Are you a fitness buff, or better yet, a personal trainer, looking for a new business opportunity you could really get excited about? If so, starting up your own gym is something you should definitely consider.
The health and fitness industry is booming throughout North America. In fact, the global health club industry alone rakes in over $80 billion dollars every year, while approximately one in five North American adults have at least one gym membership.
The industry continues to grow, and in the age of Instagram selfies and social media, where so many are so keen to look as great as they possibly can, the fitness trend isn't likely to die out any time soon. Rather, all forecasts indicate that it's only going to get bigger.
In this article we're going to do a rough breakdown of some of the costs involved in opening and running a fitness center. It’s a lot of hard work, but if you're prepared to take on the challenge, the rewards -- both personal and financial -- can be spectacular.
The numbers can be a little daunting, but planning out your financing in advance is crucial to the long-term success of any business. Besides, you'll need to produce a detailed business plan before anybody will even consider funding your facility -- and unless you’re already very wealthy, you’ll most certainly be needing external sources of commercial financing.
Gym start-up costs vary greatly depending on the size, location, and type of operation you hope to run. If you need to find a suitably large space and build your facility from the ground up, $1 million would be a good place to start.
That said, a facility in the heart of Vancouver is going to be a lot more expensive to build than a similarly sized gym on the outskirts of Winnipeg, for example, if only because of the prohibitively high property values of the former location. On the other hand, a relatively simple cycling studio in a less expensive part of the country shouldn't set you back much more than $50,000, again depending on your location.
Regardless of size and where your fitness center will be located, you’ll first need to break down the associated costs into two categories: one-time costs and recurring costs.
Your greatest one-time expense and most important decision will definitely be the physical location of your gym. You’ll probably want a space that has a fair amount of foot traffic, which can be expensive, or be prepared to make up for it in advertising costs so people actually learn about your gym.
Give a lot of thought to the other businesses around the locations you scout. Are there any health or wellness businesses nearby? Being across the street from a major health food store is probably going to be better for your business than a location that’s dotted with endless fast food joints.
Another major consideration is how much work will any given space require before you can accurately call it a gym. Will it need new flooring? A shower system for the dressing rooms? A swimming pool? None of these things come cheap.
Your next biggest expense will be the equipment you need for the facility. Rule of thumb has it that roughly 50% of your capital should go towards buying the necessary office and gym equipment, while 25% should be reserved for administrative costs like construction expenses and business permits.
Do you want to buy used, older exercise equipment? It will be a lot cheaper, but won’t likely last as long as new gear. Remember that you’re in competition with a lot of other gyms, and you don’t want your customers to feel they’ve joined a second-rate facility. Still, if you can find suitable used gym equipment that’s been built to last, it could prove to be a wise investment.
One option that could greatly reduce your upfront costs is to lease your exercise equipment. While it will save you a fortune in the beginning, over the long run you’ll likely find purchasing your equipment to be the more profitable move. Of course, there’s nothing stopping you from purchasing some of your equipment and leasing some of the more expensive gear your gym is going to need.
- Licenses, permits, insurance
In addition to the costs associated with all businesses, such as accounting, legal and incorporation fees, you may also need to purchase courses and accreditation status as certified personal trainers for both yourself and your employees. Plus, you’ll need to buy insurance. In addition to fire, vandalism, and other basic insurance products, given the nature of a gym -- where accidents are not uncommon -- you’ll also want to be well-covered for liability.
No matter how large or small a facility you intend to run, you’re going to need help, which means hiring other personal trainers and possibly a receptionist. Not to mention the professional fees you’ll need to cover for accounting and legal counsel. You won’t likely need to keep these people on retainer, but professional fees do add up, and are services you’ll continually need to access in order to run your business successfully.
- Gym management software and supplies
The good news is that there’s a ton of software available specifically catering to gym management. The less good news is that most of it comes on a subscription basis. However, prices vary enormously based on the depth and degree of service you require.
You’re also going to need a POS (point of sale) system that can accept different kinds of payment, as well as the hardware to operate it. The costs involved vary greatly based upon the provider you choose. Once you’ve laid out for the initial hardware, expect to pay somewhere between $2,000 and $2,500 per annum for your POS system.
The above is just a sampling of what it costs to open a gym in Canada. You will undoubtedly come across other expenses that can’t be adequately addressed in a short article like this.
As such, a good rule of thumb when launching any new business is to overestimate your start-up costs and leave yourself with a comfortable financial cushion afterwards.
Whether you need to lease your equipment or take out a loan, Hitachi Capital Canada can help your business grow. Contact us to find out more.