a lot of places. What makes you different and why should anyone give you their hard earned money?

- What do you offer that will attract clients?

- What experience do you have as a trainer (if thats what you plan to do) or what experience does your training staff have?

- Will this be your full time job or will you have another job and start this as a side business? (this is what I would do...)

- What do you plan to invest initially? What is your repayment plan? (If money is borrowed)

- Do you plan to rent or own? (equipment and facility)

- 24hr Facility? Probably an additional $10-15K to get a system installed.

These are just a few questions that you should be going over. Like others have mentioned, talk with some gym owners, but not neccessarily in the market you hope to enter (some have been known to give bad advice and not want anymore competition than they already have). Brian Schwab, who owns Orlando Barbell, had a great series of posts on the Elitefts.com site about how he opened his facility. Definitely worth reading.

If it were me, I would start small and borrow as little as possible. You could probably get started with around $50K in equipment plus your monthly Utilities and Rent (if you choose to rent). If this will be your only job, plan on times being tough to start. Plan for that in your finances. You still have to eat and live as well. Know your target audience. Have a business and financial plan in place and stick to it.

The gym where my team trains now is an older facility, that in its prime was doing $20K a month. They paid off everything and own the building now, but they never upgraded, never replaced carpet, still have old equipment, and have trouble getting new members, other than the hardcore guys who lift there. If it werent for the fact that their overhead is rediculously low, they wouldve gone under already. The origional owner (his son runs it now) was a banker and ran the gym on the side. His son pretty much makes his salary with personal training every month and the monthly income of the gym goes towards utilities. They dont have much hope of signing many new members consistently, so as the membership dies off and stops renewing, it will be tougher and tougher for the gym to survive. The point of this story is to always reinvest. Like Rob said, take care of the gym and make sure you can fix everything and keep the place nice. New, commercial grade equipment is VERY expensive up front (especially cardio equipment), but will last if you take care of it.

Not so much advice, just some of my thoughts, as I have thought about doing this at some point in the future.

[GJN5002]

Some of my favorite gyms have a really great collection of different equipment. Old machines from the 70's different kinds of dumbbells, different plates etc. It makes it more interesting than having the whole life fitnes line and would probably be cheaper too. Start contacting gyms and see if they are selling any equipment.

[IRBS]

Some of my favorite gyms have a really great collection of different equipment. Old machines from the 70's different kinds of dumbbells, different plates etc. It makes it more interesting than having the whole life fitnes line and would probably be cheaper too. Start contacting gyms and see if they are selling any equipment.


This works for guys like us, but will not make you any money....you have to think like a businessman and not a lifter. Money is not made on the guys that always show up and train hard. Money is made on soccer moms and suits who want a nice place to "work out."

If he just wants his own private place to train, then that idea will work, but I think he is talking about building a buisiness and livelihood.

There are trainers who are making it out there with very little (Eliott Hulse, Zack Even-Esh to name a couple) but they target a different audience than just a "gym owner"...they train Athletes. Thats why it is VERY important to know your target audience. They also both had a long hard road getting to where theyre at.

[arsilva]

I'm a marketing major planning to open a gym, as well. I did a whole semester-long business proposal project on the topic of opening a gym. the biggest problem for me (that i was able to bs out to make the project look good) was that profitability is very difficult with all the startup, overhead, etc

[NJC_Manhattan]

Hey everyone,

I finally realized what I want to do with my life in regards to making a living. These past four years of business school I did nothing but obsess about having my own gym one day. I plan on making that a reality with in the next year or two.

I spoke with certain family members and other people who would be willing to invest and money is not the issue anymore.

What I really need is advice? What should I expect? What were some of the problems you faced? How did you overcome these issues? What about price? What kind of equipement should I have? Which company can I rely on in regards to getting quality dumbbells, bars, benches, etc...? I have a general plan and what I want to buy. I need guidance.

I have a million questions. I will take any advice that you have?

Before I even get started, if you are planning on doing this you better go through Angel investors/Private Equity because no bank (no matter what your credit) is going to lend to such a speculative project as a gym.

Why?

1. Real-estate: You may have to buy raw land to build your gym. Raw land is one of the most speculative investments around. And in this climate that is a red flag for banks.

