Owning a gym can be a very profitable business, but there are several things you should consider before making the decision to open your own gym.
A November 2020 Statista survey reported that 68% of gyms that had been open for more than eight years were profitable. That figure dropped to 52% for gyms that had been open less than three years. In other words, owning a gym is profitable...but in the long run.
In this blog post, we'll talk about whether owning a gym is profitable and what you need to do in each area of your business to make that gym profitable.
Anyone who has ever thought about owning a gym has probably fantasized about the potential benefits. After all, the market for fitness services is large and has been growing steadily in recent years (even in spite of the pandemic). However, it's important to be realistic about the work involved in running a gym. Before you hire staff, you're likely to be doing everything.
This includes everything from cleaning and maintenance to customer service and marketing. In addition, you can expect to work long hours, from early in the morning to late at night (obviously, your clients will want you to be open as many hours as possible). While owning a gym can be profitable, it is not a get-rich-quick scheme. Those who succeed in this business are those who are willing to work hard and have a lot of patience.
So how can a gym make a profit in such a saturated market?
The answer comes down to three crucial areas you need to define in your business that revolve around operations, finances and member retention.
Effective operations are crucial to knowing where your business is now and where it will be in the future. Making this work efficiently in every area of the business may seem extremely complex, but there are always ways to strengthen processes, and that's the first point we'll explore.
For starters, you can break down the financial operations that work well in your business and the areas that could be improved. For problem areas, you'll need to ask yourself two key questions:
🤔What is causing this problem?
🤔 Do I know what needs to be done to fix it?
If the answer is yes: you know what needs to be changed, so you can take action. To do this, you can map out a roadmap of the steps you are going to take to improve this area of the business. Make a plan where you have to take one action a week to move to the next step. Once done, measure the impact of that step before moving on to the next one. As you go through this process, you will learn what works and what doesn't, until you find a balance that offers a solution.
If the answer is no: you need to find someone who does. It could be a mentor, someone who has been in your situation before, or maybe you opt to hire a consultant. By being proactive with the right approach and the right people, finding the right solution is much easier.
No one knows what the future holds, and this has become a mantra for all of us since 2020. Therefore, it is essential that you can physically see where each area of your business stands, so that you can be prepared for both the best and worst case scenarios. Below, we've outlined some questions that will get you thinking in the right direction.
🤔 What is your current churn rate?
🤔 How can you improve it?
🤔 What does your cash flow look like now?
🤔 How will these considerations affect your cash flow in the coming months?
You will need to answer these types of questions to plan for the future from a financial standpoint; we will discuss your company's finances in more detail in the next section.
To be profitable, a fitness center owner needs to have an overall view of what his or her finances look like, both now and in the future.
The three key financial statements to understand in business are: The balance sheet, the income statement and the cash flow statement. Once you understand them, you'll see where you need to make adjustments in the future. Each of these is fairly simple to understand, so we'll give a quick overview:
✅ The balance sheet: an overview of your company's current situation. It's what you have, what you owe and what you have left over. This statement shows your overall growth.
✅ Profit and loss statement: describes what your company earns compared to expenses and shows the cash your company generates each month.
✅ Cash flow statement: this is similar to the profit and loss statement, but includes other expenses, such as tax payments and staff salaries.
When you understand how your business is performing at a high level, you can take steps to address problem areas and make sure you are financially secure and making a profit.
A good idea is to have extra income that doesn't generate any expenses for you, such as offering virtual classes or having an online store for fitness and health-related products. You can also choose to sell nutritional plans through your App.
In the fitness industry, acquisition is important, getting new leads is great and converting those leads into members is even better. But what's much more crucial to a gym's success is keeping them. Memberships are the basis of revenue and ultimately have a direct impact on profits.
Just as with the regular business of your physical studio, the online fitness market is competitive. And now more than ever, it's crucial to remember what differentiates your gym from the rest.
To motivate and engage your partners, you have to be up close and personal. 63% of today's consumers expect personalization to be a standard of service, and 54% are willing to share personal information if it is used to create a personalized experience. It's an important aspect of maintaining retention rates and provides several benefits for both your business and your customers
👍🏻 A better personal branding
👍🏻 Happy and motivated customers
👍🏻 Effective onboarding process
If your customers have a great experience from the start, they are more likely to stay with you for longer.
Running a profitable fitness center won't always be easy, but with efficient operations and a clear view of your finances you're likely to succeed. Member retention remains a key area of focus, not only for profitability, but for long-term growth and success.