Americans spend an estimated $26 billion on gym memberships per year, with 81 million adults going to the gym every day. This means that as a gym owner, the probability of success is extremely high. Opening a gym, big or small, opens many doors for financial growth, especially in 2022.
However, there are a lot of things to consider before opening a small gym.
The costs to open a small gym can vary widely, largely based on size, location and equipment. While a small franchise gym may require $200,000 – $500,000 or more to open, a small independent gym location may cost $20,000 to $100,000 or more to open.
The cost of securing a location, marketing efforts, and upfront investments in equipment is a lot to bear. So how much does it really cost to open a small gym? Below is a guide to the efforts your will need to put into being a gym owner.
Why Open a Gym?
As established previously, people are spending billions of dollars a year on their gym memberships, and that number is growing every year. As Americans continue to invest in their physical health, gym membership fees are on an incline and present a great opportunity for business owners. Since there are so many types of gyms, you have the ability to open a small gym that fits right for you and your desired customer base.
On top of the upward trend of fitness goers, opening a small gym can benefit you personally really well. It could give you financial freedom once the business settles in. It also gives you the chance to live and advocate for a healthier lifestyle. You also have the creativity to make it a unique experience and even expand locations if successful. While the benefits are intriguing, there is still a lot of planning and budgeting you will have to do before making the initial investment.
The Cost of Opening a Gym
This can be a difficult question to answer since there are many ways to break it down. First, you need to consider the one-time costs versus the continued investments. You must also think about location, business permit fees, and equipment costs. Building a gym from the ground up is also a huge cost to consider. Take into consideration square footage and whether you are renting out the building or owning it. Regardless of your approach, thinking in terms of one-time fees versus continued costs will make it easier to digest.
One-Time Costs
Again, depending on the approach, not everyone will have the same starting initiatives. However, it’s best to keep in mind that you will be needing to make a large investment to open a small gym to get the ball rolling. Here are the most standard one-time costs to open a small gym.
● Building and location. This price differs depending on where you want your gym located and how big you want the building to be. Opening a fully-fledged fitness center may be a larger investment than opening a small cycling studio. Will you be providing locker rooms? Showers? Private training rooms? You can spend more than $500,000 on location alone, so be sure to do proper research.
● License and permits. This can also depend on location. You will need location permits, health and safety permits, and ownership licenses. Expect to spend a few hundred dollars to obtain all of the right things.
● Equipment. You can’t have a gym without equipment! This can be a large range depending on what type of gym you want to open. You can spend as little as $10,000 for basic equipment or up to $50,000 for a fully-operating commercial location. Look at your finances and see where you fit comfortably upon determining what kind of equipment you need. Luckily, many places sell at a discounted price for purchasing in bulk.
● Technology. You will need a point of sales system and basic computers/tablets to efficiently run a business and manage member invoicing. You will also need a website to grow your online presence.
For a free template so you can estimate your own gym start up costs, please go here for a Google Sheets document titled: Estimated initial gym start up costs for a small gym. You can download it and save it as your own from the Google platform.
Ongoing Investments
While the initial one-time costs are a lot to digest, there will be a continuation of investments you will have to make to run a gym, like the electricity bill and advertising. Here are some of the most standard ones for opening a small gym.
● Insurance payments. As a fitness facility, you are legally obligated to have insurance for liability. Rates will vary depending on factors, but it could cost upward of $10,000 to start. Then you will have to continue to pay a monthly premium.
● Utilities and supplies. These in-house payments are no joke and can cost your gym up to $7000 a month on electricity, proper air conditioning, and sanitary stations. You also need to purchase cleaning supplies like wipes to wipe down equipment and vacuums and mops. A clean gym is a safe and healthy gym, so it may even be in your best interest to hire a cleaning crew.
● Lease payments. Whether you rent or buy, you will have monthly mortgage payments to adhere to. This price varies.
● Staff salaries. When opening a small gym, you’ll have to hire the right team to manage your business. Employee salaries will be different depending on position and what’s required of them. However, this is definitely an important cost to consider.
● Marketing and advertising. Paying for advertising efforts, promotional opportunities, and branding to get your name out there is another important investment. As a business, you need to get members, and marketing is a great way to do that.
Here’s a simple income statement for a typical small gym. Use this as a helpful tool to help you get started and play with the numbers to see what is possible. This is also a helpful exercise to see what the largest expenses are and how small changes in your customer counts and your average sales revenue per customer can make a large impact on your sales revenue, your gross income and your net income.
Go here to access the document. Again, be sure to save the document as your own first, then you can edit as you’d like and use it as your own small gym planning tool.
Please note, in this example, we used BankRate.com to check the cost of borrowing $50,000 to pay for equipment. Of course, you’ll probably need great credit, some cash or collateral and other requirements in order to borrow money.
Should You Open a Small Gym?
With any entrepreneurial pursuit, there come challenges you will need to overcome before you reach success. Expect to make mistakes, learn from them, and grow in this business journey. Whether you are opening a small or a large gym, there are a lot of costs associated with it. Doing your research, having the correct budget calculations, and making smart investments will set a strong foundation for starting out.
Now that you have a standard outline of what it takes to open a gym you will be more prepared when budgeting out your finances. No matter the kind of gym, location, or size, estimating initial costs will give you a better understanding of what you are getting into.
Sources:
- https://www.freshbooks.com/hub/startup/cost-to-start-a-gym
- https://abcfitness.com/owning-a-gym/cost-of-owning-a-gym/
- https://www.sage.com/en-us/accounting-software/startup-costs/gym/
- https://www.honeycombcredit.com/post/how-much-does-it-cost-to-start-a-gym
- https://www.yanrefitness.com/gym-startup-costs/
- https://www.finder.com/unused-gym-memberships#:~:text=About%2082.1%20million%20adults%20spend,billion%20of%20this%20%2428.6%20billion.