2. Your cash flows will stem primarily from membership/trainers/retail materials. Banks will valuate your company based on a DCF (discounted cash flow) model. Depending on your target demographic cash flows can be radically altered. For example, not many people are bodybuilders. If you make a gym that is geared towards that, then you are limiting your market share. That is why globo gym places tend to do well, they appeal to the masses. Only exception is Bally's which is in Bankruptcy.

So what can you do?

Build a business model with 5yr pro-forma financial statements. Have it done by a CPA and reviewed by a Lawyer. Estimated cost: $8-10gs

Partner with an equipment company. Offer them a 20% equity stake in your company in return for discounts on equipment. Have your CPA structure the deal. I repeat equity NOT DEBT! Those are two very, very different things. Get them to draft an LOI of your relationship with them. Present the LOI to the bank and leverage their commitment to get a loan (debt. Most likely a bridge loan) for the first 2 fiscal years of your business. Also have the CPA develop an Exit strategy (at some point, unless you're a sucker for pain, you want the business to be automated).

Perform selective advertisement. Don't market yourself to death. Be exclusive. Make people want to join you. Make sure advertising is done in high end sports mags/tv. NO INTERNET ADVERTISING. Estimated cost: $10-11gs

This should be a good starting place.

A word of advice and this is going to sound cold, but this is the way investments work. Keep all talk related to costs/breakeven points/profits. DO NOT say, 'this is a great gym', 'you could really help the community', 'lets keep people healthy'. Investors could give a shit less about that.

To give you a bit about what I do. I work in finance. But when someone says they work in finance, thats like saying, 'Hey I live in America', it doesn't mean anything. I am an institutional investment and hedge fund analyst at a boutique broker-dealer in Midtown Manhattan. I look at financials all day.

Just my two cents.

[C.Coronato]

NJC knows his shit. Good post homie.

[Maccabee]

I knew I would get good advice from you guys. Keep it coming fellas.

I know this wont happen in a month. I know it will take a few years, however I am willing to make this dream of mine a reality.

Thank you very much guys.

[Maccabee]

I spoke with a friend at the gym today who has a lot of experience in this field. I asked him what he thought it would cost to open up a gym like the one we went to and he said to start 500,000 dollars.

I guess it makes sense because the gym is two floors. Loads of equipement in 3 massive rooms. Plus locker room, boxing room, juice bar, and aerobics room.

It makes sense. I am excited and I know this will be very tough.

[krazyassmexican]

bro bro before you go on and spend that much money you may wanna check this up

http://www.snapfitness.com/franchise_us/index.cfm

[Little Z]

word of advice.. dont jump in without testing the water..

you do not want to go dump 500k on a 2 story gym with a juice bar, aerobics, and all the glitz and glamor..

if you want some solid advice.. i can get you in contact with a fellow Animal who owns his own gym, and he can give you all the info
you will need.. all the dirt.. everything.. shoot me a PM and let me know.

[violator]

I'm a marketing major planning to open a gym, as well. I did a whole semester-long business proposal project on the topic of opening a gym...

ya know, while i respect anyone whos busted the books...its quite a different scenario in practise...

brother, ur best bet, as many have already mentioned IS TO FIND A MENTOR...someone like little Z has mentioned is absolutely invaluable to your own feasibility study...and if u can, get more than one mentor...if ur worried that the local gym owners will give u bum advice...which they very well might do, then theres always email to reach someone on the other end of the country...

As a business owner of a start up company i built from the ground up over the last 7 years the most important tip i can give u is this;

a start up business is very intensive and very costly, often exceeding the budgets u initially calculated for...as well as having to create and implement a sound base of "systems" to run ur business while ur on vacation etc, so that u dont lose any potential profits...

Ur best bet would be to find someone that owns a gym & wants to sell. My reason for this is that while u can still do ur own renovations, add equipment etc... the business should already have a set of books which u can analyse, or at least send to an accountant to analyse, as well as A SOLID BASE OF SYSTEMS already in place, so u will already have a groundbase to improve on with your own ideas to individualise the business to your own style.

What i have found in my experience from quite a few other cats in business that have begun a "start up" is that they dont realise this and the reality of the costs involved...this leads them down a scary financial spiral until they have to sell in order to prevent going bankrupt....THIS IS WHERE U WANT TO BE POSITIONED...as the next owner of that enterprise, mainly because theyve done the groundwork & payed the huge startup costs, which u can now avoid and use to your advantage what theyve already built, systems, assets etc...which u can usually pick up a much lower capital outlay than they originally did...THIS IS CRUCIAL, I PROMISE YOU....

