According to the IHRSA, around 81% of gym owners shut their businesses within their first year, which causes a lot of confusion, including the idea that owning a gym is not a profitable business endeavor. However, upon closer inspection, the fitness industry is only growing. So, the question arises, why do first-year owners quit? And what makes a gym profitable? One aspect that can significantly affect the gym's profitability is the costs associated with opening and running the gym and the ability to attract and retain members. By understanding and managing these factors, gym owners can increase the chances of profitability in their business.
Owning a gym can be lucrative if you are smart about it. You need to know how to turn a profit. You don't have to be a financial expert for that to happen; you need a good plan.
Reflect on the reality of the costs: understanding the impact on gym profitability
Many gym owners need to pay more attention to the costs of running their businesses. For your gym to be successful, you need to think in advance beyond the startup costs. Think about how much you will have to pay your staff, how much you'll need for equipment, and how much you need to bring in to maintain everything.
A good idea would be to leave a gap in your budget for emergency expenses. Refrain from assuming you will spend a lower amount; things can change, and something as simple as inflation can cause a severe strain on your budget. Salaries must also be renegotiated regularly, especially if you want to keep your employees.
You must acknowledge the reality of these costs upfront and not just hope you'll "work them out." You may find yourself in a tough bind if you have a good plan with at least some leeway.
Determine potential revenue streams: maximizing gym profitability
To maximize your gym's profitability, you need to know exactly where your revenue is coming from. Point out some streams that you know for a fact you can rely on in the future, such as merchandise, regular subscriptions, and recurring popular classes. Add them to your business plan to calculate a potential monthly revenue average.
Think about how much money you will make from personal training, group classes, and other services you may provide. Try to be realistic here, not just hopeful. Even gyms have their off-season, so you may want to calculate the "what ifs" as well. If you get the most activity during summer, you should also ensure the gym expenses can be covered during winter. A good rule of thumb is to budget based on your lowest-performing month.
Focus on your gym's profitability and marketing
Around 14% of businesses fail because of bad marketing, so you need to work on your gym branding. Unless you create a recognizable brand, people will not know about you. Without brand improvement, even your current customers will move on to greener pastures.
Find your brand voice and use it during your marketing campaigns. Social media is a great medium, but you can also rely on email marketing for this. Find the platforms that work best for you, and be consistent.
Invest in high-value equipment
High-quality equipment is essential and should be considered. To maximize your profitability, you should focus on investing in equipment that is easy to use and will last for a long time. No one likes to lift weights only to realize they are seconds from breaking.
Aside from purchasing, you must ensure that your equipment is maintained correctly. Follow the required maintenance schedule for each piece and give them thorough examinations regularly. Remember that for the gym equipment to last for as long as possible, it must stay in appropriate humidity and temperatures. Otherwise, it may wear prematurely. Manage your facilities to be optimal settings for your equipment.
Invest in effective gym management software
To increase the profitability of your gym, you may want to streamline operations – and the best way to do so is to use effective gym management software. For example, a membership management software system will help you put things in order, centralizing your operations.
A gym app where members can oversee their accounts without staff intervention can be handy here. This way, customers no longer have to go to the gym to update their membership physically. They can set up their accounts, see schedules, and follow the program without paying a visit on their "rest day." This will make things much easier for them in the long run, leading to a pleasant experience. It can also be a great way to add value outside your facility; apps can host online fitness tracking and instruction that can be accessed from anywhere.
The right software can also make it much easier for you to oversee your business's finances. This way, you will not have any empty spots in your budget and will know exactly how much profit you are getting. Moreover, good accounting software will help to prevent you from spending more money than you are earning.
The bottom line
Owning a gym can be very profitable if you know what you are doing. It would be best if you had a good picture of the income and potential profits while focusing on high value and quality. Do the math, set your goals, and track your performance to succeed.