What percentage of gym businesses fail?

Opening a gym is a huge step in your life and career. As a gym owner, there is nothing you want more than to see your business become successful. And while many gyms evolve, turning into popular brands, some of them fail. It's important to understand the reasons why gym businesses fail so that you can take steps to avoid the same fate.

Now, that doesn’t mean that your gym is going to fail. If you are dedicated and work hard, you’ll boost your success rate. At the same time, it’s essential to know how many gym businesses fail so you can use it as a motivator to do better and keep your gym afloat. 

How many gym businesses fail?

No matter how much hope you have for your business, unpredictable things can happen. Not all gyms make it in the long term, and there are many reasons for that. Perhaps the marketing campaign is not strong enough and doesn’t reach the right audience. Maybe the owner doesn’t improve the equipment and conditions for the members, or they don’t know how to fight the competition.

Ashley Selman, the owner of Evolution Trainers in Mountain View, CA, says that 81% of fitness studios end up failing or closing during their first year. Selman has plenty of business and fitness experience, as she was a personal trainer for a long time in Mountain View.

According to Selman, many people open their own gym because they are passionate about fitness. However, they lack passion for business. The recipe for success in the fitness field involves knowledge in both industries: fitness and management/marketing.

On top of many gyms failing during the first year, the survival expectations for many fitness centers are also low. Less than 50% of gyms are expected to last longer than 5 years. Similar to Selman, Jim Thomas, the founder of Fitness Management USA, Inc., also believes that the low success rate comes from the fact that very few gym owners do not have the right marketing knowledge and don’t have a love for business.

On top of that, the U.S. Bureau of Labor Statistics shows that private-sector establishments in all industries have a first-year failure rate of around 20%. This is proof that compared to different business types, health, and fitness companies are 4 times more likely to experience failure.

While the success rate is so low for new gyms, gym owners have not stopped trying to become popular. The industry keeps growing. According to Statista, 2019 saw 41,370 new fitness clubs in the United States.

Why do so many gym businesses fail?

There are various reasons why gym businesses fail, but the most common ones are:

• The gym owner neglected finances, opening the business without having enough capital
• No business plan was made before the business was established
• The gym owner chose the wrong location, which is either not convenient for potential members or not visible enough
• Competitors were not taken seriously
• The marketing plan and promotions were not adequate
• The gym had no online presence
• No changes were made to the business over the years

How can gym businesses survive

One thing that many gym owners should keep in mind is that simply being passionate about fitness is not enough to keep the business alive. Besides offering fitness services, you should also implement the right sales and marketing strategies for the business to run properly.

But if you lack marketing knowledge and experience, the key is to find an expert in the field. When done right, sales and marketing can do wonders for a business. By continuously investing in marketing campaigns, you can see your gym becoming more and more successful.

Furthermore, gym owners should not rely on learning from trial and error. While it may seem the right thing, it can cost too much, which can be damaging to the business.

One way to increase the success rate of your new gym is to come up with a good business plan. You can also take business classes to get the necessary knowledge and experience for running a company, no matter how small.

You need to know how to manage employees, what features you need in gym management software, how tax forms must be submitted, how you should apply for a business license, and so on. This can only be learned in specialized classes or from someone who has done business before.

The Bottom Line

With a gym business failure rate of 81%, many gym owners should be more careful before opening their own businesses. Passion for fitness is not enough to keep the gym running forever. Without the right business experience and knowledge, your small company can fail. Luckily, there are classes that can teach you how to manage a business. Also, if you have the budget, you can hire a specialist to deal with the marketing aspect on your behalf.