Ill use a practical example; my friend bought a cafe franchise, the costs to start up were very high, he ended up spending millions(rands not USD) and then the economy goes down and no one could afford to eat out, he slaved thru it for the last 2 years, but still cant balance the books....now this is a franchise, which helps with systems etc, but not financially....he ended up selling the business a month ago, to a new owner, who got a cheaper lease on the property because of the proven financial difficulties with my friend, he got all the assets of the shop at 40% of there value(most of which was nearly 100% perfect), & he got all the systems (admin etc) which were already working great.
All he had to do was slap his own name on the door(the franchise took its brand away, freeing him to create his own) & open for business, & now the guy is killin it...

remember, a lot of ur costs will impact ur cash flow in the first 2-3years, so if u can reduce the amount u spend in the beginning, it can only help.


But i applaude u bro. There are very few people who have the courage to start their own business, and even fewer that actually start a business that IS IN LINE WITH THEIR CORE VALUES AND PASSIONS....thats the real key to business, do what ur passionate about and things will start to unfold for you, why?, because youll be motivated by ur values to make it work....thats the most common thread ive found in people who have been successful in anything in life, especially business.

Good luck bro, PM me if u need any business advice, id like to know how u it goes for you.

peace

[violator]

Before I even get started, if you are planning on doing this you better go through Angel investors/Private Equity because no bank (no matter what your credit) is going to lend to such a speculative project as a gym.

Why?

1. Real-estate: You may have to buy raw land to build your gym. Raw land is one of the most speculative investments around. And in this climate that is a red flag for banks.

2. Your cash flows will stem primarily from membership/trainers/retail materials. Banks will valuate your company based on a DCF (discounted cash flow) model. Depending on your target demographic cash flows can be radically altered. For example, not many people are bodybuilders. If you make a gym that is geared towards that, then you are limiting your market share. That is why globo gym places tend to do well, they appeal to the masses. Only exception is Bally's which is in Bankruptcy.

So what can you do?

Build a business model with 5yr pro-forma financial statements. Have it done by a CPA and reviewed by a Lawyer. Estimated cost: $8-10gs

Partner with an equipment company. Offer them a 20% equity stake in your company in return for discounts on equipment. Have your CPA structure the deal. I repeat equity NOT DEBT! Those are two very, very different things. Get them to draft an LOI of your relationship with them. Present the LOI to the bank and leverage their commitment to get a loan (debt. Most likely a bridge loan) for the first 2 fiscal years of your business. Also have the CPA develop an Exit strategy (at some point, unless you're a sucker for pain, you want the business to be automated).

Perform selective advertisement. Don't market yourself to death. Be exclusive. Make people want to join you. Make sure advertising is done in high end sports mags/tv. NO INTERNET ADVERTISING. Estimated cost: $10-11gs

This should be a good starting place.

A word of advice and this is going to sound cold, but this is the way investments work. Keep all talk related to costs/breakeven points/profits. DO NOT say, 'this is a great gym', 'you could really help the community', 'lets keep people healthy'. Investors could give a shit less about that.

To give you a bit about what I do. I work in finance. But when someone says they work in finance, thats like saying, 'Hey I live in America', it doesn't mean anything. I am an institutional investment and hedge fund analyst at a boutique broker-dealer in Midtown Manhattan. I look at financials all day.

Just my two cents.

Good post...and very informative for you, since the guy is in finance...directly from the horses mouth, so to speak.

THIS IS EXACTLY WHAT U CAN EXPECT FROM FINANCIAL INSTITUTIONS....ALL OF THEM

and i have to say, it pisses me off...thoroughly(no disrespect to you NJC)
how anyone is expected to realistically plan 5 years into their future cash flow is beyond me....

Angel investors are the way to go, personally i did all the crap above and visited 36, yes 36 financial institutions for finance when i started out and all of them declined me...why?...because my risk ratios were to high...fuck sakes...what do banks know about risk in the real world, nothing....i had to finance by means of angel investors as well.
u said u can finance it privately, then go for it bro, u dont need the headaches..and the interest rates are usualy much more favourable and they wont take everything u own if u start to default.

& NEVER give up equity if u can avoid it, ever.... the more control u can have over your business the better.

oh, and one other crucial piece of advice;

NEVER SIGN SURETY/ COLLATERAL ON ANYTHING!!!!!....this is a classic newbie mistake which can lead you into huge financial duress in the future if things turn sour.

