How To Start a Gym

starting a Gym

We get between 5 and 10 requests every month from people who want to start a gym in their community. And that really doesn’t come as a surprise, with more and more people wanting to live a healthier lifestyle the gym industry is booming! It is no wonder that these young entrepreneurs have spotted the opportunity and now want to take advantage of it. So we have decided to provide some advice on starting a gym.

I Want to Start a Gym!

It’s all fine and dandy to say “hey, I want to start a gym” but there is a lot more to it than just a light-bulb moment. Just like starting any business from scratch there are many challenges to conquer, hurdles to jump over and brick walls to demolish! We have simplified this process into 4 main steps or phases:

  1. Research
  2. Business Plan
  3. Funding
  4. Implementation

Step 1 – Do Your Research

This is the make-or-break phase of your entire business plan, concept or idea. It is during this period that you will do intensive research, and investigation in order to establish whether or not your gym will be viable i.e. make a profit! However, research is not an exact science – it can only give you enough data to guide you towards an educated decision. You will only really find out if a business idea is successful or not when you actually start it! That being said, it is still vital to do this research – which would include things like:

  • Location & Gym Size – You need to identify a space that is large enough to cater for the people in the area, safe & convenient enough for people to want to visit it, and cheap enough so that you don’t break the bank before you even start! Some would say that the location of your gym is the most important aspect, and we would tend to agree. A gym that is highly visible (like in a shopping centre or next to a main road) will naturally attract more people than a gym tucked away in an industrial area. Size is also important, because you want to ensure that the space you choose caters perfectly for the amount of members you expect. When you start a gym, the location of your gym really depends on the following points:

  • Potential Clients – Good businesses thrive because they fulfill a need! You can go about this in 2 ways: 1) Either you first decide on what kind of gym you want to open and then you try find a space where there is a need for it. 2) Or you first find a space and then try to identify what kind of gym would thrive there. Either way it will require you to do research in that area to determine the needs of the people living/working there. This is the only way to really determine whether or not people will come to your gym.

  • Competition – What other gyms are in the area? And are they offering the same services as you are? If you want to open a Pilates studio in an area filled with Pilates studios, chances are you won’t thrive (unless you offer a spectacular service). Identifying your competition plays an important role in determining where you want to situate your gym and what services or products you can offer to set yourself apart from your competitors.

  • Type of Gym – Another important aspect to research when you start a gym, is what kind of gym will thrive in an area. Perhaps the Pilates studio you were so set on opening doesn’t seem feasible anymore, but you identified a need for Yoga classes – so from a business point of view, the Yoga studio seems more viable. As we mentioned earlier, identify the need of that neighborhood/community and build your business around that.

  • Start-Up Costs – Knowing how much money you need to get your venture off the ground will give you a good idea of what you are getting yourself into. We aren’t going to butter this up or beat around the bush – starting a gym is expensive! This is because it requires a relative large piece of land and expensive commercial machinery. It is VERY hard for us to tell you exactly how much it will cost you because it depends on the size of the gym, the amount of equipment you want and the type of equipment you want. You would also need to decide between renting equipment and buying it cash.

  • Gym Equipment Costs – Most manufacturers have more than one range of equipment – they generally have an entry level range, which is more affordable, and then a premium range which is obviously more expensive. The benefits of entry level gym equipment is that you save money, but then you need to beware that this equipment isn’t always the best quality and might not come with a quality guarantee. The benefits of premium equipment is that it will last, it generally has a good warranty and your members will love using it. The prices below will give you a broad idea of what entry level and premium equipment can cost you:
    • Commercial Treadmills: R30 000 – R150 000 per treadmill
    • Commercial Bikes: R20 000 – R90 000 per bike
    • Spinning Bikes: R10000 – R80 000 per bike
    • Ellipticals: R30 000 – R130 000 per elliptical
    • Rowing Machines: R10 000 – R20 000
    • Selectorised Strength Machines: R25 000 – R75 000 per machine
    • Cable Crossovers and Multi Gyms: R50 000 – R130 000 per machine
    • Barbell and Dumbell Racks: R10 000 – R30 000
    • Dumbells (2kg – 60kg): R400 – R16 000 per dumbbell
    • Barbells (10kg – 50kg): R1200 – R6000 per barbell
    • Rubber Flooring: R200 – R400 per square meter

Step 2 – Build a Business Plan

Unless you have a couple of million Rands lying around, you would need an investor to help you start a gym. But any investor who is even partially successful would want a detailed breakdown of how their money will be invested and when they will see a return. This is done with a business plan. A well researched, thorough business plan could be your golden ticket – it could help you secure that funding!

Business Plans have a specific format that needs to be followed – here is a template. Typically you would take all the research you did in Step 1, structure it, refine it and use it to build the business plan. We aren’t going to get into the nitty-gritty of writing a business plan as there are hundreds of websites out there that give you step-by-step instructions, and you can even pay some sites to do it for you. But the most important part of your business plan is:

  • “Financial Statements and Projections” – More often than not an investor would skip right to this section, because it is here where they will see whether this business is viable. In short, you need to show the investor how your gym will make a profit, but more importantly how you intend to pay them back the money they gave you to start a gym. In order to do this you need to work out your Start-up Costs vs Income vs Expenses:
    • Start-Up Costs – By this stage you should know exactly how big your gym is and how much gym equipment you need, and it is only at this stage that you should approach a company like Matrix Fitness with a list of equipment to get an accurate quote. You would do the same with other companies to get accurate costings on furniture, building costs (if you are building), flooring etc.
    • Expenses – What are the day-to-day running costs of your gym?  Staff salaries, water & lights, maintenance, loan repayments, bond repayments, equipment rental etc.
    • Income –  How much money will your gym bring in each month? How many members you will get? What should their membership fees be?

Now, double your estimated expenses and cut your estimated income in half for the first six months, because this is most likely what’s going to happen when you start a gym. If you can still succeed in this scenario, then you’ve got a chance.

Step 3 – Funding Your Gym

So you have done your research, and you have your professional business plan in your trembling hands – now you need to look for funding. This can be daunting but there are many websites in South Africa that offer funding for young entrepreneurs. Opening up a decent sized gym will cost a decent chunk of money (anything from R5m – R20m), but if you have done your research correctly and really identified a need in a community or area then investors would be willing to fund the project. As you can see, the research that you conducted is really what will make or break your venture – if it’s thorough and accurate then you have a chance, if its sloppy and brief then you should go back to the drawing board.

Step 4 – Implementation

Everything up to now has been theory! You have estimated your start-up costs, expenses, income and member numbers – now you need to put it all into action. By now your investor has most likely provided you with the start-up capital which is at your disposal, ready to be used. As we mentioned earlier, the only REAL way to see whether a business is successful or not is to start it! Yes there will be hurdles in the way, and unforeseen challenges to really test you – but being able to overcome those challenges is what being an entrepreneur is all about. There is no reward without risk. Good luck!