[rockyIV]

I think it's great you are following your dream and living the lifting dream by making it your work. You could always call your gym "Average Joe's" or

ROCKY's Body Shop or something equally cheesy.

Good luck bro

[NJC_Manhattan]

NJC knows his shit. Good post homie.

Thanks for the props bro. Just trying to help


Good post...and very informative for you, since the guy is in finance...directly from the horses mouth, so to speak.

THIS IS EXACTLY WHAT U CAN EXPECT FROM FINANCIAL INSTITUTIONS....ALL OF THEM

and i have to say, it pisses me off...thoroughly(no disrespect to you NJC)
how anyone is expected to realistically plan 5 years into their future cash flow is beyond me....

Angel investors are the way to go, personally i did all the crap above and visited 36, yes 36 financial institutions for finance when i started out and all of them declined me...why?...because my risk ratios were to high...fuck sakes...what do banks know about risk in the real world, nothing....i had to finance by means of angel investors as well.
u said u can finance it privately, then go for it bro, u dont need the headaches..and the interest rates are usualy much more favourable and they wont take everything u own if u start to default.

& NEVER give up equity if u can avoid it, ever.... the more control u can have over your business the better.

oh, and one other crucial piece of advice;

NEVER SIGN SURETY/ COLLATERAL ON ANYTHING!!!!!....this is a classic newbie mistake which can lead you into huge financial duress in the future if things turn sour.

No worries Vio.

Just to be clear, banks can measure your risk based on your credit rating, feasibility of project, future cash flows (5yrs is actually the minimum, I normally run models of 10yrs plus. I would go into it, but it would be about 20 pages long.), whether they can sell your debt to other institutions to loosen up liquidity, etc.

Collateral is a necessary evil to attain a loan. No bank or person or entity or group is going to just give you money without some kind of backup. A word alone is not enough, you may have to post something. If debt scares you, then you are going to have to raise equity.

Ways of raising equity:
Follow the business modeling advice above. Contact any HNWI (high-net worth individual) you know. Go to social business events and market to individuals. DO NOT hold a mass reception where you are the only one talking. Everyone there will start to think about what they want for lunch and/or leave.

Other ways:
- Websites. Spend the initial membership fee and join an entrepreneur site. Be wary of places like LinkedIn.
- Hire a broker. These people have access to capital sources and will act as a middle man. Another necessary evil in this business.

Ways of showing you're not financially inept:
- Learn the ins and out of financial statements (balance sheet, income statement, cash flow statement)
- Learn relevant financial ratios and basic analysis (this is bread and butter investment banking)
- Get somewhat of a team. (A veteran manager unless it is you, a solid trainer, an accountant, a lawyer, and at least one investor)

Remember this about profit:
- You have to spend money to make money.
- Even the most successful business normally make $1 in profit for every $100 they spend.
- Revenues ARE NOT NET PROFIT! You need to take into account your costs.
- For the first 1-3 years it is NOT uncommon for a business to be operating at a loss.

Just do your homework and youll be fine.

[NJC_Manhattan]

I spoke with a friend at the gym today who has a lot of experience in this field. I asked him what he thought it would cost to open up a gym like the one we went to and he said to start 500,000 dollars.

I guess it makes sense because the gym is two floors. Loads of equipement in 3 massive rooms. Plus locker room, boxing room, juice bar, and aerobics room.

It makes sense. I am excited and I know this will be very tough.


I would be wary of things like a juice bar. You need to get the nod from health commissions and pay an insurance policy (choking, food poisoning, etc.). You may find the costs from this venture will outweigh the benefits.


Though you may already know of this gym. This is arguably the finest gym I have ever been a part of. It is near perfect. Highly recommended.

http://edgegyms.com/

- Efficient use of space
- Clean and modern design
- High end equipment
- Professional Staff
- Varied approaches to exercise
- Somewhat exclusive

[violator]

Quote:
Originally Posted by Pokoritel Check Out Post
I spoke with a friend at the gym today who has a lot of experience in this field. I asked him what he thought it would cost to open up a gym like the one we went to and he said to start 500,000 dollars.

I guess it makes sense because the gym is two floors. Loads of equipment in 3 massive rooms. Plus locker room, boxing room, juice bar, and aerobics room.

It makes sense. I am excited and I know this will be very tough.







Bro...be VERY careful with what ur doin here.... the best analogy i can give to you to explain my point is this...

when u start lifting, u dont know what ur doing, but over time u learn the values of nutrition, good form in lifts...the difference between HIT/ volume etc....
this is similar in business, you will aquire all the neccesary skills OVER TIME...

But the one thing you wouldnt do is jump into an advanced routine...because that would lead to injury etc

see where im goin here?

a business like uve described is very diversified & governed by many systems to keep it operating at 100% efficiency... what has he told you about these systems?
Consider this... the ultimate goal of business is to sell it after uve made a decent return on investment... so no matter the size of the deal there can be profit in it. A business, while it can be emotional attaching, has no place in this arena, it is simply a vehicle u are using to achieve a goal(just like in lifting), now im not saying just choose any old thing because it will make profit, because thats not what drives you, u know ur passion & what u want to do...all im saying is be careful, this prolly wont be the last business you own

I guess what im trying to say is...start small & hone ur skills, get control of your business abilities and then grow into an establishment such as the one uve described...theres no point in starting at the top,its a long way to fall....IT DOESNT HAVE TO BE TOUGH...

some key points to ask ur mentor;

how long have u been in business?
what was your first venture?
have u failed in the past?, if yes, then why? & how would you have done it differently?
did you have a mentor & how did that effect your progress in business?
if not, then what skills have you learned to achieve ur success?

[RhinoJoe]

Now you get my two cents....

I've been n the process of opening a gym for about a year now. All the things you guys are saying are true. However, one quick word of advice: if you seek out investors, especially on online entrepreneur communities, be very VERY careful of who you are dealing with. I came very close on more than one occasion to getting royally screwed by less-than-scrupulous individuals posing as investors. There are people out there that are running the Nigerian scam to its fullest and they really know how to hook you. Everyone says, "They would never fool me," even I said it, but I almost got shafted. Thank God I had my wits about me and made sure everything was legit (which it turned out not to be). Basically, if someone is offering you a deal that is too good to be true, guess what? It is. Don't fall for it and don't spend anyone's money until well after the check has cleared and the bank is smiling.

[Maccabee]

Thank you all for your responses. If anyone else would like to contribute please do so. Thanks.

[violator]

.... There are people out there that are running the Nigerian scam to its fullest and they really know how to hook you...

true dat bro...u must see how many of these fuckers there are in my country, i know 3 cats who have fallen for these bastards scams....

Point: if it sounds to good to be true, it probably is....funny how these cliches come in to play....

[FITGYM]

If you need help or suggestions than please contact me and I will guide you in this cut throat bizz...

Your Bro in Animal Training and Iron,
Fit Gym

[Maccabee]

YO GUYS,

I am very close to getting a place.

Do you guys think its a good idea to have a gym in a basement of a store?

I am thinking about turning into a place where I can train clients. I will have to get a license which wont be to hard.

I am debating about making it public.

[Maccabee]

Things are falling apart. I just sat down with my family and we had a serious discussion about future business plans for the family.

We talked about every thing. In the end we came to conclusion that it aint worth investing into the gym.

Instead my family as a whole decided to buy the store next door that went out of business to expand the family business.

THIS HIT ME OUT OF NOWHERE. I didnt even know my family wanted to get the place.

It was either the gym or the business next door.

I quit my job to focus on the gym. I had everything planned out. I am not sad or angry. I have to support my family. I am still young.

Maybe later on in the future I will get a gym. For now I got my job back at the family business and were going to start doing construction very soon.

We have to brake down the wall.

Thank you for all the support. I truly appreciate it.

I am sad and a little angry but I cant turn my back on family.

Today I had to workout sessions legs and delts just to calm down a bit. Thank you all.

[violator]

Brother, i feel for u....
but look at this as your first business lesson.... that sometimes even the best laid plans become sidetracked...
While its impossible to divorce emotion from business decision, u will get used to it....
just dont get lost in it & call it quits...never accept defeat on your dreams...
THIS IS YOUR PASSION....HOW BAD DO YOU WANT IT?
analyse the situation...whats the probleem thats stopping you?...finance?
a mere formality...if u keep searching the answers will be brought to you...heck, when i was looking for my second round of finance, it took alomost 14mths and over 36 "no's" before someone said yes.....
Live & learn brother...in every problem, there lies an opportunity...remember that...

[Maccabee]

You are right. I will keep trying. I will find a way. Peace